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


                                 FORM 10-Q/A


                      AMENDMENT NO. 1 TO QUARTERLY REPORT
     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
                                        

                       COMMISSION FILE NUMBER 0-28476


                               OZEMAIL LIMITED
                               ACN 066 387 157
           ------------------------------------------------------
           (Exact name of registrant as specified in its charter)


   NEW SOUTH WALES, AUSTRALIA                                NOT APPLICABLE
---------------------------------                       ------------------------
  (State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                          Identification No.)


 OZEMAIL CENTRE, 39 HERBERT STREET, ST. LEONARDS NEW SOUTH WALES 2065 AUSTRALIA
--------------------------------------------------------------------------------
         (Address of principal executive offices, including zip code)


   Registrant's telephone number, including area code: (011 61 2) 9433-2400


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                             YES [_]       NO [X]


Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:

          AT SEPTEMBER 30TH, 1997, THERE WERE 103,800,010 SHARES OUTSTANDING OF
THE REGISTRANT'S COMMON STOCK, PAR VALUE A$0.004 ("ORDINARY SHARES").  OF THE
OUTSTANDING ORDINARY SHARES, 33,800,000 ARE REPRESENTED BY 3,380,000 AMERICAN
DEPOSITARY SHARES ("ADSs"). ONE ADS REPRESENTS TEN ORDINARY SHARES.

<PAGE>
 
                                OZEMAIL LIMITED

                                  FORM 10-Q/A

                      Amendment No. 1 to Quarterly Report
                   For the Quarter Ended September 30, 1997

                                     INDEX

PART I.  FINANCIAL INFORMATION
        
         ITEM 1. FINANCIAL STATEMENTS
        
         CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
        
            CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1997
            AND DECEMBER 31, 1996...........................................  3
                                                                            
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE   
            AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996...............  4
                                                                            
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE    
            MONTHS ENDED SEPTEMBER 30, 1997 AND 1996........................  5
                                                                            
            NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS....  6
                                                                            
         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS....................................... 17 
                                                                            
                                                                            
PART II. OTHER INFORMATION                                                  
                                                                            
         ITEM 1. LEGAL PROCEEDINGS.......................................... 25
                                                                            
         ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.................. 25
                                                                            
         ITEM 3. DEFAULTS UPON SENIOR SECURITIES............................ 26
                                                                            
         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........ 26
                                                                            
         ITEM 5. OTHER INFORMATION.......................................... 26
                                                                            
         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................... 26
                                                                            
         SIGNATURES......................................................... 29
                                                                            
         EXHIBIT INDEX...................................................... 30
<PAGE>
 
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                OZEMAIL LIMITED
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                             DECEMBER 31,  SEPTEMBER 30,
                                                                 1996         1997
                                                             ------------  -------------
<S>                                                          <C>           <C>
                                                  ASSETS
 Current assets:
  Cash                                                           A$44,615       A$55,343
  Accounts receivable - trade, net of allowances of A$546                       
  and A$1,196, respectively                                         4,782          6,176
  Receivable from shareholder                                          27             27
  Other receivables                                                   707             --
  Other current assets                                              1,366          1,498
                                                                 --------       --------
 Total current assets                                              51,497         63,044
                                                                                
 Plant and equipment, net                                          13,789         21,918
 Goodwill on acquisition                                               --             88
 Non-current investments                                               24          3,105
                                                                 --------       --------
                                                                 A$65,310       A$88,155
                                                                                
                                  LIABILITIES AND SHAREHOLDERS' EQUITY          
                                                                                
 Current liabilities:                                                           
  Accounts payable                                               A$ 8,835       A$10,696
  Bank overdraft                                                       64            284
  Current portion of financing                                        134          2,897
  Accrued expenses and other liabilities                              980          1,603
  Deposits under agreements with Metro                                 --         18,686
  Net deferred income tax liability                                   152            181
  Income taxes payable                                                399          4,089
                                                                 --------       --------
  Total current liabilities                                        10,564         38,436
                                                                                
  Non-current portion of financing                                    240          4,120
                                                                 --------       --------
 Total liabilities                                                 10,804         42,556
                                                                 --------       --------
                                                                                
 Minority interest                                                     --             --
 Commitments and contingencies (Note 7)                                         
 Shareholders equity:                                                           
 Ordinary Shares, A$0.004 par value; 1,250,000,000 shares                       
 authorized:                                                                    
 103,800,010 shares issued and outstanding                            414            415
 Additional paid-in capital                                        53,234         53,331
 Retained earnings                                                    852         (8,151)
 Cumulative foreign currency translation adjustment                     6              4
                                                                 --------       --------
                                                                   54,506         45,599
                                                                 --------       --------
                                                                 A$65,310       A$88,155
                                                                 ========       ========
</TABLE>
  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
 
                                OZEMAIL LIMITED
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (Unaudited)
<TABLE>
<CAPTION>
 

                                              THREE MONTHS ENDED       NINE MONTHS ENDED
                                                 SEPTEMBER 30             SEPTEMBER 30
                                               1996         1997       1996            1997
                                             -------      --------   --------        --------
<S>                                          <C>          <C>        <C>             <C>
 
Net access revenues                          A$7,977      A$14,728   A$18,561        A$38,557
 
Costs and expenses:
Cost of revenues - network operations
and support                                    1,760         3,967      4,248          10,976
Cost of revenues - communications and                                               
other                                          2,787         4,440      6,535          12,490
Sales and marketing                            1,867         3,845      5,002           9,617
Product development                               50         1,852        159           6,945
General and administrative                       879         1,429      2,891           6,373
Total costs and expenses                       7,343        15,533     18,835          46,401
                                             -------      --------   --------        --------
Income (loss) from operations                    634          (805)      (274)         (7,844)
                                             -------      --------   --------        --------
Other income (expense):                                                             
Foreign exchange gain (loss)                     128          (116)       869            (112)
Interest and other income                        998           918      1,280           2,966
Interest paid to shareholders                      -             -        (68)              -
Interest expense                                  (4)          (96)       (54)           (219)
                                             -------      --------   --------        --------
Income (loss) before provision for income                                           
taxes and minority equity interest             1,756           (99)     1,753          (5,209)
Income tax expense                              (678)         (299)      (748)         (3,794)
Minority equity interest                           -             -         17               -
                                             -------      --------   --------        --------
Net income (loss)                              1,078          (398)     1,022          (9,003)
                                             -------      --------   --------        --------
Net income (loss) per sha re                 A$ 0.01      A$(0.004)  A$  0.01        A$(0.087)
Weighted average ordinary shares and                                                
share equivalents*                           107,524       103,663     88,730         103,555
                                             -------      --------   --------        --------
Net income/(loss) per ADS                    A$ 0.10      A$ (0.04)  A$ (0.12)       A$ (0.87)
Weighted average ADSs                         10,752        10,366      8,873          10,356
</TABLE>

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

                                       4
<PAGE>
 
                                OZEMAIL LIMITED
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                             NINE MONTHS ENDED
                                                               SEPTEMBER 30
                                                         ---------------------------
                                                            1996             1997
                                                         ---------         ---------
<S>                                                      <C>               <C>
Cash flows from operating activities:                               
Net income                                               A$  1,022          A$ (9,003)
Adjustments to reconcile net income to net                          
cash provided by (used in) operating activities:                    
Depreciation and amortization                                1,252              5,244
Allowance for bad and doubtful accounts                        532                652
Assets written off                                               -                578
Unrealized gains on foreign exchange translation              (171)              (113)
Gain on sale of current investment in marketable                    
 securities                                                   (125)                 -
Loss on disposal of plant and equipment                          -                 44
Gain on sale of interests in related entities                    -               (775)
Writeback of provisions and expenses incurred                    -               (556)
Minority equity interest                                       (17)                 -
Changes in assets and liabilities:                                  
Accounts receivable                                         (3,620)            (2,714)
Other current assets                                        (1,609)                38
Accounts payable, accrued expenses and other current                
 liabilities                                                 2,594              1,706
Income taxes payable and deferred income taxes                 304              3,718
Other non current assets                                       201                  -
                                                        ----------          ---------
Net cash provided by/(used in) operating activities            363             (1,181)
                                                        ----------          ---------
CASH FLOWS FROM INVESTING ACTIVITIES:                               
Net repayments from (advances to) shareholders                 131                  -
Other non current assets                                      (298)                 -
Purchase of current investment in marketable securities     (3,089)                 -
Proceeds from sale of marketable securities                  3,214                  -
Purchase of non-current investment                             (53)                 -
Purchase of plant and equipment                             (2,942)            (9,729)
Proceeds from sale of plant and equipment                       -                  37
Deposits under agreements with Metro                            -              18,686
Distribution to minority interest                               -                (896)
                                                        ----------          ---------
Net cash used in investing activities                      (3,037)              8,098
                                                        ----------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES:                               
Proceeds from issuance of ordinary shares                  52,549                  99
Proceeds from short-term debt - due to shareholder          1,300                   -
Net repayment of long term debt                            (1,800)                  -
Net principal repayments on short-term debt - due to                
 shareholder                                                 (236)                  -
Proceeds from long-term debt                                  149                   -
Proceeds from minority shareholders                            77                   -
Payments under capital lease obligations                        -              (1,622)
Proceeds from sale and leaseback transactions                   -               5,000
Net proceeds from (repayment of ) bank overdraft             (197)                221
                                                        ----------          ---------
Net cash provided by financing activities                  51,842               3,698
                                                        ----------          ---------
INCREASE (DECREASE) IN CASH                                49,168              10,615
Cash at the beginning of the period                             9              44,615
Effect of exchange rate changes on subsidiary balances          9                  (1)
Effect of exchange rate changes on translation of US$               
 account                                                      171                 114
                                                        ----------          ---------
Cash at the end of the period                           A$ 49,357           A$ 55,343
</TABLE>

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

                                       5
<PAGE>
 
                                OZEMAIL LIMITED

       NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 1 - THE COMPANY

The Company

     OzEmail Limited and its subsidiaries (the "Company") provide Internet
access and other value added services in Australia and New Zealand.  Cyber
Publications Pty Limited ("Cyber"), a wholly owned subsidiary of OzEmail Limited
("OzEmail"), publishes Australian NetGuide, a monthly magazine available on
newsstands.  Voyager New Zealand, an 80% owned subsidiary of OzEmail
("Voyager"), is a New Zealand Internet service provider.  OzEmail also has an
80% owned dormant subsidiary, OzEmail Technologies Pty Limited (formerly OzEmail
Telecommunications Pty Limited).  In November, 1996 OzEmail Fax Investments Pty
Limited ("OzEmail Fax Investments"), a wholly owned subsidiary of OzEmail,
entered into a partnership agreement with Ideata Pty Limited ("Ideata"), a
company incorporated in Australia, to develop and commercialize devices for
voice and fax digitization and transmission through telephone, Internet and
other communications systems as developed by or on behalf of Ideata.  The
voice/fax system, business, intellectual property in the system, and other
assets of this partnership were then transferred to OzEmail Interline Pty
Limited ("OzEmail Interline") and the partnership was dissolved.  Following this
transaction, OzEmail Fax Investments owns an 80% equity interest in OzEmail
Interline. The Company purchased an additional 8% investment in OzEmail
Interline in April 1998.

     On September 10, 1997 OzEmail entered into an agreement with FTR Holdings
Limited ("FTR"), an entity affiliated with Mr. Malcolm Turnbull, a director of
OzEmail.  Under this agreement, OzEmail purchased all of the issued share
capital of Microweb Pty Limited ("Microweb"), a subsidiary of FTR, for a lump
sum of A$1.00 and deferred consideration equal to 10% of Microweb's revenues in
respect of those areas of the Microweb business as outlined in the agreement for
a period of two years from the effective date of the agreement of July 1, 1997
(see Note 5).

Basis of presentation

     The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions for Form 10-Q and
Article 10 of Regulation S-X.  The condensed balance sheets as of December 31,
1996 and September 30, 1997, the condensed statements of operations for the
three months and nine months ended September 30, 1996 and 1997, and the
condensed statements of cash flows for the nine months ended September 30, 1996
and 1997 have been prepared by the Company, and have not been audited.  In the
opinion of management, these interim financial statements reflect all
adjustments, consisting of normal recurring adjustments necessary to present
fairly the financial position, results of operations, and cash flows of the
Company at September 30, 1997, and for all periods presented.  Although the
Company believes that the disclosures in these financial statements are adequate
to make the information presented not misleading, certain information normally
included in financial statements and related footnotes prepared in accordance
with generally accepted accounting principles has been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
The accompanying financial statements should be reviewed in conjunction with the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.

     The results for the quarter ended September 30, 1997, are not necessarily
indicative of the results that may be expected for the fiscal year ended
December 31, 1997, or any future period.

     The Company conducts most of its business in Australian dollars. Amounts
included in the financial statements and in notes herein are in Australian
dollars and referenced as "A$". References to "US$" are to United States dollars
and references to "NZ$" are to New Zealand dollars.  The exchange rates between
the U.S. dollar and the Australian dollar were $0.7881, $0.7936 and $0.7166
(expressed in U.S. dollars per Australian dollar) at 

                                       6
<PAGE>
 
September 30, 1996, December 31, 1996, and September 30, 1997, respectively.


Restatement and Transactions with Metro

     In November 1996, OzEmail Fax Investments entered into a partnership, in
which it held 80% interest, to commercialize devices for voice and fax
digitization and transmission through telephone, internet and other
communications systems. The voice/fax system, business, intellectual property in
the system, and other assets of this partnership were transferred to OzEmail
Interline and the partnership was dissolved on June 26, 1997.  Following this
transaction, OzEmail Fax Investments owned an 80% equity interest in OzEmail
Interline.

     During June 1997, the Company via OzEmail Fax Investments, and its
partnership interest, entered into agreements with subsidiaries of Metro
Holdings AG ("Metro") under the terms of which (1) the partnership agreed grant
an exclusive license to a subsidiary of Metro in respect to certain Internet
telephony technology for US$9,400,000 (A$12,655,000) and (2) Metro would
purchase a 40% equity interest in OzEmail Interline on a ratable basis from the
current shareholders for US$5,600,000 (A$7,539,000), of which 80% being
US$4,480,000 (A$6,031,000) was accounted for by OzEmail Fax Investment. In the
original second quarter 1997 10Q filing, on the  basis of the above
transactions, the Company reported license fee revenues of A$10,124,000 and a
profit on sale of it's equity in OzEmail of $4,791,000, net of costs associated
with the investment. OzEmail consolidated  Interline's operating losses and
recorded a minority interest of 52%.

     During April 1998, the Company, for a number of reasons, agreed to
repurchase the equity interest in OzEmail Interline held by Metro and rescind
the license agreement in exchange for issuing to Metro 5,400,000 Ordinary Shares
(represented by 540,000 ADSs) valued at approximately US$11,948,000
(A$18,381,000) on April 15, 1998.

     Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
Topic 5-H the Company has restated its previously reported second quarter
results to reverse the gain recorded on the initial sale of the equity interest
in OzEmail Interline. The Company has also reversed previously recorded license
revenues recognized in the second quarter of 1997 from Metro. (As noted in Note
4 to the consolidated financial statements, these transactions are still subject
to tax under Australian taxation laws .)

     Amounts received from Metro totaling A$18,686,000 are reflected as
"Deposits under agreements with Metro" in the accompanying Balance Sheet as of
September 30, 1997. These amounts will be released in April 1998, when the
Company issues the aforementioned 540,000 ADS's and records an additional 8%
equity interest in OzEmail Interline.



                                                        1997
                                                    THIRD QUARTER
                                                    (IN THOUSANDS)
         
Net Income previously reported                         A$ 448
Less adjustments to reported Net Income:                
License Fee Revenue                                      (623)
Minority Interest adjustment                             (223)
Adjusted Net Income (Loss)                               (398)
                                                         ====

     The Company's repurchase of the equity interest in OzEmail Interline held
by Metro and the termination of the license agreement will be recorded as 1998
transactions in the Company's statutory accounts and amounts received from Metro
will be subject to taxation in 1997 under Australian tax laws.

Use of estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles 

                                       7
<PAGE>
 
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 reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Principles of consolidation

     The consolidated financial statements include the accounts of OzEmail and
its controlled subsidiaries and partnerships.  All intercompany accounts and
transactions have been eliminated.

     Loses in excess of minority interest in consolidated subsidiaries are
recorded 100% by the Company.

Revenue recognition

     The Company's revenues are derived primarily from hourly connect time and
monthly user charges for access to the Internet and are recognized over the
period such services are rendered, if collection of the resulting receivable is
deemed probable and provided no significant obligations remain outstanding.  The
Company also derives revenue from its share of license fees for the licensing of
OzEmail Phone and OzEmail Fax technology to network affiliates of OzEmail
Interline, one-time registration, sales of the Company's value added services,
set-up and establishment fees, advertising revenues received from the provision
of online content, and timed charges for the provision of the OzEmail Phone
Internet telephony service in Australia.  Revenues from registration, set-up and
establishment fees are recognized at the time these services are completed and
related software, hardware and other services are delivered and provided.
Revenues associated with other activities are recognized as services are
rendered and products are delivered.  Revenues from advertising associated with
NetGuide Online, OzEmail's web-based hypertext-linked guide to the Internet, are
recognized ratably over the period such advertisements are run.

     In conjunction with providing hourly and monthly internet access, the
Company provides free telephone technical support to its customers.  Costs of
these services are period expensed to match the related revenues recognized from
access to the Internet.

Cost of revenues

     The Company segregates its cost of revenues into two categories:  network
operations and support and communications and other.

     Cost of revenues - network operations and support includes: technical and
customer support staff; network and equipment maintenance and support;
depreciation expense on network equipment; and applicable overhead costs.

     Cost of revenues - communications and other includes: monthly
telecommunications expenses; a fee payable as a percentage of revenue to the New
South Wales government for revenues sourced from government customers; merchant
commissions on credit card sales, cost of domain name registrations; and
editorial and production costs related to the production of NetGuide Magazine.

Plant and equipment

     Plant and equipment are stated at cost.  Depreciation is computed using the
straight line method over the estimated useful lives of the assets.  Leasehold
improvements, including labor and overhead costs of Points of Presence (POPs),
fax interface node and voice interface node installations, are amortized over
the shorter of the term of the related lease or the estimated useful lives of
the assets.  Plant and equipment classes and their respective useful lives are
as follows:

                                                                   YEARS
                                                                   -----
    Telecommunications plant and equipment                           3
    Computer equipment                                               3
    Furniture and fittings                                           5

                                       8
<PAGE>
 
Advertising costs

     The Company expenses advertising costs as incurred.  Given its limited
operating history, the Company does not believe that sufficient objective
evidence exists to estimate probable future benefits of direct response
advertising; accordingly, the costs relating to direct response advertising are
expensed as incurred.  The costs associated with direct response advertising
include costs of printing, production and shipping of starter kits.

Income taxes

     Income taxes are computed using the asset and liability method.  Under the
asset and liability method, deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax
bases of assets and liabilities and are measured using the currently enacted tax
rates and laws.

A valuation allowance is established for any deferred assets for which
realization is considered more likely than not.

Functional currency

     The functional currency of OzEmail, Cyber, OzEmail Fax Investments, OzEmail
Interline and Microweb is the Australian dollar.  The functional currency of
Voyager is the New Zealand dollar.  Voyager's balance sheet accounts are
translated into Australian dollars at the exchange rate prevailing at the
balance sheet date.  Revenues, costs and expenses are translated into Australian
dollars at average rates for the period.  Gains and losses resulting from
translation are accumulated as a component of shareholders' equity.

Concentration of credit risk

     Financial instruments that potentially subject the Company to credit risk
consist principally of trade receivables from customers in Australia and New
Zealand.  The Company generally requires no collateral from its customers.
However, the Company maintains an allowance for bad and doubtful accounts
receivable based on the expected collectibility of all accounts receivable.  At
December 31, 1996 and September 30, 1997, no customer accounted for more than
10% of accounts receivable.  Cash and cash equivalents held with banks and
financial institutions in Australia and New Zealand also potentially subject the
Company to credit risk.

Dependence on certain third party suppliers

     The Company is currently dependent on third party suppliers with respect to
purchase of certain key products and services including services provided by
Telstra, digital modems, server equipment, and license for its web browser
software.  Although alternate sources of supply are available for these
products, making a transition could prove costly and cause interruption in
service.  Failure to obtain the key products on a timely basis could have a
material adverse effect on the Company's business, results of operations and
financial condition.

Net income (loss) per share

     Net income (loss) per share is based upon the weighted average number of
Ordinary and Ordinary equivalent shares outstanding during the period.  Ordinary
equivalent shares consist of stock options (using the treasury stock method).
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
Ordinary and Ordinary equivalent shares issued during the period from April 1995
to March 1996 have been included in the calculation of net income (loss) per
share as if they were outstanding for all periods presented (using the treasury
stock method for options at the initial public offering price).

Product development costs

                                       9
<PAGE>
 
     Statement of Financial Accounting Standard No. 86 (SFAS 86) requires the
capitalization of certain software development costs once technological
feasibility is established, which the Company defines as the completion of a
working model.  The capitalized cost is then amortized on a straight line basis
over the estimated product life, or on the ratio of current revenues to total
projected product revenues, whichever is greater.

Stock Based Compensation

     The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of APB No. 25 Accounting for Stock Issued to
Employees, and complies with the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation.  Under APB No. 25, compensation cost
is recognized based on the difference, if any, on the date of grant between the
fair value of the Company's stock and the amount an employee must pay to acquire
the stock.

Dividends

     Any dividend payments made by the Company would, under the Australian
Corporations Law, be limited to the Company's retained earnings, which
aggregated A$852,000 at December 31, 1996 and A$9,761,000 at September 30, 1997
as determined under the Australian Corporations Law and relevant Australian
Accounting Standards.  Any payment of dividends would be made in Australian
dollars.

                                      10
<PAGE>
 
Cash equivalents and short-term investments

     All highly liquid investments with a maturity of three months or less when
purchased are considered to be cash equivalents and those with maturities
greater than three months are considered short-term investments.  As of December
31, 1996, and September 30, 1997, the Company had no current investments with
original maturities greater than three months.

Fair value of financial instruments

     The carrying amount of the Company's financial instruments, including
accounts receivable, approximates fair values.

Share split

          On September 18, 1997, a general meeting of shareholders approved the
subdivision of each of the issued and unissued OzEmail A$0.04 ordinary shares
into ten A$0.004 ordinary shares.  Each American Depositary Share represents 10
A$0.004 OzEmail ordinary shares.  All prior balances have been amended to take
account of the share split.

NOTE 2 - PLANT AND EQUIPMENT


<TABLE>
<CAPTION>
 
                                                              DECEMBER 31,        SEPTEMBER 30,
                                                                  1996                 1997
                                                              -----------         ------------
                                                                       (IN THOUSANDS)
<S>                                                           <C>                    <C>
PLANT AND EQUIPMENT CONSISTED OF THE FOLLOWING:
Telecommunications plant and equipment                          A$ 6,930                A$ 16,332
Computer Equipment                                                 8,529                    9,457
      Furniture and fittings                                         262                    1,788
      Leasehold improvements                                         512                    1,125
                                                                --------                ---------
                                                                  16,233                   28,702
                                                                --------                ---------
      LESS:
      Accumulated depreciation                                    (2,444)                  (6,784)
                                                                --------                ---------
      Net plant and equipment                                   A$13,789                A$ 21,918
                                                                ========                =========
</TABLE>

NOTE 3 - NON CURRENT ASSETS

Non Current Investments

     The Company recorded a gain of A$775,000 when it transferred the assets of
the Web Wide Media business to Softbank Interactive Marketing Inc. ("Softbank")
on March 13, 1997 in return for the issue of 7.25% of the total share capital of
Softbank (subsequently reduced to 6.25% as a consequence of the allotment of
stock options to Softbank employees).  The equity holding in Softbank was valued
at A$3,082,000 as at March 31, 1997.  This valuation was based on an independent
valuation of the Company's interest in Softbank. As at September 30, 1997, the
directors consider this valuation to still be indicative of the value of the
investment.

NOTE 4 - ACQUISITIONS

OzEmail West

   On September 10, 1997, OzEmail entered into an agreement with FTR Holdings
Limited ("FTR"), an entity affiliated with Mr. Malcolm Turnbull, a director of
OzEmail. Under this agreement, OzEmail purchased all of the issued share capital
of Microweb, a subsidiary of FTR, for a lump sum cost of A$1.00.  Contingent
consideration 

                                      11
<PAGE>
 
has also been agreed equal to 10% of Microweb's revenues, for a period of two
years effective from July 1, 1997 in respect to the following areas of the
Microweb business.


(a) all revenue received by OzEmail in respect of any services delivered to any
    person who at the time of invoice has an account with OzEmail and an invoice
    address in Western Australia; and

(b) any software products or web developments, developed by Microweb which are
    sold, licensed, assigned or otherwise dealt with, whether such revenue is
    earned by Microweb, or any other entity which OzEmail owns or controls.


This consideration is deemed to be a compensation expense payable to the
previous shareholders of the Company and will be recognized through the profit
and loss as incurred.

In October 1997, Microweb underwent a change of name to OzEmail West (Note 6).

   The acquisition of OzEmail West was accounted for using the purchase method
of accounting and, accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based upon their fair values as follows:

                                                             (in thousands)
Fair value of assets acquired                                    A$  127
Less:
Cash paid                                                              -
                                                                 -------
Liabilities assumed                                              A$  127
                                                                 =======

     The excess of the purchase price over the fair value of net assets acquired
was approximately A$88,000 and has been recorded as goodwill.  This will be
amortized on a straight-line basis over 6 months commencing from October 1,
1997.  The operating results of OzEmail West have been included in OzEmail's
combined statements of operations since the date of acquisition.  The pro forma
effect on the year ended December 31, 1997 and 1996 is considered immaterial.

NOTE 5 - INCOME TAXES

     The Company's incurred tax for the nine months ended  September 30, 1997
despite US GAAP losses being recorded, as the Company was assessed under
Australian taxation Laws, on A$16,155,000 representing 80% of both the license
fee revenue and proceeds from Metro when purchasing its 40% share of OzEmail
Interline received as part of the Metro transactions and will not be recorded as
income for U.S. GAAP purposes.

     Income before provision for income taxes and minority interest in the nine
months to September 30, 1997, includes A$1,010,000 of losses relating to the New
Zealand operations of the Company's majority owned subsidiary Voyager.

     Voyager has incurred a loss since its formation in 1995.  At September 30,
1997, the Company had A$1,915,000 of net operating loss carryforwards associated
with its New Zealand operations.  These loss carryforwards are available to
reduce future taxable income of Voyager without any time limitation.  However,
the loss carryforwards will expire in the event of a change in ownership of
Voyager of greater than 51%.  Management believes that, based on the history of
such losses and other factors, the weight of available evidence indicates that
it is more likely than not that the New Zealand operations will not be able to
utilize the net operating loss carryforwards, and thus a full valuation reserve
of A$689,000 has been recorded at September 30, 1997 with respect to such
losses.  If future evidence indicates that it is likely that the Company will be
able to utilize its New Zealand operations' net operating loss carryforwards in
future years, the valuation reserve will be reduced, which correspondingly will
reduce the Company's tax provision.

                                      12
<PAGE>
 
NOTE 6 - RELATED PARTY TRANSACTIONS

     In the quarter ended September 30, 1997,  the Company paid $25,000 to a
Company affiliated with a non-executive director for corporate advisory services
and related expenses associated with the proposed listing of OzEmail on the
Australian Stock Exchange.

     In the quarter ended September 30, 1997, the Company paid an amount of
A$1,800 to a director of a company affiliated with one of its executive
directors for consultancy services.

     On May 24, 1997, the Company and FTR, an entity affiliated with Mr. Malcolm
Turnbull, a director of the Company, entered into an agreement whereby the
Company agreed to pay FTR gross income based on 35% of all revenue received by
the Company in respect of OzEmail services delivered to subscribers in Western
Australia, net of referral fee amounts paid to third parties in connection with
the establishment of accounts with OzEmail for services.  FTR agreed that at
least 28.6% of all revenues paid to it by the Company under the agreement would
be spent on marketing and promotion expenditure within Western Australia. The
agreement had an initial term of two years, during which either party had a
right to terminate on sixty days notice. After the initial term, the agreement
would be automatically renewed until terminated by either party on sixty days
notice in writing. The parties agreed that if the Company exercised its right to
terminate during the initial term, then FTR would receive, in each month for a
period of twelve months following expiry of the agreement, gross income based on
25% of all revenue received by the Company in respect of OzEmail services in
Western Australia, net of referral fees paid to third parties.

     On September 10, 1997 OzEmail and FTR terminated this agreement and entered
into a new agreement whereby OzEmail purchased all of the issued share capital
of Microweb Pty Limited (Microweb), a subsidiary of FTR, for a lump sum of
A$1.00 and deferred consideration equal to 10% of Microweb's revenues in respect
of those areas of the Microweb business as outlined in the agreement for a
period of two years from the effective date of the agreement of July 1, 1997.
Such revenues include, but are not limited to:

(a)  all revenue received by OzEmail in respect of any services delivered to any
     person who at the time of invoice has an account with OzEmail and an
     invoice address in Western Australia; and

(b)  any software products or web developments, developed by Microweb which are
     sold, licensed, assigned or otherwise dealt with, whether such revenue is
     earned by Microweb, or any other entity which OzEmail owns or controls.

NOTE 7 - STOCK OPTIONS

     Mr. David Spence, the President and Chief Operating Officer of the Company,
was granted options to purchase 5,675,600 Ordinary Shares at A$0.33 per Share in
August 1995, of which options to purchase 300,000 Shares were exercised on
August 11, 1997.

     At September 30, 1997 OzEmail has on issue 103,800,010 Ordinary Shares. Of
these Shares, 33,380,000  are represented by ADSs which are now in the ratio of
one ADS for every ten Ordinary Shares.

     At September 30, 1997 options to purchase 3,069,990 Ordinary Shares are
outstanding and 2,972,490 of such options are vested.  At September 30, 1997
options to purchase 3,055,000 Ordinary Shares are available for grant under the
plan.

                                      13
<PAGE>
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES

Litigation

     On July 11, 1996 the Company reported that an adverse ruling had been
rendered by the Federal Court of Australia in the lawsuit against it by Trumpet
Software Pty Limited ("Trumpet") over alleged copyright infringements and
violations of Australia's Trade Practices Act. In August 1997, the Company put
forward an Offer of Compromise for the sum of A$500,000 (inclusive of interest
but exclusive of legal fees expensed by Trumpet), which offer was duly accepted
by Trumpet in settlement of the litigation. The Company has accrued an estimated
amount for its exposure with respect to legal fees previously expensed by
Trumpet.

     On March 18, 1997, the Australasian Performing Rights Association ("APRA")
filed a statement of claim against the Company.  APRA claims that the Company
has infringed copyright in a variety of musical works owned and controlled by
APRA by the Company's customers to download those works.  APRA seeks injunctive
relief and damages against the Company.  The Company is defending this action.
The Company does not believe that this action will give rise to any material
liability.  However, there can be no assurance that the ultimate disposition of
this claim will not have a material adverse impact on the business, results of
operations or financial condition of the Company, or that the Company will not
be required to obtain a license or pay a license fee.

     OzEmail owns an 80% equity interest in Voyager, with the remaining 20%
equity interest held by Messrs. John O'Hara and Alistair Stevens, formerly two
non-executive directors of Voyager (the "Minority Shareholders").  OzEmail and
the Minority Shareholders are parties to a Shareholders Agreement setting out
certain rights and restrictions on the employment and stock ownership of the
Minority Shareholders.  Pursuant to the Shareholders Agreement and other
agreements between OzEmail and Voyager, OzEmail undertakes to provide its
services and intellectual property to Voyager at cost.  OzEmail has the power to
select a majority of the board of directors of Voyager.  In the event of
termination of employment of the Minority Shareholders, the Shareholders
Agreement provides that the Minority Shareholders have a right to sell their
equity interest in Voyager to OzEmail at fair value.  The Minority Shareholders
are also entitled to participate on a pro rata basis in any sale by OzEmail of
its equity interest in Voyager.  On January 2, 1997 the Minority Shareholders
provided formal notice to OzEmail that they wished to exercise their option
under the Shareholders Agreement to sell their shares in Voyager to OzEmail at
fair value. The parties could not reach a consensus on the price at which such
sale of shares would take place and the Minority Shareholders commenced
proceedings in September, 1997, in the High Court of New Zealand for recovery of
the share sale price. OzEmail has sought legal advice from legal counsel and
intends to defend the matter. The Company has provided for an amount that it
believes adequately covers the fair value of the shares and all other costs
associated with this claim.

     From time to time, the Company has received, and may in the future receive,
notice of claims by other parties against the Company. As of the date of this
Form 10-Q, the Company is not a party to any other legal proceedings, and is not
aware of any other pending or threatened proceedings the outcome of which, in
the opinion of management, would have a material adverse impact on the Company's
business, results of operations or financial condition.

Leases

     The Company leases premises, facilities, and certain of its network and
host system equipment, hardware and equipment relating to office fitout, under
capital leases and non-cancelable operating leases expiring in various years
through 2001.  At September 30, 1997 the Company's future minimum payments under
non-cancelable operating leases with initial terms of one year or more
aggregated A$4,304,000.  At September 30, 1997, the present value of future
minimum capital lease payments, including the current portion of A$2,956,000,
aggregated A$7,018,000.

                                      14
<PAGE>
 
Capital Expenditure Commitments

     As at September 30, 1997, total capital expenditure, relating to
telecommunications plant and equipment and communications equipment contracted
but not provided for in the financial statements totaled A$1,202,000.

NOTE 9 - SUBSEQUENT EVENTS

Capital Expenditure commitments

     Subsequent to September 30, 1997, the Company has entered into capital
expenditure commitments which total approximately A$1,232,000.  The capital
commitments relate to network, communications and computer equipment.

Acquisition of Access One

     On November 8, 1997, the Company agreed to purchase the Internet business
of Solution 6 Holdings Limited ("Solution 6").  This transaction involves the
purchase by the Company of all of the shares in Access One Pty Limited ("Access
One"), a wholly-owned subsidiary of Solution 6, and all assets which are
necessary to conduct the Internet business. The transaction was completed on
November 25, 1997 at which date the consideration for the acquisition was
determined as the sum of $A5 million and on the basis of the issue of 10,000,000
Ordinary Shares (reduced from 10,500,000 as determined in the preliminary
agreement).  Of such shares, 7,200,000 were issued to Solution 6, on November
25, 1997, with the balance to be issued on satisfaction of determining a working
capital adjustment representing the adjustment to the fair value of net assets
acquired as determined in accordance with the terms of the agreement for the
sale and purchase of the Internet business of Solution 6.  The total working
capital adjustment represents the best estimate by the Company's management of
the amount considered to be repayable by Solution 6.  As part of the
transaction, Solution 6 granted to OzEmail unlisted equity securities being
options to acquire 4,160,000 Solution 6 ordinary shares at an exercise price of
A$0.75.  The options have been valued at the fair market value as determined on
25 November 1997, using the Black and Scholes model, and have been included
within other assets.  The option has a term of three years from the completion
of the acquisition.  Additionally, Mr Chris Tyler, Chief Executive Officer of
Solution 6, accepted an invitation to join the Board of Directors of OzEmail.

NOTE 10 - NET INCOME (LOSS) PER SHARE

     In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings per
Share. SFAS No. 128 establishes a different method of computing net income per
share than is currently required under the provisions of Accounting Principles
Board Opinion No. 15. Under SFAS No. 128, the Company will be required to
present both basic net income per share and diluted net income per share. Basic
net income (loss) per share would have been A$(0.004) and A$0.010 per share for
the three months ended September 30, 1997 and 1996, respectively, and A$(0.087)
and A$0.012 for the nine months ended September 30, 1997 and 1996, respectively.
Diluted net income (loss) per share would have been A$(0.004) and A$0.010 per
share for the three months ended September 30, 1997 and 1996 respectively and
A$(0.087) and A$0.012 for the nine months ended September 30, 1997 and 1996
respectively. The Company plans to adopt SFAS No 128 in its fiscal quarter
ending December 31, 1997 and at that time all historical net income per share
data presented will be restated to conform to the provisions of SFAS No. 128.

                                      15
<PAGE>
 
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                            -----------------
                                                              1996      1997
                                                            -------    ------
<S>                                                         <C>        <C>
Cash paid for interest....................................    A$122    A$  334
Cash paid for tax.........................................      442         76
Non cash investing and financing:
Property and equipment acquired under capitalized leases..       --      5,000
</TABLE>

                                       16
<PAGE>
 
PART I.  FINANCIAL INFORMATION


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

     Except for historical information contained herein, the matters discussed
in this report contain forward-looking statements that involve risks and
uncertainties.  The Company's actual results could differ materially from those
anticipated by these forward-looking statements as a result of various factors,
including those set forth in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.  Factors that could cause or contribute to such
differences include those discussed herein as well as those included in the
documents that the Company files from time to time with the Securities and
Exchange Commission.  The Company disclaims any obligation to update its
forward-looking statements.


OVERVIEW

     OzEmail holds 80% of the issued share capital of OzEmail Interline, which
is responsible for commercializing technology for the transmission of voice and
fax communications over the Internet. It is the ongoing intention of OzEmail
Interline to create an international network of affiliates responsible for
rolling out the technology on a networked basis throughout the world. Thus, it
is intended that customers of an individual network affiliate will be able to
call locations throughout the world through the gateways of other affiliate
networks. In July, 1997, OzEmail Interline entered into a non-exclusive license
and service provider agreement with Concentric Network Corporation
("Concentric") of the USA for the provision of the service in the USA.
Concentric'v network will serve as a USA "gateway", terminating calls from
overseas and originating international calls made from the USA to the other
countries where network affiliates operate compatible networks. In September,
1997, OzEmail Interline entered into an exclusive license and service provider
agreement with MagicTel for the provision of the service in Hong Kong.


Restatement and Transactions with Metro Holdings Ag

     During June 1997, the Company via OzEmail Fax Investments, and its
partnership interest with Ideata, entered into agreements with subsidiaries of
Metro Holdings AG ("Metro") under the terms of which (1) the partnership agreed
to grant an exclusive license to a subsidiary of Metro in respect to certain
Internal telephony technology US$9,400,000 (A$12,655,000) and (2) Metro would
purchase a 40% equity interest in OzEmail Interline on a ratable basis from the
current shareholders for US$5,600,000 (A$7,539,000) of which 80% being
US$4,480,000 (A$6,031,000) was accounted for by OzEmail Fax Investments and the
remaining 20% being accounted for by Ideata.  During April 1998, the Company ,
for a number of reasons,  agreed to repurchase the equity interest in OzEmail
Interline held by Metro and rescind the license agreement in exchange for
issuing to Metro 5,400,000 Ordinary Shares (representing 540,000 ADSs).  Metro
has agreed to act as an agent in Europe for the Company's prepaid phone card
service.

     As the equity interest in OzEmail Interline held by Metro was repurchased
within one year of sale, in accordance with Securities and Exchange Commission
Staff Accounting Bulletin Topic 5-H the Company has restated its previously
reported quarterly results to reverse the gain recorded on the initial sale of
the equity interest in OzEmail Interline. The Company has also reversed
previously recorded license revenues. Amounts received from Metro totaling
$18,686,000 are reflected as "Deposits under agreements with Metro" in the
accompanying Balance Sheet as of September 30 1997.

     The Company's repurchase of the equity interest in OzEmail Interline held
by Metro and the termination of the license agreement will be recorded as 1998
transactions in the Company's statutory accounts and amounts received from Metro
will be subject to taxation in 1997 under Australian tax laws.

     In September, 1997, OzEmail commenced the roll-out of support for Flex and
x2 56kbps modem technology in Australia, offering 50 free hours access bundled
with every US Robotics or Flex 56kbps modem, available through leading retailers
across Australia.

                                       17
<PAGE>
 
     In July, 1997, OzEmail launched an Internet Starter Kit dedicated
specifically to families.  The OzEmail Internet Family Pack gives a family a
unique Internet address and separate OzEmail user identification and Email
addresses for up to 4 family members.  Each family has 20Mb of space on
OzEmail's Web server to publish through OzEmail's Web pages.  The Family Pack
also gives the option of parental control by including a trial version of the
Cyber Patrol Internet filtering software. OzEmail also commenced the
distribution of a new Internet Starter Kit in July 1997 at leading Australian
stores for A$9.95, offering no up-front registration fee and eight free hours of
Internet access. This is designed to make Internet access easy and appealing to
first time users.

     OzEmail retained its Australian peak connect-time charges at A$5.00
(US$3.58) in the third quarter of 1997. The current industry environment remains
very dynamic and competitive. As a result of increasing competition in the
Internet access and services industry, the Company expects to encounter
significant pricing pressure, which in turn could result in reductions in the
average selling price of the Company's services.


POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

     The Company's prospects should be considered in the light of the risks,
expenses and difficulties frequently encountered by companies in the early stage
of development, particularly companies in new and evolving markets.  The
Company's operating results may fluctuate significantly in the future as a
result of a variety of factors, including user demand for Internet access and
services, capital expenditures and other costs relating to the maintenance and
expansion of operations, the number and mix of residential and business
customers, customer retention rates, pricing changes by the Company and its
competitors, new service introductions by the Company and its competitors,
delays or expense in obtaining necessary equipment, access to telecommunications
transmission capacity supplied by telecommunication carriers, economic
conditions in the Internet access and services industry, and general economic
conditions.  There can be no assurance that the Company will be able to offset
the effects of any future price reductions or cost increases with increased
numbers of customers, higher revenue from enhanced services, cost reductions or
otherwise.  There can be no assurance that revenue growth will continue or that
the Company will in the future sustain profitability on either a quarterly or
annual basis.

     The Company's expense levels are based in part on its expectations
regarding future revenues and are fixed to a large extent in the short term.  As
a result, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall.  Any significant revenue
shortfall would therefore have a material adverse impact on the Company's
results of operations.

     The Company anticipates a decrease in demand during Australia and New
Zealand's summer months in December, January and February of each year.  There
can be no assurance that the Company's results in any future quarter will not be
negatively affected by such trends.


LITIGATION

     On July 11, 1996 the Company reported that an adverse ruling had been
rendered by the Federal Court of Australia in the lawsuit against it by Trumpet
Software ("Trumpet")over alleged copyright infringements and violations of
Australia's Trade Practices Act. In August, 1997, the Company proposed an Offer
of Compromise for the sum of A$500,000 (inclusive of interest but exclusive of
legal fees previously expensed by Trumpet), which offer was duly accepted by
Trumpet in settlement of the litigation. The Company has accrued an estimated
amount for its exposure with respect to legal fees previously expensed by
Trumpet.

     On March 18, 1997, the Australasian Performing Rights Association ("APRA")
filed a statement of claim against the Company.  APRA claims that the Company
has infringed copyright in a variety of musical works owned and controlled by
APRA by permitting the Company's customers to download those works.  APRA seeks
injunctive relief and damages against the Company.  The Company is defending
this action.  The Company does not believe that this action will give rise to
any material liability.  However, there can be no assurance that the ultimate
disposition of this claim will not have a material adverse impact on the
business, results of operations or financial condition of the Company, or that
the Company will not be required to obtain a license or pay a license fee.

                                       18
<PAGE>
 
     OzEmail owns an 80% equity interest in Voyager, with the remaining 20%
equity interest held by Messrs. John O'Hara and Alistair Stevens, formerly two
directors of Voyager (the "Minority Shareholders").  OzEmail and the Minority
Shareholders are parties to a Shareholders Agreement setting out certain rights
and restrictions on the employment and stock ownership of the Minority
Shareholders.  Pursuant to the Shareholders Agreement and other agreements
between OzEmail and Voyager, OzEmail undertakes to provide its services and
intellectual property to Voyager at cost.  OzEmail has the power to select a
majority of the board of directors of Voyager.  In the event of termination of
employment of the Minority Shareholders, the Shareholders Agreement provides
that the Minority Shareholders have a right to sell their equity interest in
Voyager to the Company at fair value.  The Minority Shareholders are also
entitled to participate on a pro rata basis in any sale by OzEmail of its equity
interest in Voyager.  On January 2, 1997 the Minority Shareholders provided
formal notice to OzEmail that they wished to exercise their option under the
Shareholders Agreement to sell their shares in Voyager to OzEmail at fair value.
The parties could not reach a consensus on the price at which such sale of
shares would take place and the Minority Shareholders commenced proceedings in
September, 1997, in the High Court of New Zealand for recovery of the share sale
price. OzEmail has sought legal advice from legal counsel and intends to defend
the matter. The Company has provided for an amount that it believes adequately
covers the fair value of the shares and all other costs associated with this
claim.

     From time to time, the Company has received, and may in the future receive,
notice of claims by other parties against the Company. As of the date of this
Quarterly Report, the Company is not a party to any other legal proceedings, and
is not aware of any other pending or threatened proceedings the outcome of
which, in the opinion of management, would have a material adverse impact on the
Company's business, results of operations or financial condition.

                                       19
<PAGE>
 
RESULTS OF OPERATIONS

     The following table sets forth the consolidated operating results of the
Company as a percentage of net revenue.

<TABLE> 
<CAPTION> 
                                                    Three Months    Nine Months
                                                       Ended           Ended
                                                    September 30,   September 30,
                                                    ------------    -------------       
                                                    1996    1997    1996     1997
                                                    ----    ----    ----     ----
<S>                                                 <C>     <C>     <C>      <C> 
Revenues........................................... 100%    100%    100%     100%
Costs and expenses
Cost of revenues - network operations and support..  22.1    26.9    22.9     28.5
Cost of revenues - communications and other........  34.9    30.1    35.2     32.4
Sales and marketing................................  23.4    26.1    26.9     24.9
Product development................................   0.6    12.6     0.9     18.0
General and administrative.........................  11.0     9.7    15.6     16.5
                                                     ----   -----   -----   ------
Total costs and expenses...........................  92.0   105.4   101.5    120.3
                                                     ----   -----   -----   ------
Income from operations.............................   8.0    (5.4)   (1.5)   (20.3)
Interest and other income (expense) net............  12.5     5.6     6.2      7.1
Foreign exchange gain (loss).......................   1.6    (0.8)    4.7     (0.3)
Income before provision for income taxes and
   minority equity interest........................  22.0    (0.6)    9.4    (13.5)
Net income.........................................  13.5%  (1.3)%    5.5%  (23.3)%
</TABLE>

COMPARISON OF REVENUES FOR THREE MONTHS ENDED SEPTEMBER 30, 1997, WITH REVENUES
FOR THREE MONTHS ENDED SEPTEMBER 30, 1996

     Revenues consist primarily of hourly connect-time charges for Internet
access.  The Company also derives revenues from the licensing of Internet
telephony technology to network affiliates, one-time registration charges,
monthly connection charges, sales of the Company's value added services, set-up
and establishment fees, advertising and subscription fees associated with
NetGuide Magazine and NetGuide Online, and advertising revenue from the
provision of the Company's online content. From May, 1997, the Company has also
recognized timed charge revenue from OzEmail Phone customers in Australia.

     Revenues grew by 84.6% to A$14,728,000 in the third quarter of 1997 from
A$7,977,000 in the third quarter of 1996.  The increase in revenues was
attributable primarily to growth in the number of active customers using the
Company's services and increases in billable hours; revenue from the provision
of Internet services to the New South Wales Department of School Education; an
up-front license fee from the licensing by OzEmail Interline of its Internet
telephony technology to its network affiliate in the United States;  increased
revenue from the sale and usage of ISDN connections and permanent modems; and
increased sales from the Company's value added services.  As of September 30,
1997, the Company's active customer base consisted of 127,200 active customers
as compared to 95,700 active customers as at September 30, 1996.


COMPARISON OF REVENUES FOR NINE MONTHS ENDED SEPTEMBER 30, 1997, WITH REVENUES
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996

     Revenues grew by 107.7% to A$38,557,000 in the nine months ended September
30, 1997 from A$18,561,000 in the nine months ended September 30, 1996. The
increase in revenues was primarily attributable to growth in the number of
active customers using the Company's services and increases in billable hours;
revenue from the provision of Internet services to the New South Wales
Department of School Education; increased revenue from usage of ISDN connections
and permanent modems; and increased sales from the Company's value added
services.

                                       20
<PAGE>
 
COMPARISON OF COSTS AND EXPENSES FOR THREE MONTHS ENDED SEPTEMBER 30, 1997, WITH
COSTS AND EXPENSES FOR THREE MONTHS ENDED SEPTEMBER 30, 1996

     Cost of Revenues - Network Operations and Support.  Cost of revenues -
network operations and support includes: technical and customer support staff;
network and equipment maintenance and support; depreciation and amortization
expense on network equipment; and applicable overhead costs.  Cost of revenues -
network operations and support increased 125.4% to A$3,967,000 in the third
quarter of 1997 from A$1,760,000 in the third quarter of 1996, and increased as
a percentage of net revenues to 26.9% from 22.1%, respectively.  The increase in
cost of revenues - network operations and support in absolute terms was
primarily attributable to expansion of the Company's customer base and the
concurrent increases in the size and complexity of the Company's
telecommunications network and support infrastructure for Internet access and
installation of the OzEmail Phone and OzEmail Fax networks. The increase in cost
of revenues - network operations and support as a percentage of net revenues was
primarily attributable to higher depreciation and overhead costs associated with
the expansion of the Company's Australian network.

     Cost of Revenues - Communications and Other.  Cost of revenues -
communications and other includes: monthly telecommunications expenses;
consultancy fees related to communications costs; editorial and production costs
related to the production of NetGuide in Australia; cost of domain name
registrations; and a fee payable as a percentage of revenue to the New South
Wales Government for revenues sourced from government customers. Cost of
revenues - communications and other increased 59.3% to A$4,440,000 in the third
quarter of 1997 from A$2,787,000 in the third quarter of 1996, but decreased as
a percentage of net revenues to 30.1% from 34.9%, respectively.  The increase in
cost of revenues - communications and other in absolute terms was primarily
attributable to increases in the use of the Company's services and network.

     Sales and Marketing.  Sales and marketing expenses include: sales and
marketing personnel; promotional expenses; expenses related to the provision of
the Company's online content services; and allocable overheads. Specific
marketing costs include advertising, co-operative disk bundling with computer
hardware and modem manufacturers and retailers, computer fairs and registration
starter disks.  Sales and marketing expenses increased 105.9% to A$3,845,000 in
the third quarter of 1997 from A$1,867,000 in the third quarter of 1996, and
increased as a percentage of net revenues to 26.1% from 23.4%, respectively.
The increase in sales and marketing expenses in absolute terms was primarily
attributable to: increased promotional activities; increased salaries and wages
related to the hiring of additional staff for expansion of the Company's
corporate sales force; the OzEducate department; and the provision of the
Company's online content services.

     Product Development.  Product development expenses include: software
development; engineering staff; software development fees paid to consultants;
and allocable overheads.  Product development expenses increased to A$1,852,000
in the third quarter of 1997 from A$50,000 in the third quarter of 1996, and
increased as a percentage of net revenues to 12.6% from 0.6%, respectively.  The
increase in product development expenses was primarily attributable to costs
related to the commercialization of the OzEmail Interline Internet telephony
technology.

     General and Administrative.  General and administrative expense includes:
administrative staff costs; depreciation of non-network equipment; travel
expense of management; allocable overheads; and allowance for bad and doubtful
accounts and bank charges.  General and administrative expenses increased 62.6%
to A$1,429,000 in the third quarter of 1997 from A$879,000 in the third quarter
of 1996, but decreased as a percentage of net revenues to 9.7% from 11.0%,
respectively.  The increase in general and administrative expenses is primarily
attributable to: costs associated with increased provisioning in respect of
in line with receivables growth and corporate policy; increased consultancy
fees; and hiring of additional management, finance and administrative staff to
support the Company's expanding customer base.

     Interest and Other Income and Expense.  Interest and other income decreased
to A$918,000 in the third quarter of 1997 from A$998,000 in the third quarter of
1996. The decrease was primarily attributable to a decrease in short-term
Australian interest rates throughout 1997.  Interest expense increased to
A$96,000 in the third quarter 

                                       21
<PAGE>
 
of 1997 from A$4,000 in the third quarter of 1996. The increase was primarily
attributable to finance costs related to capital leases on network equipment.
Interest expense in the third quarter of 1996 related to a shareholder loan.

     Income Taxes.  The Company's tax expense for the third quarter, 1997, is
based on its forecast tax provision for its Australian operations for the year
ended December 31, 1997.  The Company has recorded an income tax expense despite
the US  GAAP losses recorded.  This is primarily due to losses incurred in
Voyager which management believes based on available evidence, it is more likely
than not that these operations will not be able to utilize the operating loss
carryforwards, and thus a full valuation reserve has been recorded.  At
September 30, 1997, the Company recorded a net deferred tax liability of
A$181,000 for its Australian operations.


COMPARISON OF COSTS AND EXPENSES FOR NINE MONTHS ENDED SEPTEMBER 30, 1997 WITH
COSTS AND EXPENSES FOR NINE MONTHS ENDED SEPTEMBER 30, 1996

     Cost of Revenues - Network Operations and Support. Cost of revenues -
network operations and support increased 158.3% to A$10,976,000 in the nine
months ended September 30, 1997 from A$4,248,000 in the nine months ended
September 30, 1996, and increased as a percentage of net revenues to 28.5% from
22.9%, respectively.  The increase in cost of revenues - network operations and
support was primarily attributable to expansion of the Company's customer base
and the concurrent increases in the size and complexity of the Company's
telecommunications network and support infrastructure for Internet access and
installation of the OzEmail Phone and OzEmail Fax network.

     Cost of Revenues - Communications and Other. Cost of revenues -
communications and other increased 91.1% to A$12,490,000 in the nine months
ended September 30, 1997 from A$6,535,000 in the nine months ended September 30,
1996, but decreased as a percentage of net revenues to 32.4% from 35.2%,
respectively.  The increase in cost of revenues - communications and other in
absolute terms was primarily attributable to increases in the use of the
Company's services and network.

     Sales and Marketing.  Sales and marketing expenses increased 92.3% to
A$9,617,000 in the nine months ended September 30, 1997 from A$5,002,000 in the
nine months ended September 30, 1996, but decreased as a percentage of net
revenues to 24.9% from 26.9%, respectively.  The increase in sales and marketing
expenses in absolute terms was primarily attributable to:  increased salaries
and wages related to the hiring of additional sales and marketing staff;
increased promotional activities; and increased allocable overhead expenses.

     Product Development.  Product development expenses increased to A$5,037,000
in the nine months ended September 30, 1997 from A$159,000 in the nine months
ended September 30, 1996, and increased as a percentage of net revenues to 18.0%
from 0.9%, respectively.  The increase in product development expenses was
primarily attributable to costs related to the commercialization of the OzEmail
Interline Internet telephony technology.

     General and Administrative. General and administrative expenses increased
120.4% to A$6,373,000 in the nine months ended September 30, 1997 from
A$2,891,000 in the nine months ended September 30, 1996, and increased as a
percentage of net revenues to 16.5% from 15.6%, respectively. The increase in
general and administrative expenses in absolute terms is primarily attributable
to: costs associated with increased provisioning in respect of litigation and
potential litigation; hiring of additional management, finance and
administrative staff to support the Company's expanding customer base; increases
in provisions for doubtful debts in line with receivables growth and corporate
policy; and increased consultancy fees.

     Interest and Other Income and Expense.  Interest and other income increased
to A$2,966,000 in the nine months ended September 30,1997 from A$1,280,000 in
the nine months ended September 30, 1996. The increase was primarily
attributable to a profit from the sale of  the Web Wide Media business in the
March quarter of 1997.  Interest expense increased  to A$219,000 in the nine
months ended September 30, 1997 from A$54,000 in the nine months ended September
30, 1996. Interest expense for the nine months ended September 30, 1997 was
attributable to finance costs related to capital leases on network equipment.
Interest expense in the nine months to September 30, 1996 related to a
shareholder loan and a bank overdraft.

                                       22
<PAGE>
 
     Income taxes.  The Company incurred tax for the nine months ended September
30, 1997, despite the US GAAP losses recorded, as the Company was assessed on
the A$16,155,000 received as part of the Metro transactions, which have been
assessed as capital in nature under US GAAP.  Management also believe that based
on the available evidence it is more likely than not that these operations will
not be able to  utilize the operating loss carry forwards in relation to
Voyager, and thus a full valuation reserve has been recorded.


LIQUIDITY AND CAPITAL RESOURCES

     The Company has historically financed its operations to date through cash
flow from operations, sale and lease-back of equipment, shareholder loans, bank
advances and the issuance of equity securities.  In the third quarter of 1996,
the Company completed its initial public offering, raising net proceeds of
US$41,664,000 (approximately A$52 million).  In the third quarter of 1996 the
Underwriters of the initial public offering exercised an over-allotment option
to acquire a further 150,000 ADSs at US$14 per share.

     Net cash used in operating activities in the nine months to September 30,
1997 totaled A$1,181,000 (US$930,000), as compared to net cash provided by
operating activities of A$363,000 (US$286,000) in the nine months ended
September 30, 1996.  The level of net cash flows provided by operating
activities in the nine months to September 30 has decreased primarily as a
result of increased expenditure on product development incurred in rolling out
the OzEmail Fax and Voice Telephony Network.

     Net cash provided by investing activities for the nine months to September
30, 1997 totaled A$8,098,000 (US$6,380,000), as compared to net cash flows used
in investing activities of A$3,037,000 (US$2,393,000) for the nine months to
September 30, 1996.  The increase in net cash used in investing activities in
the nine months to September 30, 1997 as compared to the nine months to
September 30, 1996, relate primarily to cash consideration arising from
"deposits under agreements from Metro" received for the licensing of the OzEmail
Phone and Fax technology to and proceeds from the sale of 40% of OzEmail
Interline, as recorded in accordance with SEC staff accounting bulletin 5H. This
has been offset by the acquisition of additional telecommunications and computer
plant and equipment. "Deposits under agreements with Metro" will be settled by
OzEmail by the issuance of shares during April 1998.

     Net cash provided by financing activities totaled A$3,698,000
(US$2,650,000) in the nine months to September 30, 1997, as compared to net cash
provided by financing activities of A$51,842,000 (US$40,857,000) in the nine
months to September 30, 1996.  Net cash  provided by financing activities in the
third quarter of 1996 principally related to proceeds from the Company's initial
public offering. Net cash  provided by financing activities in the nine months
to September 30,1997, was primarily attributable to the sale and lease-back of
equipment under finance leases.

     The Company believes that its cash and cash equivalents of A$55,343,000
(US$39,659,000) as at September 30, 1997 will be sufficient to meet its
presently anticipated working capital and capital expenditure requirements for
the remainder of the year to December 1997.  However, the Company may seek to
expand its operations by making acquisitions or entering into joint ventures or
licensing agreements in domestic or international markets, which may require
additional capital.  Entrance into certain countries or markets could require a
significant commitment of resources, which could in turn require the Company to
obtain additional financing earlier than otherwise expected. There can be no
assurance that the Company will be able to successfully obtain such financing in
a timely fashion, and limitations imposed on the foreign ownership of stock
under the Australian Foreign Takeovers and Acquisitions Act could frustrate such
efforts.  The Company may from time to time consider the acquisition of
complementary businesses, products or technologies which may require additional
financing, although it has no present understandings, commitments or agreements,
nor is it engaged in any discussions or negotiations, with respect to any such
transaction, that may require additional financing.

                                       23
<PAGE>
 
OTHER

     Under Australian law, foreign persons are prohibited from acquiring more
than a limited percentage of the shares in an Australian company without
approval from the Australian Treasurer, or in certain other limited
circumstances.  These limitations are set out in the Australian Foreign
Takeovers and Acquisitions Act.  At this time, any foreign person, together with
associates, is prohibited from acquiring 15% or more of the outstanding shares
in the Company, and the total holdings of all foreign persons must be less than
40% in the aggregate unless approval is granted by the Australian Treasurer.
Such investment restrictions could have a material adverse effect on the
Company's ability to raise capital as needed and could make difficult or render
impossible attempts by foreign entities to acquire the Company, including
attempts that might result in a premium over market prices to holders of the
Company's ADSs.

                                       24
<PAGE>
 
                                 OZEMAIL LIMITED


PART II.  OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

     On July 11, 1996 the Company reported that an adverse ruling had been
rendered by the Federal Court of Australia in the lawsuit against it by Trumpet
over alleged copyright infringements and violations of Australia's Trade
Practices Act. In August 1997, the Company put forward an Offer of Compromise
for the sum of A$500,000 (inclusive of interest but exclusive of legal fees
expensed by Trumpet), which offer was duly accepted by Trumpet in settlement of
the litigation.

     On March 18, 1997, the Australasian Performing Rights Association ("APRA")
filed a statement of claim against the Company.  APRA claims that the Company
has infringed copyright in a variety of musical works owned and controlled by
APRA by permitting the Company's customers to download those works.  APRA seeks
injunctive relief and damages against the Company.  The Company is defending
this action.  The Company does not believe that this action will give rise to
any material liability.  However, there can be no assurance that the ultimate
disposition of this claim will not have a material adverse impact on the
business, results of operations or financial condition of the Company, or that
the Company will not be required to obtain a license or pay a license fee.  The
failure to obtain such a license could have a material adverse impact on the
Company.

     OzEmail owns an 80% equity interest in Voyager, with the remaining 20%
equity interest held by Messrs John O'Hara and Alistair Stevens, formerly two
non-executive directors of Voyager (the "Minority Shareholders").  The Company
and the Minority Shareholders are parties to a Shareholders Agreement setting
out certain rights and restrictions on the employment and stock ownership of the
Minority Shareholders.  Pursuant to the Shareholders Agreement and other
agreements between OzEmail and Voyager, OzEmail undertakes to provide its
services and intellectual property to Voyager at cost.  OzEmail has the power to
select a majority of the board of directors of Voyager.  In the event of
termination of employment of the Minority Shareholders, the Shareholders
Agreement provides that the Minority Shareholders have a right to sell their
equity interest in Voyager to OzEmail at fair value.  The Minority Shareholders
are also entitled to participate on a pro rata basis in any sale by OzEmail of
its equity interest in Voyager.  On January 2, 1997 the Minority Shareholders
provided formal notice to OzEmail that they wished to exercise their option
under the Shareholders Agreement to sell their shares in Voyager to OzEmail at
fair value. The parties could not reach a consensus on the price at which such
sale of shares would take place and the Minority Shareholders commenced
proceedings on September 12, 1997, in the High Court of New Zealand for recovery
of the share sale price. OzEmail has sought legal advice from legal counsel and
intends to defend the matter. The Company has provided for an amount that it
believes adequately covers the fair value of the shares and all other costs
associated with this claim.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Changes in Securities

     In August, 1995, Mr. David Spence, the President and Chief Operating
Officer of OzEmail, was granted an option to purchase 567,560 Ordinary Shares at
an exercise price of A$3.30 per Share, which will expire in July 2000. The
option vests rateably over three years, with one-third of the Ordinary Shares
vesting on each of June 30, 1996, 1997 and 1998. In August, 1997, Mr. Spence
acquired 30,000 Shares by exercising a portion of his options, which he
subsequently sold on the Nasdaq National Market. Following the exercise of these
options, the ordinary issued share capital of OzEmail increased to 10,380,001
Ordinary Shares.

     OzEmail had on issue 10,380,001 Ordinary Shares prior to the ten for one
share split approved by shareholders at a general meeting of OzEmail held on
September 18, 1997.  As a consequence of that share split, OzEmail has on issue
103,800,010 Ordinary Shares as at September 30, 1997. Of these Shares, a total
of 33,380,000 are represented by ADSs which are now in the ratio of one ADS for
every ten Ordinary Shares.

                                       25
<PAGE>
 
     Options to purchase a total of 344,500 Ordinary Shares have been granted
under the Company's 1996 Stock Option Plan, of which options to purchase 325,000
Shares were granted in June, 1996, and of which options to purchase 19,500 were
granted in November, 1996. Following the first vesting date of June 30, 1997 for
the first 325,000 options that were granted, the Company has recalculated the
number of options under the 1996 Stock Option Plan that have vested or are still
to vest. On the basis of this re-calculation, and following the ten for one
share split approved by shareholders, options to acquire 3,069,990 Ordinary
Shares have vested or are still to vest under the 1996 Stock Option Plan.


Use of Proceeds

     In May,1996, the Company issued and sold 3,350,000 ADSs at a price of US$14
per ADS, or US$46,900,000 in the aggregate.  The managing underwriters were
Nationsbanc Montgomery Securities, Inc. and Unterberg Harris.

     In connection with the offering, the Company incurred (i) A$290,000 of
expenses of directors and affiliates of the Company, and (ii) A$5,761,000 in
registration expenses (including A$3,913,000 for underwriting discounts and
commissions, A$77,000 for underwriting expenses, and A$1,771,000 for other
related expenses).  The net proceeds of the offering, after deducting the
foregoing expenses, were A$52,549,000.

     The Company has used a portion of the net proceeds of the offering as
follows: (i) approximately A$1,800,000 was used to repay indebtedness to
directors, (ii) A$5,532,000 for the purchase and installation of property, plant
and equipment, (iii) A$1,750,000 for repayment of bank overdraft, (iv) A$82,000
for professional indemnity insurance, (v) A$4,672,000 for investment in new
projects, technology and products to expand and complement the business, and
(vi) A$38,713,000 placed in short term money market investments.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.


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

     On September 18, 1997, a general meeting of shareholders was convened.  At
the meeting, the following resolutions were passed: the division of the share
capital of OzEmail to effectuate a ten for one share split (7,248,298 votes for;
1,700 votes against); amendments to the OzEmail Articles of Association to be
consistent with the listing rules of the Australian Stock Exchange Limited
(7,350,398 votes for; 1,500 votes against); and an increase in the maximum
aggregate remuneration per year of OzEmail non-executive directors to A$300,000
(7,345,865 votes for; 3,303 votes against).


ITEM 5.  OTHER INFORMATION.

     On November 8, 1997, the Company entered into an agreement to purchase the
Internet business of Solution 6 Holdings Limited ("Solution 6"), including all
of the outstanding shares of Access One Pty Limited, a wholly-owned subsidiary
of Solution 6 ("Access One"). This transaction involves the purchase by the
Company of all of the shares in Access One, and all assets which are necessary
to conduct the Internet business. The consideration for the acquisition is the
sum of $A5,000,000 and the issue of 10,500,000 Ordinary Shares (approximately 9%
of the expanded ordinary share capital). The purchase price may be adjusted
prior to and post completion to account for any working capital deficiency and
other matters.  The vendor is responsible for all liabilities pre-dating the
acquisition other than those relating to ongoing operations. The Chief Executive
Officer of Solution 6, Mr. Chris Tyler, will be invited to join the board of
OzEmail upon completion of the acquisition.  Solution 6, as part of the
transaction has granted to OzEmail a call option to acquire 4.16 million
ordinary shares at an exercise price of $A0.75 per share. Subject to successful
completion of due diligence, the transaction is expected to be completed on or
prior to November  24, 1997.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

                                       26
<PAGE>
 
(a)  EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT          DOCUMENT DESCRIPTION
--------         --------------------
<C>              <S>   
     3.1         Memorandum of Association. (Incorporated by reference to
                 Exhibit 3.1 of the Company's registration statement under the
                 Securities Act on Form F-1, Registration Statement No. 333-
                 4794)

     3.2         Articles of Association. (Incorporated by reference to Exhibit
                 3.2 of the Company's registration statement under the
                 Securities Act on Form F-1, Registration Statement No. 333-
                 4794)

     3.3         Constitution of Archbold Holdings Limited (Voyager New Zealand
                 Limited) (Incorporated by reference to Exhibit 3.3 of the
                 Company's registration statement under the Securities Act on
                 Form F-1, Registration Statement No. 333-4794)

     3.4         Memorandum and Articles of Association of Cyber Publications
                 Pty Limited. (Incorporated by reference to Exhibit 3.4 of the
                 Company's registration statement under the Securities Act on
                 Form F-1, Registration Statement No. 333-4794)

     4.1         Form of Specimen of American Depositary Share Certificate
                 (Incorporated by reference to Exhibit 4.1 of the Company's
                 registration statement under the Securities Act on Form F-1,
                 Registration Statement No. 333-4794)

     4.2         Form of Specimen of American Depositary Receipt. (Incorporated
                 by reference to Exhibit 4.2 of the Company's registration
                 statement under the Securities Act on Form F-1, Registration
                 Statement No. 333-4794)

     4.3         Form of Deposit Agreement among OzEmail Limited, Bank of New
                 York as Depositary, and holders from time to time of ADSs
                 issued thereunder. (Incorporated by reference to Exhibit 4.4 of
                 the Company's registration statement under the Securities Act
                 on Form F-1, Registration Statement No. 333-4794)

    10.1         Share Sale Agreement between OzEmail Limited and FTR Holdings
                 Limited, dated September 10, 1997. (Incorporated by reference
                 to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q,
                 previously filed with the Securities and Exchange Commission on
                 November 14, 1997, under the Securities Exchange Act, as
                 amended)

    10.2         Agreement for Sale and Purchase of the Internet Business of
                 Solution 6, dated November 8, 1997. (Incorporated by reference
                 to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q,
                 previously filed with the Securities and Exchange Commission on
                 November 14, 1997, under the Securities Exchange Act, as
                 amended)

    11.1         Computation of Pro Forma Net Income (Loss) per Common and
                 Equivalent Share.

    99.1         Press release dated November 10, 1997, regarding acquisition of
                 Access One. (Incorporated by reference to Exhibit 99.1 of the
                 Company's Quarterly Report on Form 10-Q, previously filed with
                 the Securities and Exchange Commission on November 14, 1997,
                 under the Securities Exchange Act, as amended)

    99.2         Press release dated November 10, 1997, regarding third quarter
                 1997 results. (Incorporated by reference to Exhibit 10.1 of the
                 Company's Quarterly Report on Form
</TABLE> 

                                       27
<PAGE>
 
<TABLE> 
<C>              <S>  
                 10-Q, previously filed with the Securities and Exchange
                 Commission on November 14, 1997, under the Securities Exchange
                 Act, as amended)

(B)              REPORTS ON FORM 8-K. There were no reports on Form 8-K for the
                 quarter ended September 30, 1997.

</TABLE>

                                       28
<PAGE>
 
                                 SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 to the Quarterly Report on Form
10-Q to be signed on its behalf by the undersigned thereunto duly authorized.


                              OZEMAIL LIMITED



Date: May 19, 1998            By: /s/ Sean M. Howard
                                 -----------------------------------------
                                  Sean M. Howard
                                  Chief Executive Officer


Date: May 19, 1998            By: /s/ David M. Spence
                                 -----------------------------------------
                                  David M. Spence
                                  President and Chief Operating Officer


Date: May 19, 1998            By: /s/ Ian McGregor
                                 -----------------------------------------
                                  Ian McGregor
                                  Chief Financial Officer

                                       29
<PAGE>
 
                                 EXHIBIT INDEX


EXHIBIT NO.  DESCRIPTION                                                
-----------  -----------                                                

11.1         Computation of Pro Forma Net Income (Loss) per Common
             and Equivalent Share

                                       30