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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

              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                                 31-1487885
   ------------------------                   -----------------------
(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/A or any amendment to
this Form 10-KSB/A. [ ]

The Company's revenues from continuing operations for the fiscal year ended
January 2, 2000 totaled $106,744.

As of November 17, 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 $1,577,000. As of November 17, 2000, there were
outstanding 4,846,839 shares of the registrant's common stock.







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       This Annual Report on Form 10-KSB/A amends and replaces in its entirety
the Company's Annual Report on Form 10-KSB filed April 4, 2000. This Form
10-KSB/A restates the Consolidated Financial Statements to reflect the
reclassification of the Company's restaurant division as a discontinued
operation during the third quarter of fiscal 2000 and the implementation of a
10-for-1 reverse stock split of the Company's common stock during the fourth
quarter of fiscal 2000. See also the accompanying notes to the consolidated
financial statements regarding the Company's divestiture of IZ.com, which also
occurred in the fourth quarter of fiscal year 2000. Conforming changes have also
been made in the footnotes to the Financial Statements.

                       DOCUMENTS INCORPORATED BY REFERENCE

       Portions of the registrant's definitive proxy statement for the 2000
Annual Meeting of Shareholders 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/A, 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 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.






























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                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
PART I                                                                Page
<S>               <C>                                                 <C>
     ITEM 1.      Description of Business.............................  1
                  Risk Factors........................................  7
     ITEM 2.      Description of Property............................. 18
     ITEM 3.      Legal Proceedings................................... 20
     ITEM 4.      Submission of Matters to a Vote of Security Holders. 20

PART II

     ITEM 5.      Market for Common Equity and Related Shareholder
                  Matters............................................. 21
     ITEM 6.      Management's Discussion and Analysis of Financial
                    Condition and Results of Operations............... 27
     ITEM 7.      Financial Statements................................ F-1
     ITEM 8.      Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure................. 30

PART III

     ITEM 9.      Directors, Executive Officers, Promoters and Control
                    Persons; Compliance with Section 16(a) of the
                    Exchange Act...................................... 31
     ITEM 10.     Executive Compensation.............................. 31
     ITEM 11.     Security Ownership of Certain Beneficial Owners and
                  Management.......................................... 31
     ITEM 12.     Certain Relationships and Related Transactions...... 31

     ITEM 13.     Exhibits and Reports on Form 8-K.................... 32

SIGNATURES.............................................................39
</TABLE>























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                                     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.

       During the fiscal quarter ended October 1, 2000, the Company developed a
formal plan for the divestiture of the restaurant division. The consolidated
financial statements of the Company, included as part of this filing, have thus
been restated to reflect the restaurant division as discontinued operations.

       Our Internet marketing division is in the business of connecting
entertainment and media brands with their fans through the use of email and fan
club sites. The Internet division consists of three companies: PopMail Network,
Inc. ("PopMail Network"), based in Irving, Texas, is a provider of permission
and vanity web based e-mail services to broadcast stations, professional sports
teams and other brand name clients in the media and entertainment industries;
Fan Asylum, Inc. ("Fan Asylum"), based in San Francisco, California, is a
provider of official online and offline fan club sites for recording artists in
the music industry; and formerly IZ.com, Inc. ("IZ"), which was based in
Bellevue, Washington, and was a provider of digital publishing services,
newsletters and technology for high-end brands. The Company has recently
completed the sale of IZ.com, as it no longer fit with the Company's ongoing
business plan.

       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 was attempting to integrate the use
of multiple media - television, the Internet and email - to reach 18 to 25 year
olds and derive commerce. PopMail attempted to build a brand and marketing
strategy that will allow it to dominate its target market. As a result of the
acquisition, Iz.com changed its strategic focus to apply its multimedia
expertise to the email-based marketing business operated by PopMail.

       In December 2000, the Company sold the assets of IZ.com to its current
management team.

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

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email newsletters under the artists brand and hosts the web site for each of its
Artists.

       As noted in the Risk Factors section of this Form 10-KSB/A, the Company
has incurred substantial operating losses to date and, as of January 2, 2000,
has a deficiency in working capital of approximately $8.2 million, net of any
restaurant assets reclassified to net assets of discontinued operations. 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/A, 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.

       In September 2000, the Company received a notice from The Nasdaq Stock
Market indicating that the Company's common stock had failed to maintain a
minimum bid price greater than or equal to $1.00 over the preceding thirty
consecutive trading days as required under Marketplace Rule 4310(c)(4). Should
the Company's common stock fail to achieve and maintain a bid price equal to or
greater than $1.00 for a minimum of ten consecutive trading days anytime before
December 12, 2000, the Company's common stock will be delisted from the Nasdaq
SmallCap Market. On October 12, 2000, the Company implemented a 10-for-1 reverse
stock split. As of November 17, 2000, the Company had 4,846,839 post-split
shares of common stock, $.01 par value, outstanding. Unless otherwise noted, all
references within this 10-KSB/A have been restated to reflect the Company's
post-split common stock numbers.

       In December 2000, the Company received an additional notice from The
Nasdaq Stock Market indicating that the Company failed to maintain a minimum of
two active market makers for 10 consecutive trading days as required by Nasdaq
Marketplace Rule 4310(c)(01). This deficiency, as well as the minimum bid price
deficiency, will be considered at a oral hearing by the Nasdaq Listing
Qualifications Panel on January 11, 2001.

DESCRIPTION OF POPMAIL NETWORK, INC.

       PopMail Network (the "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 400 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 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.

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       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 email 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.

       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.6


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       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).

       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
           400 Clients. Many of these Clients have not fully utilized the
           capability of the Network services by introducing advertising or
           e-commerce 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.
         - 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.





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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 license agreements.

DESCRIPTION OF FAN ASYLUM, INC.

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

DESCRIPTION OF RESTAURANT DIVISION

GENERAL

       During the fiscal quarter ended October 1, 2000, the Company developed a
formal plan for the divestiture of the restaurant division. The consolidated
financial statements of the Company, included as part of this filing, have thus
been restated to reflect the restaurant division as discontinued operations.

       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 connection with the sale completed in April
2000, PopMail assigned the lease for the Kenwood restaurant property to the
buyer, who is required to make the lease payments. PopMail remains primarily
obligated under the lease. In November 2000, the buyer has notified the Company
about its intention to re-sell the unit. The Company has also been informed that
two months of property lease payments are past due.

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

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Machu Picchu in the Andes and the sweeping plains of the Serengeti desert in
Tanzania, Africa.

       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

       On May 31, 2000, the Company entered into an agreement (the "Management
Services Agreement") with an officer of the Company (the "Manager") to manage
substantially all the operations of the Cafe Odyssey restaurant segment (the
"Management Services") under the auspices of an independent management company
(the "Management Company"). On May 31, 2000, the Manager resigned from the
Company to fulfill his obligation to the Management Company under the Management
Services Agreement.

       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 the Manager of Management Company.

       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.


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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.

RISK FACTORS

       An investment in our common stock is very risky. You may lose the entire
amount of your investment. Prior to making an investment decision, you should
carefully review the accompanying consolidated financial statements and related
notes included elsewhere in this report and consider the following risk factors:

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

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

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

       Although our common stock is currently listed on the Nasdaq SmallCap
Market, we cannot guarantee that an active public market for our common stock
will continue

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to exist. In September 2000, the Company received a notice from The Nasdaq Stock
Market indicating that the Company's common stock had failed to maintain a
minimum bid price greater than or equal to $1.00 over the preceding thirty
consecutive trading days as required under Marketplace Rule 4310(c)(4). To
satisfy this objective, the Company chose to implement a reverse stock split.
The Company's share price has substantially fallen below the minimum bid price
of $1.00. In December 2000, the Company received an additional notice from The
Nasdaq Stock Market indicating that the Company failed to maintain a minimum of
two active market makers for 10 consecutive trading days as required by Nasdaq
Marketplace Rule 4310(c)(01). This deficiency, as well as the minimum bid price
deficiency, will be considered at a oral hearing by the Nasdaq Listing
Qualifications Panel on January 11, 2001. In addition, we have responded to
numerous inquiries from Nasdaq expressing concern over various matters,
including but not limited to a "going concern" qualification expressed by our
former independent auditors as of January 3, 1999. Accordingly, our securities
may be delisted from the Nasdaq SmallCap Market or be required to reapply for
listing meeting the Nasdaq initial listing requirements, which are generally
more stringent than the requirements currently governing the Company's listing.
Additional factors giving rise to such delisting could include, but are not be
limited to: (1) a reduction of our net tangible assets to below $2,000,000, (2)
a reduction to one active market maker, (3) a reduction in the market value of
the public float of our securities to less than $1,000,000, (4) a reduction of
the trading price of our common stock to less than $1.00 per share or (5) the
discretion of the Nasdaq SmallCap Market.

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

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

       Our plan of business development and our day-to-day operations rely
heavily on the experience of the executive management team. The loss of any
person could adversely affect the success of our operations and strategic plans
and, consequently, have a detrimental effect on the market price of our stock.

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

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

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

                                        8
<PAGE>   12
       On September 1, 1999, we completed a merger with popmail.com, inc. ("Old
Popmail"). Old Popmail was a provider of Internet email services to radio
stations across the country. On December 3, 1999, we acquired ROI Interactive,
LLC ("ROI"). ROI is a provider of permission and affinity based email services
to broadcast stations, professional sports teams and other brand name clients in
the media and entertainment industries. On February 9, 2000, we acquired IZ.com
Incorporated ("IZ.com"). IZ.com, which we sold in December 2000, was a provider
of digital publishing services, newsletters and technology for high-end brands.
On June 15, 2000, we acquired Fan Asylum, Inc. ("Fan Asylum"). Fan Asylum is a
provider of official online and offline fan club sites for recording artists in
the music industry. Consequently, we face the added risks, expenses and
difficulties related to developing and operating a new business enterprise.
Given our lack of significant operating history, investors may have difficulty
assessing the many factors, which will determine our ability to generate future
profits.

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

       Following our merger with Old Popmail on September 1, 1999, James L.
Anderson was elected to our Board of Directors and served as its Chairman until
his resignation on January 24, 2000. Effective February 1, 2000, Mr. Anderson
resigned from our Board. Based upon a Schedule 13D filed with the Securities and
Exchange Commission on September 13, 1999, Mr. Anderson controlled indirectly or
directly, as of that date, approximately 59.6 percent of our outstanding common
stock. As of October 1, 2000, Mr. Anderson indirectly or directly controlled
approximately 21.5 percent of our outstanding common stock. Accordingly, he may
have the ability to determine the election of members of the Board of Directors
and determine the approval of corporate transactions and other matters requiring
shareholder approval. Unless and until Mr. Anderson substantially decreases his
percentage beneficial ownership in our common stock, he will continue to have
significant influence over our affairs.

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

       As of October 1, 2000, we have a total of 4,065,356 shares of our common
stock reserved for issuance pursuant to our stock options plans, outstanding
preferred stock and common purchase warrants. Most of these shares have either
been registered for resale or are subject to agreements providing for their
registration for resale under certain circumstances. Accordingly, our existing
shareholders face a substantial risk of dilution and the trading price of our
common stock may decrease as these convertible securities are exercised or
converted into shares of common stock and subsequently offered for sale through
the Nasdaq SmallCap Market.

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

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

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

       Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we seek to protect
through a

                                        9
<PAGE>   13
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.

REQUESTS FOR INCREASING THE AUTHORIZED SHARES OF COMMON STOCK COULD CREATE
FUTURE DILUTION.

       A special meeting of the Shareholders of PopMail was held on November 27,
2000, to approve an amendment to the Company's Articles of Incorporation, as
amended, to increase the number of authorized shares from 10,000,000 shares of
undesignated capital stock to 25,000,000 shares of undesignated capital stock.
The amendment was approved.

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 25,000,000 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 October 11, 2000, we have 4,747,087 shares of common stock issued
and outstanding, including 193,183 shares of Series E Convertible Preferred
Stock, 287,408 shares of Series F Convertible Preferred Stock outstanding and
600,000 shares of Series G 10% Convertible Preferred Stock. As of October 1,
2000, a further 4,065,356 shares of common stock have been reserved as follows:

     - A maximum of 79,285 shares of common stock reserved for issuance upon
       exercise of the Series E Preferred Shares, 193,183 shares of which are
       currently outstanding;
     - A maximum of 737,500 shares of common stock reserved for issuance
       upon conversion of Series F Convertible Preferred Stock;
     - A maximum of 672,428 shares of common stock reserved for issuance in
       connection with the Series G 10% Convertible Preferred Stock and upon
       exercise of certain warrants issued in connection with the Series G
       Preferred Stock;
     - 334,886 shares of common stock issuable upon exercise of options
       granted under the IZ.com Incorporated stock option plan assumed by the
       Company;
     - 260,000 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;
     - 1,606,257 shares issuable upon the exercise of outstanding warrants
       (excluding the warrants issued in connection with the sale of the
       Series G Preferred Stock);
     - 300,000 shares reserved for issuance under our 1997 Stock Option and
       Compensation Plan, of which options reverting to 262,766 shares are
       currently outstanding;
     - 75,000 shares for issuance under our 1998 Director Stock Option Plan,
       of which options relating to 39,833 shares are currently outstanding.

       The rights of holders of preferred stock and other classes of common
stock

                                       10
<PAGE>   14
that may be issued could be superior to the rights granted to holders of the
Units issued in our initial public offering. Our Board's ability to designate
and issue such undesignated shares could impede or deter an unsolicited tender
offer or takeover proposal. Further, the issuance of additional shares having
preferential rights could adversely affect the voting power and other rights of
holders of common stock.

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

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

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

       As permitted by Minnesota law, our Amended and Restated Articles of
Incorporation provide that members of our Board of Directors are not personally
liable to you or the Company for monetary damages resulting from a breach of
their fiduciary duties. These limitations on director liability may discourage
shareholders from suing directors for breach of fiduciary duty and may reduce
the likelihood of derivative litigation brought against a director by
shareholders on the Company's behalf. Furthermore, our Bylaws provide for
mandatory indemnification of directors and officers to the fullest extent
permitted by Minnesota law. All of these provisions limit the extent to which
the threat of legal action against our directors for any breach of their
fiduciary duties will prevent such breach from occurring in the first instance.

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

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

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

                                       11
<PAGE>   15
perform as expected, our business operating results and financial condition may
be materially adversely affected.

FAILURE TO MANAGE OUR GROWTH MAY ADVERSELY AFFECT OUR BUSINESS.

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

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

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

       The market price of publicly traded securities generally reflects, to a
large degree, the expectations of industry analysts and significant investors
with respect to the short and long-term operating results of the issuers. When
issuers fail to meet such expectations, the market price of their publicly
traded securities usually decreases, sometimes significantly, and may not
recover. There can be no assurance that we will be able to satisfy the
expectations of market analysts and investors to avoid a precipitous drop in the
market price of our common stock.

INTERNET DIVISION

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

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

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

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

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

OUR EMAIL BASED PRODUCTS AND FAN CLUB SERVICES ARE DEPENDENT UPON THE INTERNET.

       The success of our services and products will depend in large part upon
the continued development and expansion of the Internet. The Internet has
experienced, and is expected to continue to experience, significant and
geometric growth in the number of users and the amount of traffic. There can be
no assurance that the Internet infrastructure will continue to be able to
support the demands placed on it by this continued growth. In addition, the
Internet could lose its viability due to

                                       12
<PAGE>   16
delays in the development or adoption of new standards and protocols (for
example, the next-generation Internet Protocol) to handle increased levels of
Internet activity, or due to increased governmental regulation. There can be no
assurance that the infrastructure or complementary services necessary to make
the Internet a viable commercial marketplace will be developed, or, if
developed, that the Internet will become a viable commercial marketplace for
services and products such as those we offer. If the necessary infrastructure or
complementary services or facilities are not developed, or if the Internet does
not become a viable commercial marketplace, our business, results of operations,
and financial condition will be materially adversely affected.

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

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

     - The growth in consumer access to, and acceptance of, new interactive
       technologies such as the Internet;
     - The adoption of Internet-based business models;
     - The development of technologies that facilitate two-way communications
       between companies and target audiences; and
     - Acquiring members to the brands services.

       Significant issues concerning the commercial use of Internet
technologies, including security, reliability, privacy, cost, ease of use and
quality of service, may inhibit the growth of services that use these
technologies. Our future success will depend, in part, on our ability to meet
these challenges, which must be met in a timely and cost-effective manner. We
cannot be sure that we will succeed in effectively meeting these challenges, and
our failure to do so 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 and fan club
services may not continue to grow, our services may not be adopted and
individual personal computer users in business or at home may not use the
Internet or other interactive media for commerce, interaction and communication.
If the market for Internet email, fan club sites and other services fails to
sustain growth, or develops more slowly than expected, or if our services do not
achieve market acceptance, our business would be materially and adversely
affected.

INTERNET STOCKS ARE SUBJECT TO MARKET VOLATILITY.

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

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



                                       13
<PAGE>   17
INCREASED COMPETITION RESULTING FROM AN INCREASE IN THE NUMBER OF EMAIL FAN CLUB
AND BRANDED LABEL NEWSLETTERS PROVIDERS MAY HAVE AN ADVERSE EFFECT ON POPMAIL'S
FUTURE BUSINESS OPERATIONS.

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

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

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

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

       We plan to derive a substantial portion of our future revenues from
online advertising and direct marketing in our branded email, fan club
newsletters, artist web sites and Web-based programs. If these services do not
continue to achieve market acceptance, we may not generate sufficient revenue to
support our continued operations. The Internet has not existed long enough as an
advertising medium to demonstrate its effectiveness relative to traditional
advertising. Advertisers and advertising agencies that have historically relied
on traditional advertising remain slow to adopt online advertising. Many
potential advertisers have limited or no experience using 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 CLIENT AND MEMBER BASE WE MAY NOT BE ABLE
TO COMPETE EFFECTIVELY FOR ADVERTISERS.

       Our revenue has been derived primarily from the licensing of our email
services, set up and hosting fees through PopMail Network, creating content
through IZ.com for specific brands and from management fees, ticket fees,
commerce fees and

                                       14
<PAGE>   18
artist travel packages through Fan Asylum. All three companies are seeking to
provide timely and relevant information to their clients customers, fans and
viewers with personalized content and information that is of most interest to
the opt-in member or fan, through targeted email, personalized newsletters and
fan club sites. If we are unable to maintain and expand our affinity brand
member base and add clients to our "affinity brand network," advertisers could
find our audience less attractive and effective for promoting their products and
services and we could experience difficulty retaining our existing advertisers
and attracting additional advertisers. To date, we have relied on referral-based
marketing activities to attract a portion of our members and will continue to do
so for the foreseeable future. This type of marketing is largely outside of our
control and there can be no assurance that it will generate rates of growth in
our member base comparable to what we have experienced to date.

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

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

       Through IZ.com and Fan Asylum, we have relied on our editorial staff to
identify and develop substantially all of our content utilizing content derived
from other parties and from our clients. Because our members' preferences are
constantly evolving, our editorial staff may be unable to accurately and
effectively identify and develop content that is relevant and appealing to our
members. As a result, we may have difficulty maintaining and expanding our
member base, which could negatively affect our ability to retain and attract
advertisers. If we are unable to retain and attract advertisers our revenue will
decrease. Additionally, we license a small percentage of our content from third
parties. The loss, or increase in cost, of our licensed content may impair our
ability to assimilate and maintain consistent, appealing content in our 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 CLIENTS
AND MEMBERS AND FAIL TO ATTRACT NEW ADVERTISERS, REDUCING OUR REVENUES AND
HARMING OUR FINANCIAL RESULTS.

       We face intense competition from both traditional and online advertising
and direct marketing businesses. If we do not respond to this competition
effectively, we may not be able to retain current advertisers or attract new
advertisers, which would reduce our revenue and harm our financial results.
Currently, several companies offer competitive 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

                                       15
<PAGE>   19
offer online products or services.

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

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

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

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

                                       16
<PAGE>   20
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. We have established and communicated to our members a
privacy policy. In the event that we convey personally identifiable information
to our corporate customers without permission or in violation of our stated
privacy policy, we may incur liability for the unlawful invasion of privacy.

RESTAURANT DIVISION

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

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

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

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

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
sold the Kenwood restaurant and assigned the related lease to an unrelated third
party, 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;

                                       17
<PAGE>   21
     - The overall success of the malls, entertainment centers and other
       venues where Cafe Odyssey restaurants are or will be located;
     - Economic conditions affecting disposable consumer income; and
     - The continued popularity of themed restaurants in general and the Cafe
       Odyssey concept in particular.

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

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

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

        - The preparation and sale of food;
        - Building and zoning requirements;
        - Environmental protections;
        - Minimum wage requirements;
        - Overtime;
        - Working and safety conditions;
        - The sale of alcoholic beverages;
        - Sanitation;
        - Relationships with employees;
        - Unemployment;
        - Workers compensation; and
        - Citizenship requirements.

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


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.




                                       18
<PAGE>   22
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 exceed
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.

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 exceed 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. 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. In November 1999, the Company assigned the related lease (described below)
in connection with the sale of restaurant assets, which was completed in April
2000, to a third party, who subsequently reopened the restaurant under another
name and continues to operate them. Although the third party is responsible for
all payments due under the lease, PopMail remains primarily obligated under the
lease. In November 2000, the third party has notified the Company about its
intention to re-sell the unit. The Company has also been informed that two
months of property lease payments are past due.

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

                                       19
<PAGE>   23
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.


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.





































                                       20
<PAGE>   24
                                     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/A, 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 and have not been adjusted to
reflect the Company's October 2000 10-for-1 reverse stock split. 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
<S>                                                        <C>          <C>
 FISCAL YEAR ENDED JANUARY 3, 1999:

         First Quarter............................         $3.75        $1.88
         Second Quarter...........................          5.38         2.25
         Third Quarter............................          3.63         1.00
         Fourth Quarter...........................          1.13         0.50

 FISCAL YEAR ENDED JANUARY 2, 2000:

         First Quarter............................          1.03         0.56
         Second Quarter...........................          3.56         0.50
         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 REGISTERED AND UNREGISTERED SECURITIES

The following table lists recent sales of registered and unregistered securities
by

                                       21
<PAGE>   25
the Company: (All share amounts and exercise prices are pre-split values and do
not take into account the October 2000 10-for-1 reverse stock split.)
<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 guarantees
                                        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
                                        500,000 shares of        Jack Feltl               of a loan and
                                        common stock, at an      Cayne Mills              pledge of certain
                                        exercise price of        Timothy Maudlin          collateral
                                        $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
-------------------------------------------------------------------------------------------------------------
4/20/99      Warrants to purchase       Warrants to purchase     Gulfstream Financial     Financial advisory
             an aggregate of            an aggregate of          Partners                 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       Acquisition of
                                                                 Concepts                 1.5% of the
                                                                                          outstanding shares
                                                                                          of Internet
                                                                                          Community Concepts
-------------------------------------------------------------------------------------------------------------
8/19/99      Private Placement of       Up to 750,000 Units      Certain accredited       $450,000
             Units consisting of        at a price of $2.00      investors
             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,      Engagement Fee of
                                                                 Inc.                     $80,000 for
                                                                                          Investment Banking
                                                                                          services
-------------------------------------------------------------------------------------------------------------
10/12/99     Warrant to purchase        Warrant to purchase      Metropolitan             Financial advisory
             600,000 shares of                                   Capital                  services
             common stock                                        Partners, Inc.
-------------------------------------------------------------------------------------------------------------
10/12/99     Warrant to purchase        Warrant to purchase      Michael Bird             In connection with
             15,000 shares of           15,000 of common                                  loan
             common stock               stock
-------------------------------------------------------------------------------------------------------------
11/3/99      Warrants to purchase       Warrants to purchase     Gulfstream Financial     Financial advisory
             an aggregate of            an aggregate of          Partners and Blake       services
             1,850,000 shares           1,850,000 shares         Capital Partners
             of common stock            of common stock
-------------------------------------------------------------------------------------------------------------
10/13/99     Common stock               66,187 shares            Cunningham Group         Restaurant
                                                                 Construction Services,   construction
                                                                 LLC                      services
-------------------------------------------------------------------------------------------------------------
11/10/99     Common stock               288,000 shares           Frank Terrizzi           (3)
-------------------------------------------------------------------------------------------------------------
11/24/99 (4) Common stock               900,000 shares           LegacyMaker, Inc.        In exchange for
                                                                                          cancellation of
                                                                                          previously issued
                                                                                          warrant
-------------------------------------------------------------------------------------------------------------
</TABLE>



                                       22
<PAGE>   26
<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     Private Placement of       $2,000,000 4%            Certain accredited       $1,393,000
             Convertible Debentures     Convertible              investors
                                        Debentures and
                                        warrants to purchase
                                        150,000 shares of
                                        common stock at an
                                        exercise price of
                                        $1.625
-------------------------------------------------------------------------------------------------------------
11/24/99     Private Placement of       Warrant to purchase      J.P. Carey Securities,   Commissions
             Convertible Debentures     125,000 shares of        Inc.
                                        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,     In consideration
             Warrants                   200,000 shares of        L.P.                     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
-------------------------------------------------------------------------------------------------------------
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
                                        common stock warrant     investors                of $500,000 and
                                        to purchase 100,000                               consulting services
                                        shares common stock
                                        at an exercise price
                                        of $1.00
-------------------------------------------------------------------------------------------------------------
12/23/99     Warrant to purchase        Warrant to purchase      Montgomery &             In consideration
             common stock               16,666 shares at an      Associates               for financial
                                        exercise price of                                 services
                                        $2.00
-------------------------------------------------------------------------------------------------------------
 Various     Warrants to purchase       Warrants to purchase     Stephen D. King          Issued in
  dates      common stock               an aggregate of          Jerry L. Ruyan           connection with
  from                                  340,000 shares at        Andrew Green             guarantee
12/31/99                                an exercise price
   to                                   of $0.75
2/29/2000
-------------------------------------------------------------------------------------------------------------
1/19/2000    Warrants to purchase       Warrant to purchase      Gulfstream Financial     In consideration
             common stock               700,000 shares at an     Partners, LLC            for financial
                                        exercise price of                                 services
                                        $2.00
-------------------------------------------------------------------------------------------------------------
1/19/2000    Units consisting of        2,350,000 Units          Certain accredited       $2,350,000
             common stock and           consisting of 1          investors
             Warrants to purchase       share of common
             common stock               stock and one
                                        warrant to purchase
                                        one share of common
                                        stock at an
                                        exercise price of
                                        $2.00
-------------------------------------------------------------------------------------------------------------
1/26/2000    Warrants to purchase       Warrant to purchase      Frank W. Terrizzi        In consideration
             common stock               100,000 shares at                                 for consulting
                                        an exercise price                                 services
                                        of $1.00 (5)
-------------------------------------------------------------------------------------------------------------
</TABLE>





                                       23
<PAGE>   27
<TABLE>
<CAPTION>
             TITLE AND                                                                    CASH OR
             DESCRIPTION OF             AMOUNT OF                                         CONSIDERATION
DATE         SECURITIES                 SECURITIES               ISSUED TO                RECEIVED
-------------------------------------------------------------------------------------------------------------
<S>          <C>                        <C>                      <C>                      <C>
1/31/2000    Series E Preferred         Series E Preferred       Certain accredited       $450,000
             Stock and warrants         Stock and warrants       investors
             to purchase common         to purchase an
             stock                      aggregate of
                                        175,000 shares at
                                        an exercise price
                                        of $3.00
-------------------------------------------------------------------------------------------------------------
2/9/2000     Warrants to purchase       Warrant to purchase      Blake Capital            In consideration
             common stock               150,000 shares at        Partners, LLC            for financial
                                        an exercise price                                 services
                                        of $2.25
-------------------------------------------------------------------------------------------------------------
2/9/2000     Units consisting of        2,457,608 Units          Certain accredited       $6,165,878
             common stock and           consisting of 1          investors
             warrants to purchase       share of common
             common stock               stock and 1 warrant
                                        to purchase one
                                        share of common
                                        stock at an
                                        exercise price
                                        of $3.00
-------------------------------------------------------------------------------------------------------------
4/17/2000    Warrants to purchase       Warrants to purchase      Black Brook             In consideration
             common stock               550,000 shares at an      Capital LLC, and        for financial
                                        exercise price of         Sands Brothers &        services
                                        $1.625                    Co., Ltd
-------------------------------------------------------------------------------------------------------------
4/18/2000    Warrants to purchase       Warrant to purchase       Blake Capital           In connection
             common stock (BCP          250,000 shares at an      Partners, LLC           with certain
             Series)                    exercise price of                                 financing
                                        $2.00
-------------------------------------------------------------------------------------------------------------
4/26/2000    Warrants to purchase       Warrants to purchase      Maris Kott and          In consideration
             common stock               100,000 shares at an      Dara Podber             for financial
                                        exercise price of                                 services
                                        $1.625
-------------------------------------------------------------------------------------------------------------
5/2/2000     Series G Convertible       600,000 shares of         The Shaar Fund,         $4,000,000
             Preferred Stock            Series G Convertible      Ltd.
                                        Preferred Stock and a
                                        Warrant to purchase
                                        500,000 shares at
                                        exercise price of
                                        $2.51
-------------------------------------------------------------------------------------------------------------
5/15/2000    Warrants to purchase       Warrant to purchase       Fairview Partners       In consideration
             common stock               80,000 shares at an                               for financial
                                        exercise price of                                 services
                                        $2.00
-------------------------------------------------------------------------------------------------------------
6/5/2000     Common stock               800,000 shares            Tim McQuaid             As consideration
                                                                                          in a merger
                                                                                          transaction
-------------------------------------------------------------------------------------------------------------
6/13/2000    Common Stock               450,706 Shares            CraftClick.com          As consideration
                                                                                          for an investment
-------------------------------------------------------------------------------------------------------------
6/14/2000    Common stock, warrants     Common stock, warrants    Certain accredited      $2,700,000
             and certain adjustable     to purchase 300,000       investors
             warrants to purchase       shares at an exercise
             common stock               price of $1.00 and
                                        certain adjustable
                                        warrants to purchase
                                        common stock at a
                                        nominal exercise price
-------------------------------------------------------------------------------------------------------------
6/15/2000    Warrants to purchase       Warrants to purchase       J.P. Carey             In connection
             common stock               300,000 shares at an       Securities, Fiji       with certain
                                        exercise price of          Capital,               financing
                                        $1.00                      Metropolitan
                                                                   Capital Partners,
Inc
-------------------------------------------------------------------------------------------------------------
7/19/2000    Warrants to purchase       Warrants to purchase       Cam Birge              In consideration
             common stock               50,000 shares at an                               for financial
                                        exercise price of                                 services
                                        $0.75
-------------------------------------------------------------------------------------------------------------
7/26/2000    Warrants to purchase       Previously issued          Maris Kott and         In consideration
             common stock               warrants to purchase       Dara Podber            for financial
                                        100,000 shares at an                              services
                                        exercise price of
                                        $1.625 were repriced
                                        to $0.75 per share
-------------------------------------------------------------------------------------------------------------
</TABLE>




                                       24
<PAGE>   28
<TABLE>
<CAPTION>
             TITLE AND                                                                    CASH OR
             DESCRIPTION OF             AMOUNT OF                                         CONSIDERATION
DATE         SECURITIES                 SECURITIES               ISSUED TO                RECEIVED
-------------------------------------------------------------------------------------------------------------
<S>          <C>                        <C>                      <C>                      <C>
7/26/2000    Warrants to purchase       Warrants to purchase       J.P. Carey             In connection
             common stock               300,000 shares at an       Securities, Fiji       with certain
                                        exercise price of          Capital,               financial
                                        $1.00 repriced to          Metropolitan           arrangements
                                        purchase 200,000           Capital Partners,
                                        shares at an               Inc.
                                        exercise price of
                                        $0.75
-------------------------------------------------------------------------------------------------------------
7/28/2000    Warrants to purchase       Warrants to purchase       Andrew Green           In connection
             common stock               25,000 shares at an                               with certain
                                        exercise price of                                 financial
                                        $0.75                                             arrangements
-------------------------------------------------------------------------------------------------------------
8/2/2000     Common stock               300,000 shares             Phil Bane              Pursuant to a
                                                                                          Restricted Stock
                                                                                          Purchase
                                                                                          Agreement
-------------------------------------------------------------------------------------------------------------
8/15/2000    Common stock               60,000 Shares              Metropolitan           In consideration
                                                                   Capital Partners,      for financial
                                                                   Inc.                   services
-------------------------------------------------------------------------------------------------------------
8/18/2000    Warrants to purchase       Warrants to purchase       Certain accredited     In connection
             common stock               an aggregate of            investors              with an agreement
                                        2,000,000 shares at                               to immediately
                                        an exercise price of                              exercise
                                        $0.625                                            previously
                                                                                          outstanding
                                                                                          warrants
-------------------------------------------------------------------------------------------------------------
8/25/2000    Common stock               240,000 Shares             Wayne Mills            In consideration
                                                                                          of purchase of
                                                                                          Promissory Note
                                                                                          of Officer and
                                                                                          Director of the
                                                                                          Company
08/28/2000   Warrants to purchase       Warrants to purchase       Andrew Green           In connection
             common stock               25,000 shares at an                               with certain
                                        exercise price of                                 financing
                                        $0.75                                             arrangements
-------------------------------------------------------------------------------------------------------------
9/14/2000    Warrants to purchase       Warrants to purchase       Apache Bluff Corp.     In consideration
             common stock               200,000 shares at an                              for financial
                                        exercise price of                                 consulting
                                        $0.50                                             services
-------------------------------------------------------------------------------------------------------------
9/14 and     Warrants to purchase       Warrants to purchase       Certain accredited     In connection
9/15/2000    common stock               an aggregate of            investors              with an agreement
                                        618,626 shares                                    to immediately
                                        an exercise price of                              exercise
                                        $1.00                                             previously
                                                                                          outstanding
                                                                                          warrants
-------------------------------------------------------------------------------------------------------------
</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.

(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.


                                       25
<PAGE>   29
(3) As an additional incentive to exercise 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 for conversion
$200,000 debt and other financing services.

(4) Agreement to exchange entered into as of this date. Actual issuance occurred
subsequent to January 2, 2000.

(5) 50,000 shares vest only if company is sold in taxable event to shareholders.

       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.


















































                                       26
<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. During the
Company's third fiscal quarter ended October 1, 2000, management has entered
into a formal plan for the disposition of the restaurants resulting in this
filing being restated to reflect the restaurants as a discontinued operation in
the accompanying consolidated financial statements. 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.

       Future revenue and profits, if any, will depend upon various factors,
including the rapidly changing e-commerce community of the Internet and general
economic conditions. The Company's ongoing source of revenue is limited to
income from its Internet email services division. There can be no assurances the
Company will successfully implement its expansion plans. 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/A, the Company has incurred substantial operating losses to
date and, as of January 2, 2000, has a deficiency in working capital of
approximately $8.2 million, net of any restaurant assets reclassified to net
assets of discontinued operations. 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 finalized the sale of
this restaurant during April 2000.

       Net sales for the email service division were $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

                                       27
<PAGE>   31
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.

       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 $8,201,651 at January 2,
2000, compared to a deficit of $3,639,028 on January 3, 1999 (net of net assets
of discontinued operations). 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 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.


                                       28
<PAGE>   32
       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 2000 are described in the Consolidated
Financial Statements and Related Notes.

       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. 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, we will be unable to continue
as a going concern.





















































                                       29
<PAGE>   33
ITEM 7.  FINANCIAL STATEMENTS

                                POPMAIL.COM, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                       Page
<S>                                                                    <C>
Report of Independent Certified Public Accountants  -
   Grant Thornton LLP.................................................. F-1

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

Financial Statements - Restated

   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
</TABLE>





















<PAGE>   34
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 (except for Note M,
 as to which the date is December 18, 2000)


                                       F-1



<PAGE>   35





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>   36



                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
                      RESTATED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>



ASSETS                                                          January 2,           January 3,
                                                                  2000                 1999
                                                             ------------         -------------
<S>                                                         <C>                   <C>
Current assets
  Cash and equivalents                                       $  1,136,137          $    106,247
  Accounts receivable                                             270,557                     -
  Other current assets                                            450,016               118,233
                                                             ------------          ------------
    Total current assets                                        1,856,710               224,480


Property and equipment, at cost
  Leasehold improvements                                                -                45,069
  Equipment and fixtures                                        1,051,900                81,220
                                                             ------------          ------------
                                                                1,051,900               126,289
Less accumulated depreciation
  and amortization                                                157,021                15,970
                                                             ------------          ------------
                                                                  894,879               110,319

Net assets of discontinued operations                           9,601,351             8,298,599

Goodwill, net of accumulated
  amortization of $3,924,232                                   36,277,346                     -

Other assets, net                                                   7,312               139,787
                                                             ------------          ------------
                                                             $ 48,637,598          $  8,773,185
                                                             ============          ============
</TABLE>



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


                                       F-3


<PAGE>   37







                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
                      RESTATED 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
  Accounts payable                                                  1,329,223               243,877
  Due to affiliates                                                   120,000               100,000
  Accrued compensation                                                415,896               379,466
  Other accrued expenses                                              695,309                61,595
                                                                 ------------          ------------
    Total current liabilities                                      10,058,363             2,934,938

Long-term obligations                                               1,321,643                     -
                                                                 ------------          ------------
      Total liabilities                                            11,380,006             2,934,938

Commitments and contingencies                                               -                     -

Shareholders' equity
  Common stock, $.01 par value, 100,000,000 shares
    authorized; 2,469,587 and 800,009 shares
    issued and outstanding                                             24,696                 8,000
  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                                       75,123,422            20,353,141
  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
                                                                 ------------          ------------
                                                                 $ 48,637,598          $  8,773,185
                                                                 ============          ============
</TABLE>


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


                                       F-4

<PAGE>   38




                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
                 RESTATED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                           Years ended
                                                              -------------------------------------
                                                                 January 2,              January 3,
                                                                   2000                    1999
                                                              -------------           -------------
<S>                                                           <C>                     <C>
Revenues
  Internet marketing services, net                            $     106,744           $           -

Costs and expenses
  General, administrative and development expenses                5,011,736               3,081,213
  Amortization of goodwill                                        3,924,232                       -
                                                              -------------           -------------
    Total costs and expenses                                      8,935,968               3,081,213
                                                              -------------           -------------
    Loss from operations                                         (8,829,224)             (3,081,213)

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 from continuing operations                             (18,773,330)             (3,030,839)

Loss from operations of discontinued restaurant division         (1,960,841)             (3,675,743)
                                                              -------------           -------------
  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 loss per common share:
  Continuing operations                                       $      (18.57)          $       (3.79)
  Discontinued operations                                             (1.94)                  (4.59)
                                                              -------------           -------------
Net loss                                                      $      (20.51)          $       (8.38)
                                                              =============           =============
Basic and diluted net loss attributable to common
  shareholders per common share                               $      (23.99)          $       (8.38)
                                                              =============           =============


Basic and diluted weighted average outstanding shares             1,010,845                 800,013
                                                              =============           =============
</TABLE>




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

                                       F-5


<PAGE>   39





                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<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>
Balance at December 28, 1997    800,019    $ 8,000       --     $     --  $ 20,224,951  $  (400,000)  $ (7,416,312)   $ 12,416,639
   Issuance of warrants to
     guarantors                      --         --       --           --       128,490           --             --         128,490
   Cancellation of share
     grant                          (10)        --       --           --          (300)          --             --            (300)
   Net loss                          --         --       --           --            --           --     (6,706,582)     (6,706,582)
                              ---------   --------  -------   ----------  ------------   ----------   ------------    ------------
Balance at January 3, 1999      800,009      8,000       --           --    20,353,141     (400,000)   (14,122,894)      5,838,247

   Issuance of common stock
     in lieu of compensation     28,001        280       --           --       197,428           --             --         197,708
   Issuance of common stock
     for services                35,194        352       --           --       629,506           --             --         629,858
   Warrants issued for
     services                        --         --       --           --     1,301,500           --             --       1,301,500
   Issuance of common stock      18,000        180       --           --       199,820           --             --         200,000
   Common stock issued for
     conversion of
     promissory notes
     payable and payment of
     interest                    19,715        197       --           --       404,561           --             --         404,758
   Stock option conversions      11,900        119       --           --        89,130           --             --          89,249
   Exercise of warrants         225,000      2,250       --           --     2,935,250           --             --       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>   40


                                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     275,000      2,750       --           --    6,279,711            --            --       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                  101,600      1,016   (2,000)  (2,000,000)   1,998,984            --            --              --
   Conversion of Class B
     preferred                  863,390      8,634   (2,024) (21,589,755)  21,581,121            --            --              --
   Conversion of Class C
     preferred                   91,778        918   (1,395)  (1,395,000)   1,394,082            --            --              --
   Record non-cash
     preferred stock deemed
     dividend                        --         --       --   (3,338,461)   3,338,461            --            --              --
   Record preferred stock
     deemed dividend                 --         --       --    3,338,461           --            --    (3,338,461)             --
   Dividends paid or
     accrued on preferred
     stock                           --         --       --      176,000           --            --      (176,000)             --
   Warrants issued to
     guarantors of notes
     payable                         --         --       --           --    1,232,833            --            --       1,232,833
   Repricing of warrants
     related to the PopMail
     acquisition                     --         --       --           --    4,539,311            --            --       4,539,311
   Warrants issued for
     private placement
     costs in connection
     with Series A, C and D
     issuances                       --         --       --           --      469,500            --            --         469,500
   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    2,469,587   $ 24,696  177,805   $3,331,000 $ 75,123,422  $ (2,850,000) $(38,371,526)   $ 37,257,592
                             ==========   ========  =======   ==========  ===========  ============   ===========     ===========
</TABLE>




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

                                       F-7

<PAGE>   41



                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
                 RESTATED 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:
      Depreciation and amortization                                       157,025                14,311
      Amortization of goodwill                                          3,933,411                     -
      Amortization of warrant discount                                    972,333                59,302
      Loss on disposal of property and equipment                           51,615                     -
      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               128,490
      Repricing of warrants issued in the popmail acquisition           4,539,311                     -
      Discontinued operations                                             961,143             3,586,474
      Other                                                               567,177                     -
      Changes in operating assets and liabilities, net of
        effect of business acquisitions:
          Accounts receivable                                             341,080                     -
          Other current assets                                           (307,340)               16,500
          Other assets                                                    176,387              (120,493)
          Accounts payable                                                557,893              (209,755)
          Accrued expenses                                               (547,679)               (9,796)
                                                                      -----------            ----------

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

Investing activities:
  Purchases of property and equipment, net                                (98,419)              (28,469)
  Issuance of note receivable to affiliate                             (2,450,000)                    -
  Discontinued operations                                              (4,027,388)           (9,341,105)
                                                                      -----------            ----------

             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>   42



                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
           RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


<TABLE>
<CAPTION>


                                                                                 Years ended
                                                                       ----------------------------------
                                                                         January 2,            January 3,
                                                                           2000                  1999
                                                                       -----------           ------------
<S>                                                                   <C>                   <C>
Financing activities:

  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             2,000,000
  Payments on long-term debt                                                    -              (980,889)
  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)
  Discontinued operations                                               1,763,493             2,576,385
                                                                       ----------            ----------

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

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

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

Cash and 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>   43



                                POPMAIL.COM, INC.
                          (FORMERLY CAFE ODYSSEY, INC.)
           RESTATED 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>   44



                                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 email 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.

       During the fiscal quarter ended October 1, 2000, the Company developed a
formal plan for the divestiture of the restaurant division. The accompanying
consolidated financial statements have thus been restated to reflect the
restaurant division as a discontinued operation. 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 finalized the sale of this
restaurant in April 2000.

       On October 12, 2000, the Company implemented a 10-for-1 reverse stock
split. Unless otherwise noted, all references within these financial statements
have been restated to reflect the Company's post-split common stock numbers.

       The email services division provides permission marketing and
affinity-based email 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 EQUIVALENTS

       The Company includes as cash and 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.

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

                                      F-11

<PAGE>   45


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.

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
for continuing operations was approximately $5,000 and $55,000 during 1999 and
1998.

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 stock outstanding during the
year. The impact of common stock equivalents has been excluded from the
computation of weighted average common stock 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 (on a pre-split
basis) of the Company's common stock valued at $21,589,755; the issuance of
4,407,098 (on a pre-split basis) 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 (on a pre-split basis) 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

                                      F-12

<PAGE>   46
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 (on a
pre-split basis) of the Company's common stock valued at $6,282,461 and $150,000
in closing 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 and has been restated to reflect only the historical continuing
operations. 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                                   $  1,030,000   $     49,000
Net loss from continuing operations
  attributable to common shareholders           (33,578,000)   (16,737,000)
Net loss per share attributable
  to common shareholders                       $     (16.35)  $     (10.06)
Weighted average shares outstanding               2,054,000      1,663,000
</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  -  NOTES PAYABLE

       Notes payable consists of the following:

<TABLE>
<CAPTION>

                                              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 (on a pre-split basis) 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 (on a pre-split basis) five-year warrants each to two of
the directors in November 1998, and 400,000 (on a pre-

                                      F-13

<PAGE>   47

split basis) 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 was
due on demand. This credit facility provided 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 (on a pre-split
basis) five-year warrants at an exercise price of $0.75 per share. Three
payments of $1,000,000 each were paid in February, March and July 2000 against
this line of credit.

(b) In March 1999, the Company entered into an $825,000 revolving loan facility
with a financial institution collateralized by substantially all of the
Company's assets. In addition, the loan was guaranteed by five individuals. In
consideration of these guarantees, the Company issued 500,000 (on a pre-split
basis) 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 was due on demand.
This credit facility provided for monthly payments of interest accrued on the
outstanding unpaid principal balance at a rate equal to the prime rate, (8.5% as
of January 2, 2000). The loan was paid in March 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 was payable in monthly payments with interest at the prime
rate (8.5% at January 2, 2000). The principal was due on demand, and paid in
full in January 2000. The loan was uncollateralized.

       In December 1999, the Company entered into a note payable for $200,000.
The note was payable in monthly payments for interest at 15%. The principal was
due on demand, and paid in full in March 2000. In connection with the loan the
Company issued 80,000 (on a pre-split basis) five-year warrants with an exercise
price of $1.25 to the lender. The fair value of these warrants were recorded as
a discount and fully amortized over the period outstanding.

       In December 1999, the Company entered into a note payable for $325,000.
The note was payable in monthly payments for interest at 15%. The principal was
due on demand and paid in full in January 2000. In connection with the loan the
Company issued 89,375 (on a pre-split basis) five-year warrants with an exercise
price of $2.00 to the lender. The fair value of these warrants were recorded as
a discount and fully amortized over the period outstanding. In addition, the
Company issued 19,500 (on a pre-split basis) 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 (on a pre-split basis)
five-year warrants with an exercise price of $1.34 to the lender. The fair value
of these warrants were recorded as a discount and fully amortized over the
period outstanding. The loan was paid in full in March 2000.

NOTE E  -  LONG-TERM OBLIGATIONS

       In November 1999, the Company executed a senior convertible note for
$2,000,000 which matured in November 2001 and bore interest at 4%. The note and
any unpaid interest was 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 (on a pre-split basis) five-year warrants with an
exercise price of $1.625 to the lenders and a placement agent. The fair value of
these warrants were recorded as a discount and fully amortized over the period
outstanding. The entire $2,000,000 note and interest were converted into
2,006,668 shares (on a pre-split basis) of common stock during the first three
quarters of fiscal 2000.

                                      F-14

<PAGE>   48

NOTE F  -  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 matured in August 2000, and bore interest at prime plus 2%
(effective interest rate of 10.5% as of January 2, 2000). In August 2000, a
principal payment of $500,000 was made and the Company received a 30-day
extension on the balance. The Company is currently finalizing an extension of up
to one year (of monthly principle and interest payments) on the balance. The
remaining balance of the note and any unpaid interest is convertible into the
Company's common stock at a conversion price of $2.50 (pre-split price). In
connection with this note, the Company issued 500,000 (on a pre-split basis)
five-year warrants with an exercise price of $2.50 (pre-split price) to the
lender. The fair value of these warrants were recorded as a discount and fully
amortized over the original maturity 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 (on a pre-split basis) 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 (on a pre-split basis) of the
Company's common stock.

NOTE G  -  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 (on a pre-split basis) 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 101,600
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 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 863,390 shares of common stock and
warrants to purchase 4,407,098 shares (on a pre-split basis) of the Company's
common stock at $3.00 per share. All Series B shares issued in this transaction
were converted in 1999.

                                      F-15

<PAGE>   49

       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 (on a pre-split basis) 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 91,778 shares of common stock. In
November 1999, warrants for 200,000 (on a pre-split basis) 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 (on a pre-split basis) 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 (on a pre-split basis) of common stock at
$3.00 per share. Each Series E share is convertible into one share (on a
pre-split basis) 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 with the Series A, C, and D shares, warrants
for 450,000 shares (on a pre-split basis) 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         296,495              $52.20
        Granted                           52,000                7.50
        Canceled                         (19,920)              65.00
                                      ----------              ------

Outstanding at January 3, 1999           328,575               55.80
        Granted                        1,512,097               13.80
        Exercised                       (225,000)              13.10
                                      ----------              ------
Outstanding at January 2, 2000         1,615,672              $22.40
                                      ==========              ======
</TABLE>


                                      F-16

<PAGE>   50

         Outstanding warrants at January 2, 2000 are as follows:

<TABLE>
<CAPTION>

                 Exercise price
      ---------------------------------------
                                   Weighted                Number
          Range                     average               of shares
      -------------               -----------            -----------

<S>                               <C>                    <C>
      $ 0.00 - $10.00               $ 6.90                 840,710
       12.50 -  25.00                17.80                 338,887
       30.00 -  65.00                55.80                 436,075
                                                          ---------
                                    $22.40                1,615,672
                                    ======                =========
</TABLE>

Stock Options

       The Company maintains two stock option plans (the "Plans"), the 1997
Stock Option and Compensation Plan, which has 125,000 common stock reserved for
issuance and the 1998 Director Option Plan, which has 25,000 common stock
reserved for issuance. At January 2, 2000, the Plans have issued 42,933 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.

       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           70,767               $31.10
  Granted/repriced                         84,617                11.60
  Forfeited/repriced                      (73,467)               31.00
                                         --------               ------

Outstanding at January 3, 1999             81,917                11.10
  Granted                                 148,250                15.60
  Exercised                               (11,900)                7.50
  Forfeited/canceled                      (25,334)                7.50
                                         --------               ------
Outstanding at January 2, 2000            192,933               $13.70
                                         ========               ======

</TABLE>






















                                      F-17


<PAGE>   51

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


<TABLE>
<CAPTION>
                  Options Outstanding                                            Options Exercisable
    -------------------------------------------------      --------------------------------------------------------------
            Exercise price
    ------------------------------                           Weighted average
                          Weighted           Number             remaining                Weighted               Number
         Range             average          of shares        contractual life             average               of shares
    ---------------       --------          ---------       -----------------            --------               ---------

<S>          <C>          <C>               <C>             <C>              <S>         <C>                     <C>

    $ 7.50 - $10.00        $ 8.50              91,433           8.32 years                 $ 8.70                  77,433
     17.80 -  30.00         18.40             101,500           9.76 years                  20.60                  13,000
                                             --------                                    --------               ---------
                           $13.70             192,933                                      $10.40                  90,433
                            =====            ========                                    ========               =========
</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 (on a pre-split basis) 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, 87,433
outstanding options became fully vested in accordance with the change in control
provisions of the Plans.

       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                           (20.51)               (8.38)
        Pro forma                             (19.70)               (8.60)
</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 or 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 H  -  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 I  -  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

                                      F-18

<PAGE>   52

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.

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

<TABLE>
<CAPTION>


                    <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 J  -  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 were paid 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
122,500 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.

NOTE K  -  BUSINESS SEGMENTS

       The Company operates in two reportable segments, restaurant operations
(which has been reclassified to discontinued operations) and email marketing
services. The email marketing services segment began in 1999 with the Popmail
merger. The

                                      F-19

<PAGE>   53

Company's general, administrative and development expenses are included in the
email segment with the exception of those expenses directly attributable to the
restaurant division. The information relating to these segments for 1999 is as
follows:

<TABLE>
<CAPTION>


                                   Restaurant        email
                                   operations      marketing         Total
                                   ----------     ----------      ----------

<S>                               <C>            <C>            <C>
Net revenues                      $12,166,454    $   106,744    $ 12,273,198
Operating loss                     (1,960,841)    (8,829,224)    (10,790,065)
Total assets                       14,459,117     39,036,247      53,495,364
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 L  -  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, repricings, 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 M  -  SUBSEQUENT EVENTS


RECLASSIFICATION OF RESTAURANT DIVISION TO DISCONTINUED OPERATIONS

       During the third quarter ended October 1, 2000, the Company developed a
formal plan for the divestiture of the restaurant division. The accompanying
consolidated financial statements have thus been restated to reflect the
restaurant division as discontinued operations. The net assets of the restaurant
division have been reported as net assets of discontinued operations; the net
operating results of the restaurant division have been reported as loss from
operations of discontinued restaurant division; and the net cash flows of the
restaurant division have been reported as discontinued operations.




                                      F-20

<PAGE>   54

       Summarized financial information for the discontinued operations are as
follows:

<TABLE>
<CAPTION>

                                    January 2, 2000         January 3, 1999

<S>                                 <C>                    <C>
Current assets                         $    150,385           $     495,473
Property and equipment, net              13,971,925              11,589,230
Other assets                                336,809                 380,700
                                       ------------            ------------
Total assets                             14,459,119              12,465,403
Current liabilities                         645,211               1,456,067
Long-term liabilities                     4,212,557               2,710,737
                                       ------------            ------------
Total liabilities                         4,857,768               4,166,804
                                       ------------            ------------
Net assets of discontinued
  operations                           $  9,601,351            $  8,298,599
                                       ============            ============

<CAPTION>


For the years ended                 January 2, 2000         January 3, 1999
<S>                                 <C>                   <C>
Restaurant revenues                    $ 12,166,144            $  6,932,890
Total restaurant expenses                14,126,985              10,608,633
                                       ------------            ------------
Loss from discontinued operations      $ (1,960,841)           $ (3,675,743)
                                       ============            ============
</TABLE>



10-FOR-1 REVERSE STOCK SPLIT

       On October 12, 2000, the Company implemented a 10-for-1 reverse stock
split. Unless otherwise noted, all references within these financial statements
have been restated to reflect the Company's post-split common stock numbers.


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 (on a pre-split basis) of the Company's common stock and
one five-year warrant to purchase one share (on a pre-split basis) of the
Company's common stock with an exercise price of $2.00 (pre-split price). As of
March 24, 2000, the Company has issued all 2,350,000 units related to this
placement.

       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 (on a pre-split basis) of the Company's common stock and
one five-year warrant to purchase one share (on a pre-split basis) of the
Company's common stock with an exercise price of $3.00 (pre-split price). 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.

       In April 2000, the Board authorized the private placement of up to
700,000 shares of Series G 10% convertible preferred stock. As of May 15, 2000,
the Company has issued 600,000 shares at a price of $10 per share. The issuance
included an original discount of $1,500,000 and investment banking fees and
expenses of $500,000 relating to such share issues, resulting in net proceeds of
approximately $4,000,000. In addition, the Company issued warrants for the
purchase of 500,000

                                      F-21

<PAGE>   55

shares (on a pre-split basis) of common stock at $2.51 per share. The Series G
shares are convertible into the Company's common stock at a variable price
ranging from 97% to 91% of the market value at the time of conversion, subject
to certain holding periods as defined in the agreement.

       Also in April 2000, the Company advanced the sum of $245,000 to a
partnership controlled by an individual who is a significant shareholder,
director and executive officer of the Company. Under the terms of the note
receivable issued by the partnership to the Company, the entire principal plus
interest accruing at the rate of 5.74% per annum is due to the Company in March
2002. The partnership has pledged 12,250 shares of the Company's common stock as
security for the note. Proceeds of the advance were used to purchase additional
shares of the Company's stock issued in connection with the ROI acquisition.



BUSINESS ACQUISITIONS

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 25.66 shares (on a pre-split
basis). Assuming conversion of all potentially issuable shares, they would
convert into approximately 10,725,000 shares (on a pre-split basis) 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 resulted 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.

       In December 2000, the Company sold the assets of its digital publishing
company IZ.com to the current IZ.com management team. The Company will
accelerate amortization of all remaining goodwill related to IZ.com
(approximately $36,000,000) during the fourth quarter of fiscal 2000.

Fan Asylum

       On June 14, 2000, the Company purchased 100% of the common stock of Fan
Asylum from its sole shareholder ("the Seller") in exchange for up to 3.6
million shares of the Company's common stock ("the Purchase Price Shares"),
valued at $9,000,000 per the agreement, subject to adjustments based on certain
earn out and reset provisions. The initial shares are subject to a put right
pursuant to which Seller has a one-time right to "put" the initial shares to the
Company during the period between January 2, 2001 and January 31, 2001.

       In September 2000, the Company renegotiated the terms of the Fan Asylum
acquisition and agreed to (i) accelerate the time period in which the Seller
could put the initial shares to the Company, (ii) remove the earn-out provisions
as a condition of Seller receiving the earn-out shares, and (iii) immediately
retire a $200,000 debt obligation that was assumed in conjunction with the Fan
Asylum acquisition. In consideration of the forgoing, the Seller agreed to
complete a $400,000 private common stock placement with the Company at $0.46 per
share, resulting in net proceeds to the Company, in October 2000, of
approximately $186,000 after the aforementioned $200,000 retirement of debt was
completed.


                                      F-22
<PAGE>   56

NOTES PAYABLE

       In July 2000, the remaining $1,000,000 outstanding on the short-term
revolving line of credit was paid.

LONG-TERM OBLIGATIONS

       During the first three quarters of fiscal 2000, the entire $2,000,000
senior convertible note and accrued interest were converted into 2,006,669
shares (on a pre-split basis) of common stock.

SECURED PROMISSORY NOTE

       In October 2000, the Company entered into a secured promissory note
payable for $600,000. The Company received net proceeds of $450,000 after
discount and finders fees. The note was payable within 30 days and is
collateralized by specific computer equipment. In connection with the loan, the
Company issued a 200,000 share five-year warrant with an exercise price of
$0.375 to the lender. As of December 8, 2000, the Company is in payment default
and may be required to pay additional late payment fees. The Company is
re-negotiating the terms of this note, and no assurance can be given that any
reductions will be attained.

WARRANTS

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

       In April 2000, the Company re-priced 250,000 (on a pre-split basis)
previously issued $5.00 per share warrants to $2.00 per share, to induce a
warrant holder to exercise warrants previously issued.

       During the quarter ended October 1, 2000, the Company re-priced
previously issued pre-split warrants with exercise prices ranging from $2.00 to
$3.00 per share to $0.625 and $0.75 per share to induce warrant holders to
exercise warrants previously issued and generally issued replacement warrants
with an exercise price of $0.625 to $1.00 per share for each original warrant
exercised. Cash proceeds of approximately $2,083,000 were raised from the
exercise of such warrants.

COMPUTER HARDWARE ADDITION

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

RESTAURANT MANAGEMENT AGREEMENT

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

                                      F-23

<PAGE>   57

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

                                      F-24
<PAGE>   58




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 approved 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)).





























                                         30

<PAGE>   59

                                    PART III


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

       The information included in the Company's definitive proxy statement for
the 2000 Annual Meeting of Shareholders under the caption "Election of
Directors" is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

        The information included in the Company's definitive proxy statement for
the 2000 Annual Meeting of Shareholders under the caption "Election of
Directors" is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The information included in the Company's definitive proxy statement for
the 2000 Annual Meeting of Shareholders under the caption "Election of
Directors" is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       The information included in the Company's definitive proxy statement for
the 2000 Annual Meeting of Shareholders under the caption "Election of
Directors" is incorporated herein by reference.


































                                         31

<PAGE>   60

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. (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).
                                         31
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 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
         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).


                                         32

<PAGE>   61

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).

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).


                                         33

<PAGE>   62

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. 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)).


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<PAGE>   63

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
         herein by 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).

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).

                                         35

<PAGE>   64

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.

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).



                                         36

<PAGE>   65

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.

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

* Incorporated herein by reference to the like numbered Exhibit to the Company's
  Annual Report on Form 10-KSB for the fiscal year ended January 2, 2000.

                                         37

<PAGE>   66



(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.














































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<PAGE>   67

                                   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:  December 21, 2000      By: /s/ Gary Schneider
                                 -------------------------------------
                                       Gary Schneider
                                       Chief Executive Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on December 21, 2000 by the following persons on
behalf of the Registrant, in the capacities indicated.


SIGNATURE                               TITLE



/s/ Gary Schneider                      Chief Executive Officer
----------------------------------      (Principal Executive Officer)
Gary Schneider



/s/ Stephen J. Spohn                    Chief Financial Officer
----------------------------------      (Principal Financial and Accounting
Stephen J. Spohn                         Officer)



/s/ Thomas W. Orr                       Director
----------------------------------
Thomas W. Orr


                                        Director
----------------------------------
Henry Fong





















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