<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 JULY 2, 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.
                 (Name of Small Business Issuer 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 August 14, 2000, there were 40,273,933 shares of common stock, $.01 par
value, outstanding.

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

<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
                                  JULY 2, 2000

<TABLE>
<CAPTION>

                                                                                      Page
                                                                                      ----
<S>           <C>                                                                    <C>



PART I        FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

              Consolidated Balance Sheets -
                  As of July 2, 2000 (unaudited) and January 2, 2000                   4

              Consolidated Statements of Operations -
                  For the thirteen weeks and twenty-six weeks ended
                  July 2, 2000 and July 4, 1999 (unaudited)                            5

              Condensed Consolidated Statements of Cash Flows -
                  For the twenty-six weeks ended July 2, 2000 and July 4, 1999
                  (unaudited)                                                          6

              Condensed Notes to the Financial Statements (unaudited)                  7


ITEM 2.       Management's Discussion and Analysis of
                  Financial Condition and Results of Operations                        13



PART II       OTHER INFORMATION

ITEM 1.       Legal Proceedings                                                        29

ITEM 2.       Changes in Securities and Use of Proceeds                                29

ITEM 4.       Submission of Matters to a Vote of Security Holders                      30

ITEM 6.       Exhibits and Reports on Form 8-K                                         30

              Signatures                                                               32


</TABLE>


                                        3

<PAGE>   4



                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                                POPMAIL.COM, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                        July 2, 2000       January 2, 2000
                                                                        ------------       ---------------
                                                                         (Unaudited)
<S>                                                                  <C>                <C>

                                      ASSETS
       CURRENT ASSETS
            Cash and equivalents                                         $  1,685,795      $  1,136,137
            Restricted cash                                                 2,000,000                --
            Accounts receivable, net                                          694,150           275,655
            Notes receivable                                                   94,000                --
            Inventories                                                        97,133           111,807
            Other current assets                                              710,678           483,496
                                                                         ------------      ------------
                Total current assets                                        5,281,756         2,007,095


       PROPERTY AND EQUIPMENT, net                                         15,001,167        14,866,802
       GOODWILL, net                                                       84,355,554        36,277,346
       OTHER ASSETS                                                         2,469,732           344,121
                                                                         ------------      ------------
                                                                         $107,108,209      $ 53,495,364
                                                                         ============      ============

              LIABILITIES AND SHAREHOLDERS' EQUITY
       CURRENT LIABILITIES
            Notes payable                                                $  2,079,596      $  6,037,518
            Convertible promissory notes payable                            2,849,167         1,460,417
            Current maturities of long-term debt                              176,468           193,833
            Accounts payable                                                1,924,432         1,604,952
            Due to affiliates                                                 152,700           120,000
            Accrued expenses                                                1,456,884         1,286,852
            Earn Out Shares Liability                                       7,000,000                --
                                                                         ------------      ------------
                      Total current liabilities                            15,639,247        10,703,572

       DEFERRED RENT CREDITS                                                3,531,778         3,650,512
       LONG-TERM OBLIGATIONS, less current maturities                         484,370         1,883,688
                                                                         ------------      ------------
                      Total liabilities                                    19,655,395        16,237,772
                                                                         ------------      ------------

       COMMITMENTS AND CONTINGENCIES

       SHAREHOLDERS' EQUITY
            Common stock, $.01 par value, 100,000,000 shares authorized;
                 39,945,306 and 24,695,872 shares issued and outstanding      399,453           246,958
             Series C 8% convertible preferred stock                               --           693,000
             Series D 8% convertible preferred stock                               --         2,288,000
             Series E convertible preferred stock                             450,000           350,000
             Series F preferred stock                                      48,640,477                --
             Series G 10% convertible redeemable preferred stock            6,000,000                --
            Additional paid-in capital                                     97,673,303        74,901,160
            Less common stock subscribed and notes receivable
                  from affiliates                                          (3,193,430)       (2,850,000)

            Accumulated deficit                                           (62,516,989)      (38,371,526)

                                                                        -------------       -----------
                  Total shareholders' equity                               87,452,814        37,257,592
                                                                        -------------       -----------
                                                                        $ 107,108,209       $53,495,364
                                                                        =============       ===========

</TABLE>

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



                                        4


<PAGE>   5



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


<TABLE>
<CAPTION>

                                                                Thirteen weeks ended                     Twenty-six weeks ended
                                                         July 2, 2000        July 4, 1999           July 2, 2000       July 4, 1999
                                                         ----------------------------------         -------------------------------
<S>                                                      <C>                <C>                     <C>                <C>
REVENUES
     Restaurant sales, net                                 $  2,355,563        $  3,561,023        $  4,801,761        $  5,893,655
     Internet marketing services, net                           808,556                  --           1,185,961                  --
                                                           ------------        ------------        ------------        ------------
                                                              3,164,119           3,561,023           5,987,722           5,893,655

COSTS AND EXPENSES:
    Restaurant food, beverage and retail                        633,984             919,446           1,257,645           1,526,033
    Restaurant operating expenses                             1,856,440           2,498,330           3,546,505           4,214,633
    Restaurant depreciation                                     312,774             352,672             625,568             610,840
    Amortization of goodwill                                  7,057,721                  --          12,514,325                  --
    Pre-opening expenses                                             --                  --                  --             572,932
     General, administrative & development                    4,086,714             480,530           7,530,010             960,776
                                                           ------------        ------------        ------------        ------------
               Total costs and expenses                      13,947,633           4,250,978          25,474,053           7,885,214
                                                           ------------        ------------        ------------        ------------

LOSS FROM OPERATIONS                                        (10,783,514)           (689,955)        (19,486,331)         (1,991,559)

OTHER INCOME (EXPENSE)
     Interest expense                                          (992,121)           (245,283)         (1,581,081)           (387,332)
     Interest income                                             63,069               3,149             123,800               3,187
     Debt guarantee costs                                            --                  --            (155,000)                 --
     Financial advisory services                               (958,066)                 --          (2,185,144)                 --
     Loss on sale of assets                                    (761,707)                 --            (761,707)                 --
                                                           ------------        ------------        ------------        ------------
                                                             (2,648,825)           (242,134)         (4,559,132)           (384,145)
                                                           ------------        ------------        ------------        ------------

NET LOSS                                                    (13,432,339)           (932,089)        (24,045,463)         (2,375,704)

PREFERRED STOCK DIVIDENDS
  AND ACCRETION                                                 100,000             192,229             100,000             192,229
                                                           ------------        ------------        ------------        ------------

LOSS ATTRIBUTABLE TO
  COMMON SHAREHOLDERS                                      $(13,532,339)       $ (1,124,318)       $(24,145,463)       $ (2,567,933)
                                                           ============        ============        ============        ============

BASIC AND DILUTED NET LOSS
  PER COMMON SHARE                                         $      (0.36)       $      (0.11)       $      (0.70)       $      (0.29)
                                                           ============        ============        ============        ============


BASIC AND DILUTED NET LOSS
  ATTRIBUTABLE TO COMMON
  SHAREHOLDERS PER COMMON
  SHARE                                                    $      (0.36)       $      (0.13)       $      (0.70)       $      (0.31)
                                                           ============        ============        ============        ============

BASIC AND DILUTED WEIGHTED
  AVERAGE OUTSTANDING SHARES                                 37,311,939           8,332,239          34,441,027           8,193,858
                                                           ============        ============        ============        ============
</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>

                                                                                  Twenty-six weeks ended
                                                                            July 2, 2000            July 4, 1999
                                                                          ------------------      ------------------
<S>                                                                       <C>                     <C>

OPERATING ACTIVITIES:
   Net cash used in operating activities                                    (10,149,373)           (1,802,141)

INVESTING ACTIVITIES:
   Purchases of property and equipment                                       (2,424,976)           (4,206,236)
                                                                            -----------            ----------

FINANCING ACTIVITIES:
   Proceeds from issuance of stock                                           10,603,252                    --
   Proceeds from issuance of preferred stock, net                             4,100,000             2,000,000
   Proceeds from exercise of options and warrants                             5,848,125                74,249
   Proceeds from short-term notes payable                                            --             1,315,000
   Proceeds from long-term debt                                                      --             1,000,000
   Tenant allowance collected                                                        --             1,962,500
   Advances from shareholder                                                         --                50,000
   Cash restricted during the period                                         (2,000,000)                   --
   Payments on advances from shareholders and officers                         (120,000)                   --
   Payments on short-term notes payable                                      (5,229,695)             (113,384)
   Payments on long-term debt                                                   (77,675)              (74,316)
                                                                            -----------            ----------
            Net cash provided by financing activities                        13,124,007             6,214,049
                                                                            -----------            ----------

INCREASE IN CASH AND
     CASH EQUIVALENTS                                                           549,658               205,672

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

CASH AND EQUIVALENTS, end of period                                         $ 1,685,795            $  311,919
                                                                            ===========            ==========

SUPPLEMENTAL DISCLOSURE OF CASH
       FLOW INFORMATION:
         Cash paid for interest                                             $   210,328            $  236,145
</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
                                  JULY 2, 2000
                                   (UNAUDITED)



NOTE A  -  NATURE OF THE BUSINESS

PopMail.com, inc. ("the Company" or "PopMail") consists of two divisions, an
Internet marketing division and a restaurant division.

The Internet division consists of three companies. PopMail Network, Inc.
("PopMail Network"), based in Dallas, Texas, 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 which
creates an affinity network of high profile brands. IZ.com, Inc. ("IZ"), based
in Bellevue, Washington, is a provider of digital publishing services,
newsletters and technology for high-end brands. Fan Asylum, Inc., based in San
Francisco, California ("Fan Asylum") is a provider of official online and
offline fan club sites for recording artists in the music industry. Our Internet
division is in the business of connecting entertainment and media brands with
their fans through the use of e-mail, fan club sites and high-end publishing
tools.

The restaurant division develops, owns and operates upscale casual restaurants
with multiple themed dining rooms. The Company has "Cafe Odyssey" restaurants at
the Mall of America in Bloomington, Minnesota, which opened in June 1998 and at
the Denver Pavilions, in Denver, Colorado, which opened in March 1999. The
Company closed its Cincinnati, Ohio location in August 1999 and has finalized
the sale of this property. See Note G - Business Segments for further
discussion.


NOTE B  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been
prepared 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 twenty-six weeks ended July 2, 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 accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and 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.



                                       7

<PAGE>   8

                                POPMAIL.COM, INC.
               CONDENSED NOTES TO THE FINANCIAL STATEMENTS (CONT.)
                                  JULY 2, 2000
                                   (UNAUDITED)

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 July 2, 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.

Cash Flows

Non-cash financing activities included the receipt of a note receivable for the
sale of the Cincinnati, Ohio, restaurant location of approximately $1,290,000.

Restricted Cash

Restricted cash represents cash and certificates of deposit maturing within one
year that are restricted in use by the Company. As of July 2, 2000, the
restricted cash balance represents a deposit earmarked to satisfy the Company's
obligation to guarantee payment of the Fan Asylum Seller should the Seller
choose to exercise his put option as part of the Fan Asylum acquisition. The Fan
Asylum acquisition and the Seller's put right are more fully described below in
Note C.

NOTE C - BUSINESS COMBINATION

On June 14, 2000, the Company completed its acquisition of Fan Asylum, Inc.
("Fan Asylum"). Fan Asylum manages the official fan club web sites and fan clubs
for many recording artists and musical groups. Through its web site management
services, Fan Asylum designs the fan club site graphics, creates the content,
manages the on-line stores, provides travel packages, provides preferred
tickets, sends out weekly email newsletters under the artists brand and hosts
the web site for each of its Artists.

The acquisition was accounted for under the purchase method of
accounting with the operations of Fan Asylum included in the Company's
consolidated financial statements as of that date. The Company purchased 100% of
the common stock of Fan Asylum from the sole shareholder of Fan Asylum ("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 are 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. The earn-out shares 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. Twenty-five percent (25%) of the then-vested
earn-out shares and twenty-five percent (25%) of the initial shares will be
released to Seller on March 31, 2001 and on each of the three consecutive
nine-month anniversary dates thereof.

Seller is also entitled to certain price reset provisions on the earn-out
shares. If the average per share closing price of the Company's common stock
during the five days prior to March 14, 2001 and the next three consecutive
nine-month anniversaries thereafter does not equal or exceed $2.50, then Seller
is entitled to receive additional earn-out shares to bring the aggregate value
of the earn-out shares received on each reset date to an equivalent price of
$2.50 per share. The reset provisions expire when the Company's common stock
maintains a price of $3.50 per share for 20 consecutive trading days.

Finally, 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

                                       8


<PAGE>   9

                                POPMAIL.COM, INC.
               CONDENSED NOTES TO THE FINANCIAL STATEMENTS (CONT.)
                                  JULY 2, 2000
                                   (UNAUDITED)

ability to fulfill the put obligation with a $2 million cash deposit, which is
recorded as restricted cash on the accompanying July 2, 2000 balance sheet.

The total consideration, less the net asset value of the assets acquired and
liabilities assumed, resulted in approximately $9.4 million of goodwill
generated in the acquisition, which will be amortized on a straight-line basis
over 3 years. $7 million of the consideration, representing the total value of
the earn-out shares, has been recorded as a current liability in the
accompanying July 2, 2000 balance sheet until such time as the Seller earns the
shares.

In conjunction with the Fan Asylum acquisition, the Company 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 14th, 2000. As of August 15th, 2000, no Artist Options have been issued.
The Company expects to grant most if not all of the Artist Options over the next
12 months.

NOTE D  -  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 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 2200 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. As of July 2, 2000, the Company has issued 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.

Series F - In connection with the IZ.com merger, 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 currently 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 $4.0 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


                                       9

<PAGE>   10

                               POPMAIL.COM, INC.
              CONDENSED NOTES TO THE FINANCIAL STATEMENTS (CONT.)
                                  JULY 2, 2000
                                  (UNAUDITED)

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.

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.

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.


NOTE E  -  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.

                                       10

<PAGE>   11

                                POPMAIL.COM, INC.
               CONDENSED NOTES TO THE FINANCIAL STATEMENTS (CONT.)
                                  JULY 2, 2000
                                   (UNAUDITED)

Investment Banker Agreement

In April 2000, the Company entered into a two-year investment banking agreement
with Sands Brothers & Co., LTD. of New York. Sands Brothers will advise the
Company on merger and acquisition strategies, capital raising activities and
corporate development opportunities. In connection with this agreement, the
Company issued Sands Brothers 1,000,000 warrants to purchase the Company's
common stock, of which 500,000 warrants have an exercise price of $1.625 per
share (250,000 of which vested immediately) and 500,000 have an exercise price
of $4.00 per share. The remainder of these warrants vest upon Sands Brothers
successful completion of certain financing transactions.

NOTE F  -  NOTES PAYABLE

Notes payable consists of the following:


<TABLE>
<CAPTION>
                                                                    July 2, 2000    January 2, 2000
<S>                                                                 <C>             <C>

     Short-term revolving line of credit (a)                        $ 1,000,000        $  3,000,000
     Short-term revolving loan                                               --             825,000
     Short-term promissory notes, net of discount                            --           2,082,823
     Other (b)                                                        1,079,596             129,695
                                                                    -----------        ------------
                                                                    $ 2,079,596        $  6,037,518
                                                                    ===========        ============

</TABLE>


     (a) The July 2, 2000 balance is contractually secured by a $1 million
     certificate of deposit included in the accompanying balance sheets as cash
     and equivalents.
     (b) The July 2, 2000 balance represents short term notes assumed from both
     the IZ.com and the Fan Asylum acquisitions.

NOTE G  -  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 2000, the Company's general, administrative
and development expenses are included in the Internet marketing services
segment, with the exception of those expenses directly attributable to the
restaurant division. Information relating to these segments for the twenty-six
weeks ended July 2, 2000 are as follows:

<TABLE>
<CAPTION>

                                                          Restaurant             Internet
                                                          operations             services              Total
                                                          ----------             --------              -----
<S>                                                      <C>                 <C>                    <C>

     Net revenues                                         $ 4,801,761         $  1,185,961           $  5,987,722
     Loss from operations                                    (627,957)         (18,858,374)           (19,486,331)
     Total assets                                          11,976,520           95,131,689            107,108,209

</TABLE>

Sale of Cincinnati, Ohio restaurant property

In April 2000, the Company finalized the sale of the equipment, leasehold
improvements, lease rights and certain other contractual rights of its
Cincinnati, Ohio location in exchange for a 21-year, non-interest bearing
promissory note receivable. The approximate $1.27 million present value of the
future minimum cash receipts provided for under the promissory note is recorded
with other assets in the accompanying balance sheet as of July 2, 2000. The
promissory note also provides for additional payments, up to $100,000 per year,
based on either net


                                       11
<PAGE>   12



                                POPMAIL.COM, INC.
               CONDENSED NOTES TO THE FINANCIAL STATEMENTS (CONT.)
                                  JULY 2, 2000
                                   (UNAUDITED)


cash flows or gross sales from the Cincinnati location (the "Additional
Payments"). If the Cincinnati location generates the required cash flow or sales
to provide for the maximum Additional Payments, the promissory note will be paid
down in approximately 15 years. The sale resulted in a loss of approximately
$762,000 and is included in the accompanying statements of operations for the
twenty-six weeks ended July 2, 2000. The promissory note receivable is secured
primarily by a mortgage interest in the real property at the Cincinnati
location.

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 and 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 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 that 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.


NOTE H  -  SUBSEQUENT EVENTS

In July 2000, the short-term line of credit of $1,000,000 was paid with the
surrender of the certificate of deposit.

In July 2000, approximately $1,000,000 of additional convertible promissory
notes payable were converted into shares of common stock.

In August 2000, the Company acquired a minority interest in NC, Inc., a
privately held business to business Internet services company in exchange for
$1,000,000 of the Company's common stock.

                                       12






<PAGE>   13



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.


OVERVIEW

PopMail.com, inc. ("the Company" or "PopMail") consists of two divisions, the
Internet marketing services division and the restaurant division.

The Internet marketing division consists of three companies. PopMail Network,
Inc. ("PopMail Network"), based in Dallas, Texas, 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
which creates an affinity network of high profile brands. IZ.com, Inc. ("IZ"),
based in Bellevue, Washington, is a provider of digital publishing services,
newsletters and technology for high-end brands. Fan Asylum, Inc., based in San
Francisco, California ("Fan Asylum") is a provider of official online and
offline fan club sites for recording artists in the music industry. This
division connects entertainment and media brands with their fans through the use
of e-mail, fan club sites and high-end publishing tools.

The Internet marketing division positions itself as an online fan club services
and content provider by connecting people with their passions. The Company
serves affinity type clients/brands (the "Affiliates") that desire to interact
with listeners, viewers, readers, subscribers and customers (the "fans") on
their passions and interests and to enrich that experience. It targets and
serves over 500 clients in four affinity-based industries: sports,
entertainment, music and television through its subsidiaries, PopMail Network,
IZ.com and Fan Asylum. PopMail helps brand target interests, not demographics.
Our online fan club, email and content service and marketing model connects the
brand with the fan and the fan with the brand, not a third party's brand.

The restaurant division develops, owns and operates upscale casual restaurants
with multiple themed dining rooms. The Company has "Cafe Odyssey" restaurants at
the Mall of America in Bloomington, Minnesota, which opened in June 1998 and at
the Denver Pavilions, in Denver, Colorado, which opened in March 1999.

Future revenue and profits, if any, will depend upon various factors, including
the evolution of the Internet, the market acceptance of the Company's current
restaurant concept, the quality of restaurant operations, and general economic
conditions. Currently, the Company's primary source of revenue results from its
restaurant division. However, the Company is becoming less dependent on the
restaurant division with the Internet marketing division revenue increasing over
the last past three quarters. 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 the revenues from the
existing restaurants. 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.



                                       13


<PAGE>   14




                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

RESULTS OF OPERATIONS FOR THE THIRTEEN WEEKS AND TWENTY-SIX WEEKS ENDED JULY 2,
2000 AND JULY 4, 1999

REVENUES

Net sales for the Internet marketing division, which was launched with the
Company's first acquisition on August 19, 1999, were $808,556 for the thirteen
weeks ended July 2, 2000. This represents sales generated primarily by set-up,
hosting, and license fees through the sales of PopMail Network's fan club email
services, and outsourced publishing fees of IZ.com. Only two weeks of the
quarter reflected revenue resulting from the Fan Asylum acquisition on June 14,
2000. The Company's sales for the Internet marketing division for the twenty-six
weeks ended July 2, 2000 were $1,185,961.


The Company's restaurant division had net sales for the thirteen weeks ended
July 2, 2000 and July 4, 1999 of $2,355,563 and $3,561,023, or a 34% decrease of
$1,205,460. The net sales for the twenty-six weeks ended July 2, 2000 and July
4, 1999 were $4,801,761 and $5,893,655, or a 19% decrease of $1,091,894. These
decreases in sales are attributable to three factors. First, the closing of the
Cincinnati, Ohio, Kenwood Restaurant on August 29, 1999, resulted in only two
restaurants in operation during the respective 2000 periods versus three
restaurants in operation during 1999. In April 2000, the Company finalized the
sale of its Cincinnati, Ohio location, which resulted in a non-operating loss of
approximately $762,000. Second, the period following the 1999 grand opening of
the Denver Pavilions location on March 15, 1999 resulted in increased sales in
1999 versus 2000. Many new restaurant locations go through a "honeymoon" period
of relatively high sales. Same store sales comparisons generally may not be
accurate until 18 months of operations. Finally, same store sales for the Mall
of America Restaurant decreased by $208,957 or 14% to $1,287,487 for the
thirteen weeks ended July 2, 2000 from $1,496,444 for the thirteen weeks ended
July 4, 1999. Same store sales for the Mall of America Restaurant decreased by
$405,262 or 14% to $2,534,891 for the twenty-six weeks ended July 2, 2000 from
$2,940,153 for the twenty-six weeks ended July 4, 1999. Because the Mall of
America Restaurant is located on the third floor of a mall, it may not truly be
a destination driven location, but more dependent on the overall mall traffic
throughout the year.

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.

COSTS AND EXPENSES

The food, beverage, retail costs and other unit operating expenses related to
the operation of the Restaurants for the thirteen weeks ended July 2, 2000 were
$2,490,424 or a 27% decrease of $927,352 from $3,417,776 for the thirteen weeks
ended July 4, 1999. The food, beverage, retail costs and other unit operating
expenses related to the operation of the Restaurants for the twenty-six weeks
ended July 2, 2000 were $4,804,150 or a 16% decrease of $936,516 from $5,740,666
for the twenty-six weeks ended July 4, 1999. The expenses generally decreased
because of the same factors that caused the decrease in revenues, most
significantly the closing of the Kenwood location. Some of the reduced costs
were offset by management fees payable under the Restaurant Management Agreement
with a company controlled by former officers of the Company.

Depreciation expenses of the Restaurants for the thirteen weeks ended July 2,
2000 were $312,774 or a 11% decrease of $39,898 from $352,672 for the thirteen
weeks ended July 4, 1999. Restaurant depreciation expenses for the twenty-six
weeks ended July 2, 2000 were $625,568 or a 2% increase of $14,728 from $610,840
for the twenty-six weeks ended July 4, 1999.


                                       14


<PAGE>   15


                                POPMAIL.COM, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

Goodwill amortization expense for the thirteen weeks ended July 2, 2000 was
$7,057,721. Goodwill amortization expense for the twenty-six weeks ended July 2,
2000 was $12,514,325. This represents the excess of the purchase price and
related costs over the fair value of the net assets that the Company acquired
through its mergers and acquisitions. The Company amortizes acquired goodwill on
a straight-line basis over a three-year period. There was no goodwill
amortization expense for the 1999 periods, as no acquisitions were completed
prior to July 4, 1999.

The Company had general, administrative and development expenses for the
thirteen weeks ended July 2, 2000, of $4,086,714 compared to $480,530 for the
thirteen weeks ended July 4, 1999, an increase of $3,606,184. The Company's
general, administrative and development expenses for the twenty-six weeks ended
July 2, 2000, were $7,530,010 compared to $960,776 for the twenty-six weeks
ended July 4, 1999, an increase of $6,569,236. These increases reflect the
results of the acquisitions of Popmail, ROI, IZ.com and Fan Asylum, and the
related additions of the sales, publishing and development expenses related to
those operations. The Company has relocated all of the Restaurant management
services to the Denver Pavilions location and all of the corporate Internet
marketing service functions to the corporate headquarters located in Dallas,
Texas. The Company has had to address numerous nonrecurring merger and
acquisitions related costs, specifically of IZ.com and Fan Asylum, shareowner
relationship costs, etc. and development costs associated with the build-out of
the Internet marketing software. The Company expects to continue to incur
operating losses throughout 2000.

The Company's other income and expense consists primarily of interest expense,
financial advisory services and loss on sale of assets. The interest expense for
thirteen weeks ended July 2, 2000 was $992,121 as compared to $245,283 for
thirteen weeks ended July 4, 1999, an increase of $746,838. The interest expense
for the twenty-six weeks ended July 2, 2000 amounted to $1,581,081 compared to
$387,332 for the twenty-six weeks ended July 4, 1999, an increase of $1,193,749.
The increases for both the thirteen and twenty-six week periods ended July 2,
2000 over the complementary periods in 1999 relate primarily to the increased
levels of debt outstanding during 2000 and the amortization of financing fees
capitalized in raising debt. Of the $992,121 of interest expense reported for
the thirteen weeks ended July 2, 2000 and the $1,581,081 of interest expense
reported for the twenty-six week period ended July 2, 2000, $93,776 and
$210,328, respectively, was paid in cash.

The Company's financial advisory services are costs associated with services
provided by third party financial advisors for the thirteen and twenty-six weeks
ended July 2, 2000. For those periods, the Company recorded $958,066 and
$2,185,144, respectively of financial advisory service fees. These costs were
paid with cash and through the issuance of new common stock and warrants.

The Company recorded a loss on the sale of assets of $761,707 during the
thirteen weeks ended July 2, 2000. This represents the loss on the sale of the
assets of its Cincinnati, Ohio restaurant.

LIQUIDITY AND CAPITAL RESOURCES

The Company had a working capital deficit of $10,357,491 at July 2, 2000,
compared to working capital deficit of $8,696,477 on January 2, 2000. Cash and
cash equivalents were $1,685,795 at July 2, 2000, representing an increase of
$549,658 from the cash and cash 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 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.


                                       15

<PAGE>   16

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

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 $13,200,000. During the thirteen weeks ended April 2,
2000, the Company completed a private placement of 2,350,000 units valued at
$1.00 per unit resulting in cash proceeds to the Company of approximately
$2,000,000. 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 thirteen weeks ended April 2, 2000, the Company completed a
second private placement of 2,666,667 units valued at $2.25 per unit resulting
in cash proceeds to the Company of approximately $4,500,000. 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.

In May 2000, the Company raised cash proceeds of approximately $4,000,000 from
the private placement of Series G 10% convertible preferred stock which had an
aggregate stated value of $6,000,000. 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.

In June 2000, the Company raised cash proceeds of approximately $2,700,000 from
the private placement of 1,000,000 shares of common stock at a purchase price of
$3.00 per share. At the time of the closing, the investors also received a
proportionate share of (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 at a nominal exercise price with the
intention of providing the investors the ability to bring their investment value
over the life of the investment to at least $4.00 per share.

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.

The Company has no current plans to expand the restaurant division directly. It
will do so through licensing or other arrangements where the Company does not
invest directly into the business.

The Company intends to fund operations, the expansion of the Internet marketing
services division and debt service 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 restructuring 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 this entire prospectus and consider the following risk factors:

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 $24.1 million in the first six months of
2000, $24.2 million in 1999, $6.7


                                       16

<PAGE>   17
                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

million in 1998 and $4.0 million in 1997 and had a working capital deficit of
approximately $10.4 million as of July 2, 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. 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 for a period of thirty consecutive trading days or
(5) the discretion of the Nasdaq SmallCap Market.

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 Stephen D. King, our Chairman, Gary Schneider, our Chief
Executive Officer, Jesse Berst, the Chief Operating 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



                                       17
<PAGE>   18


                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)


hire additional corporate level and management employees to help implement and
operate our plans for expansion of our Internet and restaurant divisions. 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.

We have only been operating our Mall of America restaurant since June 1998 and
our Denver restaurant since March 1999. In addition, Old PopMail was founded in
December 1997, and ROI commenced operations in June 1998, while IZ.com
Incorporated was incorporated in February 1999. 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 popmail.com, inc. 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 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 August 4, 2000, Mr. Anderson indirectly or directly controlled
approximately 22.6 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.

We have a total of 42,649,174 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


                                       18

<PAGE>   19


                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

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 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 July 28, 2000, we have 40,273,932 shares of common stock, 225,000 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 July 28, 2000, a further 42,649,174 shares of common
stock have been reserved as follows:

         a maximum of 750,000 shares of common stock reserved for issuance upon
         exercise of the Series E Preferred Shares, 225,000 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 7,224,282 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;


                                       19

<PAGE>   20



                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

         17,600,997 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 2,033,333 shares are
         currently outstanding;

         750,000 shares for issuance under our 1998 Director Stock Option Plan,
         of which options relating to 290,000 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
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


                                       20

<PAGE>   21

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)


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
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.



                                       21

<PAGE>   22

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

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
500 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;

         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



                                       22


<PAGE>   23

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

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, media, 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 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.



                                       23

<PAGE>   24

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)


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 services. 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

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)


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



                                       25


<PAGE>   26

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

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

OUR 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

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


                                       26


<PAGE>   27

                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

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.

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:



                                       27

<PAGE>   28


                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)

         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.



                                       28

<PAGE>   29

                           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>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                 TITLE AND                                                                         CASH OR
                 DESCRIPTION               AMOUNT OF                                               CONSIDERATION
     DATE        OF SECURITIES             SECURITIES                         ISSUED TO            RECEIVED
-------------------------------------------------------------------------------------------------------------------------
<S>              <C>                       <C>                                <C>                  <C>
   4/17/2000     Warrants to Purchase      Warrants to purchase 550,000       Black Brook          In consideration for
                 Common Stock              shares at an exercise price of     Capital LLC, and     financial services
                                           $1.625                             Sands Brothers &
                                                                              Co., Ltd
-------------------------------------------------------------------------------------------------------------------------
   4/18/2000     Warrants to Purchase      Warrant to purchase 250,000        Blake Capital        In connection with
                 Common Stock (BCP         shares at an exercise price of     Partners, LLC        certain financing
                 Series)                   $2.00
-------------------------------------------------------------------------------------------------------------------------
   4/26/2000     Warrants to Purchase      Warrants to purchase 100,000       Maris Kott and       In consideration for
                 Common Stock              shares at an exercise price of     Dara Podber          financial services
                                           $1.625
-------------------------------------------------------------------------------------------------------------------------
   5/2/2000      Series G Convertible      600,000 shares of Series G         The Shaar Fund,      $4,000,000
                 Preferred Stock           Convertible Preferred Stock        Ltd.
                                           and a Warrant to purchase
                                           500,000 shares at an exercise
                                           price of $2.51
-------------------------------------------------------------------------------------------------------------------------
   5/15/2000     Warrants to Purchase      Warrant to purchase 80,000         Fairview Partners    In consideration for
                 Common Stock              shares at an exercise price of                          financial services
                                           $2.00
-------------------------------------------------------------------------------------------------------------------------
   6/14/2000     Common Stock, Warrants    Common Stock, Warrants to          Certain Accredited   $2,700,000
                 to Common Stock, and      purchase 300,000 shares at an      Investors
                 certain Adjustable        exercise price of $1.00 per
                 Warrants to purchase      shares, and certain Adjustable
                 Common Stock              Warrants to purchase Common
                                           Stock at a nominal exercise
                                           price
-------------------------------------------------------------------------------------------------------------------------
   6/15/2000     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                              Capital,
                                                                              Metropolitan
                                                                              Capital Partners,
                                                                              Inc.
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       29

<PAGE>   30


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

On June 13, 2000, the Annual Meeting of Shareholders of PopMail.com, inc.
("Annual Meeting") was held. There were 36,272,928 shares of Common Stock
entitled to vote at the meeting, 225,000 shares of Series E Preferred Stock and
3,729,694 Series F Preferred Stock. A total of 32,624,807 shares were
represented at the meeting. The following matters were voted:

<TABLE>
<CAPTION>
         (A)      To ratify the acquisition of IZ.com, Incorporated and the
                  issuance of up to 10,725,000 shares of PopMial common stock in
                  connection therewith:

                 Shares Voted For              Against                    Abstain               Broker Non-Vote
                 ----------------              -------                    -------               ---------------
<S>              <C>                           <C>                        <C>                   <C>
                    21,753,244                 750,541                    442,730                  9,678,292
<CAPTION>

         (B)      Vote to approve an amendment to PopMail's 1997 Stock Option
                  and Compensation Plan to increase the number of shares of
                  common stock issuable thereunder from 1,250,000 to 3,000,000
                  shares:

                 Shares Voted For              Against                    Abstain               Broker Non-Vote
                 ----------------              -------                    -------               ---------------
<S>              <C>                           <C>                        <C>                   <C>
                    21,297,538                1,196,762                   451,215                  9,678,292


<CAPTION>
         (C)      Vote to approve an amendment to the 1998 Director Stock Option
                  Plan to increase the number of shares of common stock issuable
                  thereunder from 250,000 to 750,000 shares:

                 Shares Voted For              Against                    Abstain               Broker Non-Vote
                 ----------------              -------                    -------               ---------------
<S>              <C>                           <C>                        <C>                   <C>
                    21,742,632                 741,078                    462,805                  9,678,292

</TABLE>


<TABLE>
<CAPTION>

         (D)      To elect five directors. All of the management's nominees for
                  directors as listed in the proxy statement were elected with
                  the following:

                                                Shares Voted For               Withheld
                                                ----------------               --------
<S>                                             <C>                           <C>
         Stephen D. King                           31,351,310                 1,273,497
         Jesse Berst                               31,362,810                 1,261,997
         Thomas W. Orr                             31,444,758                 1,180,049
         Michael L. Krienik                        31,444,758                 1,180,049
         Gary Schneider                            31,356,460                 1,268,347

</TABLE>



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 (PP
         Series).

    4.2  Schedule identifying material details of warrants issued by the
         Company substantially identical to the warrant filed as Exhibit 4.1.


                                       30

<PAGE>   31



    4.3     Form of Warrant to Purchase Shares of Common Stock of the Company
            issued to Black Brook Capital LLC.
    4.4     Form of Warrant to Purchase Shares of Common Stock of the Company
            (SB Series).
    4.5     Schedule identifying material details of warrants issued by the
            Company substantially identical to the warrant filed as Exhibit 4.4.
    4.6     Form of Warrant to Purchase Shares of Common Stock of the Company
            issued to Fairview Partners.
    4.7     Form of Agents Warrant to Purchase Common Stock (issued in
            connection with a private placement.
    4.8     Schedule identifying material details of warrants issued by the
            Company substantially identical to the warrant filed as Exhibit 4.7.
    4.9     Form of Warrant Agreement dated June 12, 2000 (issued to Investors
            in connection with a private placement)
    4.10    Schedule identifying material details of warrants issued by the
            Company substantially identical to the warrant filed as Exhibit 4.9.
    4.11    Form of Adjustable Warrant dated as of June 12, 2000 (issued to
            Thompson Kernahan & Co., Inc. on behalf of investors in connection
            with a private placement)
    10.1.1  Promissory Note dated March 30, 2000 from King Family Partners, in
            favor of the Company.
    10.1.2  Management Agreement between Cafe Odyssey, LLC and H D Spirits,
            Inc. and Odyssey Restaurants, LLC dated May 2000.
    10.1.3  License and Credit Enhancement Agreement effective as of May 2000,
            between Cafe Odyssey, LLC and Odyssey Restaurants, LLC.

    27   Financial Data Schedule


         (b) REPORTS ON FORM 8-K


            On April 24, 2000, the Company filed a Current Report on Form 8-K/A
            dated February 9, 2000, under Item 7, filing the financial
            statements of IZ.com and the pro forma financial statements of the
            Company.

            On May 8, 2000, the Company filed a Current Report on Form 8-K dated
            May 2, 2000, under Item 5, announcing that it had completed an
            equity financing in the amount of $6,000,000.

            On June 30, 2000, the Company filed a Current Report on Form 8-K
            dated June 14, 2000 under Items 5 and 7 announcing the purchase of
            all of the outstanding common stock of Fan Asylum, Inc.




                                       31

<PAGE>   32


                                   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:    August 16, 2000

                                       32