<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 16, 1999
PopMail.com, inc.
(Exact name of registrant as specified in its charter)
Minnesota 0-23243 31-1487885
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4801 West 81st Street, Suite 112, Bloomington, MN 55437
(Address of principal executive offices) (Zip Code)
(Former Name or Former Address, if Changed Since Last Report)
Registrant's telephone number, including area code: (612) 837-9917
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Popmail.com, Inc.
We have audited the accompanying balance sheet of Popmail.com, Inc. (a
Delaware corporation and a development stage company) as of December 31, 1998
and 1997, and the related statements of income, stockholders' deficit and cash
flows for the year ended December 31, 1998, the month ended December 31, 1997
and for the period from December 2, 1997 (inception) to December 31, 1998. 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 audits 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 and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Popmail.com, Inc. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the year ended December 31, 1998, the month ended December 31, 1997
and for the period from December 2, 1997 (inception) to December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Barry Morgan & Company, P.C.
Dallas, Texas
June 1, 1999
<PAGE> 3
POPMAIL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------- August 31,
ASSETS 1997 1998 1999
-------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ -- $ 25,253 $ 95,021
Accounts receivable - trade 1,000 20,681 163,463
Accounts receivable - affiliate - net of
reserve of $600,000 -- -- --
Prepaid expenses -- 3,250 13,412
-------- ---------- ----------
Total current assets 1,000 49,184 271,896
PROPERTY AND EQUIPMENT
Computer hardware 243,063 723,395 724,248
Computer software 99,856 184,718 184,719
Furniture and fixtures 3,997 52,376 51,127
-------- ---------- ----------
346,916 960,489 960,094
Less accumulated depreciation 774 131,980 259,791
-------- ---------- ----------
346,142 828,509 700,303
OTHER ASSETS
Domain names - net 52,566 25,525 38,715
Organization costs - net 6,523 5,197 5,197
Deposits -- 11,412 --
-------- ---------- ----------
59,089 42,134 43,912
-------- ---------- ----------
$406,231 $ 919,827 $1,016,111
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
LIABILITIES AND December 31,
STOCKHOLDERS' DEFICIT -------------------------- August 31,
1997 1998 1999
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ -- $ 331,283 $ 211,729
Accrued expenses -- 69,027 --
Note payable - affiliate 554,087 3,154,259 5,019,387
----------- ----------- -----------
Total current liabilities 554,087 3,554,569 5,231,116
COMMITMENTS AND CONTINGENCIES -- -- --
STOCKHOLDERS' DEFICIT
Class A common stock, $.01 par value, 1,000
shares authorized, 10 shares issued and
outstanding
-- -- --
Class B common stock, $.01 par value,
999,000 shares authorized; 990, 1,990, and
1,990 shares issued and outstanding at
December 31, 1997, December 31, 1998 and
August 31, 1999
10 20 20
Additional paid-in capital 990 1,980 251,980
Retained deficit, including deficit accumulated through
the development stage of $2,593,334
(148,856) (2,636,742) (4,467,005)
----------- ----------- -----------
(147,856) (2,634,742) (4,215,005)
----------- ----------- -----------
$ 406,231 $ 919,827 $ 1,016,111
=========== =========== ===========
</TABLE>
<PAGE> 5
POPMAIL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
December 2,
1997 December 2,
(inception) to Eight months 1997
Years ended December 31, December 31, ended August 31, (inception) to
-------------------------- -------------------------- August 31,
1997 1998 1998 1998 1999 1999
----------- ----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues $ -- $ 49,235 $ 49,235 $ 1,024 $ 12,518 $ 61,753
Selling, general and administrative 17,134 1,953,345 1,970,479 956,995 1,673,551 3,644,030
Research and development 131,722 378,464 510,186 -- -- 510,186
----------- ----------- ----------- ----------- ----------- -----------
148,856 2,331,809 2,480,665 956,995 1,673,551 4,154,216
----------- ----------- ----------- ----------- ----------- -----------
Operating loss (148,856) (2,282,574) (2,431,430) (955,971) (1,661,033) (4,092,463)
Interest expense -- (161,904) (161,904) (100,000) (169,230) (331,134)
----------- ----------- ----------- ----------- ----------- -----------
Net loss $ (148,856) $(2,444,478) $(2,593,334) $(1,055,971) $(1,830,263) $(4,423,597)
=========== =========== =========== =========== =========== ===========
Loss per share $ (148.86) $ (1,923.27) $ (1,055.97) $ (915.13)
=========== =========== =========== ===========
Weighted average shares outstanding 1,000 1,271 1,000 2,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
POPMAIL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM DECEMBER 2, 1997 (INCEPTION)
THROUGH AUGUST 31, 1999
<TABLE>
<CAPTION>
Common A Common B
--------------- -------------- Additional
Shares Amount Shares Amount capital Deficit Total
------ ------ ------ ------ --------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 2, 1997 -- $ -- -- $10 $ -- $ -- $ --
Stock issue 10 -- 990 10 990 -- 1,000
Net loss -- -- -- -- -- (148,856) (148,856)
-- -------- ----- --- -------- ----------- -----------
Balance at December 31, 1997 10 -- 990 10 990 (148,856) (147,856)
Stock issue -- -- 1,000 10 990 -- 1,000
Distribution -- -- -- -- -- (43,408) (43,408)
Net loss -- -- -- -- -- (2,444,478) (2,444,478)
-- -------- ----- --- -------- ----------- -----------
Balance at December 31, 1998 10 -- 1,990 20 1,980 (2,636,742) (2,634,742)
Contributions by shareholder
(unaudited) -- -- -- -- 250,000 -- 250,000
Net loss (unaudited) -- -- -- -- -- (1,830,263) (1,830,263)
-- -------- ----- --- -------- ----------- -----------
Balance at August 31, 1999
(unaudited) 10 $ -- 1,990 $20 $251,980 $ 4,467,005 $ 4,215,005
== ======== ===== === ======== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
POPMAIL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 2,
1997
Years ended December 31, (inception) to
------------------------ December 31,
1997 1998 1998
--------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(148,856) $(2,444,478) $(2,593,334)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 11,398 190,025 201,423
(Increase) decrease in:
Accounts receivable -- (18,681) (18,681)
Prepaid expenses -- (3,250) (3,250)
Other assets (69,713) (85,272) (154,985)
Increase (decrease) in:
Accounts payable -- 331,283 331,283
Accrued expenses -- 69,027 69,027
--------- ----------- -----------
Net cash used by operating activities (207,171) (1,961,346) (2,168,517)
Cash flows from investing activities:
Purchase of property and equipment (346,916) (613,573) (960,489)
--------- ----------- -----------
Net cash used by investing activities (346,916) (613,573) (960,489)
Cash flows from financing activities:
Proceeds from notes payable - affiliate 554,087 3,150,172 3,704,259
Payments on note payable - affiliate -- (550,000) (550,000)
--------- ----------- -----------
Net cash provided by financing activities 554,087 2,600,172 3,154,259
Net increase in cash -- 25,253 25,253
Cash at beginning of period -- -- --
--------- ----------- -----------
Cash at end of period $ -- $ 25,253 $ 25,253
========= =========== ===========
Supplemental disclosures
Noncash distributions to stockholders $ -- $ 43,408 $ 43,408
=========== =========== ===========
Noncash stock subscriptions $ 1,000 $ 1,000 $ 2,000
=========== =========== ===========
<CAPTION>
December 2,
Eight months 1997
ended August 31, (inception) to
-------------------------- August 31,
1998 1999 1999
----------- ----------- --------------
<S> <C> <C> <C>
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities:
Net loss $(1,055,971) $(1,830,263) $(4,423,597)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 87,000 127,811 329,234
(Increase) decrease in:
Accounts receivable (3,266) (142,782) (161,463)
Prepaid expenses -- (10,162) (13,412)
Other assets (262,736) (1,778) (156,763)
Increase (decrease) in:
Accounts payable 112,101 (119,554) 211,729
Accrued expenses 7,500 (69,027) --
----------- ----------- -----------
Net cash used by operating activities (1,115,372) (2,045,755) (4,214,272)
Cash flows from investing activities:
Purchase of property and equipment (363,416) -- (960,489)
Proceeds from sale of property and equipment -- 395 395
----------- ----------- -----------
Net cash provided by (used by)
investing activities (363,416) 395 (960,094)
Cash flows from financing activities:
Proceeds from notes payable - affiliate 1,478,788 1,865,128 5,569,387
Payments on note payable - affiliate -- -- (550,000)
Contributions by stockholders -- 250,000 250,000
----------- ----------- -----------
Net cash provided by financing activities 1,478,788 2,115,128 5,269,387
Net increase in cash -- 69,768 95,021
Cash at beginning of period -- 25,253 --
----------- ----------- -----------
Cash at end of period $ -- $ 95,021 $ 95,021
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
POPMAIL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statements as of August 31, 1999, for the eight months ended August
31, 1999 and 1998, and for the period from December 2, 1997 (inception) to
August 31, 1999 are unaudited, but in the opinion of management include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation thereof. The results of operations for the eight months
ended August 31, 1999 and 1998 are not necessarily indicative of the results
for the full year.
Nature of Business
Popmail.com, Inc. (the "Company"), a Delaware Corporation, was incorporated
on December 2, 1997. The Company has devoted substantially all of its
resources from inception to present to developing and implementing web-based
e-mail messaging systems for the radio industry. The Company substantially
completed developing its e-mail system in June 1998 and started its first
implementation in July 1998. To date the Company has approximately 550 radio
stations under contract and has implemented its system in approximately 190
stations.
The e-mail messaging systems "Popmail" was developed in association with
equitymedia.com, an affiliate. Equitymedia.com is the owner of the entire
right, title and interest in and to all programs, applications and computer
codes, including but not limited to all source and object codes, which relate
to or are incorporated in "Popmail". (See note F).
As of December 31, 1998, the Company had not received any revenue from this
service.
Cash Equivalents
For the purpose of the statement of cash flows, liquid investments with a
maturity of 90 days or less are treated as cash equivalents.
Income Taxes
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be an S corporation. In lieu of corporation income
taxes, the shareholders of an S corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision for federal
income taxes has been included in the accompanying financial statements.
Property, Equipment and Depreciation
Property and equipment are stated at cost less accumulated depreciation.
Depreciation of property and equipment is being provided for by the
straight-line method over an estimated useful life of five years. Domain
names are amortized over a life of two years. Organization costs are
amortized over a five year period.
<PAGE> 9
POPMAIL.COM, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE A - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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 may differ from those estimates.
Research and Development
Research and development costs are charged to the statement of operations as
incurred. Statement of Financial Accounting Standards Board No. 86
"Accounting for the Costs of Computer Software to be Sold. Leased or
Otherwise Marketed", requires capitalization of certain software development
costs subsequent to establishment of technological feasibility.
Based on the Company's product development process, technological feasibility
is established on completion of a working model. Costs incurred by the
Company between completion of the working model and the point at which the
products are ready for general release have been insignificant. Therefore,
all research and development costs have been expensed.
Concentrations of Credit Rick
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash investments and receivables. The
Company places its cash investments with financial institutions and limits
the amount of credit exposure to any one financial institution. The Company
to date has not generated significant receivables from trade customers.
Fair Value
The carrying amounts in the balance sheets for cash, receivables, and notes
payable approximate the respective fair values due to the short maturities of
those instruments.
Loss Per Share
The computation of loss per share is based on the weighted average number of
outstanding common shares during the period.
<PAGE> 10
POPMAIL.COM, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE B - NOTE PAYABLE - AFFILIATE
Note payable to affiliate is an 8% demand note payable to an entity
controlled by the Company's controlling shareholder. (See note D).
NOTE C - LEASE COMMITMENTS
The Company conducts its operations in leased facilities. Rental expense was
$46,086 for the year ended December 31, 1998. Minimum future lease payments
required under this lease are as follows:
<TABLE>
<S> <C>
1999 $136,944
2000 136,944
2001 136,944
--------
$410,832
========
</TABLE>
NOTE D - RELATED PARTY TRANSACTIONS
During 1997 and 1998 all of the Company's operations were funded by the
Company's controlling shareholder or by companies owned by or under his
control. This includes amounts paid by these entities and billed to the
Company as well as cash advances made directly to the Company. These advances
were typically represented by demand notes payable to these entities. In
addition, the Company incurred costs on behalf of these affiliates which were
subsequently billed to these entities. At December 31, 1998 all of these
amounts were consolidated into one note payable to the principal affiliate.
(See note B).
During 1998 the Company provided product development and other services to an
affiliate and billed the affiliate $600,000 for these service. On April 30,
1999 this receivable was written off. This receivable was reserved at
December 31, 1998 and for purposes of financial statement presentation, the
provision was netted against revenues.
On December 31, 1998 the Company distributed Domain Names with a book value
of $43,408 to its shareholders.
See also note F.
<PAGE> 11
POPMAIL.COM, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE E - COMMON STOCK
The Company is authorized to issue 1,000,000 shares of common stock of which
1,000 has been designated as Class A and 999,000 has been designated as Class
B. Class A shares are entitled to one vote per share. Class B shares are
non-voting.
NOTE F - SUBSEQUENT EVENTS
On January 1, 1999 the Company entered into a License Agreement with
equitymedia.com, an affiliate. The agreement grants the Company the right to
use the "Popmail" software in connection with the operation of radio stations
in the United States and the right to sub-license "Popmail" in connection
with English language radio stations in the United States. The agreement is
for a period of one year with successive one-year renewal terms unless
terminated by the Company.
In May 1999 the Company entered into a definitive agreement to merge with
Cafe Odyssey, Inc. a public company.
<PAGE> 12
(b) Pro Forma Financial Information
PRO FORMA UNAUDITED FINANCIAL STATEMENTS
The following pro forma unaudited condensed combined financial statements are
prepared to reflect the merger effective September 1, 1999 between the
Registrant, Popmail.com, Inc. (formerly Cafe Odyssey, Inc.) (Cafe Odyssey) and
popmail.com, Inc. (Popmail) accounted for as a purchase. The pro forma unaudited
condensed combined financial information consists of pro forma unaudited
condensed combined statements of operations for the year ended January 3, 1999
and for the thirty four weeks ended August 29, 1999 and a pro forma unaudited
condensed combined balance sheet as of August 29, 1999. The pro forma unaudited
condensed combined statements of operations give effect to the merger as if the
transaction had occurred on December 29, 1997. The pro forma unaudited condensed
combined balance sheet gives effect to the merger as if had occurred on August
29, 1999.
The pro forma unaudited condensed combined financial tatements give effect to
certain adjustments, including: (1) the issuance of 2,024 Cafe Odyssey Series D
Preferred Shares which are convertible into 8,635,902 Cafe Odyssey common
shares; (2) the issuance of a warrant to shareholders of popmail.com, Inc.; (3)
the issuance of convertible debt and Series B convertible Preferred Shares as
well as proceeds from the exercise of the warrant, used to pay off a portion of
the Legacy Maker note payable; (4) and a step-up of net assets and resulting
goodwill created by the acquisition as well as related amortization expense.
The periods presented conform to the fiscal year of the registrant.
<PAGE> 13
PRO FORMA UNAUDITED CONDENSED COMBINED BALANCE SHEET
AUGUST 29, 1999
<TABLE>
<CAPTION>
CAFE PRO FORMA PRO FORMA
ODYSSEY POPMAIL ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 952,765 $ 95,021 4,950,000 (3) $ 1,528,399
(4,469,387)(4)
Accounts receivable -- 163,463 -- 163,463
Inventories 166,827 -- -- 166,827
Other current assets 383,828 13,412 -- 397,240
------------ ------------ ------------ ------------
Total current assets 1,503,420 271,896 480,613 2,255,929
PROPERTY AND EQUIPMENT, NET 15,080,030 700,303 -- 15,780,333
OTHER ASSETS 1,028,973 43,912 -- 1,072,885
GOODWILL -- -- 25,371,510 (1) 29,586,515
4,215,005 (2)
------------ ------------ ------------ ------------
$ 17,612,423 $ 1,016,111 $ 30,067,128 $ 48,695,662
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term notes payable $ 1,025,000 $ -- $ -- $ 1,025,000
Accounts payable 889,931 211,729 -- 1,101,660
Convertible promissory notes payable 150,000 -- 2,000,000 (3) 2,150,000
Note payable-Legacy Maker -- 5,019,387 (4,469,387)(4) 550,000
Current portion of long-term debt 197,488 -- -- 197,488
Accrued expenses 393,902 -- -- 393,902
------------ ------------ ------------ ------------
Total current liabilities 2,656,321 5,231,116 (2,469,387) 5,418,050
DEFERRED RENT 3,695,607 -- -- 3,695,607
LONG-TERM DEBT, less current portion 3,643,694 -- -- 3,643,694
------------ ------------ ------------ ------------
Total liabilities 9,995,622 5,231,116 (2,469,387) 12,757,351
------------ ------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES -- -- -- --
SHAREHOLDERS' EQUITY
Preferred Stock 3,700,000 -- 2,200,000 (3) 26,952,554
21,052,554 (1)
Common stock 87,996 20 (20)(2) 92,996
5,000 (3)
Additional paid-in capital 24,110,290 251,980 4,318,956 (1) 29,174,246
(251,980)(2)
745,000 (3)
Less: common stock subscribed (400,000) -- -- (400,000)
Accumulated deficit (19,881,485) (4,467,005) 4,467,005 (2) (19,881,485)
------------ ------------ ------------ ------------
Total shareholders' equity 7,616,801 (4,215,005) 32,536,515 35,938,311
------------ ------------ ------------ ------------
$ 17,612,423 $ 1,016,111 $ 30,067,128 $ 48,695,662
============ ============ ============ ============
</TABLE>
<PAGE> 14
NOTES TO PRO FORMA UNAUDITED CONDENSED COMBINED BALANCE SHEET
(1) Reflects the issuance of additional shares and warrant and transaction
expenses to effect the merger as follows:
<TABLE>
<CAPTION>
Common Stock Warrant TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Cafe Odyssey Series B preferred stock and warrant
issued 2,024 4,407,098 4,409,122
Price per share/fair value per warrant a) $ 2.34 b) $ 0.98
----------- ----------- -----------
Total c) $20,242,554 $ 4,318,956 $24,561,510
Plus transaction expenses 810,000 810,000
----------- ----------- -----------
$21,052,554 $ 4,318,956 $25,371,510
=========== =========== ===========
</TABLE>
a) The price per share is based on the closing price of the Cafe
Odyssey Common Stock on August 29, 1999. The conversion rate used to
convert the Cafe Odyssey Preferred Shares into Common Shares is based
on the price of an outstanding common share of Cafe Odyssey on August
29, 1999.
b) The fair value per warrant was calculated using the Black Scholes
option pricing model on the date of grant, August 29, 1999.
c) The total common stock value reflects the number of outstanding
common shares at August 29, 1999 (8,635,902) multiplied by the
closing price per common share at August 29, 1999 ($2.34).
(2) Reflects the elimination of the shareholders' equity accounts of Popmail.
The increase in goodwill is a result of cost exceeding the identifiable assets
acquired of Popmail.
(3) As a condition of the merger, Cafe Odyssey was required to raise enough
funds to payoff a portion of the Legacy Maker note payable. The company raised
these funds as follows:
<TABLE>
<S> <C>
Issuance of convertible promissory notes payable $ 2,000,000
Issuance of Series D convertible preferred stock 2,200,000
Proceeds from exercise of warrants 750,000
-----------
$ 4,950,000
===========
</TABLE>
(4) Reflects the repayment of outstanding indebtedness to Legacy Maker, Inc. (an
affiliate of Popmail)
<PAGE> 15
PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THIRTY FOUR WEEKS ENDED AUGUST 29, 1999
<TABLE>
<CAPTION>
CAFE PRO FORMA PRO FORMA
ODYSSEY POPMAIL ADJUSTMENTS COMBINED
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 8,459,030 $ 12,518 $ -- $ 8,471,548
------------ ----------- ----------- -------------
Costs and Expenses:
Food, beverage and retail costs 2,170,503 -- -- 2,170,503
Restaurant operating expenses 5,876,806 -- -- 5,876,806
Depreciation and amortization 839,296 111,834 6,574,781 (1) 7,525,911
Pre-opening expenses 572,932 -- -- 572,932
Creative -- 67,734 -- 67,734
Sales -- 297,010 -- 297,010
Technical -- 303,750 -- 303,750
General, administrative and development expenses 2,074,778 893,223 -- 2,968,001
------------ ----------- ----------- -------------
Total costs and expenses 11,534,315 1,673,551 6,574,781 19,782,647
------------ ----------- ----------- -------------
LOSS FROM OPERATIONS (3,075,285) (1,661,033) (6,574,781) (11,311,099)
INTEREST EXPENSE, net (529,459) (169,230) -- (698,689)
------------ ----------- ----------- -------------
NET LOSS (3,604,744) (1,830,263) (6,574,781) (12,009,788)
PREFERRED STOCK DIVIDENDS AND ACCRETION (2,153,846) -- -- (2,153,846)
------------ ----------- ----------- -------------
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (5,758,590) $(1,830,263) $(6,574,781) $ (14,163,634)
============ =========== =========== =============
BASIC AND DILUTED NET LOSS PER SHARE
NET LOSS $ (0.43) -- -- $ (0.70)
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (0.68) -- -- $ (0.83)
BASIC AND DILUTED WEIGHTED AVERAGE
OUTSTANDING SHARES 8,432,293 -- 8,635,902 17,068,195
============ =========== =========== ============
</TABLE>
<PAGE> 16
PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 3, 1999
<TABLE>
<CAPTION>
CAFE PRO FORMA PRO FORMA
ODYSSEY POPMAIL ADJUSTMENTS COMBINED
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net Sales/revenues $ 6,932,891 $ 49,235 $ -- $ 6,982,126
------------ ----------- ----------- ------------
Costs and Expenses:
Food, beverage and retail costs 1,897,492 -- -- 1,897,492
Restaurant operating expenses 5,038,104 -- -- 5,038,104
Depreciation and amortization 940,186 -- 9,862,172(1) 10,802,358
Pre-opening expenses 732,851 -- -- 732,851
Loss on impairment of restaurant related assets 2,000,000 -- -- 2,000,000
Selling, general, administrative and
development expenses 3,081,213 2,331,809 -- 5,413,022
------------ ----------- ----------- ------------
Total costs and expenses 13,689,846 2,331,809 9,862,172 25,883,827
------------ ----------- ----------- ------------
LOSS FROM OPERATIONS (6,756,955) (2,282,574) (9,862,172) (18,901,701)
OTHER INCOME (EXPENSE):
Interest expense (130,625) (161,904) -- (292,529)
Interest income 180,999 -- -- 180,999
------------ ----------- ----------- ------------
Total other income (expense) 50,374 (161,904) -- (111,530)
------------ ----------- ----------- ------------
NET LOSS $ (6,706,581) $(2,444,478) ($9,862,172) $(19,013,231)
============ =========== =========== ============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.84) #DIV/0! $ (1.14)
============ =========== =========== ============
BASIC AND DILUTED WEIGHTED AVERAGE
OUTSTANDING SHARES 8,000,131 -- 8,635,902 16,636,033
============ =========== =========== ============
</TABLE>
<PAGE> 17
NOTES TO PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 3, 1999 AND THE
THIRTY FOUR WEEKS ENDED AUGUST 29, 1999
The pro forma unaudited condensed combined statements of operations reflect
amortization of goodwill associated with the transaction.
(1) Reflects goodwill arising from the Merger of $29,586,515 amortized on a
straight-line basis over three years.
<PAGE> 18
(c) EXHIBITS. The following documents are filed as an exhibit to this Form
8-K/A and are incorporated herein by reference:
Exhibit
No. Description
23.1 Consent of Barry Morgan and Company, P.C.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POPMAIL.COM, INC.
Date: November 15, 1999 By: Thomas W. Orr
-------------------------------------
Name: Thomas W. Orr
Title: Chief Financial Officer
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated June 1, 1999 in this form 8-K, and into the Company's
previously filed Registration Statement file Nos. 333-62729, 333-62747,
333-80241, 333-85243, and 333-88199.
BARRY MORGAN & COMPANY, P.C.
Dallas, Texas
November 15, 1999
