<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED JANUARY 2, 2000

                         COMMISSION FILE NUMBER 0-23243

                                POPMAIL.COM, INC.
             (Exact name of registrant as specified in its chapter)

          MINNESOTA                                           41-1487885
   ------------------------                           -----------------------
(State or other jurisdiction of             (I.R.S. Employer identification No.)
 incorporation or organization)

                        1331 CORPORATE DRIVE, SUITE 350
                              IRVING, TEXAS 75038
                                 (972) 550-5500

               (Address, including zip code, and telephone number
                  of registrant's principal executive offices)

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                Shares of common stock (par value $.01 per share)

                         Common Stock Purchase Warrants
                         -----------------------------

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
                  ------
The Company's revenues for the fiscal year ended January 2, 2000 totaled
$12,273,198.

As of March 27, 2000, the aggregate market value of the registrant's common
stock, $.01 par value, held by non-affiliates of the registrant, computed by
reference to the average high and low prices on such date as reported by the
NASDAQ SmallCap Market was $90,409,000. As of March 27, 2000, there were
outstanding 34,422,928 shares of the registrant's common stock.



<PAGE>   2


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement to be filed within 120
days after the end of the fiscal year covered by this report are incorporated by
reference into Items 9, 10, 11 and 12 of Part III hereof.

                           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
risk and other factors discussed in this Form 10-KSB, 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 possible
uncertainties in the customer base in these areas; competitive pressures from
other restaurant companies and providers of email-based services; 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 laws and regulations;
and other risks identified from time to time in the Company's SEC reports,
registration statements and public announcements.



<PAGE>   3


                                    TABLE OF
                                    CONTENTS


<TABLE>
<CAPTION>

                                                                                                              Page
PART I                                                                                                        ----
<S>                   <C>                                                                                     <C>
     ITEM 1.          Description of Business.................................................................  1
                      Risk Factors............................................................................  8
     ITEM 2.          Description of Property................................................................. 21
     ITEM 3.          Legal Proceedings....................................................................... 23
     ITEM 4.          Submission of Matters to a Vote of Security Holders..................................... 23

PART II
     ITEM 5.          Market for Common Equity and Related Shareholder
                      Matters................................................................................. 24
     ITEM 6.          Management's Discussion and Analysis of Financial Condition
                      and Results of Operations............................................................... 25
     ITEM 7.          Financial Statements.................................................................... F-1
     ITEM 8.          Changes in and Disagreements with Accountants on Accounting
                      and Financial Disclosure................................................................ 35

PART III
     ITEM 9.          Directors, Executive Officers, Promoters and Control Persons;
                      Compliance with Section 16(a) of the Exchange Act....................................... 36
     ITEM 10.         Executive Compensation.................................................................. 36
     ITEM 11.         Security Ownership of Certain Beneficial Owners and
                      Management.............................................................................. 36
     ITEM 12.         Certain Relationships and Related Transactions.......................................... 36

PART IV
     ITEM 13.         Exhibits and Reports on Form 8-K........................................................ 36
</TABLE>



<PAGE>   4


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         PopMail.com, inc. ("PopMail") currently consists of two divisions, the
restaurant division and the Internet division. The restaurant division develops,
owns and operates restaurants with multiple themed dining rooms designed to
appeal to the upscale casual dining market. PopMail has Cafe Odyssey restaurants
at the Mall of America in Bloomington, Minnesota which opened in June 1998, and
in the Denver Pavilions, which opened in March 1999.

         Our Internet division consists of two companies, PopMail Network, Inc.,
("Network") based in Dallas, TX, a provider of permission and affinity based
email services to broadcast stations, professional sports teams and other
clients in the media and entertainment industries and the recently formed
IZ.com, Inc. ("IZ"), based in Bellevue, WA. The name "IZ was borrowed from
IZ.com Incorporated, a Delaware corporation acquired by PopMail in February
2000. IZ only recently commenced its operations.

         The Company commenced operations as Hotel Mexico, Inc. ("HMI"), which
was incorporated in Ohio in January 1994. In 1996, the Company opened the
Kenwood Restaurant under the trade name Hotel Discovery, and in August 1997, HMI
was reorganized as Hotel Discovery, Inc., a Minnesota corporation. During
February 1998, the Company changed the name of its restaurant concept from Hotel
Discovery to Cafe Odyssey and changed the name of the Company to Cafe Odyssey,
Inc.

         Pursuant to a merger effective September 1, 1999, the Company acquired
popmail.com, inc., a Delaware corporation engaged in the business of providing
Internet email services. Following the merger, the Company changed its corporate
name from Cafe Odyssey, Inc. to PopMail.com, inc.

         On December 3, 1999, ROI Acquisition Corporation, a Texas corporation
and wholly owned subsidiary of PopMail, acquired, effective as of November 30,
1999, substantially all of the assets and assumed substantially all of the
liabilities of ROI Interactive, LLC ("ROI"), a Texas limited liability company.
ROI provides exclusive email service and permission-based, opt-in marketing
services to television stations and major league sports franchises.

         Effective February 9, 2000, PopMail acquired IZ.com, Incorporated
("IZ.com"), a Delaware corporation. IZ.com (to be renamed "PopMail Media, Inc.")
is attempting to integrate the use of multiple media - television, the Internet
and email - to reach 18 to 25 year olds and derive commerce. PopMail Media is
attempting to build a brand and marketing strategy that will allow it to
dominate its target market. As a result of the PopMail Media acquisition, the
Company is changing its strategic focus to apply its multimedia expertise to the
email-based marketing business operated by PopMail. The Company is currently
modifying its website and television programming efforts in a directed effort to
complement PopMail's business strategy.

         As noted in the Risk Factors section of this Form 10-KSB, the Company
has incurred substantial operating losses to date and, as of January 2, 2000,
has a deficiency in working capital of approximately $8.7 million. 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.

         As also noted in the Risk Factors section of this Form 10-KSB, the
factors discussed in the preceding paragraph (among other factors) give rise to
a risk that the Company's common stock will be delisted from the Nasdaq SmallCap
Market, leading to a loss of liquidity and a decrease in the market price of the
Company's stock.

DESCRIPTION OF POPMAIL NETWORK, INC.

         Network provides email services that allow its Clients to provide: 1)
outbound distribution email messages to registrants of the services and network
and 2) web based affinity email accounts to visitors of our Client's sites i.e.,
joe@yoursitemail.com. Network has over 500 Clients in the broadcast,
professional sports teams, media and entertainment industries. Network considers
its Clients to be "Affiliates," and the subscribers to ENEWSNOTIFIER(TM) and
PopMail(TM) to be "Members" because of their affinity towards, and willingness
to receive, information from one or more Affiliates. Together, these combined
services create a permission and affinity based email marketing network. The
distribution through this network, called "e-channels", is customized for each
Member, allowing them to select exactly the content they choose from their
favorite broadcast, entertainment and sports companies. "Clients" are defined as
entities that either pay Network for services or while not paying for a service,
have agreed through contract to provide Network either some right, limited or
complete, to communicate with Member(s). As a result, some Network Clients both
pay Network money and allow access to Members while other Network Clients may
only allow Network access to Members. Network has historically provided
customized email services and distribution to meet the marketing



                                       1
<PAGE>   5


needs of individual businesses forming a one-to-one relationships with their
customers in the broadcast, media, sports and entertainment industries.

         Network plans to bring more interested consumers ("Members") to its
Client's products by extending their brand, marketing efforts and content beyond
its own database and to other databases within our network of Clients.
Management believes the primary value of Network is the expanding base of
Members who have chosen to receive services from a Network Client and who
"opt-in" to services, content and products from other Network Clients.

Market

         Rapidly Growing Market: Email is currently the number one application
on the Internet according to Forrester Research. Forrester estimates that email
will become a $4.8 Billion dollar industry by 2004, of which Network hopes to
capture a small share.

         Growing Demand and Use for Email; The benefits of using email are: low
cost and higher response rates compared to traditional advertising and direct
mail, global reach, tracking of users interests, ease of use, and near real time
delivery.

         Unique Position Within a Growing Market; Much commercial email is
unsolicited and is generic - not targeted to the recipient's needs or interests.
The majority of this commercial email is the electronic equivalent of junk mail.
Users receive these unsolicited emails from retail and category "opt-in" lists
or from lists compiled as they visit various web sites. This approach is
increasingly ineffective and disliked by recipients. In fact, growing resentment
towards unsolicited commercial email may lead to privacy regulation in the
United States.

         The opposite of unsolicited email is "permission and affinity-based"
marketing which has been "opted-in" by recipients. In other words, recipients
have replied positively to a request by a company that they will willingly
accept email content from a specified source. The next level of the permission
basis is affinity, in which recipients have willingly allied with a group or
organization of their choice and have sought information from that group, brand,
icon or trusted agent.

Services

At the present time, Network offers two proprietary e-mail services which are
described below:

      -    ENEWSNOTIFIER(TM) (ENN) - a permission marketing email service, which
allows Clients to collect preference and demographic information from their
customers and create a Member database. These organizations can then use this
database to send out targeted, personalized and customized messages for
marketing purposes. Network provides the Client with a username and password to
access the administration area for sending out their own emails. Clients link
the services from their site. When a user visits the client's site, they click
on the icon which links them to our servers. They then sign up and select the
topics of interest to them on the Client's custom service. Network presently
offers the ENEWSNOTIFIER service through ROI.

      -    PopMail(TM) is an affinity email service that allows Clients to
offer free Web based email boxes on their home pages. Members sign up for a
personal email address that contains their affinity group's name (such as
JoeSmith@Yoursitemail.com). Clients benefit from the affinity with their
customers and higher traffic on their Web site when registrants visit the
Client's site to send and receive their email. Clients can also sell
advertising.


                                       2
<PAGE>   6


The Member visits the Client's site and clicks on the sign up box on
the frame that resides on the Client's site. Each page is customized with the
client's look and feel. Each time the Member wants to check their email they
visit the client's site and enter their username and password in the boxes on
the frame.

At present, Network targets four vertical markets for its email services:
broadcast, media, sports and entertainment. Companies in these vertical markets
typically have customers with a stronger affinity for their product or service -
such as a favorite sports team, radio station, personality, or publication.
Using Network's email services allows Clients to cut through the clutter and
inefficiencies of traditional marketing, and more effectively and efficiently
promote and brand their content, products or services to their viewers,
listeners, fans and customers on the topics and items already of interest to
them. Benefits and examples of these programs in action include:


     -     Television Stations - increase ratings by using ENN to notify
Members, via email, about news stories of interest to them scheduled for
broadcast on their station.


     -     Radio Stations - advertise their brand and drive traffic to their
sites by using PopMail(TM).

     -     Sports Teams - provide advanced information to Members, sell tickets
and merchandise, and sponsor promotions using ENN.

     One of Network's goals is to leverage the relationships between the
Company's Clients and their customers and to strengthen the PopMail Network.

Revenues

     Network currently generates revenue through the following means:

     -    Annual license fees
     -    Monthly hosting fees
     -    Set up fees

     Although very little revenue has been generated to date by advertisements
and no revenue has been produced from e-commerce up-selling to Members, and
there can be no assurance that this will change, Network intends to introduce
these revenue generators to its business model within the near future.

Competition

     There are many companies which compete directly or indirectly with
PopMail. Those in customer relationship management and outbound email production
include public companies such as Critical Path (CPTH), Digital Impact (DIGI)
Mail.com(MAIL), Message Media, Inc. (MESG), Kana Communications, Inc., (KANA)
24/7 Media Inc. (TFSM) and Exactis (XACT). There are a host of large and smaller
privately held companies. IZ's competitors include InfoBeat, Lifeminders
(LFMN), YesMail (YESM) and Netcreations(NTCR).


                                       3
<PAGE>   7

         At present, there are few affinity based email companies combining
affinity content with branded email and permission based email-marketing
services specifically towards the vertical markets we are currently in.

Strategy

         Network plans to employ the following growth strategies:
         -    Continue to solidify its presence in its current targeted vertical
              markets. At present, Network has signed agreements with more than
              500 Clients. Many of these Clients have not fully utilized the
              capability of the Network services by introducing advertising or
              e-commere for up-selling and, as such, Network is also focusing on
              the education of its Clients and Members to increase usage and,
              ultimately, Members.
         -    Grow its existing member databases.
         -    Assist Clients in the development of affinity rich content for
              distribution through the network to permission based Members.
         -    Resell IZ content through its network.
         -    Seek out and acquire companies that can enhance our goals, member
              growth and content development.
         -    Form strategic relationships with other businesses that may
              provide compatible and collaborative Internet services for the
              Company's Broadcast, Media, Sports and Entertainment Clients.
         -    Select and move aggressively into other vertical markets where
              Network's products and services can be effective branding and
              marketing tools.
         -    Generate revenue from each contact between the Company and each
              Client.

         Network is currently looking at building e-commerce functionality into
its product offerings; this may be done internally or Network may select a
strategic partner in order to build its member base more rapidly. The Company
will also regularly introduce enhanced versions of its services and product
offerings.

         In addition, Network has begun to penetrate the international market
and has begun to develop and deploy bilingual versions of Network's services.

Intellectual Property

         The Company relies on tradename and trademark protection for its
proprietary names and logos. PopMail has not registered or sought to register
any patents. The Company seeks to protect its know-how and trade secrets
primarily through confidentiality and licence agreements.

Description of IZ.com, Inc.

         IZ, based in Bellevue, WA, was recently incorporated as a wholly owned
Delaware subsidiary of PopMail. IZ produces web content for ZD Net under
contract at the direction of award winning journalist, Jesse Berst. The
newsletter called the "Berst Alert" is part of the web based information site
called Jesse Berst's Anchor Desk. See: http://www.zdnet.com/anchordesk. The
content provided through the Berst Alert is in the form of an affinity email
newsletter currently received by approximately 1.6 millions registrants each


                                       4
<PAGE>   8

day. IZ is paid a fee to produce the Berst Alert under a one-year non-cancelable
agreement expiring in February 2001.

         IZ plans to create and establish email content newsletters through
trusted agents (icons or personalities) with high affinity appeal within the
current Network vertical markets: broadcast, media, sports and entertainment. IZ
will resell content through Network to its network of affiliated Clients and
will establish additional content vertical markets. However, there can be no
assurance that IZ will produce any new newsletters.

DESCRIPTION OF RESTAURANT DIVISION

General

         PopMail's restaurant division develops, owns and operates restaurants
with multiple themed dining rooms designed to appeal to the upscale casual
dining market. PopMail owns and operates two full service "Cafe Odyssey"
restaurants, one in the Mall of America, located in Bloomington, Minnesota, a
suburb of Minneapolis (the "Mall of America Restaurant"). The Mall of America
Restaurant opened on June 8, 1998, and the second, which opened on March 15,
1999, at the Denver Pavilions, located in the downtown district of Denver,
Colorado (the "Denver Pavilions Restaurant").

         PopMail has no current plans to expand the restaurant division through
additional owned restaurants. The Company may ultimately license more Cafe
Odyssey restaurants or enter into other arrangements for additional restaurants
which do not require the Company to invest substantial amounts of capital.

         In 1996 the Company opened a restaurant in Cincinnati, Ohio (the
"Kenwood Restaurant") under the trade name Hotel Discovery. PopMail closed the
Kenwood Restaurant in September 1999. In November 1999 the Company entered into
an agreement to sell the assets relating to the Kenwood Restaurant, subject to
certain contingencies concerning transfer of the liquor license and certain
other matters, which contingencies have not yet been fully resolved. In
connection with the pending sale, PopMail assigned the lease for the restaurant
property to the proposed buyer, who has been making the required lease payments
since November 1999. PopMail remains primarily obligated under the lease.

Concept

         PopMail's restaurants are positioned in the upscale casual segment and
differentiate themselves from the competition by offering its guests an
enveloping experience that combines award winning food with sophisticated,
non-intrusive entertainment. While there are restaurants that have a strong food
base and others that focus on entertainment, PopMail feels that the
"experiential dining" combination it offers is unique to the industry.

         Based on the concepts of travel, discovery and adventure, each
restaurant provides guests with a dining experience in multiple themed
environments that capture the romance, passion and nature of exotic locations
throughout the world utilizing state-of-the-art technology in sound, video,
lighting, scenery and decor. The Mall of America and Denver Pavilions
Restaurants contain three dining rooms that replicate the environments of the
lost City of Atlantis, the ancient Incan ruins of Machu Picchu in the Andes and
the sweeping plains of the Serengeti desert in Tanzania, Africa.


                                       5
<PAGE>   9

         The menu at each restaurant offers a broad range of cuisine from around
the world, including "cultural fusion" menu items such as Barcelona Spring Rolls
and Asian Tacos. Features include American, Asian, Jamaican, West Indian,
Mexican and European tastes and textures. Menu items are freshly made, using
only the highest quality fresh meats, produce, spices and other ingredients. The
menu mirrors the exploratory journey and adventure society themes of the
restaurants.

         Each restaurant also has a retail area located at the entrance which
includes a collection of adult and children's casual clothing, including
T-shirts, sweatshirts, shirts and caps, and a limited amount of other logo
merchandise.

Restaurant Operations

         PopMail strives to maintain quality operations through extensive
training of its employees and careful supervision of personnel. PopMail has
developed a detailed operations manual containing specifications relating to
food and beverage preparation, maintenance of premises and employee conduct.
Each restaurant is expected to have a director of operations with a staff of
five to seven managers and a staff accountant. Each director of operations
reports directly to PopMail's President of Restaurant Operations.

         PopMail requires all kitchen and front-of-the-house managers to
complete an intensive six-week training program which includes two weeks of food
preparation training in the kitchen, as well as complete cross-training on all
other phases of the restaurant's operations. PopMail's restaurant management is
then tested on PopMail's philosophy, management strategy, policies, procedures
and operating standards. In addition, each prospective guest service employee
actually tastes, and is tested on, every food and beverage item on the menu.
Daily shift meetings are held prior to lunch and dinner to re-educate the
service staff on all menu items, to communicate daily specials, to respond to
feedback from comment cards and to reinforce service standards.

Competition

         The food service industry is intensely competitive with respect to food
quality, concept, location, service and price. In addition, there are many
well-established food service competitors with substantially greater financial
and other resources than PopMail and with substantially longer operating
histories. PopMail believes that it competes with other full-service dine-in
restaurants, take-out food service companies, fast-food restaurants,
delicatessens, cafeteria-style buffets and prepared food stores, as well as with
supermarkets and convenience stores. Competitors include national, regional and
local restaurants, purveyors of carry out food and convenience dining
establishments.

         Competition in the food service business is often affected by changes
in consumer tastes, national, regional, and local economic and real estate
conditions, demographic trends, traffic patterns, the cost and availability of
labor, purchasing power, availability of product, and local competitive factors.
PopMail attempts to manage or adapt to these factors, but it should be
recognized that some or all of these factors could cause PopMail to be adversely
affected. Management is of the opinion that quality food which is pleasingly
presented is an absolute requirement within the upscale casual segment of the
industry. Cafe Odyssey restaurants have won nine major food awards in three
cities, reflecting PopMail's commitment to food excellence.



                                       6
<PAGE>   10

Government Regulations

         PopMail is subject to federal, state and local laws affecting the
operation of its restaurants, including zoning, health, sanitation and safety
regulation and alcoholic beverage licensing requirements. Each restaurant is
operated in accordance with standardized procedures designed to assure
compliance with all applicable codes and regulations. The suspension of a food
service or liquor license would cause an interruption of operations at the
affected restaurant. PopMail believes that it is in compliance with all
licensing and other regulations.

         PopMail is subject to "dram shop" statutes in the State of Minnesota
which generally provide a person injured by an intoxicated person the right to
recover damages from the establishment or establishments that served alcoholic
beverages to the intoxicated person. PopMail has obtained insurance against such
potential liability.

         PopMail is also subject to the Fair Labor Standards Act, which governs
minimum wages, overtime and working conditions. A significant portion of
PopMail's restaurant employees are paid at rates relating to either the federal
or state minimum wage. Accordingly, an increase in the minimum wage would
directly increase each restaurant's labor cost.

         Obtaining alcoholic beverage licenses from various jurisdictions will
require disclosure of certain detailed information about directors, officers and
greater than 10 percent shareholders of PopMail's equity securities, and will
necessitate that such persons be approved by the appropriate liquor licensing
authority.

EMPLOYEES

         As of January 2, 2000, PopMail employed 271 persons, including 41 in
the Internet email services division and 230 persons in the Company's restaurant
operations. Approximately 85 of the Company's employees work part-time. None of
PopMail's employees is represented by a collective bargaining organization and
the Company has never experienced a work stoppage, strike or labor dispute. The
Company believes its relations with its employees are satisfactory.



                                       7

<PAGE>   11


                                  RISK FACTORS

         The following discussion should be read in connection with the
Company's consolidated financial statements and related notes included
elsewhere in this report.

         WE HAVE INCURRED LOSSES TO DATE AND IF OUR REVENUES DO NOT IMPROVE, WE
WILL NEED ADDITIONAL FINANCING IN ORDER TO CONTINUE OPERATIONS AND PURSUE OUR
BUSINESS PLAN.

         PopMail incurred net losses of approximately $24.2 million during 1999,
$6.7 million in 1998 and $4.0 million in 1997 and had a working capital deficit
of approximately $8.7 million as of 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. Even though financing activity subsequent to January 2,
2000 has improved our working capital position (see Note N to the financial
statements) 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, or if we
fail to achieve or sustain profitable operations, the market price of our stock
will suffer.

         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 of 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 in our securities
to less than $1,000,000, (4) a reduction of the trading price of our Common
Stock to less than $1.00 per share or (5) the discretion of the Nasdaq SmallCap
Market.

         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



                                       8
<PAGE>   12


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 Chief Executive Officer,
Ronald K. Fuller, our President, Jesse Berst, the CEO of our IZ business,
Thomas W. Orr, our Chief Financial Officer and Gary Schneider, the CEO of our
PopMail Network division. The loss of any of them could adversely affect the
success of our operations and strategic plans and, consequently, have a
detrimental effect on the market price of our stock.

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

         Our success will depend in large part upon our ability to supplement
our existing management team. We will need to hire additional corporate level
and management employees to help implement and operate our plans for expansion
of our Internet 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. Finally,
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, as of March 27, 2000,
Mr. Anderson indirectly or directly controlled approximately 31.6 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 29,483,118 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 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.


                                       9
<PAGE>   13

         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 March 27, 2000, we have 34,422,928 shares of common stock,
275,000 shares of Series E Convertible Preferred Stock and 287,408 shares of
Series F Convertible Preferred Stock outstanding. As of such date, a further
31,055,117 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, 275,000 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;

         -    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;

         -    15,100,889 shares issuable upon the exercise of outstanding
              warrants;



                                       10
<PAGE>   14
     -        1,250,000 shares reserved for issuance under our 1997 Stock Option
              and Compensation Plan, of which options reverting to 1,590,333
              shares are currently outstanding (including 340,333 shares which
              remain subject to shareholder approval);

     -        250,000 shares for issuance under our 1998 Director Stock Option
              Plan, of which options relating to 290,000 shares are currently
              outstanding, of which 40,000 remain subject to shareholder
              approval; and

     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.


                                       11
<PAGE>   15
To finance any acquisition, we may use capital stock or cash or a combination
of both. Alternatively, we may borrow money from a bank or other lender. If we
use capital stock, our shareholders may experience dilution. If we use cash or
debt financing, our financial liquidity would be reduced. In addition,
acquisitions may result in nonrecurring charges or the amortization of
significant goodwill that could adversely affect our ability to achieve and
maintain profitability.

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

      -  Difficulties in the assimilation of the operations, technologies,
         products and personnel of the acquired company,
      -  Risks of entering markets in which we have no or limited prior
         experience,
      -  Expenses of any undisclosed or potential legal liabilities of the
         acquired company,
      -  The applicability of rules and regulations that might restrict our
         ability to operate, and
      -  The potential loss of key employees of the acquired company.

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

         FAILURE TO MANAGE OUR GROWTH MAY ADVERSELY AFFECT OUR BUSINESS

         We have grown rapidly and expect to continue to grow rapidly 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.


                                       12
<PAGE>   16


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

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


                                       13
<PAGE>   17

                                INTERNET DIVISION

         WE ARE ENTERING INTO A NEW BUSINESS VENTURE IN AN EVOLVING INDUSTRY
IN WHICH WE HAVE NO EXPERIENCE AND WHICH HAS AN UNPROVEN REVENUE MODEL.

         The email business adds a significantly different business to our
business operations. Some members of our present management have little or
no experience with the business of providing email services.  The
Internet industry is rapidly evolving, extremely competitive, and the market
place for internet-related shares has been very volatile. Furthermore, the
email business has no proven revenue model.  Consequently, there can be no
assurance that sufficient revenues will be generated to support our current
operations and other capital requirements.

         IN LIGHT OF RECENT CONSOLIDATION IN THE RADIO INDUSTRY, THE LOSS OF ANY
SIGNIFICANT AFFILIATE CONTRACTS WOULD NEGATIVELY IMPACT POPMAIL'S OPERATIONS.

         The last few years have brought substantial concentration of power
among a few players in the radio industry. Consequently, significant portions of
the industry are controlled by a relatively few organizations. We already have
affiliation contracts in place with 2 of the 5 largest organizations and are in
negotiations with the remaining players. In light of such consolidation,
however, the loss of any of these significant affiliation contracts or our
inability to enter into contracts with other radio industry entities would
negatively impact our operations.

         OUR EMAIL BASED PRODUCTS 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


                                       15
<PAGE>   18


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 email 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 email
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 email 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 email 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.

         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 FREE
EMAIL PROVIDERS THAT TARGET THE RADIO INDUSTRY MAY HAVE AN ADVERSE EFFECT ON
POPMAIL'S FUTURE BUSINESS OPERATIONS.

         Currently there are hundreds of free email providers, but our
management believes that it is currently the only email provider that
targets the radio industry. To the extent we are successful within the radio
industry, we anticipate others will attempt to compete in the radio segment.
Increased competition due to a greater number of free email providers targeting
the radio industry may have an adverse affect on our future business operations.

         WE MAY FACE INCREASING COMPETITION FOR RADIO STATION CUSTOMERS AND
INTERNET ADVERTISERS.

         As a provider of free email, we compete with numerous other email
providers, many of which have more capital than us. The principal competitors in
the private-label email service business are: CommTouch, WhoWhere, MailChek,
iName, and OnMedia. Of these providers, to the knowledge of our management, only
MailChek and OnMedia have any radio station customers. The Company views its
greatest competitive threat to its ability to establish relationships with radio
stations as the potential availability of software that may duplicate many of
the features in the PopMail email system. In addition, we face increasing
competition for Internet advertisers.

         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


                                       16
<PAGE>   19

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.

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

         We have to derive a substantial portion of our revenue from online
advertising and direct marketing, including both email and Web-based programs.
If these services do not continue to achieve market acceptance, we may not
generate sufficient revenue to support our continued operations. The Internet
has not existed long enough as an advertising medium to demonstrate its
effectiveness relative to traditional advertising. Advertisers and advertising
agencies that have historically relied on traditional advertising may be
reluctant or slow to adopt online advertising. Many potential advertisers have
limited or no experience using email 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 email advertising in general is vulnerable to the
negative public perception associated with unsolicited email, known as "spam."
Public perception, press reports or governmental action related to spam could
reduce the overall demand for email advertising in general, which could reduce
our revenue and prevent us from achieving or sustaining profitability.

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

         Our revenue has been derived primarily from advertisers seeking
targeted member groups in order to increase their return on advertising
investments. If we are unable to maintain and expand our member base,
advertisers could find our audience less attractive and effective for promoting
their products and services and we could experience difficulty retaining our
existing advertisers and attracting additional advertisers. To date, we have
relied on referral-based marketing activities to attract a portion of our
members and will continue to do so for the foreseeable future. This type of
marketing is largely outside of our control and there can be no assurance that
it will generate rates of growth in our member base comparable to what we have
experienced to date.

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


                                       17
<PAGE>   20


         OUR BUSINESS DEPENDS ON OUR ABILITY TO DEVELOP AND MAINTAIN RELEVANT
AND APPEALING CONTENT IN OUR EMAIL MESSAGES; IF WE ARE NOT ABLE TO CONTINUE TO
DELIVER SUCH CONTENT WE MAY BE NOT ABLE TO MAINTAIN AND EXPAND OUR MEMBER BASE,
WHICH COULD NEGATIVELY AFFECT OUR ABILITY TO RETAIN AND ATTRACT THE ADVERTISERS
WE NEED TO SUSTAIN REVENUE GROWTH.

         We have relied on our editorial staff to identify and develop
substantially all of our content utilizing content derived from other parties.
Because our members' preferences are constantly evolving, our editorial staff
may be unable to accurately and effectively identify and develop content that is
relevant and appealing to our members. As a result, we may have difficulty
maintaining and expanding our member base, which could negatively 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 email 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 emails 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 ADVERTISERS 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 email 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 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 email messages
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. The hardware

                                        18

<PAGE>   21


infrastructure on which our system operates is located at PSINet in Reston,
Virginia. We do not currently have fully redundant systems or a formal disaster
recovery plan. Our system is susceptible to natural and man-made disasters,
including earthquakes, fires, floods, power loss and vandalism. Further,
telecommunications failures, computer viruses, electronic break-ins or other
similar disruptive problems could adversely affect the operation of our systems.
Our insurance policies may not adequately compensate us for any losses that may
occur due to any damages or interruptions in our systems. Accordingly, we could
be required to make capital expenditures in the event of unanticipated damage.
In addition, our members depend on Internet service providers, or ISPs, for
access to our Web site. Due to the rapid growth of the Internet, ISPs and Web
sites have experienced significant system failures and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
These problems could harm our business by preventing our members from
effectively utilizing our services.

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

         The market for Internet email 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 email
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 email 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 email 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. PopMail has established and communicated to its members a
privacy policy. In the event that the

                                       19

<PAGE>   22

Company conveys personally identifiable information to its corporate customers
without permission or in violation of its 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 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:

         -  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
         -  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.





                                       20

<PAGE>   23

ITEM 2.  DESCRIPTION OF PROPERTY.

                         THE MALL OF AMERICA RESTAURANT

Location

         The Mall of America Restaurant consists of approximately 17,800 square
feet located on the third floor of the Mall of America in Bloomington,
Minnesota, a suburb of Minneapolis. This site is leased pursuant to a lease
agreement dated August 4, 1997.

         The Mall of America opened in August 1992 with 266 tenants and now
holds approximately 520 stores, merchandise carts and attractions, including
four large anchor tenants (Macy's, Bloomingdale's, Sears and Nordstrom). The
mall encompasses 4.2 million square feet on four enclosed floors, of which 2.5
million square feet are leasable, and employs 11,000 to 13,000 people, depending
on the season. More than 93% of the leasable space is under contract, up from
71% five years ago. The mall draws an estimated 40 million visitors per year.
Tourists account for 35% to 37% of annual mall traffic, but increases up to 50%
in the summer months.

Description of Lease

         The term of the lease is for 12 years, commencing on June 1, 1998. The
lease does not provide for renewal terms.

         The lease provides for the payment of either a minimum annual rent or a
percentage rent based on gross sales. The minimum annual rent is $25 per square
foot, or $405,375 per year based on approximately 16,215 square feet of leased
area. The percentage rent is the amount by which 6% of gross sales exceeds
minimum rent. The terms of payment do not change over the course of the lease
term. The lease also provided for a waiver of the minimum annual rent only, for
the first year of the lease. In addition to the fixed minimum rent and
percentage rent, the Company is required to pay its proportionate share of
common area maintenance costs; taxes, insurance, maintenance and operating
costs.

                         THE DENVER PAVILIONS RESTAURANT

Location

         The Denver Pavilions Restaurant consists of approximately 18,000 square
feet located on the third floor of the Denver Pavilions in Denver, Colorado.
This site is leased pursuant to a lease agreement dated May 12, 1998 and
includes office space utilized for the Company's restaurant division.

                                       21
<PAGE>   24


Description Of Lease

         The term of the lease is for 15 years, commencing on February 27, 1999.
The lease also provides for three renewal terms.

         The lease provides for the payment of either a minimum annual rent or a
percentage rent based on gross sales. The minimum annual rent increases
throughout the term of the lease from $450,000 per year in years one through
five to $568,800 in years 11 through 15. The percentage rent is the amount by
which 5% of gross sales exceeds minimum rent. The lease also provides for a
tenant allowance. In addition to the fixed minimum rent and percentage rent, the
Company is required to pay its proportionate share of common area maintenance
costs: taxes, insurance, maintenance and operating costs.

                             THE KENWOOD RESTAURANT

Location

         The Kenwood Restaurant opened in December 1996 under the name Hotel
Discovery and was closed by the Company in August 1999. In November 1999, the
Company assigned the related lease (described below) in connection with the
pending sale of restaurant assets to a third party, who subsequently reopened
the restaurant under another name and continues to operate the same. The
property is approximately 17,000 square feet in size on three levels and is
located at the northeast corner of Sycamore Plaza at Kenwood Shopping Center in
Cincinnati, Ohio. Although the third party has paid all payments due under the
lease since November 1999, PopMail remains primarily obligated under the lease.

Description of Lease

         The initial term of the lease is 15 years with an option for two
additional five-year periods. The lease provides for the payment of both a
monthly fixed minimum rent and a percentage rent based on gross sales in excess
of an escalating base amount. The monthly fixed minimum rent is $12,833 for the
first five years of the initial lease term, $14,117 for the sixth through tenth
years of the initial lease term, $15,400 for the eleventh through fifteenth
years of the initial lease term.

         In addition to the fixed minimum rent, the lease provides for the
payment of a percentage rent equal to 4% of the gross sales from the restaurant
in excess of the following annual gross sales amounts; $3,850,000 for the first
five years of the initial lease term, $4,235,000 for the sixth through tenth
years of the initial lease term, $4,620,000 for the eleventh through fifteenth
years of the initial lease term. No percentage rent was paid in 1998 or 1999. In
addition to the fixed minimum rent and percentage rent, the Company is required
to pay its proportionate share of common area maintenance costs; taxes,
insurance, maintenance and operating costs.

                         IRVING TEXAS OFFICE FACILITIES

         PopMail's Internet email services division subleases approximately
8,500 square feet of office space in Irving, Texas. PopMail's sublease commenced
on September 1, 1998 and expires on December 31, 2001. Rentals of $11,412.00 per
month ($136,444 annually) are required under the sublease, in addition to
nominal charges for common area maintenance.

                                       22

<PAGE>   25

ITEM 3.  LEGAL PROCEEDINGS.

         The Company is involved in legal actions in the ordinary course of its
business. Although the 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 business, operating results and financial condition of the
Company.

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

         The Company did not submit any matters to a vote of security holders
during the last quarter of the fiscal year covered by this report.

                                       23
<PAGE>   26

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

PRICE RANGE OF COMMON STOCK

         Since November 3, 1997, the common stock of the Company has been traded
in the over-the counter market and quoted on the Nasdaq SmallCap Market.
Initially, the Company's common stock was quoted under the symbol "HOTD". On May
21, 1998, the Company changed its corporate name from Hotel Discovery, Inc. to
Cafe Odyssey, Inc. In conjunction with this change, effective May 24, 1998, the
Company's symbol for its common stock was changed to "CODY." Effective September
1, 1999, the Company acquired popmail.com, inc. and changed its name to
PopMail.com, inc. In connection with the change in the Company's name, the
Company's symbol for its common stock was changed to "POPM."

         As described more fully in the Risk Factors section of this Form
10-KSB, there is a substantial risk that PopMail's common stock will be delisted
from the Nasdaq SmallCap Market. In the event that such risk materializes,
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 and the market price
of our shares may decrease significantly.

         The following table sets forth the high and low bid prices of the
Company's common stock for the periods indicated. The Nasdaq bid quotations
represent inter-dealer prices, without retail mark-ups, mark-downs or
commissions, and may not necessarily represent actual transactions:
<TABLE>
<CAPTION>
                                                           HIGH          LOW
 FISCAL YEAR ENDED JANUARY 3, 1999:
<S>                                                      <C>           <C>
         First Quarter............................         $3.75        $1.88
         Second Quarter...........................          5.38         2.25
         Third Quarter............................          3.63         1.00
         Fourth Quarter...........................          1.13          .50

 FISCAL YEAR ENDED JANUARY 2, 2000:

         First Quarter............................          1.03          .56
         Second Quarter...........................          3.56          .50
         Third Quarter............................          4.88         1.94
         Fourth Quarter...........................          4.09         1.44
</TABLE>

         As of March 27, 2000, there were approximately 270 shareholders of
record of the Company's common stock, and approximately 6,000 other beneficial
owners whose shares are held in street name.

         The Company has never declared or paid any cash dividends or
distributions on its capital stock. The Company does not intend to pay any cash
dividends on its common stock in the foreseeable future, as the current policy
of the Company's Board of Directors is to retain all earnings, if any, to
support operations and finance expansion. Future declaration and payment of
dividends, if any, will be determined in light of then current conditions,
including the Company's earnings, operations, capital requirements, financial
condition, restrictions in financing arrangements and other factors deemed
relevant by the Board of Directors.

RECENT SALES OF UNREGISTERED SECURITIES

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

<TABLE>
<CAPTION>
                   TITLE AND                                                                    CASH OR
                   DESCRIPTION OF           AMOUNT OF                                           CONSIDERATION
DATE               SECURITIES               SECURITIES             ISSUED TO                    RECEIVED
----------------------------------------------------------------------------------------------------------------------
<S>                <C>                      <C>                    <C>                          <C>
1/22/99            Warrant to purchase      Warrants to purchase   Stephen D. King              In connection with
                   Common Stock             shares of Common       Jerry Ruyan                  certain guaranties
                                            Stock(1)               Greg Mosher                  of a loan
                                                                   Andrew Green
----------------------------------------------------------------------------------------------------------------------
2/23/99            Warrant to purchase      Warrant to purchase    Frank W. Terrizzi            In consideration
                   Common Stock             50,000 shares of                                    for a loan
                                            Common Stock
----------------------------------------------------------------------------------------------------------------------
3/3/99             Warrant to purchase      Warrants to purchase   Stephen D. King              In consideration
                   Common Stock             an aggregate of        Michael Berg                 of a guaranty of a
                                            500,000 shares of      Jack Feltl                   loan and pledge of
                                            Common Stock, at an    Cayne Mills                  certain collateral
                                            exercise price of      Timothy Maudlin
                                            $0.75
----------------------------------------------------------------------------------------------------------------------
3/18/99            Warrant to purchase      Warrant to purchase    Stephen D. King              In consideration
                   Common Stock             150,000 shares of                                   of a guaranty of a
                                            Common Stock, at an                                 loan and pledge of
                                            exercise price of                                   certain collateral
                                            $1.00
----------------------------------------------------------------------------------------------------------------------
3/18/99            Warrant to purchase      Warrant to purchase    Cunningham Group             In consideration
                   Common Stock             150,000 shares of      Construction Services        of certain
                                            Common Stock, at an                                 financial
                                            exercise price of                                   concessions
                                            $0.75
----------------------------------------------------------------------------------------------------------------------
4/20/99            Warrants to purchase     Warrants to purchase   J. Jeffrey Brausch &         Financial Advisory
                   an aggregate of          an aggregate of        Company                      Services
                   330,000 shares of        330,000 shares of      CTC, Inc.
                   common stock at an       Common Stock, at an
                   exercise price of $0.75  exercise price of
                                            $0.75
</TABLE>

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

         (1) The Guaranty provides for an initial Warrant to purchase 200,000
shares of Common Stock, at an exercise price of $0.75, to be issued to each of
the Guarantors. Additionally, penalty Warrants are to be provided for each month
after the due date that the loan and guaranties are still outstanding. To date,
Warrants to purchase 940,000 shares of Common Stock have been issued.


                                       24
<PAGE>   27
<TABLE>
<CAPTION>
                   TITLE AND                                                                    CASH OR
                   DESCRIPTION OF           AMOUNT OF                                           CONSIDERATION
DATE               SECURITIES               SECURITIES             ISSUED TO                    RECEIVED
----------------------------------------------------------------------------------------------------------------------
<S>                <C>                      <C>                    <C>                          <C>
4/28/99            Warrants to purchase     Warrants to purchase   Gulfstream Financial         Financial
                   an aggregate of          an aggregate of        Partners                     Advisory Services;
                   1,000,000 shares of      1,000,000 shares of
                   common stock(2)          common stock

----------------------------------------------------------------------------------------------------------------------
6/10/99            Common Stock             120,000 Shares         Internet Community Concepts  Acquisition of
                                                                                                1.5% of the
                                                                                                outstanding shares
                                                                                                of Internet
                                                                                                Community Concepts
----------------------------------------------------------------------------------------------------------------------
8/19/99            Private Placement of     Up to 750,000 Units    Certain Accredited           Offering still in
                   Units consisting of      at a price of $2.00    Investors                    process
                   one share of Series E    per Unit 175,000
                   Convertible Preferred    units have sold
                   Stock and one Warrant    through Jan. 2, 2000
                   to purchase one share
                   of Common Stock
----------------------------------------------------------------------------------------------------------------------
9/29/99            Common Stock             75,000 shares          NC Capital Markets, Inc.     Engagement Fee of
                                                                                                $80,000 for
                                                                                                Investment Banking
                                                                                                services
----------------------------------------------------------------------------------------------------------------------
10/12/99           Warrant to purchase      Warrant to purchase    Metropolitan                 Financial
                   600,000 shares of                               Capital                      Advisory
                   Common stock                                    Partners,                    Services
                                                                   Inc.

                   Warrant to purchase      Warrant to purchase    Michael Bird                 In connection  with
                   15,000 shares of         15,000 of Common                                    loan
                   common stock at an
----------------------------------------------------------------------------------------------------------------------
11/3/99            Warrants to purchase     Warrants to            Gulfstraw
                   an aggregate of          purchase an            Financial
                   1,850,000 shares         aggregate of           Partners
                   of Common Stock          1,850,000              and Blake
                                            shares of              Capital Partners
                                            Common Stock
----------------------------------------------------------------------------------------------------------------------
10/13/99           Common Stock             66,187 shares          Cunningham Group             Construction
                                                                   Construction Services, LLC   Services
----------------------------------------------------------------------------------------------------------------------
11/10/99           Common Stock             288,000 shares         Frank Terrizzi               As an additional incentive,
                                                                                                to excercise immediately,
                                                                                                an additional Warrant to
                                                                                                purchase 500,000 shares at
                                                                                                $2.00 was issued.
                                                                                                Additionally, in consideration
                                                                                                of further financial services,
                                                                                                Warrants to purchase 1,000,000
                                                                                                shares of common stock at an
                                                                                                exercise price of $1.50 were
                                                                                                issued and Warrant to purchase
                                                                                                350,000 shares of common stock
                                                                                                at an exercise price of $1.625 was
                                                                                                issued.
                                                                                                Conversion $200,000
                                                                                                debt and other financing
                                                                                                services




</TABLE>

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

         (2) Terms originally called for warrants to purchase 1,000,000 shares
of common stock, one-fourth of which vested once the stock price reached $2.00
per shares for 10 consecutive days at an exercise price of $1.00 per share,
one-fourth vested once the stock price reached $4.00 per shares for 10
consecutive days at an exercise price of $2.00 per share, one-fourth vested once
the stock price reached $6.00 per shares for 10 consecutive days at an exercise
price of $3.00 per share, one-fourth vested once the stock price reached $8.00
per shares for 10 consecutive days at an exercise price of $4.00 per share.
Warrants to purchase 500,000 shares of common stock were amended to reduce the
exercise price to $2.00 in exchange for the investor agreeing to immediately
exercise the warrants. As an additional incentive, an additional Warrant to
purchase 500,000 shares at $2.00. Additionally, in consideration of further
financial services, Warrants to purchase 1,000,000 shares of common stock at an
exercise price of $1.50 were issued and Warrant to purchase 350,000 shares of
common stock at an exercise price of $1.625 was issued.
<PAGE>   28
<TABLE>
<CAPTION>
                   TITLE AND                                                                    CASH OR
                   DESCRIPTION OF           AMOUNT OF                                           CONSIDERATION
DATE               SECURITIES               SECURITIES             ISSUED TO                    RECEIVED
----------------------------------------------------------------------------------------------------------------------
<S>                <C>                      <C>                    <C>                          <C>
11/24/99 (4)       Common Stock             900,000 shares         LegacyMaker, Inc.            In exchange for
                                                                                                cancellation of
                                                                                                Previously issued
                                                                                                Warrant
======================================================================================================================
11/24/99           Private Placement of     $2,000,000 4%          Certain accredited           $1,393,000
                   Convertible Debentures   Convertible            investors
                                            Denbentures and
                                            Warrants to purchase
                                            150,000 shares of
                                            Common Stock at an
                                            exercise price of
                                            $1.625
                                            --------------------------------------------------------------------------
                                            Warrant to purchase    J.P. Carey Securities, Inc.  Commissions
                                            125,000 shares of
                                            Common  Stock at an
                                            exercise price of
                                            $1.625
======================================================================================================================
12/1/99            Private Placement of     2,450,000 shares       members of ROI, LLC          450,000
                   Common Stock in
                   Connection with ROI
                   Acquisition
----------------------------------------------------------------------------------------------------------------------
12/1/99            Private Placement of     Warrant to purchase    The Hillstreet Fund, L.P.    In consideration
                   Warrants                 200,000 shares of                                   for a loan
                                            common stock at an
                                            exercise price of
                                            $1.34
----------------------------------------------------------------------------------------------------------------------
12/6/99            Private Placement of     Warrant to purchase    Hal Taylor                   In consideration
                   Warrants                 80,000 shares of                                    for a loan
                                            common stock at an
                                            exercise price of
                                            $1.25
</TABLE>

(4) Agreement to exchange entered into as of this date. Acted issuance occured
subsequent to January 2, 2000.
<PAGE>   29
<TABLE>
<CAPTION>
                   TITLE AND                                                                    CASH OR
                   DESCRIPTION OF           AMOUNT OF                                           CONSIDERATION
DATE               SECURITIES               SECURITIES             ISSUED TO                    RECEIVED
----------------------------------------------------------------------------------------------------------------------
<S>                <C>                      <C>                    <C>                          <C>
12/10/99           Private Placement of     Warrant to purchase    eBankerUSA.com, Inc.         In consideration
                   Warrants                 89,375 shares of                                    for financing
                                            Common Stock at an                                  services
                                            exercise price of
                                            $2.00
----------------------------------------------------------------------------------------------------------------------
12/10/99           Private Placement of     Warrant to purchase    American Frontier            As finder's fee
                   Warrants                 19,500 shares of       Financial Corporation        for financing
                                            Common Stock at an                                  services (see
                                            exercise price of                                   eBanker)
                                            $1.25

======================================================================================================================
12/14/99           Private Placement        628,800 shares of      Certain accredited           Cash in the amount and
                                            Common Stock Warrant   investors                    of $500,000
                                            to purchase 100,000                                 Consulting Services
                                            shares common stock
                                            at an excercise price
                                            of $1.00
                                            --------------------------------------------------------------------------

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

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

</TABLE>


All of the above-referenced warrants expire five years after the date of
issuance. In all of the above cases, there was no underwriter involved. The
Company relied upon Rule 506 of Regulation D and or Section 4(2) of the
Securities Act of 1933, as amended.


<PAGE>   30


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

         The following discussion should be read in connection with the
Company's consolidated financial statements and related notes included elsewhere
in this report.

Overview

         PopMail.com, inc. ("the Company" or "PopMail") consists of two
divisions, the Internet email services division and the restaurant division.
Management's primary focus is to develop the Internet email division by
exploring additional revenue sources and complementary services through mergers,
acquisitions and joint ventures. The Company is exploring other business
acquisitions for the Internet Division. However, no assurance can be given that
other mergers or acquisitions will be completed or desired results achieved.

                                       25
<PAGE>   31
         Future revenue and profits, if any, will depend upon various factors,
including the rapidly changing e-commerce community of the Internet, the market
acceptance of the Company's current restaurant concept, the quality of
restaurant operations, and general economic conditions. The Company's present
source of revenue is limited to its existing restaurants and minor fee income
from its Internet e-mail services division. There can be no assurances the
Company will successfully implement its expansion plans, of the Internet email
services or restaurant division, 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 addition of
the Internet email services division, the Company will be hiring senior
management to operate that division. As noted in the Risk Factors section of
this Form 10-KSB, the Company has incurred substantial operating losses to date
and, as of January 2, 2000, has a deficiency in working capital of approximately
$8.7 million. 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. All references herein to "1999" represent a 52-week
fiscal year ended January 2, 2000 and "1998" represents a 53-week fiscal year
ended January 3, 1999.

RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED JANUARY 2, 2000 AND JANUARY 3,
1999

                                    Net Sales

         Net sales for the restaurant division increased by $5,233,563 or 75.5%
to $12,166,454 for 1999 from $6,932,891 for 1998. Sales at the Mall of America
Restaurant increased by $1,705,481 or 39.8% to $5,988,165 for 1999 from
$4,282,684 for 1998. The Mall of America Restaurant was open for the full
fifty-two weeks in 1999 vs. 30 weeks in 1998. Sales at Denver Pavilions were
$5,008,674 for the 42 weeks of operations in 1999. The Kenwood Restaurant had
sales in 1999 of $1,169,615 before it closed on August 29, 1999.  The Kenwood
Restaurant had sales of $2,650,207 in 1998.  The Company is currently finalizing
the sale of this restaurant.

         Net sales for the email service division was $106,744 resulting from
the ROI acquisition completed on December 3, 1999.

Costs and Expenses

         The restaurants food, beverage and retail costs were $3,144,513 (25.8%
of net sales) for 1999 as compared to $1,897,492 (27.4% of net sales) for 1998,
which remain within the normal operating percentage of net sales. This reduction
in the percentage change from the prior year indicates stabilization in overall
cost of goods sold.

         Restaurants operating expenses were $8,404,324 (69.1% of net sales) for
1999 as compared to $5,038,105 (72.7% of net sales) for 1998. The increase in
restaurant operating expenses is due primarily to the opening of the Denver
Pavilions Restaurant.

         The 74.4% increase in depreciation expense in 1999 is primarily
attributable to the new Denver Pavilions Restaurant.

                                       26

<PAGE>   32

         Goodwill amortization expense for 1999 was $3,933,411. This represents
the excess of the purchase price and related costs over the fair value of the
net assets of business acquired. The Company amortizes goodwill on a
straight-line basis over a three-year period. Remaining goodwill amortization at
January 2, 2000 is as follows: $13,277,280 for 2000, $13,277,280 for 2001 and
$9,722,786 for 2002.

         The restaurant division had pre-opening expenses of $939,179 in 1999
as compared to $732,851 in 1998. Of these expenses, $871,220 were for the Denver
Pavilions Restaurant and $67,959 related to the start-up site located in Irvine,
California. The Company has decided not to open a restaurant at this site.

         The Company's executive and administrative office located in
Bloomington, Minnesota, had general, administrative and development expenses of
$5,002,557 for 1999 as compared to $3,081,213 for 1998. This increase reflects
the results of the acquisitions of Old Popmail and ROI. The email service
division's executive and administrative office located in Dallas, Texas, had
general, administrative and development expenses of $1,536,589 for 1999. These
expenses represent administrative and development expenses of Old Popmail and
ROI since Acquisition. The Company has to address the numerous executive and
administrative staffing requirements from its mergers and acquisitions,
shareholder relationships, and development costs associated with Internet email
software creation. The Company will be seeking additional senior management
personnel as well as support staff, which will also have an associated impact on
future earnings. The Company expects to continue to incur operating losses
during 2000.

         The Company's other income and expense consist of interest income,
interest expense, warrant repricing, debt guarantee cost and financial advisory
services. Interest expense for 1999 was $2,357,245 as compared to $130,625 for
1998. This increase of $2,226,620 relates to the financing fees generated in
raising debt throughout the year and additional borrowings during the year.
Interest income for 1999 was $49,323 as compared to $180,999 for 1998
reflecting lower levels of cash of 1999. The Company recorded a warrant
repricing expense of $4,539,311 relating to the Series B Preferred Stock issued
in the Popmail Merger. The Company recorded costs associated with the guarantees
provided for debt financing for 1999 of $1,607,833. The Company also recorded
costs associated with services provided by third party financial advisors for
1999 of $1,489,040. These costs were paid with both the issuances of new common
stock and warrants.

                         Liquidity and Capital Resources

         The Company had a working capital deficit of $8,696,477 at January 2,
2000, compared to a deficit of $3,870,058 on January 3, 1999. Cash and cash
equivalents were $1,136,137 at January 2, 2000 representing an increase of
$1,029,890 from the cash and cash equivalents of $106,247 at January 3, 1999.

         During 1999, the Company's principal capital requirements were

                                       27
<PAGE>   33
the construction of the Denver Pavilions Restaurant and the acquisition of
furniture, fixtures and equipment of approximately $4.2 million, net of landlord
contributions, and the acquisition and merger with popmail.com, inc., of
approximately $5.1 million. The Company used approximately $5,900,000 in cash
for operations and $6,600,000 for investing activities during 1999. The Company
generated approximately $13,500,000 in cash from financing activities in 1999.

         The Company's primary sources of working capital in 1999 were proceeds
from the sale of common and preferred stock, and the issuances of warrants and
debt. Financing activity in 1999 and early 2000 are described in the
Consolidated Financial Statements and Related Notes.


                                       28
<PAGE>   34


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

         The Company intends to fund operations and the expansions of the
Internet email services division through additional equity and debt
transactions. Management believes it has resources sufficient to meet the
Company's working capital needs for the next twelve months from its cash on
hand, proceeds available from the exercise of stock options and warrants, and
additional equity and debt financing.

                                       34

<PAGE>   35

ITEM 7.  FINANCIAL STATEMENTS

                                POPMAIL.COM, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                          Page

Report of Independent Certified Public Accountants  -
   Grant Thornton LLP.................................................... F-1

Report of Independent Public Accountants  -
   Arthur Andersen LLP................................................... F-2

Financial Statements

   Consolidated Balance Sheets........................................... F-3

   Consolidated Statements of Operations................................. F-5

   Consolidated Statements Shareholders' Equity.......................... F-6

   Consolidated Statements of Cash Flows................................. F-8

   Notes to Consolidated Financial Statements... ........................ F-11


<PAGE>   36


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders
PopMail.com, inc.

                We have audited the accompanying consolidated balance sheet of
PopMail.com, inc. and subsidiaries (the Company, formerly Cafe Odyssey, Inc.) as
of January 2, 2000 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

                In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
PopMail.com, inc. and subsidiaries as of January 2, 2000 and the results of
their consolidated operations and their consolidated cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States.


                                                          /s/ GRANT THORNTON LLP


Minneapolis, Minnesota
March 24, 2000

                                      F-1

<PAGE>   37


To PopMail.com, inc. (formerly Cafe Odyssey, Inc.):


         We have audited the accompanying balance sheet of PopMail.com, inc.
(formerly Cafe Odyssey, Inc.) as of January 3, 1999 and the related statements
of operations, shareholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of PopMail.com, inc.
(formerly Cafe Odyssey, Inc.) as of January 3, 1999 and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has suffered recurring
losses from operations and has a net working capital deficit that raises
substantial doubt about its ability to continue as a going concern.  The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

                                      /s/ ARTHUR ANDERSEN LLP





Minneapolis, Minnesota
February 19, 1999


                                      F-2
<PAGE>   38



                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                           CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                               January 2,             January 3,
                ASSETS                                                            2000                   1999
                                                                              -----------           ------------
<S>                                                                          <C>                   <C>
Current assets
   Cash and cash equivalents                                                  $  1,136,137          $    106,247
   Accounts receivable                                                             275,655                     -
   Inventories                                                                     111,807               161,463
   Other current assets                                                            483,496               452,243
                                                                              ------------          ------------

                Total current assets                                             2,007,095               719,953

Property and equipment, at cost
   Leasehold improvements                                                       12,711,082             6,435,925
   Equipment and fixtures                                                        5,526,412             4,014,095
   Construction in progress                                                              -             2,823,920
                                                                              ------------          ------------
                                                                                18,237,494            13,273,940
   Less accumulated depreciation and amortization                                3,370,692             1,574,392
                                                                              ------------          ------------
                                                                                14,866,802            11,699,548

Goodwill, net of accumulated amortization
   of $3,933,411                                                                36,277,346                     -

Other assets, net                                                                  344,121               520,487
                                                                              ------------          ------------

                                                                              $ 53,495,364          $ 12,939,988
                                                                              ============          ============
</TABLE>

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

                                      F-3

<PAGE>   39


                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                LIABILITIES AND
                SHAREHOLDERS' EQUITY                                           January 2,            January 3,
                                                                                  2000                  1999
                                                                              ------------          ------------
<S>                                                                          <C>                   <C>
Current liabilities
   Notes payable                                                              $  6,037,518          $  2,000,000
   Convertible promissory notes payable                                          1,460,417               150,000
   Current maturities of long-term obligations                                     193,833               199,007
   Accounts payable                                                              1,604,952             1,452,648
   Due to affiliates                                                               120,000               100,000
   Accrued compensation                                                            529,336               539,027
   Other accrued expenses                                                          757,516               149,329
                                                                              ------------          ------------

                Total current liabilities                                       10,703,572             4,590,011

Deferred rent credits                                                            3,650,512             1,755,852
Long-term obligations, less current maturities                                   1,883,688               755,878
                                                                              ------------          ------------

                Total liabilities                                               16,237,772             7,101,741

Commitments and contingencies                                                            -                     -

Shareholders' equity
   Common stock, $.01 par value, 100,000,000 shares
      authorized; 24,695,872 and 8,000,089 shares
      issued and outstanding                                                       246,958                80,001
   Series C 8% convertible preferred stock, par value $.01;
       $1,000 stated value; authorized 2,000 shares; 605 shares
      issued and outstanding at January 2, 2000                                    693,000                     -
   Series D 8% convertible preferred stock, par value $.01;
      $1,000 stated value; authorized 2,200 shares; 2,200 shares
      issued and outstanding at January 2, 2000                                  2,288,000                     -
   Series E convertible preferred stock, par value $.01; $2.00
      stated value; authorized 750,000 shares; 175,000 shares
      issued and outstanding at January 2, 2000                                    350,000                     -
   Additional paid-in capital                                                   74,901,160            20,281,140
   Less common stock subscribed and note receivable
      from affiliate                                                            (2,850,000)             (400,000)
   Accumulated deficit                                                         (38,371,526)          (14,122,894)
                                                                              ------------          ------------
                                                                                37,257,592             5,838,247
                                                                              ------------          ------------

                                                                              $ 53,495,364          $ 12,939,988
                                                                              ============          ============

</TABLE>

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

                                      F-4


<PAGE>   40


                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                         Years ended
                                                                              ----------------------------------
                                                                               January 2,            January 3,
                                                                                 2000                  1999
                                                                              ------------          ------------
Revenues
<S>                                                                          <C>                   <C>
   Restaurant sales, net                                                      $ 12,166,454          $  6,932,891
   E-mail services                                                                 106,744                     -
                                                                              ------------          ------------
                                                                                12,273,198             6,932,891

Costs and expenses
   Restaurant food, beverage and retail costs                                    3,144,513             1,897,492
   Restaurant operating expenses                                                 8,404,324             5,038,105
   Restaurant depreciation                                                       1,639,279               940,186
   Amortization of goodwill                                                      3,933,411                    -
   Pre-opening expenses                                                            939,179               732,851
   Loss on impairment of restaurant related assets                                      -              2,000,000
   General, administrative and development expenses                              5,002,557             3,081,213
                                                                              ------------          ------------
                                                                                23,063,263            13,689,847
                                                                              ------------          ------------

                Loss from operations                                           (10,790,065)           (6,756,956)

Other income (expense)
   Interest expense                                                             (2,357,245)             (130,625)
   Interest income                                                                  49,323               180,999
   Warrant repricing                                                            (4,539,311)                    -
   Debt guarantee costs                                                         (1,607,833)                    -
   Financial advisory services                                                  (1,489,040)                    -
                                                                              ------------          ------------
                                                                                (9,944,106)               50,374
                                                                              ------------          ------------
Net loss                                                                       (20,734,171)           (6,706,582)

Preferred stock dividends and accretion                                         (3,514,461)                    -
                                                                              ------------          ------------
Loss attributable to common shareholders                                      $(24,248,632)         $ (6,706,582)
                                                                              ============          ============

Basic and diluted net loss per share:

   Net loss                                                                   $      (2.05)         $      (0.84)
                                                                              ============          ============
   Loss attributable to common shareholders                                   $      (2.40)         $      (0.84)
                                                                              ============          ============


Basic and diluted weighted average outstanding shares                           10,108,451             8,000,131
                                                                              ============          ============


</TABLE>


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

                                      F-5

<PAGE>   41
                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                                                                            Common
                                                                                            stock
                                                                             Additional   subscribed
                                   Common stock        Preferred stock        paid-in      and note       Accumulated
                              ---------------------  ---------------------
                                Shares      Amount    Shares      Amount      capital     receivable       deficit        Total
                              ---------    --------  -------    ----------  ------------  -----------    ------------  ------------
<S>                           <C>          <C>       <C>        <C>         <C>           <C>            <C>           <C>
Balance at December 28, 1997  8,000,189    $ 80,002     --      $     --    $ 20,152,949  $  (400,000)   $ (7,416,312) $ 12,416,639
   Issuance of warrants to
     guarantors                    --          --       --            --         128,490         --              --         128,490
   Cancellation of share
     grant                         (100)         (1)    --            --            (299)        --              --            (300)
   Net loss                        --          --       --            --              --         --        (6,706,582)   (6,706,582)
                              ---------    --------  -------    ----------  ------------  -----------    ------------  ------------
Balance at January 3, 1999    8,000,089      80,001     --            --      20,281,140     (400,000)    (14,122,894)    5,838,247
   Issuance of common stock
     in lieu of compensation    280,013       2,800     --            --         194,908         --              --         197,708
   Issuance of common stock
     for services               351,942       3,519     --            --         626,339         --              --         629,858
   Warrants issued for
     services                      --          --       --            --       1,301,500         --              --       1,301,500
   Issuance of common stock     180,000       1,800     --            --         198,200         --              --         200,000
   Common stock issued for
     conversion of
     promissory notes
     payable and payment of
     interest                   197,147       1,971     --            --         402,787         --              --         404,758
   Stock option conversions     118,999       1,190     --            --          88,059         --              --          89,249
   Exercise of warrants       2,250,000      22,500     --            --       2,915,000         --              --       2,937,500
   Sale of Class A
     convertible preferred
     stock                         --          --      2,000     2,000,000          --           --              --       2,000,000
   Issuance of Class B
     convertible preferred
     stock in PopMail
     acquisition                   --          --      2,024    21,589,755          --           --              --      21,589,755
   Warrants issued in
     PopMail acquisition           --          --       --            --       4,318,956         --              --       4,318,956
   Warrants issued to
     PopMail guarantor in
     PopMail acquisition           --          --       --            --       2,700,000         --              --       2,700,000
   Sale of Class C
     convertible preferred
     stock                         --          --      2,000     2,000,000          --           --              --       2,000,000
   Sale of Class D
     convertible preferred
     stock                         --          --      2,200     2,200,000          --           --              --       2,200,000
   Sale of Class E
     convertible preferred
     stock                         --          --    175,000       350,000          --           --              --         350,000
   Note receivable issued
     to affiliate for
     purchase of common
     stock                         --          --       --            --            --     (2,450,000)           --      (2,450,000)
</TABLE>


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


                                      F-6


<PAGE>   42


                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED



<TABLE>
<CAPTION>

                                                                                             Common
                                                                                              stock
                                  Common stock        Preferred stock        Additional     subscribed
                              --------------------  ---------------------      paid-in       and note    Accumulated
                                Shares     Amount    Shares     Amount         capital      receivable    deficit         Total
                              ---------   --------  -------   ----------    ------------    ----------- ------------   ------------
<S>                          <C>         <C>       <C>       <C>            <C>            <C>          <C>            <C>
   Series A, C and D
     private placement costs       --     $   --       --     $       --    $   (722,323)  $       --   $        --    $   (722,323)
   Issuance of common stock
     in the ROI acquisition   2,750,000     27,500     --             --       6,254,961           --            --       6,282,461
   Old PopMail stock
     subscribed                    --         --       --             --            --           (2,000)         --          (2,000)
   Cash received on common
     stock subscribed              --         --       --             --            --            2,000          --           2,000
   Conversion of Class A
     preferred                1,015,999     10,160   (2,000)    (2,000,000)    1,989,840           --            --            --
   Conversion of Class B
     preferred                8,633,900     86,339   (2,024)   (21,589,755)   21,503,416           --            --            --
   Conversion of Class C
     preferred                  917,783      9,178   (1,395)    (1,395,000)    1,385,822           --            --            --
   Record non-cash
     preferred stock deemed        --         --       --       (3,338,461)    3,338,461           --            --            --
     dividend
   Record preferred stock
     deemed dividend               --         --       --        3,338,461          --             --      (3,338,461)         --
   Dividends paid or
     accrued on preferred          --         --       --          176,000          --             --        (176,000)         --
     stock
   Warrants issued to
     guarantors of notes
     payable                       --         --       --             --       1,232,833           --            --       1,232,833
   Repricing of warrants
     related to the PopMail        --         --       --             --       4,539,311           --            --       4,539,311
     acquisition
   Warrants issued for
     private placement
     costs in connection
     with Series A, C and D        --         --       --             --         469,500           --            --         469,500
     issuances
   Warrants issued in
      connection with notes
      payable                      --         --       --             --       1,882,450           --            --       1,882,450
   Net loss                        --         --       --             --            --             --     (20,734,171)  (20,734,171)
                             ----------   --------  -------   ------------  ------------   ------------  ------------  ------------
Balance at January 2, 2000   24,695,872   $246,958  177,805   $  3,331,000  $ 74,901,160   $ (2,850,000) $(38,371,526) $ 37,257,592
                             ==========   ========  ========  ============  ============   ============  ============  ============
</TABLE>


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

                                      F-7


<PAGE>   43


                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                        Years ended
                                                                              ----------------------------------
                                                                               January 2,            January 3,
                                                                                  2000                  1999
                                                                              ------------           -----------
<S>                                                                          <C>                    <C>
Operating activities:
   Net loss                                                                   $(20,734,171)          $(6,706,582)
   Adjustments to reconcile net loss to cash
     flows from operating activities:
       Restaurant depreciation and amortization                                  1,796,304               940,186
       Loss on disposal of property and equipment                                   57,030                     -
       Loss on impairment of restaurant related assets                                   -             2,000,000
       Amortization of goodwill                                                  3,933,411                     -
       Amortization of deferred rent                                               (67,840)              134,352
       Amortization of warrant discount                                            972,333                59,302
       Common stock issued in lieu of compensation                                 197,708                     -
       Common stock issued for services and interest                               684,616                     -
       Warrants issued for services                                              1,301,500                     -
       Warrants issued to guarantors                                             1,232,833                     -
       Repricing of warrants issued in the PopMail acquisition                   4,539,311                     -
       Other                                                                       567,177                     -
       Changes in operating assets and liabilities, net of effect of business
         acquisitions:
           Accounts receivable                                                     335,982                     -
           Inventories                                                              49,656              (119,697)
           Other current assets                                                     (6,810)             (202,200)
           Other assets                                                            220,278              (336,087)
           Accounts payable                                                       (375,149)              783,268
           Accrued expenses                                                       (619,327)              205,909
                                                                              ------------           -----------

                Net cash used in operating activities                           (5,915,158)           (3,241,549)

Investing activities:
   Purchases of property and equipment, net                                     (4,125,807)           (9,369,574)
   Issuance of note receivable to affiliate                                     (2,450,000)                    -
                                                                              ------------           -----------

                Net cash used in investing activities                           (6,575,807)           (9,369,574)

</TABLE>


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

                                      F-8



<PAGE>   44


                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED



<TABLE>
<CAPTION>
                                                                                           Years ended
                                                                               ----------------------------------
                                                                                January 2,            January 3,
                                                                                   2000                  1999
                                                                               -----------           ------------
Financing activities:
<S>                                                                           <C>                   <C>
   Proceeds from issuance of stock                                             $   200,000           $         -
   Proceeds from issuance of preferred stock                                     5,730,000                     -
   Proceeds from short term notes payable                                        5,020,884                     -
   Payments on short-term notes payable                                         (5,940,271)             (200,000)
   Proceeds from convertible notes payable                                       2,300,000                     -
   Payments on convertible notes payable                                          (100,000)                    -
   Proceeds from long-term debt                                                  1,500,000             3,002,976
   Payments on long-term debt                                                     (199,007)           (1,028,980)
   Tenant allowance collected                                                    1,962,500             1,621,500
   Advances from shareholder/officers                                              240,000               100,000
   Repayment of advances from shareholders/officers                               (220,000)                    -
   Proceeds from exercise of options and warrants                                3,026,749                     -
   Payments on cancellation of stock                                                     -                  (300)
                                                                               -----------           ------------

                Net cash provided by financing activities                       13,520,855             3,495,196
                                                                               -----------           ------------

                INCREASE (DECREASE) IN
                   CASH AND CASH EQUIVALENTS                                     1,029,890            (9,115,927)

Cash and cash equivalents, beginning of year                                       106,247             9,222,174
                                                                               -----------           ------------

Cash and cash equivalents, end of year                                         $ 1,136,137           $   106,247
                                                                               ===========           ===========

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                      $   703,491           $   130,625
                                                                               ===========           ===========
</TABLE>


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


                                      F-9


<PAGE>   45


                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


<TABLE>
<CAPTION>

                                                                                          Years ended
                                                                              ----------------------------------
                                                                               January 2,             January 3,
                                                                                  2000                   1999
                                                                              ------------            ----------
<S>                                                                          <C>                     <C>
Non-cash financing and investing activities:
   Conversion of preferred stock into common stock                            $  3,395,000               $ -
   Conversion of debt and interest into common stock                               404,758                 -
   Preferred stock issued for placement costs                                      820,000                 -
   Common stock issued for compensation                                            197,708                 -
   Common stock issued for services                                                629,858                 -
   Warrants issued for services                                                  1,301,500                 -
   Warrants issued to guarantors of notes payable                                1,232,833                 -
   Warrants issued for private placement costs in
      connection with Series A, C and D issuances                                  469,500                 -
   Warrants issued in connection with notes payable                              1,882,450                 -
   Repricing warrants related to the PopMail acquisition                         4,539,311                 -
   Acquisitions:
     Common stock issued                                                        27,872,216                 -
     Warrants issued                                                             7,018,956                 -
     Fair value of assets acquired                                              (1,583,952)                -
     Liabilities assumed                                                         6,903,537                 -
                                                                              ------------            ----------

         Purchase price in excess of fair value of
            assets acquired                                                   $ 40,210,757               $ -
                                                                              ============            ==========
</TABLE>


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

                                      F-10


<PAGE>   46

                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  -  NATURE OF THE BUSINESS

   PopMail.com, inc. ("the Company" or "PopMail"), formerly Cafe Odyssey, Inc.,
   consists of two divisions, the restaurant division and the e-mail services
   division.  During 1999, in conjunction with the acquisition of Popmail.com,
   Inc. the Company changed its name from Cafe Odyssey, Inc. to PopMail.com,
   inc.

   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 September
   1999 and is currently finalizing the sale of this restaurant.

   The e-mail services division provides permission marketing and affinity-based
   e-mail communications concentrating primarily on the needs of businesses in
   the broadcast, media, sports and entertainment industries located throughout
   the United States.

NOTE B  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Principles of Consolidation

   The consolidated financial statements include the accounts of the Company and
   its wholly-owned subsidiaries. All significant intercompany transactions and
   balances have been eliminated.

   Fiscal Year

   The Company has adopted a 52-53 week year ending on the Sunday nearest
   December 31 of each year. All references herein to "1999" represents a
   52-week fiscal year ended January 2, 2000 and "1998" represents a 53-week
   fiscal year ended January 3, 1999.

   Cash and Cash Equivalents

   The Company includes as cash and cash equivalents, cash on hand, bank
   deposits and all liquid money market investments with original maturities of
   three months or less when purchased, which are recorded at the lower of cost
   or market.

   Inventories

   Inventories consist primarily of restaurant food and beverages and retail
   supplies and are stated at the lower of cost or market as determined by the
   first-in first-out method.

                                      F-11

<PAGE>   47

NOTE B  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  -  Continued

   Pre-Opening Costs

   The direct and incremental costs associated with opening a new restaurant,
   which consist of hiring and training the initial workforce, mock service and
   other direct costs, are charged to operations when incurred.

   Property and Equipment

   Property and equipment acquired are recorded at cost. Leasehold improvements
   are capitalized, while repair and maintenance expenses are charged to
   operations as incurred. Leasehold improvements are amortized using the
   straight-line method over the shorter of the estimated useful life or the
   lease term for financial reporting purposes and accelerated methods for tax
   purposes. Furniture and equipment are depreciated on a straight-line method
   over their estimated useful lives of 3 to 15 years.

   Goodwill

   Goodwill represents the excess of the purchase price and related costs over
   the fair value of the net assets of businesses acquired and is amortized on a
   straight-line basis over three years.

   Fair Values of Financial Instruments

   Due to their short-term nature, the carrying value of the Company's current
   financial assets and liabilities approximates their fair values. The fair
   value of the Company's borrowings, if recalculated based on current interest
   rates, would not significantly differ from the recorded amounts.

   Deferred Rent Credits

   The restaurant operating leases provide for certain tenant inducements,
   including up-front cash payments to help cover the costs of construction, and
   scheduled increases in base rentals over their terms. Rent expense is
   recognized on a straight-line basis, and deferred rent credits have been
   established for the differences between the amounts recognized and rent paid.

   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.

   Advertising

   The Company expenses advertising costs as incurred. Advertising expense was
   approximately $977,000 and $761,000 during 1999 and 1998.

                                      F-12

<PAGE>   48

   NOTE B  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  -  Continued

   Stock-Based Compensation

   The Company utilizes the intrinsic value method for stock-based compensation.
   Under this method, compensation expense is recognized for the amount, if any,
   by which the market price of the common stock on the date of grant exceeds
   the exercise price of an option. Pro-forma information related to the fair
   value method of accounting is contained in note H.

   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
   year. 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 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.

   Reclassifications

   Certain reclassifications have been made to the 1998 financial statements to
   conform to the 1999 presentation. These reclassifications had no effect on
   net loss or shareholders' equity as previously reported.

   NOTE C  -  BUSINESS COMBINATIONS

   On August 29, 1999, the Company completed its merger with Popmail.com, Inc.,
   which was accounted for as a purchase. The results of PopMail's operations
   have been included with the Company's operations from the date of the merger.
   Consideration for the merger included the issuance of 2,024 shares of Series
   B Convertible preferred stock, convertible into 8,633,900 shares of the
   Company's common shares valued at $21,589,755; the issuance of 4,407,098
   five-year warrants to purchase common at an exercise price of $3.00 per share
   valued at $4,318,956; the assumption of approximately $5,019,000 of notes
   payable, which required the issuance of 900,000 five-year warrants to the
   holder of those notes valued at $2,700,000; and $890,000 in closing costs.
   The total consideration exceeded the fair value of the net liabilities
   acquired by approximately $33,800,000, which has been recorded as goodwill
   and is being amortized on a straight-line basis over three years.

   On December 3, 1999, the Company completed the acquisition of ROI Interactive
   LLC (ROI). This acquisition was accounted for as a purchase with the results
   of operations included with the Company's operations from the date of
   acquisition. Total consideration included the issuance of 2,750,000 shares of
   the Company's common shares valued at $6,282,461 and $150,000 in closing

                                      F-13

<PAGE>   49


   NOTE C  -  BUSINESS COMBINATIONS - Continued

   costs. The total consideration exceeded the fair value of the net liabilities
   acquired by approximately $6,400,000, which has been recorded as goodwill and
   is being amortized on a straight-line basis over three years.

   The following unaudited consolidated pro forma information assumes the above
   business combinations occurred at the beginning of the respective periods
   presented. However, the 1998 pro forma information does not include ROI, as
   it did not begin operations until 1999.

<TABLE>
<CAPTION>
                                                                                      Years ended December 31,
                                                                                     --------------------------
                                                                                         1999           1998
                                                                                     ------------   -----------
<S>                                                                              <C>               <C>
     Net revenues                                                                    $13,303,000   $ 6,982,126
     Net loss attributable to common shareholders                                    (35,539,000)  (20,413,468)

     Net loss per share attributable to common shareholders                               $(1.73)       $(1.23)
     Weighted average shares outstanding                                              20,540,500    16,634,031
</TABLE>

   The unaudited pro forma information is not necessarily indicative of the
   combined results that would have occurred had the merger and acquisition
   occurred on those dates, nor is it indicative of the results that may occur
   in the future.

   NOTE D  -  IMPAIRMENT OF RESTAURANT RELATED ASSETS

   In 1998, the Company recorded a non-cash write-down of its Cincinnati, Ohio
   restaurant assets of $2,000,000. This impairment was determined by Company's
   management based on the operating performance of the restaurant combined with
   the difference between the carrying amount of the assets and the undiscounted
   cash flows estimated to be generated. The write-down was calculated in
   accordance with the requirements of Statement of Financial Accounting
   Standards (SFAS) No. 121 "Accounting for the Impairment of Long-Lived Assets
   and for Long-Lived Assets to be Disposed Of", based primarily on operating
   projections, future discounted cash flows and other relevant market factors.

                                      F-14

<PAGE>   50


 NOTE E  -  NOTES PAYABLE

<TABLE>
<CAPTION>
   Notes payable consists of the following:
                                                                                     January 2,           January 3,
                                                                                       2000                 1999
                                                                                     ----------           ---------
<S>                                                                                <C>                   <C>
     Short-term revolving line of credit (a)                                          $3,000,000          $2,000,000

     Short-term revolving loan (b)                                                       825,000                 -

     Short-term promissory notes, net of discounts of
       $192,177 (c)                                                                    2,082,823                 -

     Other                                                                               129,695                 -
                                                                                      ----------         -----------

                                                                                      $6,037,518         $ 2,000,000
                                                                                       =========          ==========
</TABLE>

(a) In September 1998, the Company entered into a $3,000,000 revolving line of
credit with a financial institution collateralized by a leasehold mortgage,
security agreement and assignment of rents and income of the Cincinnati
restaurant. In addition, two directors and an ex-director of the Company entered
into a joint and several limited guaranty of the first $1,000,000 of the
Company's borrowings under this credit facility. In consideration of these
guarantees, the Company issued 40,000 five-year warrants to each of these
individuals at an exercise price of $0.75 per share in November 1998. Guarantees
for the other $2,000,000 were obtained later in November 1998 from two of the
aforementioned directors and an additional third party whereby two of the
directors each severally guaranteed $500,000 and the other third party
guaranteed $1,000,000, of such borrowings. All three guarantors pledged certain
collateral to the financial institution in connection with the later guarantees.
In exchange for such guarantees and pledges of collateral, the Company issued
200,000 five-year warrants each to two of the directors in November 1998, and
400,000 five-year warrants to the other third party in January 1999, all at an
exercise price of $0.75 per share. This revolving line of credit facility is due
on demand, or, if no demand is made, in July 2000. This credit facility provides
for monthly payments of interest accrued on the outstanding unpaid principal
balance at a rate equal to the prime rate, or 8.5% as of January 2, 2000 and
7.75% as of January 3, 1999. Each of the guarantee agreements contain provisions
which require the issuance of additional warrants and payment of cash penalties
if the borrowings were not paid in full by September 30, 1999. As of January 2,
2000, the Company accrued $375,000 for the cash penalties and is obligated for
and has recorded 600,000 five-year warrants at an exercise price of $0.75 per
share.

(b) In March 1999, the Company entered into a $825,000 revolving loan facility
with a financial institution collateralized by substantially all of the
Company's assets. In addition, the loan is guaranteed by five individuals. In
consideration of these guarantees, the Company issued 500,000 five-year warrants
in March 1999 (ranging from 25,000 to 250,000 warrants) to these individuals at
an exercise price of $0.75 per share. All guarantors pledged certain collateral
to the financial institution in connection with these guarantees. This revolving
line of credit facility is due on demand, or, if no demand is made, in March
2000. This credit facility provides for monthly payments of interest accrued on
the outstanding unpaid principal balance at a rate equal to the prime rate, or
8.5% as of January 2, 2000.

(c) In connection with the PopMail merger, the company assumed a note payable
for $5,019,387, of which $4,469,387 was repaid shortly after the merger. The
remaining $550,000 is payable in monthly payments with interest at the prime
rate (8.5% at January 2, 2000). The principal is due on demand, or, if no demand
is made, in full amount in January 2000. The loan is uncollateralized.

                                      F-15
<PAGE>   51

NOTE E  -  NOTES PAYABLE - Continued

        In December 1999, the Company entered into a note payable for $200,000.
        The note is payable in monthly payments for interest at 15%. The
        principal is due on demand, or, if no demand is made, in full amount in
        March 2000. In connection with the loan the Company issued 80,000
        five-year warrants with an exercise price of $1.25 to the lender. The
        fair value of these warrants has been recorded as a discount and is
        being amortized over the life of the note.

        In December 1999, the Company entered into a note payable for $325,000.
        The note is payable in monthly payments for interest at 15%. The
        principal is due on demand, or, if no demand is made, in full amount in
        March 2000. In connection with the loan the Company issued 89,375
        five-year warrants with an exercise price of $2.00 to the lender. The
        fair value of these warrants has been recorded as a discount and is
        being amortized over the life of the note. In addition, the Company
        issued 19,500 five-year warrants at an exercise price of $2.00 per share
        to a third party as a finders fee on this note.

        Also in December 1999, the Company entered into a note payable for
        $1,200,000. At the inception of the loan, the Company prepaid the
        interest of 13% ($91,000) for the life of the note until the loan
        matures in July, 2000. In connection with the loan the Company issued
        200,000 five-year warrants with an exercise price of $1.34 to the
        lender. The fair value of these warrants has been recorded as a discount
        and is being amortized over the life of the note.

NOTE F  -  LONG-TERM OBLIGATIONS

   Long-term obligations consists of the following:
<TABLE>
<CAPTION>
                                                                                    January 2,           January 3,
                                                                                       2000                1999
                                                                                    ----------           ----------
<S>                                                                             <C>                     <C>
     Senior promissory notes, bearing interest at 15.94%, due in monthly           $  755,878            $  954,885
       installments of principal and interest, through July 2002,
       collaterized by equipment                                                    1,321,643                 -
     4% senior convertible note payable, net of discount of                         ---------            ----------
       $678,357 (a)                                                                 2,077,521               954,885
       Less current maturities                                                        193,833               199,007
                                                                                    ---------            ----------
                                                                                   $1,883,688            $  755,878
                                                                                    =========            ==========


   Aggregate future maturities of long-term obligations are as follows:

                2000                                                                  $  193,833
                2001                                                                   1,548,722
                2002                                                                     334,966
                                                                                        --------
                                                                                      $2,077,521
                                                                                      ==========

</TABLE>

                                      F-16
<PAGE>   52


NOTE F  -  LONG-TERM OBLIGATIONS  -  Continued

(a)      In November 1999, the Company executed a senior convertible note for
         $2,000,000 which matures in November 2001 and bears interest at 4%. The
         note and any unpaid interest is convertible into the Company's common
         stock at the trading price at the day of the conversion. In connection
         with this note, the Company issued 275,000 five-year warrants with an
         exercise price of $1.625 to the lenders and a placement agent. The fair
         value of these warrants has been recorded as a discount and is being
         amortized over the life of the note.

NOTE G  -  CONVERTIBLE PROMISSORY NOTES PAYABLE

   Convertible promissory notes payable consists of the following:
<TABLE>
<CAPTION>
                                                                                    January 2,           January 3,
                                                                                      2000                 1999
                                                                                   -----------           ----------
<S>                                                                              <C>                    <C>
       Senior convertible note payable, net of discount of $539,583 (a)             $1,460,417           $        -
       Other (b)                                                                              -              150,000
                                                                                    -----------          -----------

                                                                                    $ 1,460,417          $   150,000
                                                                                    ===========          ===========
</TABLE>

(a)      In August 1999, the Company executed a senior convertible note for
         $2,000,000 which matures in August 2000, and bears interest at prime
         plus 2% (effective interest rate of 10.5% as of January 2, 2000). The
         note and any unpaid interest is convertible into the Company's common
         stock at a conversion price of $2.50. In connection with this note, the
         Company issued 500,000 five-year warrants with an exercise price of
         $2.50 to the lender. The fair value of these warrants has been recorded
         as a discount and is being amortized over the life of the note.

(b)      Consisted of three 8.01% convertible promissory notes which matured in
         July 1999. The notes were converted into 89,147 shares of the Company's
         common stock.

        In May 1999, the Company executed one other convertible promissory note
        of $300,000 which matured in 1999; $100,000 was repaid and the
        additional $200,000 was converted into 108,000 shares of the Company's
        common stock.

NOTE H  -  SHAREHOLDERS' EQUITY

   Convertible Preferred Stock

   Series A - In May 1999, the Company issued 2,000 shares of Series A 8%
   convertible preferred stock with a stated value of $1,000 per share in a
   private placement transaction. In addition, the Company issued warrants for
   the purchase of 300,000 shares of the Company's common stock at $3.00 per
   share to the investor. The preferred stock was convertible into the Company's
   common stock at a price equal to 65% of the market value at the time of
   conversion. During 1999, all Series A shares were converted into 1,015,999
   shares of common stock. In November 1999, the warrants issued with the Series
   A shares were re-priced to $1.00 per warrant.

   In connection with the issuance of the Series A shares, the Company
   recognized a non-cash deemed dividend of approximately $1,077,000 which was
   recorded as a discount to preferred stock

                                      F-17

<PAGE>   53

NOTE H  -  SHAREHOLDERS' EQUITY  - Continued

   with a corresponding credit to additional paid-in capital. The discount was
   recognized at the date of issue of the Series A shares, the same date at
   which the shares were eligible for conversion. The accretion of the discount
   is reflected in the statement of operations as an adjustment to net loss, but
   has no effect on total shareholders' equity. The Company also accrued
   approximately $21,000 in preferred stock dividends in 1999 related to the
   Series A shares.

   Series B - In June 1999, the Company issued 2,024 shares of Series B
   convertible preferred stock in connection with the PopMail merger (see note
   C). The Series B shares were convertible into 8,633,900 shares of common
   stock and warrants to purchase 4,407,098 shares of common stock at $3.00 per
   share. All Series B shares issued in this transaction were converted in 1999.
   In November 1999, the warrants issued in connection with the Series B
   conversion were re-priced from $3.00 to $0.75 per share. In connection with
   this re-pricing, the Company recognized an expense of approximately
   $4,500,000.

   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 are convertible into the Company's common stock at a price
   equal to 65% of the market value at the time of conversion. During 1999,
   1,395 shares of Series C were converted into 917,783 shares of common stock.
   In November 1999, warrants for 200,000 shares issued with the Series C shares
   were re-priced to $1.00 per warrant.

   In connection with the issuance of the Series C shares, the Company
   recognized a non-cash deemed dividend and discount accretion of approximately
   $1,077,000 similar to that of the Series A shares. The Company also accrued
   approximately $67,000 in preferred stock dividends in 1999 related to the
   Series C shares.

   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 are convertible into the Company's common stock at a price
   equal to 65% of conversion. No Series D shares were converted during 1999.

   In connection with the issuance of the Series D shares, the Company
   recognized a non-cash deemed dividend and discount accretion of approximately
   $1,185,000 similar to that of the Series A and Series C shares. The Company
   also accrued approximately $88,000 in preferred stock dividends in 1999
   related to the Series D shares.

   Series E - Beginning in October 1999, the Company issued 175,000 shares of
   Series E convertible preferred stock with a stated value of $2.00 per share
   in a private placement. 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. Series E shares
   are not entitled to dividends.

   All of the convertible preferred stock series contain certain liquidation
   preference provisions including accrued and unpaid dividends and defined
   payment amounts per share. In connection

                                      F-18
<PAGE>   54


NOTE H  -  SHAREHOLDERS' EQUITY - Continued

   with the Series A, C, and D shares, warrants for 450,000 shares of common
   stock at $3.00 per share were issued to a financial advisor.

   Warrants

   A summary of the Company's warrant activity is as follows:
<TABLE>
<CAPTION>
                                                                                          Weighted average
                                                                         Shares            exercise price
                                                                       ---------          ----------------
<S>                                                                 <C>                        <C>
     Outstanding at December 28, 1997                                  2,964,955               $5.22
        Granted                                                          520,000                0.75
        Canceled                                                        (199,205)               6.50
                                                                       ---------               -----

     Outstanding at January 3, 1999                                    3,285,750                5.58

        Granted                                                       15,120,973                1.38
        Exercised                                                     (2,250,000)               1.31
                                                                     -----------               -----

     Outstanding at January 2, 2000                                   16,156,723               $2.24
                                                                      ==========               =====

   Outstanding warrants at January 2, 2000 are as follows:

                                        Exercise price
                            -----------------------------------------
                                                           Weighted                Number
                                Range                      average               of shares
                            -------------                 -----------            ----------
<S>                                                      <C>                    <C>
                            $0.00 - $1.00                   $0.69                 8,407,098
                             1.25 -   2.50                   1.78                 3,388,875
                             3.00 -   6.50                   5.58                 4,360,750
                                                                                 ----------

                                                            $2.24                16,156,723
                                                             ====                ==========
</TABLE>

   Stock Options

   The Company maintains two stock option plans (the "Plans"), the 1997 Stock
   Option and Compensation Plan, which has 1,250,000 common shares reserved for
   issuance and the 1998 Director Option Plan, which has 250,000 common shares
   reserved for issuance. At January 2, 2000, the Plans have issued 429,333
   options subject to approval of additional authorized shares by the
   shareholders. The Plans are administered by a stock option committee of the
   Board of Directors, which has the discretion to determine the number of
   shares granted, the price of the option, the term of the option and the time
   period over which the option may be exercised. Stock options granted under
   these plans generally have an exercise price equal to the fair value of the
   stock on the date of grant, have a ten year term and vest ratably over three
   years.

                                      F-19

<PAGE>   55


NOTE H  -  SHAREHOLDERS' EQUITY  -  Continued

   A summary of the Company's option activity is as follows:
<TABLE>
<CAPTION>
                                                                          Weighted average
                                                         Shares            exercise price
                                                       ---------          ----------------
<S>                                                 <C>                       <C>
     Outstanding at December 28, 1997                    707,666               $3.11
        Granted/repriced                                 846,166                1.16
        Forfeited/repriced                              (734,666)               3.10
                                                       ---------                ----

     Outstanding at January 3, 1999                      819,166                1.11
        Granted                                        1,482,500                1.56
        Exercised                                       (118,999)               0.75
        Forfeited/canceled                              (253,334)               0.75
                                                       ---------                ----
     Outstanding at January 2, 2000                    1,929,333               $1.37
                                                       =========                ====
</TABLE>


   Outstanding and exercisable options at January 2, 2000 are as follows:

<TABLE>
<CAPTION>
                                       OPTIONS                                               OPTIONS EXERCISABLE
OUTSTANDING
                     Exercise price
                -------------------------                         Weighted average
                                 Weighted          Number            remaining                    Weighted            Number
               Range              average         of shares        contractual life                average          of shares
           -------------         --------         ---------        ----------------               --------          ---------
<S>                             <C>              <C>                <C>                           <C>               <C>
           $0.75 - $1.00          $0.85             914,333          8.32 years                    $0.87             774,330
            1.78 -  3.00           1.84           1,015,000          9.76 years                     2.06             130,000
                                                  ---------                                                          -------

                                  $1.37           1,929,333                                        $1.04             904,330
                                   ====           =========                                         ====             =======
</TABLE>

   On December 10, 1998, the board of directors approved a repricing of all
   outstanding stock options held by the Company's employees and directors. The
   new exercise price of $0.75 was greater than the fair market value of the
   Company's stock on that date. A total of 660,666 options priced at $3.00 to
   $4.50 were exchanged for options priced at $0.75. The new options vest in
   three equal installments on the first, second and third anniversaries of the
   new date of grant. In September, in connection with the PopMail merger,
   874,333 outstanding options became fully vested in accordance with the change
   in control provisions of the Plans.

                                      F-20
<PAGE>   56


NOTE H  -  SHAREHOLDERS' EQUITY  -  Continued

   Pro forma information regarding the fair value of stock options is as
follows:

<TABLE>
<CAPTION>
                                               1999                  1998
                                              ------                ------
<S>                                  <C>                      <C>
     Net loss
        As reported                     $(20,734,121)          $(6,706,582)
        Pro forma                        (21,173,798)           (6,891,308)
     Basic and diluted EPS
        As reported                           (2.05)                 (0.84)
        Pro forma                             (1.97)                 (0.86)
</TABLE>

   The fair value of each option is estimated on the date of grant using the
   Black-Scholes option pricing model with the following weighted average
   assumptions used for grants in 1999 and 1998: risk-free interest rates of
   6.41% and 6.01%; no expected dividend yield, expected lives of 3 and 7 years;
   and expected volatility of 150% and 80%.

   Warrants and options granted for services were valued at the fair value of
   the warrant or option granted or the value of the services provided,
   whichever is more easily determinable.

NOTE I  -  INCOME TAXES

   As of January 2, 2000 and January 3, 1999, 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.

   As of January 2, 2000, the Company had net operating loss carryforwards of
   approximately $40 million, which, if not used, will expire through 2019.

NOTE J  -  COMMITMENTS AND CONTINGENCIES

   Operating Leases

      The Company has entered into operating leases for its existing restaurants
   which have an initial lease term of ten to fifteen years with an option for
   renewal. These leases contain provisions for contingent rentals based on a
   percentage of gross revenues, as defined, and provisions for payments of real
   estate taxes, insurance and common area costs. In addition, certain of these
   leases provide for tenant inducements and rent abatement. Total rent expense,
   including common area costs, real estate taxes and percentage rent, was
   $1,385,139 and $604,146 for 1999 and 1998, respectively.

   The Company also leases office space at the Corporate headquarters in
   Minneapolis and in Dallas. The total expense for these facilities in was
   $151,801 and $104,035 for 1999 and 1998, respectively.

                                      F-21

<PAGE>   57


NOTE J  -  COMMITMENTS AND CONTINGENCIES - Continued

   Future minimum rental payments are as follows as of January 2, 2000:

<TABLE>
<S>                                             <C>
                2000                               $ 1,339,809
                2001                                 1,258,904
                2002                                 1,066,795
                2003                                 1,038,347
                2004                                 1,084,432
                Thereafter                           8,471,589
                                                    ----------

                                                   $14,259,876
                                                    ==========
</TABLE>

   Litigation

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

NOTE K  -  RELATED PARTY TRANSACTIONS

   During 1998, the Company entered into a revolving note payable with
   significant shareholder, director and executive officer to the Company to
   fund its working capital as necessary. The maximum amount of this note was
   $100,000, which was outstanding at January 3, 1999. This note was paid in
   full in 1999.

   During 1999, the Company entered into four $60,000, 18% notes payable with
   two shareholders and officers of the Company with principal plus interest
   payable at maturity. In addition to the stated interest, an amount of 3% of
   the principal is due at maturity. Two of the notes matured in 1999 and were
   paid in full. The two remaining notes are due in January 2000.

   In December 1999, the Company entered into a promissory note receivable of
   $2,450,000 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 December 2002. The Partnership has pledged
   1,225,000 shares of the Company's common stock as security for the note.
   Proceeds of this note were used to purchase shares of the Company's stock
   issued in connection with the ROI acquisition (see note C). Accordingly, this
   note has been classified as a reduction of shareholders' equity in the
   accompanying financial statements.

   Krienik Advertising, Inc., an Ohio corporation whose President, Chief
   Executive Officer and 100% shareholder is a director of the Company, provided
   marketing and advertising services to the Company. Fees paid for these
   services, including payments for subcontracted media, printing, production
   and research services, were approximately $677,000 and $741,000 during 1999
   and 1998, respectively.

                                      F-22
<PAGE>   58


NOTE L  -  BUSINESS SEGMENTS

   The Company operates in two reportable segments, restaurant operations and
   e-mail marketing services. The e-mail marketing services segment began in
   1999 with the PopMail merger. The Company's general, administrative and
   development expenses are included in the restaurant operations segment with
   the exception of those expenses directly attributable to the e-mail division.
   Information relating to these segments for 1999 are as follows:

<TABLE>
<CAPTION>
                                                          Restaurant      e-mail
                                                          operations      marketing          Total
                                                          ----------      ---------          -----
<S>                                                    <C>               <C>            <C>
     Net revenues                                         $12,166,454    $   106,744     $ 12,273,198
     Operating loss                                        (5,426,808)    (5,363,257)     (10,790,065)
     Total assets                                          14,531,247     41,414,117       55,945,364
     Equipment depreciation and amortization                1,639,279        157,025        1,796,304

     Capital expenditures, net of acquisition               4,027,388         98,419        4,125,807

</TABLE>

NOTE M  -  FOURTH QUARTER ADJUSTMENTS

   During the fourth quarter of 1999, the Company recorded several adjustments
   and transactions that affect, in part, previous quarters including the
   following approximate amounts:

<TABLE>
<S>                                                                                   <C>
     Expenses related to stock warrants and stock options for
        services, re-pricings, and financial guarantees                                 $ 8,000,000

     Adjustments to equipment and depreciation                                              950,000

     Accruals for financing fees, preferred stock dividends,
        and financial advisory services                                                   1,200,000
                                                                                         ----------
     Increase to net loss attributable to common shareholders                           $10,150,000
                                                                                         ==========
</TABLE>

   Had the above adjustments been recorded in the appropriate periods, net loss
   attributable to common shareholders would have increased by approximately
   $970,000 in each of the first two quarters and approximately $550,000 in the
   third quarter of the year ended January 2, 2000.

NOTE N  -  SUBSEQUENT EVENTS (UNAUDITED)

   PRIVATE PLACEMENTS

   In January 2000, the Company executed a private placement memorandum
   authorizing the issuance of 2,350,000 units valued at $1.00 per unit. Each
   unit consists 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. As of March 24, 2000, the Company has issued all 2,350,000
   units related to this placement.

                                      F-23
<PAGE>   59

NOTE N  -  SUBSEQUENT EVENTS (UNAUDITED) - Continued

   Also in January 2000, the Company executed a private placement memorandum
   authorizing the issuance of 2,666,667 units valued at $2.25 per unit. Each
   unit consists 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. As of March 24, 2000, the Company has issued all 2,666,667
   units related to this placement.

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

   MERGER WITH IZ.COM INCORPORATED

   On February 9, 2000, the Company completed a merger with IZ.com Incorporated
   ("IZ.com"), a development stage online convergent media company. The merger
   will be accounted for under the purchase method of accounting. The former
   shareholders of IZ.com were issued 287,408 shares of newly created Series F
   Convertible preferred stock, with an additional 130,508 shares issuable upon
   the exercise of IZ.com options assumed by PopMail. Both the Series F and
   option shares are convertible into common at a rate of 12.977 shares. This
   conversion ratio will increase to a rate of 25.66 shares, upon approval of
   the merger by the shareholders of PopMail. Assuming conversion of all
   potentially issuable shares at the higher conversion rate, they would convert
   into approximately 10,725,000 shares of the Company's common stock valued at
   approximately $47,825,000, using a share price based upon the average closing
   price of the five business days prior to the closing of the transaction. With
   estimated closing costs of $250,000, the total consideration plus the fair
   value of the net liabilities assumed will result in approximately $49,000,000
   of goodwill, which will be amortized on a straight-line basis over three
   years.

   During the period from February 9, 1999 (inception) through December 31,
   1999, IZ.com incurred net losses of approximately $5,000,000, representing
   start-up expenses.

   WARRANTS

   In March 2000, the Company took several actions to induce warrant holders to
   exercise warrants previously issued. Holders of 750,000 warrants at $2.00
   per share were issued 250,000 additional 5-year warrants with an exercise
   price of $5.00 per share. Additionally, the Company re-priced 850,000
   previously issued $3.00 per share warrants to $2.00 per share.

   Computer Hardware Addition

   In February 2000, the Company purchased computer hardware and the related
   infrastructure for its e-mail services division for approximately $1,800,000.

                                      F-24
<PAGE>   60


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         On September 30, 1999, Arthur Andersen LLP and the Company agreed to
the resignation of Arthur Andersen LLP as independent public accountants of
Registrant.

         The reports of Arthur Andersen LLP on the financial statements of the
Company for the past two years, the most recent of which is the fiscal year
ended January 3, 1999, contained no adverse opinion or disclaimer of opinion and
were not qualified or modified as to audit scope or accounting principles.
However, reference is made to said reports which includes an explanatory
paragraph that describes the uncertainty over the Company's ability to continue
as a going concern described in Note 1 of the financial statements.

         The Registrant's Board of Directors participated in and approve the
decision to change independent accountants.

         In connection with its audits for the two most recent periods and
through September 30, 1999, there were no disagreements with Arthur Andersen LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Arthur Andersen LLP would have cause them to make
reference thereto in their report on the financial statements for such years.

         During the two most recent fiscal years and through September 30, 1999,
there were no reportable events (as defined in Regulation S-B Item
304(a)(1)(iv)).

         Arthur Andersen LLP has furnished the Company with a letter addressed
to the SEC stating that it agrees with the above statements. A copy of the
letter is included in an exhibit to the Company's Current Report on Form 8-K
filed with the SEC on October 1, 1999.

         The Company engaged Grant Thornton LLP as its new independent
accountants as of September 30, 1999. During the two most recent periods and
through September 30, 1999, the Company has not consulted with Grant Thronton
LLP on items which (1) were or should have been subject to SAS 50 or (2)
concerned the subject matter of a disagreement or reportable event with the
former auditor (as described in Regulation S-B Item 304(a)(2)).

                                       35

<PAGE>   61


                                    PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Information in response to this Item is incorporated herein by
reference to the Company's definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after the end of the fiscal year covered by this
Form 10-KSB.

ITEM 10. EXECUTIVE COMPENSATION

         Information in response to this Item is incorporated herein by
reference to the Company's definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after the end of the fiscal year covered by this
Form 10-KSB.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information in response to this Item is incorporated herein by
reference to the Company's definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after the end of the fiscal year covered by this
Form 10-KSB.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information in response to this Item is incorporated herein by
reference to the Company's definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after the end of the fiscal year covered by this
Form 10-KSB.

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K

2.1      Agreement and Plan of Merger dated as of June 1, 1999 among Cafe
         Odyssey, Inc, Stephen D. King, PopMail.com, inc., all of the Holders of
         Common Stock of Popmail.com, inc. and Cafe Odyssey Acquisition
         Subsidiary, Inc. (incorporated herein by reference to Exhibit 2.0 of
         the Registrant's Current Report on Form 8-K dated June 22, 1999 and
         filed on June 25, 1999).

2.2      Agreement and Plan of Reorganization among ROI InterActive, LLC, Cafe
         Odyssey, Inc. and ROI Acquisition Corporation (incorporated herein by
         reference to Exhibit 2.0 to the Company's Current Report on Form 8-K
         dated December 17, 1999.)

2.3      First Amendment to Agreement and Plan of Reorganization, dated November
         12, 1999 by and among Parent, Sub, the Company, and the Members.
         (incorporated herein by reference to Exhibit 2.1 to the Company's
         Current Report on Form 8-K dated December 17, 1999.)

2.4      Agreement and Plan of Reorganization dated as of January 21, 2000 among
         PopMail.com, inc., IZ.com Incorporated, IZ Acquisition Corporation, and
         Virtual Group LLC.


                                       36
<PAGE>   62

         (incorporated herein by reference to Exhibit 2.1 of the Company's
         Current Report on Form 8-K dated February 9, 2000 and filed on February
         24, 2000)

3.1(A)   Articles of Incorporation, as amended (incorporated herein by reference
         to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-QSB for
         the quarter ended April 4, 1999).

3.1(B)   Certificate of Designation of Series B Convertible Preferred Stock
         (incorporated herein by reference to Exhibit 3.1(b) to the Registrant's
         report on Form 8-K dated June 22, 1999 and filed on June 25, 1999).

3.1(C)   Certificate of Designation of Series C 8% Convertible Preferred Stock
         (incorporated herein by reference to Exhibit 3.1(c) to the Registrant's
         report on Form 8-K dated July 13, 1999 and filed on July 23, 1999)

3.1(D)   Certificate of Designation of Series D 8% Convertible Preferred Stock
         (incorporated hereby by reference to Exhibit 3.1(d) to the Registrant's
         Form 8-K dated September 1, 1999 and filed on September 16, 1999)

3.1(E)   Articles of Amendment of Articles of Incorporation filed on September
         3, 1999 (incorporated hereby by reference to Exhibit 3.1(d) to the
         Registrant's Form 8-K dated September 1, 1999 and filed on September
         16, 1999)

3.1(F)   Certificate of Designation of Series F Convertible Preferred Stock
         (incorporated herein by reference to Exhibit 3.1 of the Company's
         Current Report on Form 8-K dated February 9, 2000 filed on February 24,
         2000)

3.1(G)   Certificate of Designation of Series E Convertible Preferred Stock

3.2      By-laws (incorporated herein by reference to Exhibit 3.2 to the 1997 SB
         -2).

4.1      Form of Warrant Agreement (incorporated herein by reference to
         Exhibit 4 to the 1997 SB-2)

4.2      Form of Warrant (the series of Warrants initially covers 4,407,098
         shares of common stock; subject to adjustment) (incorporated herein by
         reference to Exhibit 4.0 to the Registrant's Current Report on Form 8-K
         dated June 22, 1999)

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

4.4      Common Stock Purchase Warrant issued to J. Jeffrey Brausch & Company

4.5      Warrant to Purchase Shares of Common Stock issued to J. Jeffrey Brausch
         & Company

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

4.7      Form of Common Stock Purchase Warrant (IPO Series)


                                       37
<PAGE>   63

4.8      Schedule identifying material details of warrants issued by the Company
         substantially identical to the warrant filed as Exhibit 4.7.

4.9      Warrant to Purchase Shares of Common Stock of the Company

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 Warrant to Purchase Shares of Common Stock of the Company (GW-
         1)

4.12     Form of Warrant to Purchase Shares of Common Stock of the Company (GW-
         2)

4.13     Form of Warrant to Purchase Shares of Common Stock of the Company (MB-
         1)

4.14     Form of Warrant to Purchase Shares of Common Stock of the Company (GFP
         Series)

4.15     Schedule identifying material details of warrants issued by the Company
         substantially identical to the warrant filed as Exhibit 4.14.

4.16     Warrant to Purchase Shares of Common Stock issued to Hillstreet Fund,
         L.P.

4.17     Warrant to Purchase Shares of Common Stock issued to Andrew Baum

4.18     Schedule identifying material details of warrants issued by the Company
         substantially identical to the warrant filed as Exhibit 4.17.

4.19     Warrant to Purchase Shares of Common Stock Issued to Metropolitan
         Capital Partners, Inc. (MCP-1)

4.20     Warrant to Purchase Shares of Common Stock Issued to Metropolitan
         Capital Partners, Inc. (MCP-2)

4.21     Warrant to Purchase Shares of Common Stock Issued to Wayne L. Teidge
         (WT-1)

4.22     Warrant to Purchase Shares of Common Stock Issued to Metropolitan
         Capital Partners, Inc. (HT-1)

4.23     Warrant to Purchase Shares of Common Stock Issued to eBanker USA.com,
         Inc. (EB-1)

4.24     Warrant to Purchase Shares of Common Stock Issued to eBanker USA.com,
         Inc. (EB-2)

10.1     Indenture of Lease dated November 9, 1994 between Phillip E. Stephens,
         Trustee and Kenwood Restaurant, Inc; First Amendment to Lease dated May
         3, 1995 by and between Phillip E. Stephens, Trustee and Kenwood
         Restaurant, Zinc.; by Second Amendment to Lease dated          , 1996
         between Phillip E. Stephens, Trustee and Kenwood Restaurant Limited
         Partnership; Second Amendment to Agreement dated October 18, 1996
         between Phillip E. Stephens, Trustee and Kenwood Restaurant Limited
         Partnership; and Addendum to Second Amendment to Lease dated October
         18, 1996 between Phillip E.

                                       38
<PAGE>   64


         Stephen, Trustee and Kenwood Restaurant Limited Partnership (Kenwood
         Restaurant) (incorporated herein by reference to Exhibit 10.1 to the
         1997 SB-2).

10.2     Lease dated August 4, 1997 between Mall of America Company and Hotel
         Mexico, Inc. (Mall of America Restaurant) (incorporated herein by
         reference to Exhibit 10.2 to the 1997 SB-2).

10.3     1997 Stock Option and Compensation Plan (incorporated herein by
         reference to Exhibit 10.4 to the 1997 SB-2).

10.4     Employment Agreement between the Company and Ronald K. Fuller dated
         March 17, 1997 (incorporated herein by reference to Exhibit 10.5 to the
         1997 SB-2).

10.5     Amendment to 1997 Stock Option and Compensation Plan (incorporated
         herein by reference to Exhibit 10.6 to the 1997 SB-2).

10.6     Second Amendment to 1997 Stock Option and Compensation Plan
         (incorporated herein by reference to Exhibit 10.7 to the 1997 SB-2).

10.7     Third Amendment dated February 25, 1998 to the Company's 1997 Stock
         Option and Compensation Plan (incorporated herein by reference to
         Exhibit 10.1 to the Registrant's Quarterly Report in Form 10-QSB for
         the quarter ended June 28, 1998 (the "2-Q98 10-QSB").

10.8     1998 Director Stock Option Plan (incorporated herein by reference to
         Exhibit 10.2 to the 2Q98 10-QSB).

10.9     Shopping Center Lease dated May 12, 1998 between Denver Pavilions, L.P.
         and the Company (incorporated herein by reference to Exhibit 10 to the
         Company's current Report on Form 8-K filed on May 27, 1998).

10.10    Open-End Leasehold Mortgage, Security Agreement and Assignment of
         Rents, Income and Proceeds made as of September 23, 1998 by the Company
         to The Provident Bank ("Provident")(incorporated herein by reference to
         Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB for the
         quarter ended September 27, 1998 (the "3Q98 10-QSB")).

10.11    Revolving Promissory Note Mortgage Loan dated September 23, 1998
         between the Company and Provident (incorporated herein by reference to
         Exhibit 10.2 to the 3Q98 10-QSB).

10.12    Security Agreement dated as of September 23, 1998 between the Company
         and Provident (incorporated herein by reference to Exhibit 10.3 to the
         3Q98 10-QSB).

10.13    Agreement Among Guarantors dated November 16, 1998 among Stephen D.
         King, Jerry L. Ruyan, Greg C. Mosher and the Company (incorporated
         herein by reference to Exhibit 10.18 to the Company's Annual Report on
         Form 10-KSB for the fiscal year needed 1/4/99 (the "1998 10-KSB)).


                                       39
<PAGE>   65

10.14    Agreement Among Guarantors dated January 22, 1999 among Stephen D.
         King, Jerry L. Ruyan, Greg C. Mosher and the Company (incorporated
         hereby reference to Exhibit 10.19 to the 1998 10-KSB.)

10.15    Warrant No. PL-1 dated November 16, 1998 to purchase 40,000 shares of
         common stock of the Company issued to Stephen D. King (incorporated
         hereby reference to Exhibit 10.19 to the 1998 10-KSB.)

10.16    Schedule identifying material details of other warrants issued by the
         Company substantially identical to the warrant filed as Exhibit 10.15.

10.17    Indemnification and Contribution Agreement dated March 3, 1999 among
         Michael A. Bird, John E. Feltl, Stephen D. King, Timothy I. Maudlin,
         Wayne W. Mills and the Company (incorporated hereby reference to
         Exhibit 10.19 to the 1998 10-KSB.)

10.18    Promissory Note dated March 10, 1999 of the Company to BankWindsor
         (incorporated hereby reference to Exhibit 10.19 to the 1998 10-KSB.)

10.19    Warrant No. BWL-1 dated March 3, 1999 to purchase 25,000 shares of
         common stock of the Company issued to Michael A. Bird (incorporated
         hereby reference to Exhibit 10.19 to the 1998 10-KSB.)

10.20    Schedule identifying material details of other warrants issued by the
         Company substantially identical to the warrant filed as Exhibit 10.24
         (incorporated hereby reference to Exhibit 10.19 to the 1998 10-KSB.)

10.21    Warrant No. PL2-1 dated March 18, 1999 to purchase 150,000 shares of
         common stock of the Company issued to Stephen D. King (incorporated
         herein by reference to Exhibit 10.26 to the Amendment to the 1998
         10-KSB).

10.22    Common Stock Purchase Warrant to purchase 300,000 shares of Cafe
         Odyssey, Inc. dated as of May 14, 1999, issued to The Shaar Fund Ltd.
         (Incorporated hereby by reference to Exhibit 10.1 to the Registrant's
         Quarterly Report on Form 10-QSB for the quarter ended April 4, 1999)

10.23    Schedule identifying material details of additional warrants issued by
         the Company substantially identical to the warrant filed as Exhibit
         10.22.

10.24    Securities Purchase Agreement, dated as of May 14, 1999, between Cafe
         Odyssey, Inc., and The Shaar Fund Ltd. (Incorporated hereby by
         reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form
         10-QSB for the quarter ended April 4, 1999)

10.25    Registration Rights Agreement, dated May 14, 1999, between Cafe
         Odyssey, Inc., and The Shaar Fund Ltd. (Incorporated hereby by
         reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form
         10-QSB for the quarter ended April 4, 1999)

10.26    Indemnification Agreement between Cafe Odyssey, Inc. LegacyMaker, Inc.
         (Incorporated hereby by reference to Exhibit 10.1 to the Registrant's
         Form 8-K dated June 22, 1999 and filed on June 25, 1999)



                                       40
<PAGE>   66

10.27    Escrow Agreement by and among popmail.com, inc., James L. Anderson, as
         Attorney-in-Fact for certain Shareholders, Cafe Odyssey, Inc., Cafe
         Odyssey Acquisition Subsidiary, Inc. and Thompson & Knight, a
         professional corporation. (Incorporated hereby by reference to Exhibit
         10.2 to the Registrant's Form 8-K dated June 22, 1999 and filed on June
         25, 1999)

10.28    Agreement by and between Cafe Odyssey, Inc. and James L. Anderson
         (Incorporated hereby by reference to Exhibit 10.3 to the Registrant's
         Form 8-K dated June 22, 1999 and filed on June 25, 1999)

10.29    Indemnification Agreement between popmail.com, Inc. and Stephen D. King
         (Incorporated hereby by reference to Exhibit 10.4 to the Registrant's
         Form 8-K dated June 22, 1999 and filed on June 25, 1999)

10.30    Employment Agreement by and between Cafe Odyssey, Inc. and Stephen D.
         King (Incorporated hereby by reference to Exhibit 10.5 to the
         Registrant's Form 8-K dated June 22, 1999 and filed on June 25, 1999)

10.31    Form of Warrant  issued in connection with the Series C 8% Convertible
         Preferred Stock (Incorporated hereby by reference to Exhibit 10.1 to
         the Registrant's Form 8-K dated July 13, 1999 and filed on July 23,
         1999)

10.32    Schedule identifying material details of additional warrants issued by
         the Company substantially identical to the warrant filed as Exhibit
         10.31.

10.33    Securities Purchase Agreement, dated July 13, 1999 between the Company
         and The Shaar Fund Ltd. (Incorporated hereby by reference to Exhibit
         10.2 to the Registrant's Form 8-K dated July 13, 1999 and filed on July
         23, 1999)

10.34    Registration Rights Agreement, dated July 13, 1999 between the Company
         and The Shaar Fund Ltd. (Incorporated hereby by reference to Exhibit
         10.3 to the Registrant's Form 8-K dated July 13, 1999 and filed on July
         23, 1999)

10.35    Amended and Restated Employment Agreement dated October 5, 1999 by and
         between Cafe Odyssey, Inc., a Minnesota corporation (the "Company"),
         and Thomas W. Orr (the "Executive"). (Incorporated herein by reference
         to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-QSB for
         Quarter ended October 4, 1999.)

10.36    Securities Purchase Agreement, dated July 13, 1999 between the
         Registrant and The Shaar Fund Ltd. (Incorporated herein by reference to
         Exhibit 10.1 to the Registrant's Form 8-K dated September 1, 1999 and
         filed on September 16, 1999)

10.37    Form of Warrant issued in connection with the Series D 8% Convertible
         Preferred Stock (Incorporated hereby by reference to Exhibit 10.2 to
         the Registrant's Form 8-K dated September 1, 1999 and filed on
         September 16, 1999)

10.38    Schedule identifying material details of additional warrants issued by
         the Company substantially identical to the warrant filed as Exhibit
         10.37.


                                       41
<PAGE>   67


10.39    Registration Rights Agreement, dated July 13, 1999 between the
         Registrant and The Shaar Fund Ltd. (Incorporated hereby by reference to
         Exhibit 10.3 to the Registrant's Form 8-K dated September 1, 1999 and
         filed on September 16, 1999)

10.40    Loan Agreement by and between the Registrant and Fairview Partners
         dated as of August 24, 1999. (Incorporated hereby by reference to
         Exhibit 10.4 to the Registrant's Form 8-K dated September 1, 1999 and
         filed on September 16, 1999)

10.41    Form of Senior Convertible Note dated August 24, 1999. (Incorporated
         hereby by reference to Exhibit 10.5 to the Registrant's Form 8-K dated
         September 1, 1999 and filed on September 16, 1999)

10.42    Form of Warrant to Purchase Common Stock of the Registrant issued to
         Fairview Partners. (Incorporated hereby by reference to Exhibit 10.6 to
         the Registrant's Form 8-K dated September 1, 1999 and filed on
         September 16, 1999)

10.43    Support Agreement dated as of August 24, 1999 among Stephen D. King,
         the Registrant and Fairview Partners. (Incorporated hereby by reference
         to Exhibit 10.7 to the Registrant's Form 8-K dated September 1, 1999
         and filed on September 16, 1999)

10.44    First Deed of Trust, Security Agreement and Fixture Financing Statement
         dated as of August 24, 1999, between the Registrant and the Public
         Trustee of Denver County, Colorado. (Incorporated hereby by reference
         to Exhibit 10.8 to the Registrant's Form 8-K dated September 1, 1999
         and filed on September 16, 1999)

10.45    Agreement Between Landlord and Lender dated as of August 24, 1999 by
         Denver Pavilions, L.P. and the Registrant. (Incorporated hereby by
         reference to Exhibit 10.9 to the Registrant's Form 8-K dated September
         1, 1999 and filed on September 16, 1999)

10.46    Escrow Agreement dated August 25, 1999, by and between Fairview
         Partners, the Registrant and Johnson Trust Company. (Incorporated
         hereby by reference to Exhibit 10.10 to the Registrant's Form 8-K dated
         September 1, 1999 and filed on September 16, 1999)

10.47    Registration Rights Agreement, dated January 21, 2000 between the
         Registrant and the stockholders of IZ.com, Incorporated. (incorporated
         herein by reference to Exhibit 10.1 of the Company's Current Report on
         Form 8-K dated filed on February 24, 2000)

10.48    Pledge Agreement dated December 3, 1999 between King Family Partners
         and the Company.

10.49    First Amendment to Pledge Agreement dated December 3, 1999 dated March
         28, 2000 between King Family Partners and the Company.

10.50    Amended and Restated Promissory Note in the amount of $2,450,000 dated
         December 3, 1999 of King Family Partners to the Company.

10.51    Promissory Note in the amount of the $245,000 dated March 30, 2000 of
         King Family Partners to the Company.



                                       42
<PAGE>   68


10.52    Employment Agreement entered into as of February 9, 2000, by and
         between Jesse Berst and the Company.

10.53    Amendment to Employment Agreement dated July 27, 1999 by and between
         the Company and Ronald K. Fuller.

21       Subsidiaries

23.1     Consent of Grant Thornton, LLP

23.2     Consent of Arthur Andersen LLP

27       Financial Data Schedule

(B)      REPORTS ON FORM 8-K

On November 15, 1999, the Company filed an amendment to a report on Form 8-K/A
relating to its acquisition of Popmail.com, Inc.

On December 17, 1999, the Company filed a report on Form 8-K relating to its
acquisition of ROI Interactive, LLC.


                                       43

<PAGE>   69


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    POPMAIL.COM, INC.
                                    ("Registrant")


Dated:                  , 2000      By: /s/ Stephen D. King
        ----------------                ----------------------------------------
                                        Stephen D. King
                                        Chief Executive Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on                , 2000 by the following persons on
behalf of the Registrant, in the capacities indicated.


SIGNATURE                                                    TITLE
---------                                                    -----


/s/ Stephen D. King                      Chief Executive Officer and Director
----------------------------------
Stephen D. King                          (Principal Executive Officer)



/s/ Thomas W. Orr                        Chief Financial Officer and Director
----------------------------------
Thomas W. Orr                            (Principal Financial and Accounting
                                         Officer)



/s/ Ronald K. Fuller                     President and Director
----------------------------------
Ronald K. Fuller



/s/ Michael L. Krienik                   Director
----------------------------------
Michael L. Krienik



/s/ Frank Wood                           Director
----------------------------------
Frank Wood


                                       44
<PAGE>   70


/s/ Gary Schneider                       President of Corporate Development and
----------------------------------       Director
Gary Schneider



/s/ Jesse Berst                          Chief Operating Officer and Director
----------------------------------
Jesse Berst





                                       45