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Rule 424(b)(2)
PROSPECTUS
POPMAIL.COM, INC.
8,983,975 SHARES OF
COMMON STOCK
The 8,983,975 shares of common stock of PopMail.com, Inc. (the "Company")
offered hereby on a resale basis by the selling shareholders identified on page
16 include (i) 2,350,000 units of Company securities (the "Units"), each unit
consisting of one share of Common stock ("Unit Shares") and a warrant to
purchase one share of common stock at an exercise price of $2.00 ("Unit
Warrants"), which were issued in connection with a recent private placement,
(ii) 3,548,875 shares issuable upon the exercise (at various prices) of certain
warrants ("Warrants") and (iii) 735,100 shares held by certain shareholders of
the Company. We will receive no proceeds from the sale of the common stock by
selling shareholders.
Our common stock is listed on the Nasdaq SmallCap Market under the symbol
"POPM." On February 15, 2000, the last sale price for the Common Stock as
reported on the Nasdaq SmallCap Market was $5.00.
The shares offered by this prospectus involve a high degree of risk. SEE
"RISK FACTORS" BEGINNING ON PAGE 6 FOR A DESCRIPTION OF FACTORS WHICH SHOULD BE
CONSIDERED BY INVESTORS BEFORE PURCHASING THE SHARES OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. A REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE, AND MAY BE CHANGED.
THIS PROSPECTUS IS INCLUDED IN THE REGISTRATION STATEMENT THAT WAS FILED BY
POPMAIL WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SELLING SHAREHOLDERS
CANNOT SELL THEIR SHARES UNTIL THAT REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THE SHARES OR THE SOLICITATION OF AN
OFFER TO BUY THE SHARES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this Prospectus is February 16, 2000.
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TABLE OF CONTENTS
<TABLE>
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PROSPECTUS SUMMARY.................................................................3
RISK FACTORS.......................................................................6
USE OF PROCEEDS...................................................................16
SELLING SHAREHOLDERS..............................................................16
PLAN OF DISTRIBUTION..............................................................17
WHERE YOU CAN FIND MORE INFORMATION...............................................18
NOTE REGARDING FORWARD-LOOKING STATEMENTS.........................................20
LEGAL MATTERS.....................................................................20
EXPERTS...........................................................................20
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES....................................20
</TABLE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus. You must not rely on any information or representations not
contained in this prospectus, if given or made, as having been authorized by us.
This prospectus is not an offer or solicitation in respect to these securities
in any jurisdiction in which such offer or solicitation would be unlawful. The
delivery of this prospectus shall not under any circumstances, create any
implication that there has been no change in our affairs or that the information
contained in this prospectus is correct as of any time subsequent to the date of
this prospectus. However, in the event of a material change, this prospectus
will be amended or supplemented accordingly.
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PROSPECTUS SUMMARY
As used in this prospectus, the terms "Company","we", "us" and "our" refer
to PopMail.com,inc. and its consolidated subsidiaries.
THE COMPANY
PopMail.com, inc. (f/k/a Cafe Odyssey, Inc.) consists of two divisions, the
restaurant division and the e-mail services division.
The restaurant division develops, owns and operates restaurants with
multiple themed dining rooms designed to appeal to the upscale casual dining
market. We have a Cafe Odyssey restaurant at the Mall of America in Bloomington,
Minnesota, a suburb of Minneapolis, which opened in June 1998, and a second Cafe
Odyssey restaurant in the Denver Pavilions, an urban retail/entertainment
complex in Denver, Colorado which opened on March 15, 1999. Our first
restaurant, in the Kenwood Shopping Center in Cincinnati, Ohio, which operated
under the name "Hotel Discovery," opened in December 1996. We have recently
signed an agreement to sell this restaurant.
The email services division of PopMail.com, inc. is a leading provider of
email service to radio stations and their listeners. It combines the power of
the Internet with the most successful affinity-building, mass-medium ever
created: radio. By providing radio stations with an attractive email service
offered to listeners free of charge, PopMail leverages radio's proven ability to
engage audiences and attract advertisers. The company holds exclusive
relationships with more than 500 radio stations reaching 100 million listeners
each week.
On September 1, 1999, we completed the merger with popmail.com, inc. ("Old
Popmail"). Through partnerships with radio stations nationwide, Old Popmail was
a leading email provider to radio stations. We entered into a definitive merger
agreement with Old Popmail on June 1, 1999, and the transaction closed into
escrow on June 25, 1999. The shareholders of Cafe Odyssey, Inc. approved the
merger on August 19, 1999. As a result of the merger, Cafe Odyssey, Inc. changed
its name to PopMail.com, inc.
We began operations as Hotel Mexico, Inc., which was incorporated in Ohio
in January 1994. The Kenwood Restaurant Limited Partnership, an Ohio limited
partnership was formed in June 1995 to own and operate the Kenwood Unit. Hotel
Mexico's operations and the net assets of the Kenwood Restaurant Limited
Partnership were combined in November 1996, and in August 1997 Hotel Mexico was
reorganized as Hotel Discovery, Inc., a Minnesota corporation. On May 21, 1998,
the Company's Board of Directors and shareholders approved a change in its
corporate name from Hotel Discovery, Inc. to Cafe Odyssey, Inc.
Our executive offices are located at 4801 West 81st Street, Suite 112,
Bloomington, Minnesota 55437 and its telephone number is (612) 837-9917.
RECENT DEVELOPMENTS
On September 30, 1999, we and Arthur Andersen LLP mutually agreed to the
resignation of Arthur Andersen as our independent public accountants. Effective
as of that date, we engaged Grant Thornton LLP as our new independent public
accountants.
On October 13, 1999, we entered into a Common Stock Subscription Agreement
to acquire approximately 1.5% of the outstanding shares of Internet Community
Concepts ("ICC"), a company providing Web content, e-commerce and advertising to
nearly 350 radio stations. This agreement will give the Company a strategic
alliance with ICC.
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On October 20, 1999, we executed an Asset Purchase Agreement by and between
the Company and Werthgreen, LLC, an Ohio limited liability company, with respect
to the sale of the Hotel Discovery Restaurant in Cincinnati, Ohio. Completion of
the sale is subject to approval of the landlord.
On November 24, 1999, the remaining holders of the Company's Series B
Convertible Preferred Stock (the "Series B") elected to convert their Series B
into 8,533,498 shares of the Company's Common Stock. In exchange for this
conversion, the Company agreed to amend the Warrants held by the Series B
holders (which are exercisable into 4,407,098 shares of the Registrant's Common
Stock, subject to adjustment, representing the economic equivalent of all of the
Company's options, warrants, and other securities convertible into, or
exchangeable for, common stock which were outstanding on May 3, 1999) to change
the exercise price of the Warrants from various exercise prices to $0.75 per
share of Common Stock. Also in exchange for the conversion, the Company agreed
to issue to LegacyMaker, Inc. 900,000 shares of Common Stock of the Company in
exchange for warrants exercisable into an aggregate of 900,000 shares of Company
Common Stock at $3.00 per share, and for certain other consideration. (See page
14 under the caption "Series B" for a full description of the Series B.)
On December 3, 1999, we completed the purchase of ROI Interactive, LLC., a
Dallas-based company. Under the terms of the acquisition, we acquired
substantially all of the assets of ROI in exchange for 2,750,000 restricted
shares of PopMail.com,inc. common stock and assumption of certain liabilities.
To finance the acquisition and provide working capital for growth, we received
$1 million from exercised warrants, $2 million from the sale of a two-year 4%
convertible debenture, and $1 million from a term loan. This acquisition gives
us ownership of ROI Interactive, its technology and client roster. It also gives
both the Company and ROI a common technology and marketing platform, which
enables us to take full advantage of ROI's powerful email marketing services. In
addition, with the completion of the acquisition, Popmail.com now has a
permission and affinity marketing database of over 1 million members.
In order to close the transaction with ROI, ROI required the Company to
find a third party for resale of the ROI shares. King Family Partners, a Limited
Partnership for the benefit of certain family members of Stephen D. King, Chief
Executive Officer of the Company, and of which Mr. King is president of the
General Partner, purchased the shares on December 1, 1999 for $2.00 per share.
To finance such purchase, the Company loaned King Family Partners $2,450,000 on
a nonrecourse basis, with interest at the lowest applicable federal rate, a
maturity date of three years, and secured by the shares purchased from the
members of ROI.
On January 21, 2000, we signed an agreement to acquire IZ.com, Incorporated
in an all-stock transaction. IZ.com is a convergent media business that uses
spiral marketing to promote consumer commerce involving cross-conventional
media. On February 9, 2000, we completed our acquisition of IZ.com,
Incorporated. Under the terms of the acquisition, IZ Acquisition Corporation, a
Delaware corporation and our wholly-owned subsidiary, merged into IZ.com, and
IZ.com became our wholly-owned subsidiary. In connection with the acquisition,
IZ.com stockholders received shares of our Series F Convertible Preferred Stock
in exchange for their IZ.com shares. Assuming the approval of our shareholders,
the shares of Series F Preferred Stock will be convertible into approximately
7.3 million shares of our common stock. We also assumed IZ.com's outstanding
options and warrants.
Effective January 13, 2000, our Board of Directors approved a resolution
increasing the size of the Board from seven to eight directors and elected
Gary Schneider to fill the newly-created vacancy. Mr. Schneider was formerly
chief executive officer of ROI and currently serves in the same capacity with
our PopMail division.
The Company committed to certain individuals, including Messrs. Stephen D.
King and Jerry Ruyan, to remove them from liability on or before September 30,
1999, under the guarantees that they had made for certain debt of the Company
to the Provident Bank. The Company has failed to meet such a deadline and
certain default penalties have been and are continuing to be assessed on a
monthly basis. We are currently in negotiations with the Provident Bank and the
guarantors to cure such defaults.
On January 24, 2000, James L. Anderson resigned as chairman of our board
of directors, and effective February 1, 2000, he resigned as a director.
Jesse Barst was elected to the Board to occupy the seat vacated by Mr. Anderson.
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THE OFFERING
<TABLE>
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Common stock offered (1) ................................... 8,983,975 shares
Common stock outstanding
before the offering (2)................................... 30,197,339 shares
Common stock outstanding
after the offering........................................ 36,096,214 shares
Nasdaq SmallCap Market symbol............................... POPM
</TABLE>
(1) Represents the Unit Shares issued, the shares issuable upon exercise of
the Unit Warrants and certain other warrants, and certain other shares
issued by the Company.
(2) Does not include shares of Common Stock that are (a) reserved for issuance
upon conversion of outstanding Series E Convertible Preferred Stock (the
"Series E Preferred Shares"); (b) issuable upon exercise of the Class A
Warrants issued as part of our initial public offering, which are
exercisable into an aggregate of 2,600,000 shares (for which we would
receive approximately $16,900,000 if all were exercised); (c) issuable upon
exercise of certain other warrants covering an aggregate of 17,437,987
shares (for which we would receive approximately $30,860,000 if all were
exercised); (d) reserved for issuance upon conversion of the $2,000,001 of
8% convertible debentures issued November 30, 1999, or (e) reserved for
issuance under various stock option agreements, including those issued
under the 1997 Stock Option and Compensation Plan, 1998 Director Stock
Option Plan and those issued to certain directors.
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RISK FACTORS
An investment in our common stock is very risky. You may lose the entire
amount of your investment. Prior to making an investment decision, you should
carefully review this entire prospectus and consider the following risk factors:
WE HAVE INCURRED LOSSES TO DATE AND IF OUR RESTAURANT SALES DO NOT IMPROVE,
WE WILL NEED ADDITIONAL FINANCING IN ORDER TO CONTINUE OPERATIONS.
We incurred net losses of approximately $8.9 million for the 39 weeks ended
October 3, 1999, $6.7 million in 1998 and $4.0 million in 1997 and had a working
capital deficit of approximately $6.7 million as of April 4, 1999. Our ability
to continue our present operations and successfully implement our expansion
plans is contingent upon our ability to increase our revenues which are
presently limited to income from our three existing restaurants. Without
additional financing, cash generated from our current operations may not be
adequate to fund operations and make mortgage payments in 1999. There can be no
assurances that additional financing to fund current operations and expansion
will be available on terms acceptable or favorable to us. In addition, our
independent public accountants have issued their report relating to our
financial statements for the year ended January 3, 1999, which includes an
explanatory paragraph that raises substantial doubt concerning our ability to
continue as a going concern.
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OUR COMMON STOCK COULD BE DELISTED FROM THE NASDAQ SMALLCAP MARKET, WHICH
DELISTING COULD HINDER YOUR ABILITY TO OBTAIN ACCURATE QUOTATIONS AS TO THE
PRICE OF OUR COMMON STOCK, OR DISPOSE OF OUR COMMON STOCK IN THE SECONDARY
MARKET.
Although our common stock is currently listed on the Nasdaq SmallCap
Market, we cannot guarantee that an active public market for our common stock
will continue to exist. During most of December 1998 and into April 1999, our
common stock failed to maintain the minimum bid price criteria of $1.00 per
share as is required in order to trade on the Nasdaq SmallCap Market. In
addition, we have responded to various inquirers of NASDAQ expressing concern
over various matters, including but not limited to the "going concern"
qualification expressed by our independent auditors. 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. Additional
factors giving rise to such delisting could include, but might not be limited to
(1) a reduction of our net tangible assets to below $2,000,000, (2) a reduction
to one active market maker, (3) a reduction in the market value of the public
float in our securities to less than $1,000,000, or (4) 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 PopMail.com, inc. 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.
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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 James Anderson, our Chairman of the Board, Stephen D. King,
our Chief Executive Officer, Ronald K. Fuller, our President and Chief Operating
Officer, Thomas W. Orr, our Chief Financial Officer and Gary Schneider, the CEO
of our PopMail Network division. The loss of any of them could adversely affect
the success of our operations and strategic plans and, consequently, have a
detrimental effect on the market price of our stock.
WE MAY BE UNABLE TO HIRE QUALIFIED EMPLOYEES TO HELP IMPLEMENT AND MANAGE
OUR EXPANSION PLANS, WHICH INABILITY COULD BE DETRIMENTAL TO THE VALUE OF YOUR
INVESTMENT.
Our success will depend in large part upon our ability to supplement our
existing management team. We will need to hire additional corporate level and
management employees to help implement and operate our plans for expansion of
our Internet and restaurant divisions. 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 YOU TO
ASSESS OUR ABILITY TO OPERATE PROFITABLY.
We have only been operating our Mall of America restaurant since June 1998,
and our Denver restaurant since March 1999. In addition, Old Popmail was founded
in December 1997, and is considered to be in the developmental stage. Therefore,
in addition to the other risks included in this prospectus, 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.
OUR CHAIRMAN OF THE BOARD CONTROLS A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK
AND MAY INFLUENCE OUR AFFAIRS.
James Anderson was elected to the Board of Directors as Chairman, as a
condition of the merger with popmail.com, inc. on September 1, 1999. On January
24, 2000, he resigned as Chairman and, effective February 1, 2000, he resigned
as a member of the Board of Directors. Pursuant to a Schedule 13D filed with the
Securities and Exchange Commission on September 13, 1999, Mr. Anderson
indirectly or directly controlled approximately 58.9% 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 ownership in our common stock, he will
continue to have significant influence over our affairs.
THERE IS A RISK THAT THE VALUE OF OUR TRADEMARKS AND OTHER PROPRIETARY
RIGHTS COULD BE DIMINISHED BY IMPROPER USE BY OTHERS.
We believe that our trademarks and other proprietary rights are important
to our success and our competitive position. Accordingly, we have filed
trademark applications with the United States Patent and Trademark Office to
register both the "Cafe Odyssey" and "PopMail" marks and designs, although our
application for "PopMail" has been suspended as a result of an alleged
confusingly similar mark in use. However, the actions we have taken to establish
and protect our trademarks and other proprietary rights may be inadequate to
prevent others from imitating our products or claiming violations of their
trademarks and proprietary rights
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by us. For instance, we may not be granted trademark registration for any or all
of the proposed uses in our applications. Even if our marks are granted
registration, we may still be unable to protect such marks against prior users
in areas where we conduct or will conduct operations. We may also be unable to
prevent competitors from using the same or similar marks, concepts or
appearance.
WE MAY NOT PAY DIVIDENDS ON OUR COMMON STOCK, IN WHICH EVENT YOUR ONLY
RETURN ON INVESTMENT, IF ANY, WILL OCCUR ON THE SALE OF OUR STOCK.
To date, we have not paid any cash dividends on our common stock, and we do
not intend to do so in the foreseeable future. Rather, we intend to use any
future earnings to fund our operations and the growth of our business.
Accordingly, the only return on an investment in our common stock will occur
upon its sale.
PURSUANT TO ITS AUTHORITY TO DESIGNATE AND ISSUE SHARES OF OUR STOCK AS IT
DEEMS APPROPRIATE, OUR BOARD OF DIRECTORS MAY ASSIGN RIGHTS AND PRIVILEGES TO
CURRENTLY UNDESIGNATED SHARES WHICH COULD ADVERSELY AFFECT YOUR RIGHTS AS A
COMMON SHAREHOLDER.
Our authorized capital consists of 100,000,000 shares of capital stock. Our
Board of Directors, without any action by the shareholders, may designate and
issue shares in such classes or series (including classes or series or preferred
stock) as it deems appropriate and establish the rights, preferences and
privileges of such shares, including dividends, liquidation and voting rights.
We currently have 30,197,339 shares of common stock, and 225,000 shares of
Series E Convertible Preferred Stock outstanding. As of January 24, 2000, a
further 17,230,555 shares of common stock have been reserved as follows:
- a maximum of 750,000 shares of common stock reserved for issuance upon
exercise of the Series E Preferred Shares, 225,000 shares of which are
currently outstanding;
- 2,600,000 shares issuable upon the exercise of the Class A Warrants
issued as part of our initial public offering and the partial exercise
of the underwriter's over-allotment;
- 12,100,889 shares issuable upon the exercise of outstanding warrants;
- 1,250,000 shares reserved for issuance under our 1997 Stock Option and
Compensation Plan, of which options relating to 1,422,999 shares are
currently outstanding, of which 172,999 remain subject to shareholder
approval;
- 250,000 shares for issuance under our 1998 Director Stock Option Plan,
of which options relating to 298,333 shares are currently outstanding,
of which 48,333 remain subject to shareholder approval; and
- 58,334 shares issuable upon exercise of certain directors' stock
options.
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The rights of holders of preferred stock and other classes of common stock
that may be issued could be superior to the rights granted to holders of the
Units issued in our initial public offering. Our Board's ability to designate
and issue such undesignated shares could impede or deter an unsolicited tender
offer or takeover proposal. Further, the issuance of additional shares having
preferential rights could adversely affect the voting power and other rights of
holders of common stock.
MINNESOTA LAW MAY INHIBIT OR DISCOURAGE TAKEOVERS, WHICH COULD REDUCE THE
MARKET VALUE OF OUR STOCK.
Being 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 our stock. By impeding a
merger, consolidation, takeover or other business combination involving
PopMail.com, inc. 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 be
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.
RESTAURANT DIVISION
OUR RESTAURANT OPERATIONS OR CONTEMPLATED EXPANSION MAY PROVE UNSUCCESSFUL,
EITHER OF WHICH COULD RESULT IN CONTINUED UNPROFITABILITY AND CAUSE OUR STOCK
PRICE TO FALL.
To date, we have not generated a profit. Due to a variety of factors, many
of which are discussed in this prospectus, we may never generate significant
revenues or operate profitably. In fact, our management anticipates that net
losses will continue for the foreseeable future. Even if we succeed in expanding
our operations as contemplated, we cannot assure a successful transition to
higher volume operations. We may be unable to control our expenses, attract
necessary additional personnel, or procure the capital required to maintain
expanded operations. If our expansion is ultimately unsuccessful, the results of
our operations will suffer accordingly, and the market price of our stock may
fall.
POOR OPERATING RESULTS AT ANY OF OUR RESTAURANTS OR A DELAY IN THE PLANNED
OPENING OF NEW RESTAURANTS, COULD ADVERSELY AFFECT OUR PROFITABILITY AS A WHOLE.
We currently operate only two restaurants. Accordingly, poor operating
results at any one restaurant would materially affect the profitability and cash
flow of our operations as a whole. To a substantial extent, our
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ability to increase the number of restaurants we operate and our choice of
locations for such restaurants will determine whether we will experience future
growth in our revenues and profits. However, the significant financial
investment associated with opening our restaurants may create substantial
fluctuations in our operating results. Due to the significance of such
investments, the risk we face in opening any one of our restaurants is much
larger than that associated with most other restaurant companies' venues.
Consequently, a delay in any planned restaurant opening could materially affect
the profitability and cash flow of our operations as a whole.
THEME RESTAURANTS MAY EXPERIENCE SOME DECLINE IN SAME STORE SALES.
Same store sales (sales for restaurants that have been open at least one
year) is one measure of operating results used by stock analysts to analyze a
publicly traded retail and restaurant businesses. Theme restaurants frequently
see a decline in same store sales from the first year to the subsequent year. In
addition to negatively impacting the Company's revenues, declining same store
sales has had a negative impact on the publicly traded theme restaurant's stock
price and resulted in stock price volatility.
OUR ABILITY, OR INABILITY, TO RESPOND TO VARIOUS COMPETITIVE FACTORS
AFFECTING THE RESTAURANT 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. We will likely be
required to enter into similar long-term, non-cancelable leases for any future
restaurants we develop. If we decide to close any of our existing restaurants or
any other future restaurant, we may nonetheless be committed to perform our
obligations under the applicable lease, which would
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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.
UNPREDICTABLE RISKS ASSOCIATED WITH THE CONSTRUCTION OF ADDITIONAL
RESTAURANTS COULD RESULT IN DELAYS AND COST OVERRUNS IN THE CONTEMPLATED
EXPANSION OF OUR OPERATIONS.
As with all construction projects, we face many risks related to the
opening of additional restaurants, any of which could result in delays and cost
overruns which would negatively impact the success of any restaurant openings.
Such risks may include:
- shortages of materials or skilled labor;
- unforeseen environmental, engineering or geological problems;
- work stoppages;
- weather interference;
- floods;
- difficulties with regulatory agencies; and
- unanticipated cost increases.
IN ORDER TO FINANCE THE FUTURE DEVELOPMENT OF ADDITIONAL RESTAURANTS OR THE
ACQUISITIONS, WE MAY BE REQUIRED TO RAISE ADDITIONAL FUNDS BY ISSUING SECURITIES
ON TERMS WHICH WOULD DILUTE YOUR INTERESTS IN POPMAIL.
The cost of developing our restaurants has ranged from $4.5 to $5.1 million
per unit. We may be unable to develop future restaurants at similar costs. In
order to fund the Company's future development, and the development of
internet-related businesses, we will need to obtain financing through an
additional offering of our equity securities or by incurring indebtedness. Such
funds may not be available on terms acceptable to us or our shareholders.
Furthermore, future investors may seek and obtain, and we may be required to
offer, investment terms which are substantially better than those granted to
existing investors. The issuance of securities on such terms would dilute the
interests of existing shareholders.
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.
Our success, and consequently any investment in our common stock, depends
to a significant degree on a number of economic conditions over which we have no
control, including:
- discretionary consumer spending
- the overall success of the malls, entertainment centers and other venues
where Cafe Odyssey restaurants are or will be located
- economic conditions affecting disposable consumer income
- the continued popularity of themed restaurants in general and the Cafe
Odyssey concept in particular
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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 NEGATIVELY IMPACT OUR BUSINESS.
The restaurant industry, and to a lesser extent, the retail merchandising
industry, are subject to numerous federal, state, and local government
regulations, including those relating to:
- the preparation and sale of food
- building and zoning requirements
- environmental protections
- minimum wage requirements
- overtime
- working and safety conditions
- the sale of alcoholic beverages
- sanitation
- relationships with employees
- unemployment
- workers compensation
- citizenship requirements
Any change in the current status of such regulations, including an increase
in employee benefits costs, workers' compensation insurance rates, or other
costs associated with employees, could substantially increase our compliance and
labor costs. Because we pay many of our restaurant-level personnel rates based
on either the federal or the state minimum wage, increases in the minimum wage
would lead to increased labor costs. In addition, our operating results would be
adversely affected in the event we fail to maintain our food and liquor
licenses. Furthermore, restaurant operating costs are affected by increases in
unemployment tax rates, sales taxes and similar costs over which we have no
control.
We may also be subject in certain states to "dram-shop" statutes, which
provide a person injured by an intoxicated person the right to recover damages
from an establishment that wrongfully served alcoholic beverages to the
intoxicated person.
13
<PAGE> 14
INTERNET DIVISION
WE MAY BE ENTERING INTO A NEW BUSINESS VENTURE IN AN EVOLVING INDUSTRY IN
WHICH WE HAVE NO EXPERIENCE.
The email business adds a significantly different business to our business
operations. We and our present management also have no experience with the
business of providing email services. Furthermore, the internet industry is
rapidly evolving, extremely competitive, and the market place for
internet-related shares has been very volatile.
IN LIGHT OF THE CONSOLIDATION OF THE RADIO INDUSTRY, THE LOSS OF ANY
SIGNIFICANT AFFILIATE CONTRACTS WOULD NEGATIVELY IMPACT POPMAIL'S OPERATIONS.
The last few years have brought substantial concentration of power among a
few players in the radio industry. Consequently, significant portions of the
industry are controlled by a relatively few organizations. Popmail already has
affiliation contracts in place with 2 of the 5 largest organizations and is in
negotiations with the remaining players. In light of such consolidation,
however, the loss of any of these significant affiliation contracts or the
inability of Popmail to enter into contracts with other radio industry entities
would negatively impact Popmail's operations.
OUR E-MAIL BASED PRODUCTS ARE DEPENDENT UPON THE INTERNET.
The success of our services and products will depend in large part upon the
continued development and expansion of the Internet. The Internet has
experienced, and is expected to continue to experience, significant, geometric
growth in the number of users and the amount of traffic. There can be no
assurance that the Internet infrastructure will continue to be able to support
the demands placed on it by this continued growth. In addition, the Internet
could lose its viability due to delays in the development or adoption of new
standards and protocols (for example, the next-generation Internet Protocol) to
handle increased levels of Internet activity, or due to increased governmental
regulation. There can be no assurance that the infrastructure or complementary
services necessary to make the Internet a viable commercial marketplace will be
developed, or, if developed, that the Internet will become a viable commercial
marketplace for services and products such as those we offer. If the necessary
infrastructure or complementary services or facilities are not developed, or if
the Internet does not become a viable commercial marketplace, our business,
results of operations, and financial condition will be materially adversely
effected.
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-business 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.
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<PAGE> 15
INCREASED COMPETITION RESULTING FROM AN INCREASE IN THE NUMBER OF FREE
EMAIL PROVIDERS THAT TARGETS THE RADIO INDUSTRY MAY HAVE AN ADVERSE EFFECT
ON POPMAIL'S FUTURE BUSINESS OPERATIONS.
Currently there are hundreds of free email providers, but PopMail
management believes that it is currently the only email provider that solely
targets the radio industry. To the extent PopMail is successful within the radio
industry, we anticipate others will attempt to compete in the radio segment.
Increased competition due to a greater number of free email providers targeting
the radio industry may have an adverse affect on PopMail's future business
operations.
WE MAY FACE INCREASING COMPETITION FOR RADIO STATION CUSTOMERS AND INTERNET
ADVERTISERS.
As a provider of free email, PopMail competes with numerous other email
providers many of which have more capital than PopMail. The principal
competitors in the private-label email service business are: CommTouch,
WhoWhere, MailChek, iName, and OnMedia. Of these providers, to the knowledge of
PopMail management, only MailChek and OnMedia have any radio station customers.
PopMail views its greatest competitive threat to its ability to establish
relationships with radio stations as the potential availability of software that
may duplicate many of the features in the PopMail email system. In addition,
PopMail faces increasing competition for internet advertisers.
THERE IS A RISK THAT GOVERNMENT REGULATION OF THE INTERNET COULD BECOME
MORE EXTENSIVE.
There are currently few laws or regulations directly applicable to access
to or commerce on the Internet. However, due to the increasing popularity and
use of the Internet, it is possible that a number of laws and regulations may be
adopted with respect to the Internet, covering issues such as user privacy,
pricing, characteristics, and quality of products and service. The
Telecommunications Reform Act of 1996 imposes criminal penalties on anyone who
distributes obscene, indecent, or patently offensive communications on the
Internet. Other nations, including Germany, have taken 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.
15
<PAGE> 16
USE OF PROCEEDS
The Company received gross proceeds of $2,350,000 from the sale of the
Units, and the proceeds from the exercise of the Unit Warrants, if any, would be
a maximum of $4,700,000, all of which will be used for working capital purposes.
The proceeds to the Company from the exercise of certain other warrants, if such
warrants are exercised in full, would be a maximum of $5,724,500 which would be
used for working capital purposes. The Company will not receive any proceeds
from the sale of the shares by the selling shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares of the common stock
owned by the selling shareholders as of January 27, 2000 and after giving effect
to this offering. We will not receive any proceeds from the sale of the common
stock by the selling shareholders. The shares of common stock received upon
exercise of the warrants may be offered from time to time by the selling
shareholders.
<TABLE>
<CAPTION>
Percentage
Shares Percentage Number of Beneficial
Beneficially Beneficial Shares Offered by Ownership
Name owned before Ownership Selling After
- ---- Offering Before Offering Shareholder Offering
------------ --------------- ----------------- ----------
<S> <C> <C> <C> <C>
Gulfstream Financial Partners 2,466,000 8.2% 2,050,000 (1) 1.4%
Wayne W. Mills 2,000,000 6.6% 2,000,000 (2) *
Continental Holdings, Ltd. 700,000 2.3% 700,000 (3) *
McCandish Partners, Inc. 100,000 * 100,000 (4) *
Falconberg Corporation 500,000 1.7% 500,000 (5) *
Barry Hollander 200,000 * 200,000 (6) *
Ralph H. Grills, Jr. 200,000 * 200,000 (6) *
William M. Mower 100,000 * 100,000 (7) *
The Hillstreet Fund, LP 200,000 * 200,000 (8) *
eBanker USA.com, Inc. 89,375 * 89,375 (9) *
American Fronteer Financial
Corporation 19,500 * 19,500 (10) *
Frank W. Terrizzi 621,725 (11) 2.1% 438,100 (12) *
Timothy I. Maudlin 510,958 (13) 1.7% 312,000 (14) *
Hal Taylor 80,000 * 80,000 (15) *
Global Financial Resources 50,000 (16) * 50,000 *
Fairview Partners 500,000 2.0% 500,000 (17) *
Metropolitan Capital Partners, Inc. 785,000 (18) 2.6% 385,000 (19) 1.3%
Andrew Baum 40,000 * 40,000 (20) *
Ramel Shorte 10,000 * 10,000 (20) *
Andrew Green 460,000 1.5% 160,000 (21) *
J. Jeffrey Brausch & Co. 315,750 (22) 1.0% 300,000 (23) *
Henry Fong, Jr. 50,000 * 50,000 (24) *
Lauren Fong 50,000 * 50,000 (24) *
Benjamin Private School 50,000 * 50,000 (24) *
Barry Hollander 50,000 * 50,000 (24) *
</TABLE>
- ------------
*Less than 1%.
(1) Represents: (i) 700,000 Unit Shares, (ii) 700,000 shares issuable upon
the exercise of Unit Warrants, (iii) 500,000 shares issuable upon the
exercise (at a price of $1.50 per share) of warrant issued as
compensation for financial advisory services to be rendered throughout
2000, (iv) 150,000 shares issuable upon the exercise (at a price of
$1.625 per share) of a warrant issued in connection with financial
advisory services provided in 1999.
(2) Represents 500,000 Unit Shares and 500,000 shares issuable upon
exercise of Unit Warrants, as well as the following held by Blake
Capital Partners, LLC, of which Mr. Mills is president and a member:
(i) 500,000 shares issuable upon exercise (at a price of $1.50 per
share) of a warrant issued as compensation for financial advisory
services to be rendered throughout 2000, (ii) 250,000 Unit Shares, and
(iii) 250,000 shares issuable upon the exercise of Unit Warrants.
(3) Represents 350,000 Unit Shares and 350,000 shares issuable upon the
exercise of Unit Warrants.
(4) Represents 50,000 Unit Shares and 50,000 shares issuable upon the
exercise of Unit Warrants.
(5) Represents 250,000 Unit Shares and 250,000 shares issuable upon the
exercise of Unit Warrants.
(6) Represents 100,000 Unit Shares and 100,000 shares issuable upon the
exercise of Unit Warrants.
(7) Represents 50,000 Unit Shares and 50,000 shares issuable upon the
exercise of Unit Warrants, including 25,000 Unit Shares and 25,000
shares issuable upon the exercise of Unit Warrants held by US Bank
Trust, N.A., as trustee for the benefit of William M. Mower.
(8) Represents shares issuable upon the exercise (at a price of $1.34 per
share) of a warrant issued in connection with a December 1999 loan to
the Company.
(9) Represents shares issuable upon the exercise (at a price of $2.00 per
share) of a warrant issued in connection with a December 1999 loan to
the Company.
(10) Represents shares issuable upon the exercise (at a price of $2.00 per
share) of a warrant issued as finder's fee compensation in connection
with a December 1999 loan to the Company.
(11) In addition to the shares described in note (12), below, includes: (i)
34,625 shares owned by Mr. Terrizzi, (ii) 25,000 shares held by Mr.
Terrizzi's spouse and children, (iii) 100,000 shares issuable upon the
exercise (at a price of $1.00 per share) a warrant issued in
connection with a consulting agreement, of which only 50,000 shares
have vested to date, (iv) 50,000 shares issuable upon the exercise (at
a price of $.75 per share) of a warrant issued in connection with a
guaranty of a company loan, and (v) 14,000 shares issuable upon the
exercise (at a price of $6.00 per share) of a warrant issued in
connection with the Company's initial public offering.
(12) Represents 388,100 shares issued in connection with a December 1999
financing transaction and 50,000 shares issuable upon the exercise (at
a price of $1.00 per share) of a warrant issued in connection with a
consulting agreement.
(13) In addition to the shares described in note (14), below, Mr. Maudlin's
before offering holdings include (i) 50,000 shares issuable upon the
exercise (at a price of $.75 per share) of a warrant issued in
connection with a guaranty of a Company loan, (ii) 60,000 shares
issuable upon the exercise (at a price of $6.50 per share) of a public
warrant, (iii) 57,731 shares held by Mr. Maudlin's spouse and children,
and (iv) 31,227 shares held in trust for the benefit of Mr. Maudlin's
IRA account.
(14) Represents shares issued in connection with a January 2000 financing
transaction.
(15) Represents shares issuable upon the exercise (at a price of $1.25 per
share) of a warrant issued in connection with a December 1999 loan to
the Company.
(16) Represents shares issuable upon the exercise (at a price of $1.625 per
share) of a warrant issued in connection with financial advisory
consulting services provided to the Company in 1999.
(17) Represents shares issuable upon the exercise (at a price of $2.50 per
share) of a warrant issued in connection with an August 1999 loan to
the Company.
(18) Includes 600,000 shares issuable upon the exercise of a warrant
issued in connection with a October 1999 financial advisory consulting
agreement with the Company, of which only 200,000 shares have vested to
date. The remaining 400,000 shares vest if and when the price of the
Company's common stock meets certain minimum levels.
(19) Represents (i) 25,000 shares and 200,000 shares issuable upon the
exercise of a warrant issued in connection with an October 1999
agreement for financial advisory consulting, 100,000 shares of which
are exercisable at a price of $2.00 per share and 100,000 shares of
which are exercisable at a price of $4.00 per share, (ii) 150,000
shares issuable upon the exercise (at a price of $1.00 per share) of a
warrant issued as compensation for financial advisory consulting
services provided in December 1999, and (iii) 10,000 shares issuable
upon the exercise (at a price of $2.00 per share) of a warrant issued
as compensation for financial advisory services provided in December
1999.
(20) Represents shares issuable upon the exercise (at a price of $2.00 per
share) of a warrant issued as compensation for financial advisory
services provided in December 1999.
(21) Represents shares issued in January 2000, resulting from the exercise
(at a price of $.75 per share) of a warrant issued in connection with a
guaranty of a $3,000,000 loan to the Company made in January 1999.
(22) Includes 15,750 shares issuable upon the exercise (at a price of $3.75
per share) of a warrant.
(23) Represents shares issuable upon the exercise (at a price of $.75 per
share) of a warrant issued in connection with financial advisory
services provided to the Company in 1999.
(24) Represents shares issuable upon the exercise (at a price of $1.625 per
share) of a warrant.
<PAGE> 17
PLAN OF DISTRIBUTION
Pursuant to the terms of the subscription agreements in connection with the
unit private placement, and various other agreements with and warrants issued to
the selling shareholders, we are registering the shares offered by this
prospectus in part on behalf of the selling shareholders. We agreed to file a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") covering resale by the selling shareholders and, with respect
to some of the selling shareholders, use our best efforts to cause such
registration statement to be declared effective as soon as possible thereafter.
As used in this prospectus, the term "selling shareholders" includes: Gulfstream
Financial Partners, LLC; Wayne W. Mills, Continental Holdings, Ltd.; McCandish
Partners, Inc.; Falconberg Corporation; Barry Hollander; Ralph H. Grills, Jr.;
William M. Mower; the Hillstreet Fund, L.P.; eBanker.com USA, Inc.; American
Financial Fronteer Corporation; Frank W. Terrizzi; Timothy I. Maudlin; Hal
Taylor; Global Financial Resources; Fairview Partners; Metropolitan Capital
Partners, Inc.; Andrew Baum; Ramel Shorte; Andrew Green; J. Jeffrey Brausch &
Co.; Henry Fong, Jr.; Lauren Fong; Benjamin Private School; Barry Hollander; and
each of their respective donees, pledgees, transferees and other successors in
interest selling shares received from a selling shareholder after the date of
this prospectus. We will pay all costs and expenses in connection with the
preparation of this prospectus and the registration of the shares offered by it.
Any brokerage commissions and similar selling expenses attributable to the sale
of shares will be borne by the selling shareholders. Sales of shares may be
effected by the selling shareholders at various times in one or more types of
transactions (which may include block transactions) on the Nasdaq SmallCap
Market, in negotiated transactions, through put or call options transactions
relating to the shares, through short sales of shares, or a combination of such
methods of sale at market prices prevailing at the time of sale or at negotiated
prices. Such transactions may or may not involve brokers or dealers. The selling
shareholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of the shares, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares by the selling
shareholders.
17
<PAGE> 18
We have agreed to indemnify the selling shareholders and their officers,
directors, employees and agents, and each person who controls any selling
shareholder, in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act. Each selling shareholder has
agreed to indemnify the Company and its directors and officers in certain
circumstances against certain liabilities, including liabilities arising under
the Securities Act.
The selling shareholders and any broker-dealers that act in connection with
the sale of securities might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the securities sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act.
Because selling shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
We have informed the selling shareholders that the anti-manipulative provisions
of Regulation M promulgated under the Securities Exchange Act of 1934, as
amended, may apply to their sales in the market.
Selling shareholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of that Rule.
MINNESOTA ANTI-TAKEOVER LAW
The Company is governed by the provisions of Sections 302A.671 and 302A.673
of the Minnesota Business Corporation Act. In general, Section 302A.671 provides
that the shares of a corporation acquired in a "control share acquisition" have
no voting rights unless voting rights are approved in a prescribed manner. A
"control share acquisition" is an acquisition, directly or indirectly, of
beneficial ownership of shares that would, when added to all other shares
beneficially owned by the acquiring person, entitle the acquiring person to have
voting power of 20% or more in the election of directors. In general, Section
302A.673 prohibits a publicly-held Minnesota corporation from engaging in a
"business combination" with an "interested shareholder" for a period of four
years after the date of transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
"Business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who is the beneficial owner, directly or indirectly, or
10% or more of the corporation's voting stock or who is an affiliate or
associate of the corporation and at any time within four years prior to the date
in question was the beneficial owner, directly or indirectly, of 10% or more of
the corporation's voting stock.
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires PopMail to file information with the
Securities and Exchange Commission concerning its business and operations.
Accordingly, we file annual, quarterly, and special reports, proxy statements
and other information with the Commission. You can inspect and copy this
information at the Public Reference Facility maintained by the Commission at
Judiciary Plaza, 450 5th Street, N.W., Room 1024, Washington, D.C. 20549. You
can also do so at the following regional offices of the Commission:
(1) New York Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048
18
<PAGE> 19
(2) Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661.
You can receive additional information about the operation of the
Commission's Public Reference Facilities by calling the Commission at
1-800-SEC-0330. The Commission also maintains a website at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding companies that, like PopMail, file information electronically with the
Commission.
The Commission allows us to "incorporate by reference" information that has
been filed with it, which means that we can disclose important information to
you by referring you to the other information we have filed with the Commission.
The information that we incorporate by reference is considered to be part of
this prospectus, and related information that we file with the Commission will
automatically update and supersede information we have included in this
prospectus. We also incorporate by reference any future filings we make with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, until the selling shareholders sell all of their shares
or until the registration rights of the selling shareholders expire. This
prospectus is part of a registration statement that we filed with the Commission
(Registration No. 333-96109). The following are specifically incorporated
herein by reference:
1. Annual Report on Form 10-KSB for the fiscal year ended January 3,
1999;
2. Quarterly Report on Form 10-QSB for the quarters ended April 4,
1999, July 4, 1999 and October 3, 1999;
3. Amendment to Current Report on Form 8-K/A filed on November 15,
1999, Current Report on Form 8-K filed on December 17, 1999,
Current Report on Form 8-K filed on January 25, 2000 and
Amendment to Current Report on Form 8-K/A filed on February 15,
2000; and
4. The description of common stock included under the caption
"Securities to be Registered" in the Company's registration
statement on Form 8-A, File No. 0-23243, dated October 21, 1997,
including any amendments or reports filed for the purpose of
updating such description.
You can request a free copy of the above filings or any filings
subsequently incorporated by reference into this prospectus by writing or
calling us at the following address:
PopMail.com, inc.
Attention: Thomas Orr, Chief Financial Officer
4801 West 81st Street, Suite 112
Bloomington, Minnesota 55437
(612) 837-9917
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or amendment to this prospectus.
We have not authorized anyone else to provide you with different information or
additional information. Selling shareholders will not make an offer of our
common stock in any state where the offer is not permitted. You should not
assume that the information in this prospectus, or any supplement or amendment
to this prospectus, is accurate at any date other than the date indicated on the
cover page of such documents.
19
<PAGE> 20
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and in the documents
incorporated by reference in this prospectus are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements can be
identified by the use of predictive, future-tense or forward-looking
terminology, such as "believes," "anticipates," "expects," "estimates," "may,"
"will" or similar terms. Forward-looking statements also include projections of
financial performance, statements regarding management's plans and objectives
and statements concerning any assumption relating to the foregoing. Important
factors regarding PopMail.com, inc.'s business, operations and competitive
environment which may cause actual results to vary materially from these
forward-looking statements are discussed under the caption "Risk Factors."
LEGAL MATTERS
Legal matters in connection with the validity of the shares offered by this
Prospectus will be passed upon for the Company by Maslon Edelman Borman & Brand,
LLP, Minneapolis, Minnesota.
EXPERTS
The consolidated financial statements of PopMail.com, inc. (f/k/a Cafe
Odyssey, Inc.) as of January 3, 1999 and December 28, 1997 for the years then
ended incorporated by reference in this prospectus and elsewhere in the
registration statement of which this prospectus is a part have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in giving said report. Reference is made to
said report, which includes an explanatory paragraph with respect to the
uncertainty regarding the Company's ability to continue as a going concern as
discussed in Note 1 to the financial statements.
On September 30, 1999, the Company, with the approval of its Board of
Directors, engaged Grant Thornton LLP as the independent public accountants for
PopMail.com, inc. Prior to the engagement of Grant Thornton LLP, Arthur Andersen
LLP had served as the principal independent public accountants for the Company.
The report prepared by Arthur Andersen LLP as of January 3, 1999 and December
28, 1997 and for the years then ended contained no adverse opinion or disclaimer
of opinion and was not qualified or modified as to uncertainty of audit scope or
accounting principles. However, reference is made to said report which includes
an explanatory paragraph with respect to the uncertainty regarding the Company's
ability to continue as a going concern as discussed in Note 1 to the financial
statements. In connection with the audits as of January 3, 1999 and December 27,
1997 and through September 30, 1999, there have been 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 caused Arthur Andersen LLP to make reference to the subject matter of the
disagreements in its report.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Minnesota Statutes Section 302A.521 provides that a corporation shall
indemnify any person made or threatened to be made a party to any proceeding by
reason of the former or present official capacity of such person against
judgments, penalties, fines, including, without limitation, excise taxes
assessed against such person with respect to an employee benefit plan,
settlements, and reasonable expenses, including
20
<PAGE> 21
attorney's fees and disbursements, incurred by such person in connection with
the proceeding, if, with respect to the acts or omissions of such person
complained of in the proceeding, such person has not been indemnified by another
organization or employee benefit plan for the same expenses with respect to the
same acts or omissions; acted in good faith; received no improper personal
benefit and Section 302A.255, if applicable, has been satisfied; in the case of
a criminal proceeding, had no reasonable cause to believe the conduct was
unlawful; and in the case of acts or omissions by persons in their official
capacity for the corporation, reasonably believed that the conduct was in the
best interests of the corporation, or in the case of acts or omissions by
persons in their capacity for other organizations, reasonably believed that the
conduct was not opposed to the best interests of the corporation. Subdivision 4
of Section 302A.521 of the Minnesota Statutes provides that a corporation's
articles of incorporation or bylaws may prohibit such indemnification or place
limits upon the same. The Company's articles and bylaws do not include any such
prohibition or limitation. As a result, the Company is bound by the
indemnification provisions set forth in Section 302A.521 of the Minnesota
Statutes. As permitted by Section 302A.251 of the Minnesota Statutes, the
Articles of Incorporation of the Company provide that a director shall, to the
fullest extent permitted by law, have no personal liability to the Company and
its shareholders for breach of fiduciary duty as a director.
To the extent that indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
21
<PAGE> 22
8,983,975 SHARES
POPMAIL.COM, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
FEBRUARY 16, 2000
22
