<PAGE>   1

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

                                   FORM 10-QSB

     (Mark One)

     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended March 31, 2001

                                       OR

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

          For the transition period from _____ to _____

      Commission file number 000-30701

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

                                     OZ.COM
             (Exact name of registrant as specified in its charter)


             California                                     95-4560875
  (State or other jurisdiction of                (I.R.S. Employer Identification
   incorporation or organization)                               No.)

                                 Snorrabraut 54
                            IS-105 Reykjavik, Iceland
          (Address of principal executive offices, including zip code)

                               011 (354) 535-0000
              (Registrant's telephone number, including area code)


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

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

                                Yes  [ X ]  No [  ]

     As of March 31, 2001, there were 89,779,596 shares of the registrant's
Common Stock outstanding.


                                       1

<PAGE>   2

                                      INDEX

PART I.  FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS

             Consolidated Balance Sheets at December 31, 2000 and March 31,
             2001 (unaudited)                                                  3

             Consolidated Statements of Operations (unaudited) for the
             three months ended March 31, 2000 and 2001                        4

             Consolidated Statements of Cash Flows (unaudited) for the
             three months ended March 31, 2000 and 2001                        5

             Consolidated Statements of Comprehensive Income (unaudited)
             for the three months ended March 31, 2000 and 2001                6

             Notes to Consolidated Financial Statements                        7

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS                                         9

PART II.  OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS                                                15

     ITEM 2. CHANGES IN SECURITIES                                            16

     ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                  16

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              16

     ITEM 5. OTHER INFORMATION                                                16

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                 16

SIGNATURES                                                                    17


                                       2

<PAGE>   3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                             OZ.COM AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   December 31,            March 31,
                                                                       2000                  2001
                                                                   ------------           ------------
Assets                                                                                    (unaudited)
<S>                                                                <C>                    <C>
Current assets:
     Cash and cash equivalents                                     $  3,559,559           $  2,935,351
     Trade accounts receivable                                           98,235                 89,606
     Accounts receivable from shareholder                             3,413,433              2,392,080
     Prepaid expenses and other current assets                          530,777                608,101
                                                                   ------------           ------------
         Total current assets                                         7,602,004              6,025,138
Property and equipment, net                                           3,879,161              4,014,802
License, net of accumulated amortization of $36,684 and
  $100,176                                                              852,205                788,713
Goodwill, net of accumulated amortization of $448,505 and
  $1,224,764                                                         15,076,668             14,300,409
                                                                   ------------           ------------
         Total assets                                              $ 27,410,038           $ 25,129,062
                                                                   ============           ============
Liabilities and Shareholders' Equity
Current liabilities:
     Trade accounts payable                                        $    558,483           $    321,329
     Accrued liabilities                                              1,111,304              1,294,768
     Current portion of deferred revenue                              1,767,107              3,082,734
     Current portion of notes payable                                    21,476                 20,094
                                                                   ------------           ------------
         Total current liabilities                                    3,458,370              4,718,925

Notes payable                                                           429,521                899,366
Deferred revenue                                                      1,011,957                938,001
                                                                   ------------           ------------
         Total liabilities                                            4,899,848              6,556,292
                                                                   ------------           ------------

Minority interest                                                         8,489                 17,870
Commitments and contingencies                                                --                     --
Redeemable common stock, $0.01 par value                              4,500,000              4,500,000
Shareholder's equity:
   Convertible preferred stock, $0.01 par value:
     25,000,000 shares authorized:
     14,680,964 and 14,530,964 shares issued and
     outstanding, respectively (liquidation value
     $14,530,964)                                                    17,079,446             16,884,446
   Common stock, $0.01 par value:
     275,000,000 shares authorized:
     89,479,596 and 89,779,596 shares issued and
     outstanding, respectively                                          894,796                897,796
   Additional paid-in capital                                        30,834,321             31,026,321
   Notes receivable from shareholders                                  (353,900)              (353,900)
   Deferred stock-based compensation                                 (4,032,567)            (3,596,958)
   Accumulated deficit including accumulated other
     comprehensive income of $667,810 and $1,208,815,
     respectively                                                   (26,420,395)           (30,802,805)
                                                                   ------------           ------------
Total shareholders' equity                                           18,001,701             14,054,900
                                                                   ------------           ------------
Total liabilities and shareholders' equity                         $ 27,410,038           $ 25,129,062
                                                                   ============           ============
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       3

<PAGE>   4

                             OZ.COM AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                     FOR THE THREE MONTHS
                                                        ENDED MARCH 31,
                                               ---------------------------------
                                                   2000                 2001
                                               -----------           -----------
<S>                                              <C>                   <C>
REVENUES
     Development services                        1,702,922             2,035,666
     Client services                                    --                 2,186
     License Fees                                   59,143                59,143
                                               -----------           -----------
         Total Revenues                          1,762,065             2,096,995

COST OF REVENUES                                   973,367             1,634,447
                                               -----------           -----------

GROSS PROFIT                                       788,698               462,548

OPERATING EXPENSES
     Sales and marketing                           646,157             1,099,104
     General and administrative
       (including stock-based
       compensation of $30,296 and
       $435,609)                                 1,197,543             3,127,798
     Research and development                      231,859               841,995
                                               -----------           -----------
         Total operating expenses                2,075,559             5,068,897
                                               -----------           -----------
         Operating loss                         (1,286,861)           (4,606,349)
                                               -----------           -----------
Interest income                                    113,855                42,115
Interest expense                                   (16,041)              (20,552)
Other income (expense) net                         (89,050)             (346,192)
                                               -----------           -----------
     Loss before provision for income
       taxes and minority interest              (1,278,097)           (4,930,978)
Income taxes                                            --                    --
Minority interest                                       --                 7,563
                                               -----------           -----------
     Net loss                                  $(1,278,097)          $(4,923,415)
                                               ===========           ===========

NET LOSS PER SHARE:
     Basic                                     $     (0.02)          $     (0.05)
                                               ===========           ===========
     Diluted                                   $     (0.02)          $     (0.05)
                                               ===========           ===========
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       4

<PAGE>   5

                             OZ.COM AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                             FOR THE THREE MONTHS
                                                                                ENDED MARCH 31,
                                                                      ----------------------------------
                                                                          2000                   2001
                                                                      ------------           -----------
<S>                                                                   <C>                    <C>
Cash flows from operating activities:
     Net loss                                                         $ (1,278,097)          $(4,923,415)
     Adjustments to reconcile net loss to net cash provided
       by (used in) operating activities:
         Depreciation and amortization                                     127,703             1,129,825
         Amortization of deferred stock-based compensation                  30,296               435,069
     Changes in operating assets and liabilities:
         (Increase) decrease in accounts receivable                       (291,447)            1,029,982
         (Increase) decrease in prepaid expenses and other
           assets                                                           43,510               (84,588)
         Increase (decrease) in trade accounts payable                     297,705              (237,154)
         Increase (decrease) in accrued liabilities                        365,634               183,464
         Increase (decrease) in deferred revenue                           (59,143)            1,241,671
                                                                      ------------           -----------
              Net cash used in operating activities                       (763,839)           (1,232,709)
                                                                      ------------           -----------

Cash flows from investing activities:
     Purchases of property and equipment                                  (401,326)             (425,712)
                                                                      ------------           -----------
         Net cash used in investing activities                            (401,326)             (425,712)
                                                                      ------------           -----------

Cash flows from financing activities:
     Exercise of employee stock options                                    161,700                    --
     Issuance of notes payable                                                  --               500,000
     Repayments of notes payable                                            (4,760)               (6,792)
     Payment of capital lease obligation                                    (3,384)                   --
                                                                      ------------           -----------
         Net cash provided by financing activities                         153,556               493,208
                                                                      ------------           -----------
Effect of currency exchange rates on cash                                   30,922               541,005
                                                                      ------------           -----------
     Net decrease in cash                                                 (980,687)             (624,208)
Cash and cash equivalents at beginning of period                        13,603,592             3,559,559
                                                                      ------------           -----------
Cash and cash equivalents at end of period                            $ 12,622,905           $ 2,935,351
                                                                      ============           ===========

Supplemental cash flow information:
     Cash paid for interest                                           $      6,163           $     6,742
Supplemental disclosures of non-cash investing and financing
   activities:
     Conversion of preferred stock to common stock                    $    212,401           $   195,000
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       5

<PAGE>   6

                             OZ.COM AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (unaudited)

<TABLE>
<CAPTION>
                                           FOR THE THREE MONTHS
                                              ENDED MARCH 31,
                                     ---------------------------------
                                        2000                   2001
                                     -----------           ------------
<S>                                  <C>                   <C>
Net loss                             $(1,278,097)          $(4,923,415)

Other comprehensive income:
   Foreign currency
     translation adjustment               30,922               541,005
                                     -----------           -----------

Comprehensive loss                   $(1,247,175)          $(4,382,410)
                                     ===========           ===========
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       6

<PAGE>   7

                             OZ.COM AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

1.   INTERIM FINANCIAL STATEMENTS

     The accompanying financial statements of OZ.COM and subsidiaries (the
Company) are unaudited and have been prepared pursuant to the rules and
regulations of the U.S. Securities and Exchange Commission. Certain information
and note disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to those rules and regulations. Accordingly, these interim
financial statements and notes should be read in connection with the Company's
2000 Annual Report on Form 10-KSB. The results of operations for the interim
periods shown in this report are not necessarily indicative of results to be
expected for other interim periods or for the full fiscal year. In the opinion
of management, the information contained herein reflects all adjustments
necessary for a fair statement of the interim results of operations.

     The year-end balance sheet data were derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.

     The accompanying consolidated financial statements include accounts of the
Company and its subsidiaries.

     The Company's consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company has devoted
substantial efforts to developing new products and has incurred losses and
negative cash flows from operations since inception. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The Company is seeking to raise additional capital through the offering of
equity or debt securities. However, there can be no assurance that the Company's
efforts to achieve profitable operations or raise additional capital will be
successful. These consolidated financial statements do not include any
adjustment that might result from the outcome of this uncertainty.

2.   NET LOSS PER SHARE

     Basic net loss per share is computed using the weighted average number of
common shares outstanding for the period. Diluted net loss per share is computed
using the weighted average number of common shares outstanding and any
potentially dilutive securities. Potentially dilutive securities are not
included in the diluted earnings per share calculations as their inclusion would
be anti-dilutive to the basic net loss per share calculations. Potentially
dilutive securities not included in the diluted net loss per share calculation
and outstanding during the three months ended March 31, 2000, included preferred
shares, convertible bonds, stock options and warrants. Potentially dilutive
securities not included in the diluted net loss per share calculation and
outstanding during the three months ended March 31, 2001, included preferred
shares, stock options and warrants.

     The components of basic and diluted net loss per share are as follows:

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED MARCH 31,
                                                -----------------------------
                                                    2000              2001
                                                -----------      ------------
<S>                                             <C>              <C>
Net loss                                        $(1,278,097)     $ (4,923,415)
                                                ===========      ============
Weighted average outstanding shares of
   common stock                                  68,861,956        89,619,596

Net Loss per share:
     Basic                                      $     (0.02)     $      (0.05)
                                                ===========      ============
     Diluted                                    $     (0.02)     $      (0.05)
                                                ===========      ============
</TABLE>


                                       7

<PAGE>   8

3.   CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON STOCK

     During the three months ended March 31, 2001, holders of 150,000 shares of
preferred stock elected to convert their shares into shares of common stock. In
accordance with the terms of conversion, the shares of preferred stock were
converted into 300,000 shares of common stock.

4.   STOCK-BASED COMPENSATION

     Stock-based compensation expense totaled $30,296 and $435,609 for the three
months ended March 31, 2000 and 2001, respectively. Some stock options granted
and restricted stock sold during the years ended December 31, 1998, 1999 and
2000 have been deemed to be compensatory.

5.   NEW ACCOUNTING PRONOUNCEMENT

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133, as amended by SFAS No. 137,
establishes accounting and reporting standards for derivative financial
instruments and hedging activities related to those instruments, as well as
other hedging activities. The Company adopted SFAS 133 during the three months
ended March 31, 2001. Because the Company does not currently hold any derivative
instruments and does not engage in hedging activities, the adoption of SFAS No.
133, as amended, did not have a material impact on its consolidated financial
position, results of operations, or cash flows.

6.   GEOGRAPHIC, SEGMENT, AND SIGNIFICANT CUSTOMER INFORMATION

     The Company's chief operating decision maker is considered to be the
Company's Chief Executive Officer (CEO). The CEO reviews financial information
presented on a consolidated basis accompanied by disaggregated information about
revenues by geographic region and by product for purposes of making operating
decisions and assessing financial performance. The Company operates in three
operating segments: 1) development of software that enables the delivery of
Internet-based services to mass-market wireless telephones, 2) the delivery of
Internet-based services to wireless network operators and Internet businesses,
and related consulting services and 3) the licensing of the Company's core
technologies to Ericsson and the licensing of the Company's products to network
operators and Internet businesses. The disaggregated information reviewed on a
product basis by the CEO is as follows:

<TABLE>
<CAPTION>
                                   THREE MONTHS ENDED
                                        MARCH 31,
                              ------------------------------
                                 2000                2001
                              ----------         -----------
<S>                           <C>                 <C>
Revenues:
  Development                 $1,702,922          $2,035,666
  Client services                     --               2,186
  License                         59,143              59,143
                              ----------          ----------
      Total revenues          $1,762,065          $2,096,995
                              ==========          ==========
</TABLE>

     Revenues attributable to geographic regions are based upon the origination
of the sales. The Company currently has sales operations in Stockholm, Sweden to
address the European markets and in San Diego to address the United States and
Canadian markets. All development services related to the revenues reported
below were performed in Europe (Iceland and Sweden). Information regarding the
Company's revenues in different geographic regions is as follows:

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED
                                                   MARCH 31,
                                        ------------------------------
                                           2000                2001
                                        ----------          ----------
<S>                                     <C>                 <C>
Revenues:
  North America                         $1,661,261          $2,044,013
  Europe (principally Iceland)             100,804              52,982
                                        ----------          ----------
      Total revenues                    $1,762,065          $2,096,995
                                        ==========          ==========
</TABLE>


                                       8

<PAGE>   9

     Ericsson was the Company's only significant source of revenues during the
three months ended March 31, 2000 and 2001. Revenues attributable to Ericsson
comprised 98.4% and 99.4% of the total revenues for the three months ended March
31, 2000 and 2001, respectively.

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

     This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other parts of this Form 10-QSB contain
forward-looking statements that involve risks and uncertainties. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
"may," "will," "should," "could," "potential," "continues," "predicts" and
similar expressions and the negatives of such expressions identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to numerous assumptions, risks and uncertainties and
a number of factors that could cause actual results to differ materially from
those expressed, forecasted or implied in such forward looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in our Registration Statement on Form 10-SB/A and those
appearing elsewhere in this Form 10-QSB. You are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. We assume no obligation to update these
forward-looking statements to reflect actual results or changes in factors or
assumptions affecting such forward-looking statements.

Overview

     Since we were incorporated in December 1995, we have devoted substantially
all of our resources to developing our multi-user communications platform, first
in the context of three-dimensional ("3D") online environments, and since 1997,
primarily in the context of wireless telecommunications networks. In 1998, we
began working with Ericsson Telecom AB and/or its affiliates ("Ericsson") to
develop a wireless Internet communications platform now called "iPulse(TM)"
based on this technology. We first recognized development revenues in November
1998, and generated development revenues of approximately $4.5 million and $7.7
million in the years ended December 31, 1999 and December 31, 2000, respectively
and $2.0 million for the three months ended March 31, 2001. We first recognized
license revenues in September 1999, and generated license revenues of
approximately $0.08 million and $0.3 million in the years ended December 31,
1999 and December 31, 2000, respectively, and $0.06 million for the three months
ended March 31, 2001. In addition, we first recognized client services revenues
of approximately $0.3 million in the year ended December 31, 2000. Client
services revenue for the three months ended March 31, 2001 were minimal.

     We incurred net losses of approximately $4.9 million for the three months
ended March 31, 2001 and $1.8 million, $2.9 million and $14.0 million for the
years ended December 31, 1998, 1999 and 2000, respectively. As of March 31,
2001, we had an accumulated deficit of approximately $32.0 million. We are
currently operating at a deficit and expect to continue operating at a deficit
over at least the next six months as we achieve reductions in our cost
structure, while maintaining a sufficient resource base to support anticipated
growth in sales. We believe that our historical operating results are not
indicative of future performance for the reasons discussed below.

     We generate revenues from development work, commissions and referral fees,
license fees and client services. We receive development revenues under
contracts with each of Ericsson and Microcell Labs, Inc. as discussed further
below. Until recently, we received license revenues primarily from a license of
our core technologies to Ericsson. However, in November 2000, we amended and
entered into new agreements with Ericsson. We also entered into agreements with
Microcell Telecommunications, Inc. and/or its affiliates ("Microcell") in
connection with our acquisition of OZ.COM Canada Company ("OZ.COM Canada").
However, as a result of the levels of ownership interest of Microcell and
Ericsson at the inception of the contracts, certain payments received from
Ericsson Canada Inc., an affiliate of Ericsson Telecom AB ("Ericsson Canada"),
and Microcell have not been recognized as revenue, and future payments from
Ericsson Canada and Microcell may not be immediately recognizable as revenue
according to U.S. generally accepted accounting principles. In the first quarter
of 2001, we received payments of $750,000 for development work rendered to
Microcell, and $750,000 from Ericsson Canada under the specific co-operation and
development


                                       9

<PAGE>   10

agreement with Ericsson Canada that were not recognized as revenue. The expenses
associated with our performance of the Microcell development work have been
recognized as research and development expenses and the payments from Microcell
for the work performed have been recorded as deferred revenue on our balance
sheet. We have not incurred any cost in connection with the payment from
Ericsson Canada because as of March 31, 2001, we had not yet commenced the
performance of services for Ericsson Canada. We expect to begin performing
services under specific development agreements for Ericsson Canada in the
quarter ending June 30, 2001. We will recognize all of the deferred revenues as
current revenue at the termination of the contract under which we performed the
work.

     On November 1, 2000, we entered into a general co-operation and development
agreement with Ericsson. The general co-operation and development agreement
superseded the earlier document of the same name that we entered into in
February 1999. Pursuant to this agreement, Ericsson and the Company agreed to
cooperate in the area of Internet-based technologies, applications and services,
including, but not limited to, development, testing integration, marketing,
sales, distribution, support and maintenance of solutions based on the
technologies and services of each company. Our cooperation pursuant to this
agreement is nonexclusive and each party's participation is based on its
individual evaluation of the commercial viability and expected benefits of the
relationship.

     OZ.COM Canada entered into a specific co-operation and development
agreement with Ericsson Canada on November 8, 2000 pursuant to which OZ.COM
Canada will provide consulting and development services in the areas of mobile
Internet applications for third generation ("3G") mobile telephony platforms.
The specific co-operation and development agreement is an agreement under the
Ericsson general co-operation and development agreement. Under the terms of the
specific co-operation and development agreement, Ericsson Canada will advance to
OZ.COM Canada a total of $6 million in quarterly installments of $750,000 over
the agreement's two-year term, which installments will be applied by Ericsson
Canada against amounts due for development work performed under the agreement.
OZ.COM Canada will have access to Ericsson Canada's 3G laboratories and will
receive up to 6,000 hours of assistance from qualified 3G experts for testing of
the 3G development work. As further described below, we acquired OZ.COM Canada
on November 8, 2000 in connection with our acquisition of MCE Holding
Corporation ("Acquisition").

     OZ.COM Canada entered into a general co-operation development agreement
with Microcell dated November 8, 2000 pursuant to which Microcell agreed to use
OZ.COM Canada as its preferred development resource for development work and
consulting services in the field of wireless Internet applications. Under the
terms of the agreement, Microcell has committed to purchasing $9 million in
consulting and development services and technology licenses in quarterly
installments of $750,000 during the three-year term of the agreement. OZ.COM
Canada will have full ownership of the products developed under the agreement
and their related intellectual property rights. However, if the products are
unrelated to OZ.COM Canada's product offerings or if the products are completed
by Microcell as a result of OZ.COM Canada's breach of the agreement, Microcell
will own the product and its related intellectual property rights, with OZ.COM
Canada retaining the right to use, sell, and distribute the product outside of
Canada for three years. Microcell will have a license to use, sell and
distribute for commercial use all products developed under the agreement. The
license will be royalty free, except that Microcell will pay to OZ.COM Canada
10% of its net revenues attributable to the sale or license of the products
during the three-year term after the commercial launch of the products. OZ.COM
Canada will pay to Microcell 10% of all of its net revenues attributable to the
sale or license of products developed under the agreement during the three-year
term commencing with the commercial launch of the products.

     OZ.COM Canada also concluded a specific development and consulting
agreement with Microcell dated November 8, 2000, pursuant to which OZ.COM Canada
granted to Microcell a non-exclusive, non-transferable, non-revocable license to
use iPulse(TM) 1.5 on certain terms and conditions. Except for the revenue
sharing payments under the general co-operation and development agreement with
Microcell dated November 8, 2000 the license is royalty free. Ericsson had
granted to MCE Holding Corporation, a strategic alliance between Ericsson Canada
and Microcell, the right to grant a license to iPulse(TM) 1.5 and agreed to the
assignment of this right to OZ.COM Canada.

         Our business strategy relies to a significant extent on the widespread
propagation of the iPulse(TM) application through our relationships with network
operators and Ericsson, one of the leading


                                       10

<PAGE>   11

wireless telephone manufacturers. iPulse(TM) is available to network operators
directly from Ericsson although we have entered into an agency agreement with
Ericsson pursuant to which Ericsson is obligated to pay a commission based upon
the net amount of payments (after deduction of taxes, insurance and other
similar costs) actually received by Ericsson under licensing contracts for
iPulse(TM) concluded through Ericsson's acceptance of orders that we procure. We
will set the commission rate and the method of calculation and payment with
Ericsson from time to time. At the same time, we have the opportunity to offer
our Internet-based services to these customers. In the event that Ericsson
licenses iPulse(TM) to one of its customers, we are entitled under a specific
co-operation and development agreement dated February 1999 to a license fee
equal to 15% of the net amount of payments (after deduction of taxes, insurance
and other similar costs) actually received by Ericsson.

     In February 2000, we introduced mPresence(TM), a growing suite of mobile
Internet applications. We continue to expect to incur significant additional
expenses in developing and commercializing the mPresence(TM) service, including
costs relating to operating our network cluster and network operating center in
North America, as well as sales and marketing and research and development
expenses. Although we have taken action to control these costs, we expect to
incur substantial costs and expenses in advance of generating revenues from this
service and cannot be certain that our business model for mPresence(TM) will
result in significant revenues or profitability.

     We derive client services revenues from services provided directly to
network operator customers and a few select application service providers. These
customer services include consulting, system integration, hosting and other
value-added services. We expect in the future to generate service revenues from
hosting iPulse(TM) and other mPresence(TM) applications primarily on behalf of
network operators, as well as from product installation, maintenance and
engineering support services.

     Consequently, we expect that our future revenues will be derived from the
following:

     o    Payments from development work for Ericsson and Microcell;

     o    Commissions and referral fees paid by Ericsson with respect to sales
          and licenses of iPulse(TM);

     o    Licensing fees (i.e., revenue sharing payments) paid by Ericsson with
          respect to sales and licenses of iPulse(TM);

     o    Licensing fees and/or revenue sharing payments paid by customers with
          respect to sales and licenses of mPresence(TM) services and
          applications; and

     o    Fees from client services that we provide to our network operator
          customers.

     Our future success depends on our ability to increase revenues from the
sources identified above. If the market for client services via wireless
telephones fails to develop or develops more slowly than expected, then our
business would be materially and adversely affected. In addition, because there
are a relatively small number of network operators worldwide, any failure to
sell our products to network operator customers successfully could result in a
shortfall in revenues that could not be readily offset by other revenue sources.

     Ericsson entered into an agency agreement with us with respect to
mPresence(TM) and our valued-added services. Ericsson's commission is based upon
the net amount of payments (after deduction of taxes, hosting expenses,
third-party licensing costs, insurance and similar costs) actually received by
us under a licensing contract for mPresence(TM) concluded through our acceptance
of orders procured by Ericsson. We will set the commission rate and the method
of calculation and payment with Ericsson from time to time. In the absence of a
contrary agreement, the rate will be 15% of the net amount of payment. If
Ericsson does not participate in the sale but introduces the customer to us,
Ericsson is entitled to a finder's fee equal to 5% of the net amount of payment.
The agency agreement has a two-year term and will be automatically renewed for
an indefinite period unless earlier terminated in accordance with its
provisions.

     We also entered into a value-added distribution license agreement with
Ericsson on November 1, 2000, which superseded the value-added reseller
agreement entered into with Ericsson in February 2000. The agreement gives us
unrestricted perpetual rights to offer iPulse(TM) as a hosted service to our
mPresence(TM) customers in exchange for certain license fees. Either party to
the


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<PAGE>   12

agreement may terminate the agreement if the other party commits a material
breach of its obligations under the agreement or if any of the representations
of such other party are materially untrue, and such default is not cured within
thirty days of notice of such breach. Notwithstanding the termination of the
agreement, OZ will retain the right to provide hosting services based on the
then current version of iPulse(TM). After November 2003, and provided all
royalties due Ericsson under the agreement have been paid, Ericsson will no
longer be able to terminate the agreement.

     We expect that our gross profit on revenues derived from sales of our
products and services through Ericsson and future channel partners will be less
than the gross profit on revenues from direct sales. Our success, in particular
in international markets, depends in part on our ability to increase sales of
our products and services through value-added resellers and to expand our
indirect distribution channels.

     We expect sales in Europe and Canada to account for a significant portion
of our revenues in the foreseeable future. Risks inherent in our international
business activities include:

     o    failure by us and/or third parties to develop localized content and
          applications that are used with our products;

     o    costs of localizing our products for foreign markets;

     o    difficulties in staffing and managing foreign operations;

     o    longer accounts receivable collection time;

     o    political and economic instability;

     o    fluctuations in foreign currency exchange rates;

     o    reduced protection of intellectual property rights in some foreign
          countries;

     o    contractual provisions governed by foreign laws;

     o    export restrictions on encryption and other technologies;

     o    potentially adverse tax consequences; and

     o    the burden of complying with complex and changing regulatory
          requirements.

     Since early 2000, we have invested substantially in research and
development, marketing, domestic and international sales channels, professional
services and our general and administrative infrastructure. These investments
have significantly increased our operating expenses, contributing to net losses
in each fiscal quarter since our inception. Our limited operating history makes
it difficult to forecast future operating results. Although we believe that our
revenues will continue to grow in the next several quarters, our revenues may
not increase at a rate sufficient to achieve and maintain profitability, if at
all. We anticipate that our operating expenses will remain approximately at
their current levels as we focus on performing existing contracts and supporting
Ericsson's iPulse(TM) sales effort. Even if we were to achieve profitability in
any period, we may not sustain or increase profitability on a quarterly or
annual basis.

RESULTS OF OPERATIONS

Development Services Revenues

     Development services revenues increased from $1.7 million for the three
months ended March 31, 2000 to $2.0 million for the three months ended March 31,
2001. The increase in development services revenues was attributable primarily
to a temporary acceleration of iPulse(TM) development work in response to
specific customer demand in early 2001.

Client Services Revenues

     The quarter ended September 30, 2000 was the first period in which we
recognized client services revenue. These revenues were mainly derived from
contracts with oCen Communications, which engaged us to perform services
relating to their commercial launch of our technology, and from Ericsson, which
sponsored our Leif Ericsson project. Since then, we have focused our sales
efforts on selling iPulse(TM) jointly with Ericsson and have only secured minor
additional customer services revenues in the meantime. We believe that this will
change assuming more customers purchase iPulse(TM) licenses and prepare to
commercialize their own version of the product.


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<PAGE>   13

Licensing Revenues

     Licensing revenues were a constant $0.06 million for the three months ended
March 31, 2000 and 2001. These revenues were related to the license of our core
technology to Ericsson in 1999. As described above, we are entitled under our
arrangements with Ericsson to receive revenue sharing fees from Ericsson's
license or sale of iPulse(TM) to network operators. We also expect to receive
revenues from licensing our mPresence(TM) suite of applications to network
operators and Internet businesses. We expect our mPresence(TM) licensing
revenues to be based on a revenue-sharing model whenever possible. When revenue
sharing is not possible or, in our opinion, advisable, we will consider
alternative pricing models, including upfront or incremental royalties per
application per unit of time. We cannot be certain, however, that revenues will
be generated from mPresence(TM) licensing.

Cost of Revenues - Development Services

     Cost of revenues - development services consists of compensation and
independent consultant costs for personnel engaged in our developing services
operations and related overhead. Cost of development services revenues increased
from $1.0 million for the three months ended March 31, 2000 to $1.5 million for
the three months ended March 31, 2001. As a percentage of development services
revenues, cost of revenues - development services for the three months ended
March 31, 2000 and 2001 was 57.2% and 75.7%, respectively. Gross profit on
development services revenues is impacted by the mix of company personnel and
independent consultants assigned to projects. The gross profit we achieve is
also impacted by the contractual terms of the development assignments we
undertake, and the gross profit on fixed price contracts typically is more
susceptible to fluctuation than contracts performed on a time-and-materials
basis. We anticipate that the cost of development services revenues will
increase slightly in absolute dollars but decrease as a percentage of sales as
we continue to invest in the growth of our consulting services and licensing
operations.

Cost of Revenues - Client Services

     Cost of revenues -- client services consists of compensation and
independent consultant costs for personnel engaged in our consulting services
operations, hosting center and network operating center in North America, and
related overhead. For the three months ended March 31, 2001, cost of revenues -
client services was $0.1 million. These expenditures were primarily in
connection with the establishment of our hosting center and network operating
center in Montreal, Canada. Gross profit on client services revenues will be
impacted by the mix of company personnel and independent consultants assigned to
projects, the nature of the consulting agreements (i.e., fixed price versus
time-and-material) and hosting and monitoring expenses. Hosting and monitoring
expenses are, to a large extent, fixed and will therefore be reduced on a per
user basis as the number of users is increased. There are also significant
variable costs associated with hosting, including the need for additional
third-party software licenses, additional servers and storage capacity, and
additional bandwidth. Some of these variable expenses are affected by the number
of users, but most will be a function of end-user behavior. The more our
end-users take advantage of our services, the greater the demand will be on our
equipment infrastructure, processing power and bandwidth. We cannot predict what
actual user behavior will be and we are therefore seeking to develop contract
relationships with our customers that will pass the risk of increases in hosting
costs to our customers, but which will fix our gross profit margin on hosting
services to fairly modest levels. However, we cannot be certain that we will be
successful in entering into these types of relationships. We expect that cost of
revenues - client services will vary as a percentage of client services revenues
from period to period for the next several quarters.

Cost of Revenues - Licensing

     We have had no significant cost of revenues - licensing associated with our
historical licensing revenues, which relate to a single license of our core
technology to Ericsson in 1999. When we begin realizing licensing revenues from
the sale of licenses related to our mPresence(TM) services, we expect to incur
cost of revenues - licensing, which will consist primarily of third-party
license and support fees. We expect that cost of revenues - licensing will vary
as a percentage of licensing revenues from period to period.


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<PAGE>   14

Sales and Marketing Expenses

     Sales and marketing expenses consist primarily of compensation and related
costs for sales and marketing personnel, sales commissions, marketing programs,
public relations, promotional materials, travel expenses and trade show exhibit
expenses. Sales and marketing expenses increased 70.1% from $0.6 million, or
36.7% of revenues, for the three months ended March 31, 2000, to $1.1 million,
or 52.4% of revenues, for the three months ended March 31, 2001. These increases
resulted from the addition of personnel in our sales and marketing
organizations, reflecting our increased selling effort to develop market
awareness of our products and services. We plan to reduce substantially our
sales and marketing expenses for the balance of 2001 by reducing the sales force
in Europe and focusing our sales and marketing efforts on selling iPulse(TM)
jointly with Ericsson, primarily in North America.

General and Administrative Expenses

     General and administrative expenses consist primarily of salaries and
related expenses, accounting, legal and administrative expenses, professional
service fees, stock-based compensation, depreciation and amortization and other
general corporate expenses. General and administrative expenses increased 261.2%
from $1.2 million or 68.0% of revenues, for the three months ended March 31,
2000, to $3.1 million, or 149.2% of revenues, for the three months ended March
31, 2001. These increases were due primarily to the addition of personnel
performing general and administrative functions, the management of our
international operations, compliance with the reporting requirements under the
U.S. Securities Exchange Act of 1934, increased amortization of stock-based
compensation and amortization of intangible assets associated with the
acquisition of MCE Holding Corporation in November 2000. We expect general and
administrative expenses to begin to decline in the short-term as the effects of
recent reductions in general and administrative personnel begin to impact our
expenses. We will attempt to maintain a lower level of general and
administrative expenses relative to the fourth quarter of 2000 and commit to
additional expenses only if and when required in response to the growth of our
business.

Research and Development Expenses

     Research and development expenses consist primarily of compensation and
related costs for research and development personnel. Research and development
expenses increased from $0.2 million, or 13.2% of revenues, for the three months
ended March 31, 2000, to $0.8 million, or 40.2% of revenues, for the three
months ended March 31, 2001. The increase is primarily the result of certain
work performed for Microcell that is not presently recognizable as revenues
under U.S. generally accepted accounting principles. During the quarter ended
March 31, 2001, we recognized in research and development expenses the cost of
providing certain development services to Microcell, for which we received a
payment of $750,000, which was not recognized as revenue under U.S. generally
accepted accounting principles.

Interest Income (Expense), Net

     Interest income, net decreased from $97,814 for the three months ended
March 31, 2000 to $21,563 for the three months ended March 31, 2001. The
decrease is due to the lower cash balances held by us in the three months ended
March 31, 2001.

Other Income (Expense), Net

     Other income (expense), net changed from a net loss of $89,050 for the
three months ended March 31, 2000 to a net loss of $346,192 for the three months
ended March 31, 2001. The change is primarily the result of changes in the
currency exchange rates of the U.S. dollar relative to the Icelandic krona.

Income Taxes

     At December 31, 1999 and 2000 we had deferred tax assets of $4.7 million
and $9.7 million respectively. Due to the uncertain nature of the ultimate
realization, we have recorded a valuation allowance against deferred tax assets.
At December 31, 2000 we had net operating loss carryforwards of


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<PAGE>   15

approximately $23.9 million, $11.9 million and $4.0 million for federal, state
and foreign income tax purposes, respectively. These carryforwards will expire
from year 2001 through 2020.

Liquidity and Capital Resources

     Our primary liquidity needs are for working capital, capital expenditures,
acquisitions and investments, and, to a lesser extent, debt service. Our primary
sources of liquidity are cash flows from operations and issuances of stock.

     Net cash used in operating activities was $1.2 million for the three months
ended March 31, 2001. The net cash used by operating activities for the three
months ended March 31, 2001 was attributable primarily to the net loss of $4.9
million, which was offset primarily by a decrease of accounts receivable of $1.0
million and an increase in deferred revenue of $1.2 million.

     Net cash used in investing activities was $0.4 million for the three months
ended March 31, 2001, primarily reflecting net purchases of property and
equipment.

     Net cash provided by financing activities was $0.5 million for the three
months ended March 31, 2001, primarily reflecting the issuance of convertible
promissory notes in SmartVR, Inc., our online learning subsidiary. The funds are
being used entirely to finance the operations of the subsidiary and the
promissory notes will convert into shares of stock of SmartVR, Inc., if at all.

     As of March 31, 2001, our principal commitments consisted of obligations
outstanding under operating leases and capitalized lease obligations and the
convertible promissory notes issued by our SmartVR, Inc. subsidiary, which are
not guaranteed by us. Although we have no material commitments for capital
expenditures, we expect to increase capital expenditures and lease commitments
consistent with our anticipated growth in operations, infrastructure and
personnel. We also may increase our capital expenditures as we expand into
additional international markets.

     We are limiting discretionary expenses in all categories and plan to halt
our growth, except for some expansion in our Montreal office, which may be
offset from some attrition in other offices. We do not believe that our
operating requirements for the next 12 months can be funded from cash provided
by operations and cash reserves. However, we do believe that our current cash,
cash equivalents and short-term investments, will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for at least
the next three months. Our recurring losses from operations, negative cash
flows, and future need for additional capital raise substantial doubts about our
ability to continue as a going concern. While we have significantly reduced our
cost structure, negotiated better payment terms from our customers and focused
substantially all of our sales efforts on opportunities that will generate
additional cash in the short-term, we are not confident that cash generated from
operations will be sufficient to satisfy our liquidity requirements, and we
intend to seek to sell additional equity or debt securities. If additional funds
are raised through the issuance of debt or preferred stock securities, these
securities could have rights, preferences and privileges senior to holders of
common stock, and terms of any debt could impose restrictions on our operations.
The sale of additional equity or convertible debt securities could result in
additional dilution to our shareholders, and additional financing may not be
available in amounts or on terms acceptable to us, if at all. We cannot be sure
that any such financing will be obtained or, if obtained, will be adequate to
meet our needs. If we are unable to obtain this additional financing, we may be
required to reduce the scope of our planned product development and marketing
efforts, which could harm our business, financial condition and operating
results.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     On August 9, 2000, Garry Hare filed a complaint against us in the Superior
Court for the City and County of San Francisco, California. Mr. Hare is a former
director and officer whose employment was terminated in December 1998. We
subsequently entered into a termination agreement with Mr. Hare. The amended
complaint alleges fraud and breach of the employment and termination agreements.
The amended complaint seeks compensatory damages according to proof, punitive
damages


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<PAGE>   16

according to proof, specific performance of the stock bonus portion of the
termination agreement or employment agreement, a declaration that the
termination agreement is void, and attorneys' fees and costs. We believe that
the allegations in the amended complaint are without merit and intends to defend
the complaint vigorously. In addition, we filed a cross-complaint against Mr.
Hare on December 30, 2000, seeking attorneys' fees and damages for fraud and
breach of the termination agreement. The ultimate outcome of this matter is not
presently determinable.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS -- NOT APPLICABLE.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES -- NOT APPLICABLE.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- NOT APPLICABLE.

ITEM 5. OTHER INFORMATION -- NOT APPLICABLE.

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

     (a)  Exhibits

          NOT APPLICABLE

     (b)  Reports on Form 8-K

          We filed a Report on Form 8-K/A on January 22, 2001, which amended the
Report on Form 8-K filed on November 21, 2000 and reported (1) under Item 2 of
Form 8-K/A our acquisition of MCE Holding Corporation on November 8, 2000, (2)
under Item 5 of Form 8-K/A the execution by Ericsson and us in October 2000 of
Amendment Number One to Shareholder Rights Agreement, which eliminated
Ericsson's right under the Shareholder Rights Agreement dated February 4, 1999
to require us to repurchase the shares of Series A Preferred Stock and/or Common
Stock owned by Ericsson under certain terms and conditions, and (3) under Item 7
of Form 8-K/A, our unaudited pro forma consolidated condensed balance sheet as
of September 30, 2000 giving effect to the acquisition of MCE Holding
Corporation as if it occurred on September 30, 2000 and our unaudited pro forma
consolidated condensed statements of operations for the year ended December 31,
1999 and the nine months ended September 30, 2000 and 1999 giving effect to the
acquisition as if it occurred on January 1, 1999.


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                                    SIGNATURE

     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       OZ.COM
                                       a California corporation


                                       By: /s/  ROBERT G. QUINN
                                           -------------------------------------
                                                Robert G. Quinn
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)


Date: June 19, 2001


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