<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-QSB/A

(Mark One)

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

    For the quarterly period ended June 30, 2000

                                       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
incorporation or organization)                               Identification 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  [_]    No [X]

        As of June 30, 2000, there were 70,708,448 shares of the registrant's
Common Stock outstanding.

<PAGE>   2

                                      INDEX

                                                                            PAGE
                                                                            ----
PART I.  FINANCIAL INFORMATION

         ITEM 1. FINANCIAL STATEMENTS

                 Consolidated Balance Sheets as of June 30, 2000 (unaudited)
                 and December 31, 1999                                         3

                 Consolidated Statements of Operations (unaudited) for the
                 three months and six months ended June 30, 1999 and 2000      4

                 Consolidated Statements of Cash Flows (unaudited) for the
                 three months and six months ended June 30, 1999 and 2000      5

                 Consolidated Statements of Comprehensive Income (unaudited)
                 for the six months ended June 30, 1999 and 2000               6

                 Notes to Consolidated Financial Statements (unaudited)        7

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 AND RESULTS OF OPERATIONS                                    10

PART II. OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS                                            15

         ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                    15

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES                              15

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

         ITEM 5. OTHER INFORMATION                                            17

         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                             17

SIGNATURES                                                                    17

                                       2

<PAGE>   3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                            OZ.COM AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,        JUNE 30,
                                                                                          1999              2000
                                                                                      ------------      ------------
                                                                                                         (unaudited)
                                                                                         As Restated (See Note 7)
<S>                                                                                   <C>               <C>
ASSETS

Current assets:
    Cash and cash equivalents ..................................................      $ 13,603,592      $  9,122,538
    Trade accounts receivable ..................................................            22,456            17,340
    Trade accounts receivable from shareholder .................................         1,391,816         1,484,317
    Prepaid expenses and other current assets ..................................           406,232           503,770
                                                                                      ------------      ------------
          Total current assets .................................................        15,424,096        11,127,965
Property and equipment, net ....................................................         2,079,531         3,066,957
Other assets ...................................................................           130,510             4,280
                                                                                      ------------      ------------
          Total assets .........................................................      $ 17,634,137      $ 14,199,202
                                                                                      ============      ============


LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Trade accounts payable .....................................................      $    188,305      $    450,858
    Accrued liabilities ........................................................           505,133         1,262,167
    Current portion of deferred revenue ........................................           236,571           236,571
    Current portion of notes payable ...........................................            24,069            23,763
    Current portion of capital lease obligations ...............................             3,384                --
                                                                                      ------------      ------------
          Total current liabilities ............................................           957,462         1,973,359
Notes payable ..................................................................           505,445           488,950
Deferred revenue ...............................................................           236,572           118,286
                                                                                      ------------      ------------
          Total liabilities ....................................................         1,699,479         2,580,595
                                                                                      ------------      ------------

Redeemable convertible preferred stock, $0.01 par value; 10,052,431 shares
 issued and outstanding (liquidation value $10,052,431)  .......................        13,068,160        13,068,160


Commitments and contingencies                                                                   --                --

Shareholders' equity (deficit):
    Convertible preferred stock, $0.01 par value:
      5,685,218 and 5,473,533 shares issued and
       outstanding, respectively, (liquidation value $5,473,533) ...............        5,384,976         5,109,785
    Common stock, $0.01 par value:
      275,000,000 shares authorized:
       68,359,078 and 70,708,448 shares
       issued and outstanding, respectively ....................................           683,591           707,084
    Additional paid in capital .................................................        10,440,238        17,245,536
    Notes receivable from shareholders .........................................          (200,200)         (365,400)
    Deferred compensation ......................................................          (376,668)       (5,957,097)
    Accumulated deficit including accumulated other comprehensive
       income of $56,886 and $196,273, respectively ............................       (13,065,439)      (18,189,461)
                                                                                      ------------      ------------
          Total shareholders' equity ...........................................         2,866,498        (1,449,553)
                                                                                      ------------      ------------
           Total liabilities and shareholders' equity ..........................      $ 17,634,137      $ 14,199,202
                                                                                      ============      ============
</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                 FOR THE SIX MONTHS
                                                                       ENDED JUNE 30,                       ENDED JUNE 30,
                                                             -------------------------------       -------------------------------
                                                                  1999              2000               1999               2000
                                                             ------------       ------------       ------------       ------------
                                                              (unaudited)        (unaudited)        (unaudited)        (unaudited)
                                                                 As Restated (See Note 7)              As Restated (See Note 7)
<S>                                                          <C>                <C>                <C>                <C>
REVENUE ...............................................      $    911,302       $  1,577,094       $  1,790,110       $  3,339,159
                                                             ------------       ------------       ------------       ------------

OPERATING EXPENSES
    Cost of sales .....................................           966,776          1,329,173          1,712,924          2,302,540
    Sales and marketing ...............................           161,499          1,400,800            422,650          2,046,957
    General and administrative ........................           887,736          1,845,302          1,590,964          3,042,845
    Research and development ..........................           112,707            547,129            192,304            778,988
                                                             ------------       ------------       ------------       ------------
           Total operating expenses ....................        2,128,718          5,122,404          3,918,842          8,171,330
                                                             ------------       ------------       ------------       ------------
           Operating loss .............................        (1,217,416)        (3,545,310)        (2,128,732)        (4,832,171)
                                                             ------------       ------------       ------------       ------------
Interest income .......................................            21,248            102,292             24,862            216,147
Interest expense ......................................           (10,504)           (30,081)           (54,886)           (46,122)
Other income (expense) net ............................           (46,228)          (512,213)           (82,604)          (601,263)
                                                             ------------       ------------       ------------       ------------
           Loss before provision for income taxes .....        (1,252,900)        (3,985,312)        (2,241,360)        (5,263,409)
Income taxes ..........................................                --                 --                 --                 --
                                                             ------------       ------------       ------------       ------------
           Net loss ...................................      $ (1,252,900)      $ (3,985,312)      $ (2,241,360)      $ (5,263,409)
                                                             ============       ============       ============       ============

Net loss per share:
    Basic .............................................      $      (0.02)      $      (0.06)      $      (0.04)      $      (0.08)
                                                             ============       ============       ============       ============
    Diluted ...........................................      $      (0.02)      $      (0.06)      $      (0.04)      $      (0.08)
                                                             ============       ============       ============       ============
</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          FOR THE SIX MONTHS
                                                                     ENDED JUNE 30,               ENDED JUNE 30,
                                                             ---------------------------   ---------------------------
                                                                 1999           2000           1999           2000
                                                             ------------   ------------   ------------   ------------
                                                              (unaudited)   (unaudited)     (unaudited)   (unaudited)
                                                               As Restated (See Note 7)      As Restated (See Note 7)
<S>                                                          <C>            <C>            <C>            <C>
Cash flows from operating activities:
   Net loss ..............................................   $ (1,252,900)  $ (3,985,312)  $ (2,241,360)  $ (5,263,409)
   Adjustments to reconcile net loss to net
      cash provided (used) in operating activities:
      Depreciation .......................................        107,387        126,295        166,115        253,998
      Noncash charges (credits), net .....................         79,316             --         79,316             --
      Amortization of deferred compensation ..............         13,756        550,775         26,506        581,071
   Changes in operating assets and liabilities:
      (Increase) decrease in trade accounts receivable ...       (872,320)       204,063       (521,503)       (87,384)
      (Increase) decrease in prepaid expenses and
          other assets ...................................        (33,635)       (14,818)       (55,946)        28,692
      Increase (decrease) in trade accounts payable ......       (107,601)       (35,152)      (213,454)       262,553
      Increase (decrease) in accrued liabilities .........        299,948        391,402        334,453        757,036
      Increase (decrease) in deferred revenue ............        499,522        (59,143)       551,522       (118,286)
                                                             ------------   ------------   ------------   ------------
      Net cash used in operating activities .............      (1,266,527)    (2,821,890)    (1,874,351)    (3,585,729)
                                                             ------------   ------------   ------------   ------------

Cash flows from investing activities:
   Purchase of property and equipment ....................       (228,069)      (840,100)      (425,803)    (1,241,426)
                                                             ------------   ------------   ------------   ------------
      Net cash used in investing activities ..............       (228,069)      (840,100)      (425,803)    (1,241,426)
                                                             ------------   ------------   ------------   ------------

Cash flows from financing activities:
   Repayment of bank overdraft ...........................        (32,085)            --       (383,304)            --
   Issuance of warrants...................................             --             --        448,000             --
   Issuance of Series A preferred stock ..................      6,200,000             --      6,200,000             --
   Issuance of common stock ..............................      1,710,000             --      3,510,000             --
   Exercise of employee stock options ....................          7,800         65,200        124,400        226,900
   Payments on notes payable .............................         (6,480)       (12,041)       (29,589)       (16,801)
   Payment of capital lease obligation ...................         (3,886)            --         (7,691)        (3,384)
                                                             ------------   ------------   ------------   ------------
      Net cash provided by financing activities ..........      7,875,349         53,159      9,861,816        206,715
                                                             ------------   ------------   ------------   ------------
Effect of currency exchange rates on cash ................         57,853        108,464        135,684        139,386
                                                             ------------   ------------   ------------   ------------
   Net increase (decrease) in cash .......................      6,438,606     (3,500,367)     7,697,346     (4,481,054)
Cash and cash equivalents at beginning of period .........      1,627,015     12,622,905        368,275     13,603,592
                                                             ------------   ------------   ------------   ------------
Cash and cash equivalents at end of period ...............   $  8,065,621   $  9,122,538   $  8,065,621   $  9,122,538
                                                             ============   ============   ============   ============

Supplemental cash flow information:
   Cash paid for interest ................................   $      1,132   $      6,904   $     16,835   $     13,067
                                                             ============   ============   ============   ============
Supplemental schedule of non-cash investing and
   financing activities:
   Conversion of bonds to common stock ...................   $  1,687,000   $         --   $  2,612,000   $         --
                                                             ============   ============   ============   ============
   Conversion of common stock to preferred stock .........   $         --   $         --   $    372,402   $         --
                                                             ============   ============   ============   ============
   Conversion of preferred stock to common stock .........   $    313,810         62,790   $         --   $    275,191
                                                             ============   ============   ============   ============
   Common stock issued for employee compensation ........    $     79,229              -   $     79,229   $         --
                                                             ============   ============   ============   ============
   Common stock issued for notes .........................   $         --   $         --   $         --   $    188,000
                                                             ============   ============   ============   ============
</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

<TABLE>
<CAPTION>
                                                       FOR THE THREE MONTHS           FOR THE SIX MONTHS
                                                          ENDED JUNE 30,                 ENDED JUNE 30,
                                                 ------------------------------   -----------------------------
                                                     1999              2000            1999           2000
                                                 -------------    -------------   -------------   -------------
                                                  (unaudited)      (unaudited)     (unaudited)     (unaudited)
                                                     As Restated (See Note 7)        As Restated (See Note 7)
<S>                                              <C>               <C>             <C>            <C>
Net loss .....................................   $  (1,252,900)    $ (3,985,312)   $(2,241,360)   $ (5,263,409)

Other comprehensive income:
   Foreign currency translation adjustment ...          57,853          108,465        135,684         139,387
                                                 -------------     ------------    -----------    ------------
Comprehensive loss ...........................   $  (1,195,047)    $ (3,876,847)   $(2,105,676)   $ (5,124,022)
                                                 =============     ============    ===========    ============
</TABLE>


                                       6
<PAGE>   7

                             OZ.COM AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. INTERIM FINANCIAL STATEMENTS:

The accompanying financial statements are unaudited and have been prepared
pursuant to the rules and regulations of the 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 Registration Statement on Form 10-SB. 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 the 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 was 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.

2. NET LOSS PER SHARE

Basic net loss per share is computed based upon the weighted average number of
common shares outstanding. Diluted net loss per share is computed based upon 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 if 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 and six months ended June 30, 1999, included
preferred shares, convertible bonds, stock options, and stock warrants.
Potentially dilutive securities not included in the diluted net loss per share
calculation and outstanding during the three months and six months ended June
30, 2000, included preferred shares, stock options, and stock warrants.

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

                                             SIX MONTHS ENDED JUNE 30,
                                          ------------------------------
                                              1999               2000
                                          ------------       -----------

Net loss                                  $(2,241,360)       $(5,263,409)
                                          ===========        ===========
Weighted average outstanding shares
  of common stock                          63,983,748         69,694,564

Net loss per share:
     Basic                                $     (0.04)       $     (0.08)
                                          ===========        ===========
     Diluted                              $     (0.04)       $     (0.08)
                                          ===========        ===========

                                           THREE MONTHS ENDED JUNE 30,
                                          ------------------------------
                                              1999               2000
                                          ------------       -----------

Net loss                                  $(1,252,900)       $(3,985,312)

Weighted average outstanding shares
  of common stock                          65,431,578         70,527,170

Net loss per share:
     Basic                                      (0.02)             (0.06)
     Diluted                                    (0.02)             (0.06)


                                       7

<PAGE>   8

3. CONVERTIBLE BONDS

During the six months ended June 30, 1999, holders of $2,500,000 of convertible
bonds exercised their option to convert their bonds into the Company's common
stock. In connection with the conversion the Company issued 3,846,150 shares of
common stock.

4. CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON STOCK

During the six months ended June, 2000, holders of 211,685 shares of Series A
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 423,370 shares of common stock.

5. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB 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. Because the Company does not
currently hold any derivative instruments and does not engage in hedging
activities, the Company expects that the adoption of SFAS No. 133, as amended,
will not have a material impact on its consolidated financial position, results
of operations, or cash flows. The Company will be required to adopt SFAS No. 133
in 2001.

6. GEOGRAPHIC, SEGMENT, AND SIGNIFICANT CUSTOMER INFORMATION

During 2000, the Company adopted the provisions of SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. SFAS No. 131
establishes standards for the reporting by public business enterprises of
information about operating segments, products and services, geographic areas,
and major customers. The method for determining what information to report is
based on the way that management organizes the operating segments within the
Company for making operational decisions and assessments of financial
performance.

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. Therefore, the Company operates in a single
operating segment: the design and development of computer software and services.
The Company is positioning itself to add a second operating segment, namely the
delivery of Internet-based services to wireless network operators and Internet
businesses and related services. No revenues from this second operating segment
has been recognized to date. The disaggregated information reviewed on a product
basis by the CEO is as follows:

                              THREE MONTHS ENDED           SIX MONTHS ENDED
                                   JUNE 30,                    JUNE 30,
                           ------------------------    ------------------------
                              1999          2000          1999         2000
                           ----------    ----------    ----------    ----------

Revenues:
     Development           $  911,302    $1,517,951    $1,790,110    $3,220,873
     License                       --        59,143            --       118,286
                           ----------    ----------    ----------    ----------
         Total revenues    $  911,302    $1,577,094    $1,790,110    $3,339,159
                           ==========    ==========    ==========    ==========


                                      8

<PAGE>   9

Revenues attributable to geographic regions are based upon the origination of
the sales. However, all development services related to revenues for the periods
reported below for United States were performed in Europe. Information regarding
the Company's revenues in different geographic regions is as follows:

                              THREE MONTHS ENDED         SIX MONTHS ENDED
                                   JUNE 30,                    JUNE 30,
                           ------------------------    ------------------------
                              1999          2000          1999          2000
                           ----------    ----------    ----------    ----------
Revenues:
     Europe                $  211,258    $  129,320    $  351,938    $  230,124
     United States            700,044     1,447,774     1,438,172     3,109,035
                           ----------    ----------    ----------    ----------
         Total revenues    $  911,302    $1,577,094    $1,790,110    $3,339,159
                           ==========    ==========    ==========    ==========

7. RESTATEMENT

Subsequent to the issuance of the Company's consolidated financial statements
for the three and six months ended June 30, 1999 and 2000, the Company's
management determined that the fair value of certain warrants issued should have
been allocated to additional paid-in capital, certain previously recognized
license revenue should have been amortized, and accrued interest expense related
to the conversion of bonds payable to common stock in 1999 should have been
recognized as additional paid-in capital rather than a reduction in interest
expense. As a result, the consolidated financial statements as of December 31,
1999 and June 30, 2000 and for the three and six months ended June 30, 1999 and
2000 have been restated from amounts previously reported.

A summary of the effects of the restatement as of December 31, 1999 and June 30,
2000 and for the three and six months ended June 30, 1999 and 2000 is as
follows:

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED JUNE 30,
                                    ------------------------------------------------------------
                                        1999            1999            2000            2000
                                    ------------    ------------    ------------    ------------
                                     PREVIOUSLY                      PREVIOUSLY
                                      REPORTED        RESTATED        REPORTED        RESTATED
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>
Revenues..........................  $  1,454,282    $    911,302    $  1,560,931    $  1,577,094
Operating loss....................      (674,436)     (1,217,416)     (3,561,473)     (3,545,310)
Interest expense..................        76,496         (10,504)            N/A             N/A
Loss before provision for income
  taxes...........................      (622,920)     (1,252,900)     (4,001,475)     (3,985,312)
Net loss..........................      (622,920)     (1,252,900)     (4,001,475)     (3,985,312)

Net loss per share:
  Basic...........................  $      (0.01)   $      (0.02)   $      (0.06)   $      (0.06)
  Diluted.........................  $      (0.01)   $      (0.02)   $      (0.06)   $      (0.06)
</TABLE>

<TABLE>
<CAPTION>
                                                     SIX MONTHS ENDED JUNE 30,
                                    ------------------------------------------------------------
                                        1999            1999            2000            2000
                                    ------------    ------------    ------------    ------------
                                     PREVIOUSLY                      PREVIOUSLY
                                      REPORTED        RESTATED        REPORTED        RESTATED
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>
Revenues..........................  $  2,360,310    $  1,790,110    $  3,306,833    $  3,339,159
Operating loss....................    (1,558,532)     (2,128,732)     (4,864,497)     (4,832,171)
Interest expense..................        57,114         (54,866)            N/A             N/A
Loss before provision for income
  taxes...........................    (1,559,160)     (2,241,360)     (5,295,735)     (5,263,409)
Net loss..........................    (1,559,160)     (2,241,360)     (5,295,735)     (5,263,409)

Net loss per share:
  Basic...........................  $      (0.02)   $      (0.04)   $      (0.08)   $      (0.08)
  Diluted.........................  $      (0.02)   $      (0.04)   $      (0.08)   $      (0.08)
</TABLE>

<TABLE>
<CAPTION>
                                         DECEMBER 31, 1999                 JUNE 30, 2000
                                    ----------------------------    ----------------------------
                                     PREVIOUSLY                      PREVIOUSLY
                                      REPORTED        RESTATED        REPORTED        RESTATED
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>
Current portion of deferred
  revenue.........................  $    171,920    $    236,571    $    171,920    $    236,571
Total current liabilities.........       892,811         957,462       1,908,708       1,973,359
Deferred revenue..................       171,920         236,572          85,960         118,286
Total liabilities.................     1,570,176       1,699,479       2,483,618       2,580,595
Additional paid-in capital........     9,880,238      10,440,238      16,685,536      17,245,536
Accumulated deficit including
  accumulated other comprehensive
  income..........................   (12,376,136)    (13,065,439)    (17,532,484)    (18,189,461)
Shareholders' equity (deficit)....     2,995,801       2,866,498      (1,352,576)     (1,449,553)
</TABLE>

                                        9
<PAGE>   10

        Ericsson was our only significant customer during the three- and
six-month periods ended June 30, 1999 and June 30, 2000. Revenues attributable
to Ericsson comprised 99.7% and 100% of total revenues for the three-month
periods ended June 30, 1999 and June 30, 2000, respectively. Revenues
attributable to Ericsson comprised 94% and 97% of total revenues for the
six-month periods ended June 30, 1999 and June 30, 2000, respectively.

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

        The following discussion of our financial condition and results of
operations is as of August 18, 2000. Readers should review our subsequent
filings with the Securities and Exchange Commission for more current discussions
and analyses of our 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 or the negative 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 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
August 18, 2000. 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.

Restatement

        Subsequent to the issuance of the Company's consolidated financial
statements for the three and six months ended June 30, 1999 and 2000, the
Company's management determined that the fair value of certain warrants issued
should have been allocated to additional paid-in capital, certain previously
recognized license revenue should have been amortized, and accrued interest
expense related to the conversion of bonds payable to common stock in 1999
should have been recognized as additional paid-in capital rather than a
reduction in interest expense. As a result, the consolidated financial
statements as of December 31, 1999 and June 30, 2000 and for the three and six
months ended June 30, 1999 and 2000 have been restated from amounts previously
reported.

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 in fiscal 1999 and $3.2 million for the six months
ended June 30, 2000. We first recognized license revenues in September 1999,
and generated license revenues of approximately $0.1 million in fiscal 1999 and
$0.1 million for the six months ended June 30, 2000.

        We incurred net losses of approximately $5.3 million for the six months
ended June 30, 2000 and $4.8 million, $1.8 million and $2.9 million for the
years ended December 31, 1997, 1998 and 1999, respectively. As of June 30, 2000,
we had an accumulated deficit, including other comprehensive income, of
approximately $18.2 million. We are currently operating at a deficit and expect
to continue operating at a deficit and to increase the deficit over at least the
next twelve months as we incur increasing levels of expense to support growth.
We believe that our historical operating results are not indicative of future
performance for the following reasons, among others:

        o   Our historical revenues have come from development contracts for 3D
            environments in earlier years and more recently for the development
            of iPulse(TM) under an agreement with Ericsson, but this will change
            as we begin licensing iPulse(TM) and selling mPresence(TM) services
            directly to customers; and

        o   We have recently emerged from the development stage and anticipate
            substantial increases in the number and size of customer orders and
            revenues from operations.

        Although we expect substantial growth in both revenues and expenses, we
anticipate that increases in expenses will occur more rapidly than corresponding
increases in revenues. Also, while we are committed, at least in the short term,
to substantial increases in expenses, we cannot be certain that revenues will
increase correspondingly. Like many companies attempting to build an
Internet-based business, we expect over at least the next year and for an
indeterminate period of time thereafter to


                                       10
<PAGE>   11

follow a strategy of establishing market share by making expenditures for
marketing and infrastructure development that exceed current revenues.

        We generate revenues from development work and licenses. We receive
development revenues under a contract with Ericsson and have agreed to develop
unspecified software applications for Microcell Labs Inc. ("Microcell"), but
have not yet defined any specific development project with Microcell. We
currently receive license revenues primarily from a license of our core
technologies to Ericsson, but we expect that we will soon begin receiving
revenue sharing fees from Ericsson's license of iPulse(TM) to network operators
and eventually from licensing our mPresence(TM) suite of applications directly
to network operators, Internet business and enterprise customers and indirectly
through value-added resellers. We expect in the future to generate revenues from
hosting mPresence(TM) on behalf of network operator and Internet business
customers, as well as from product installation, maintenance and engineering
support services. However, the receipt of these revenues is subject to a number
of factors that we cannot control. Accordingly, we cannot be sure when these
revenues will be recognized or the amount of these revenues, if any.

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

         Our future success depends on our ability to increase revenues from
sales of products and services to new and existing network operator customers
and Internet business such as e-commerce sites and Internet communities. If the
market for Internet-based 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.

         Our business strategy also relies to a significant extent on the
widespread propagation of the iPulse(TM) communications platform through our
relationships with network operators, Internet business and Ericsson, one of the
leading wireless telephone manufacturers. iPulse(TM) is available to network
operators directly from Ericsson or from us. We receive 15% royalties of gross
worldwide iPulse(TM) sales by Ericsson as a result of the specific co-operation
and development agreement we entered into with Ericsson in February 1999. We
license iPulse(TM) as a component of our mPresence(TM) services to network
operators and Internet businesses. In the event that we license iPulse(TM) to a
network operator or Internet business, we must pay a royalty to Ericsson.

         We expect that our gross profit on revenues derived from sales through
indirect 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 North America 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;


                                       11

<PAGE>   12

         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 increase in the next few 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 increase substantially in absolute
dollars for the foreseeable future as we expand our product development, sales
and marketing, professional services and administrative staff. Even if we were
to achieve profitability in any period, we may not sustain or increase
profitability on a quarterly or annual basis. iPulse(TM) is a trademark of
Ericsson and mPresence(TM) is our trademark.

RESULTS OF OPERATIONS

Development Services Revenues

         Development services revenues increased from $0.9 million for the three
months ended June 30, 1999 to $1.5 million for the three months ended June 30,
2000, and increased from $1.8 million for the six months ended June 30, 1999 to
$3.2 million for the six months ended June 30, 2000. The increase in development
services revenues was attributable primarily to the timing of the commencement
of development work for Ericsson. Development started in February 1999 and built
up to optimal capacity by June 30, 1999.

License Revenues

         License revenues increased from zero for the three months ended
June 30, 1999 to $0.06 million for the three months ended June 30, 2000, and
increased from zero for the six months ended June 30, 1999 to $0.12 million for
the six months ended June 30, 2000. The increase in license revenues was
primarily due to the timing of recognition of revenues associated with the
licensing of our core technology to Ericsson in connection with the development
of iPulse(TM). We expect that we will soon begin receiving revenue sharing fees
from Ericsson's license of iPulse(TM) to network operators and beginning in 2001
from licensing our mPresence(TM) suite of applications directly to network
operators and indirectly through value-added resellers.

Cost of Revenues - Development Services

         Cost of revenues - development services consists of compensation and
independent consultant costs for personnel engaged in our development services
operations and related overhead. Cost of revenues-development services remained
constant at $0.96 million for the three months ended June 30, 1999 and the three
months ended June 30, 2000, and increased from $1.7 million for the six months
ended June 30, 1999 to $1.9 million for the six months ended June 30, 2000. As a
percentage of development services revenues, cost of revenues-development
services revenues for the three months ended June 30, 1999 and 2000 was 106.1%
and 63.6%, respectively. Cost of revenues-development services as a percentage
of the related revenues for the six months ended June 30, 1999 and 2000 was
95.7% and 60.2%, respectively. The increase in margins reflects a higher mix of
development services performed on a time and materials basis during the
three-and six-month periods ended June 30, 2000. 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 revenues-development services will increase slightly
in absolute dollars but decrease as a percentage of revenues as we continue to
invest in the growth of our consulting services and licensing operations.


                                       12


<PAGE>   13

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 from $0.2 million,
or 17.7% of total revenues, for the three months ended June 30, 1999, to $1.4
million, or 88.8% of total revenues, for the three months ended June 30, 2000.
Sales and marketing expenses increased from $0.4 million, or 23.6% of total
revenues, for the six months ended June 30, 1999, to $2.1 million, or 61.3% of
total revenues, for the six months ended June 30, 2000. 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 anticipate that sales and marketing expenses will
increase in absolute dollars as we increase our investment in these areas.

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 and other general corporate expenses.
General and administrative expenses, excluding stock-based compensation,
increased from $0.8 million, or 95.9% of total revenues, for the three months
ended June 30, 1999, to $1.3 million, or 82.0% of total revenues, for the three
months ended June 30, 2000. General and administrative expenses, excluding stock
based compensation, increased from $1.6 million, or 87.4% of total revenues, for
the six months ended June 30, 1999, to $2.5 million, or 73.7% of total revenues,
for the six months ended June 30, 2000. These increases were due primarily to
the addition of personnel performing general and administrative functions,
additional expenses in connection with our filing of our registration statement
on Form 10-SB and our resulting operation as a public company and, to a lesser
extent, legal expenses associated with increased product licensing and patent
activity.

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 $0.1 million, or 12.4% of total revenues, for the three
months ended June 30, 1999, to $0.5 million, or 34.7% of total revenues, for the
three months ended June 30, 2000. Research and development expenses increased
from $0.2 million, or 10.7% of total revenues, for the six months ended June 30,
1999, to $0.8 million, or 23.3% of total revenues, for the six months ended June
30, 2000. These increases were attributable primarily to the addition of
personnel in our research and development organization associated with product
development. Until recently, almost all of our research and development
personnel have been dedicated to development service projects, primarily the
co-development of iPulse(TM) with Ericsson. In the six months ended June 30,
2000 we have nearly doubled the number of research and development personnel and
we have initiated the development of mPresence(TM) products. We expect to
continue to make substantial investments in research and development and
anticipate that research expenses will continue to increase in absolute dollars.
In particular, we anticipate that research and development expenses will
increase significantly due to product development efforts for the mPresence(TM)
service and the addition of research and development personnel.


                                       13


<PAGE>   14

We expect general and administrative expenses to increase in absolute dollars as
we add personnel and incur additional expenses related to the anticipated growth
of our business, the management of our international operations and our
operation as a public company.

Stock-Based Compensation Expenses

         Stock-based compensation expenses totaled $0.01 million and $0.55
million for the three months ended June 30, 1999 and 2000, respectively, and
totaled $0.03 million and $0.58 million for the six months ended June 30, 1999
and 2000, respectively. Some stock options granted and restricted stock sold
during the fiscal years ended December 31, 1998 and December 31, 1999 and the
six months ended June 30, 2000 have been deemed to be compensatory. Total
deferred stock-based compensation associated with these equity arrangements
amounted to $6.7 million related to stock options granted and restricted stock
issued from February 1996 through April 2000. The amortization of deferred
stock-based compensation for these equity arrangements was $0.01 million and
$0.55 million for the three months ended June 30, 1999 and 2000, respectively,
and $0.03 million and $0.58 million for the six months ended June 30, 1999 and
2000, respectively. We expect amortization in the remainder of fiscal year 2000
of approximately $1.0 million, and $2.0 million, $1.6 million and $1.1 million
in the fiscal years ending December 31, 2001, 2002 and 2003, respectively,
relating to the amortization of the deferred stock-based compensation associated
with stock options granted and restricted stock issued from February 1996
through April 2000.

Interest Income (Expense), net

         Interest income, net increased from a net gain of $10,744 for the three
months ended June 30, 1999 to a net gain of $72,211 for the three months ended
June 30, 2000. Interest income, net increased from a net expense of $30,024 for
the six months ended June 30, 1999 to a net gain of $170,025 for the six months
ended June 30, 2000. The increase is primarily the result of an increase in cash
holdings as a result of capital investments by Ericsson during the second and
fourth quarters of 1999 in the aggregate amount of $13,068,160.

Other Income (Expense), net

         Other expense, net increased from $46,228 for the three months ended
June 30, 1999 to $512,213 for the three months ended June 30, 2000. Other
expense, net increased from $82,604 for the six months ended June 30, 1999 to
$601,263 for the six months ended June 30, 2000.

Income Taxes

         At December 31, 1998 and 1999 we had deferred tax assets of $3.7
million and $4.5 million, respectively. Due to the uncertain nature of the
ultimate realization, we have recorded a valuation allowance against deferred
tax assets. At December 31, 1999 we had net operating loss carryforwards of
approximately $11.8 million, $5.6 million and $0.1 million for federal, state
and Icelandic income tax purposes, respectively. These carryforwards will expire
from year 2001 through 2013.

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 by operating activities was $3.6 million for the six
months ended June 30, 2000. The net cash used by operating activities for the
six months ended June 30, 2000 was attributable primarily to an increase in
accounts receivable and increases in accounts payable and in accrued liabilities
of $.09 million, $0.3 million and $0.8 million, respectively, and by the net
loss of $5.3 million.

         To date, we have had no material write-offs of accounts receivable and
we have not recorded any allowance for doubtful accounts.

         Net cash used for investing activities was $1.2 million for the six
months ended June 30, 2000, primarily reflecting net purchases of property and
equipment.


                                       14


<PAGE>   15

         Net cash provided by financing activities was $0.2 million for the six
months ended June 30, 2000, primarily reflecting the net proceeds from sales of
common stock to employees through the exercise of stock options and restricted
stock.

         As of June 30, 2000, our principal commitments consisted of obligations
outstanding under operating leases and capitalized lease obligations. 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 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 nine months. We do not
believe 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
securities, these securities could have rights, preferences and privileges
senior to holders of common stock, and the 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. 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.

Year 2000 Readiness Disclosure

         With the changeover to the year 2000, we did not experience any
disruption to our operations, which could have arisen as a result of the issues
associated with the limitations of the programming code in many existing
computer systems, whereby the computer systems may not properly recognize or
process date-sensitive information. Systems that do not properly recognize such
information could generate erroneous data or cause a system to fail. There can
be no assurance that there will not be future complications arising from Year
2000 issues.

         Our program for addressing Year 2000 concerns included an assessment
and evaluation of internal systems, which resulted in testing and remediation
efforts for Year 2000 compliance. In addition, we evaluated our customers,
vendors and service providers to determine the extent to which we were
vulnerable to any failure by these third-party providers and to ascertain their
readiness for the Year 2000.

         The total estimated cost of assessing Year 2000 issues is difficult to
determine with accuracy, but total costs did not have a material adverse impact
on our operating results or financial condition. Although we believe that it has
successfully addressed any significant disruption from Year 2000, it will
continue to monitor all critical systems for the appearance of delayed
complications or disruptions, as well as continue to monitor its suppliers and
customers.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS - NOT APPLICABLE.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         During the six months ended June 30, 2000, we issued and sold 963,000
shares of common stock upon exercise of options previously granted under our
1995 Stock Option Plan. These sales were made in reliance on Rule 701 under the
Securities Act of 1933, as amended.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - NOT APPLICABLE.


                                       15


<PAGE>   16

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

         On May 3, 2000 the Company held its annual meeting of shareholders. At
the annual meeting, the Company's shareholders approved the following matters by
the following votes:

1. Election of the following directors of the Company

<TABLE>
<CAPTION>
                                                                   Broker
           Nominees            For       Against   Abstentions    Nonvotes
---------------------------------------------------------------------------
<S>                        <C>           <C>        <C>          <C>
Lars Boman                 30,648,468                            1,101,179
Guojon Mar Guojonsson      30,648,468                            1,101,179
Stig-Arne Larsson          30,648,468                            1,101,179
Skuli Mogensen             30,648,468                            1,101,179
Jeff Pulver                30,648,468                            1,101,179
</TABLE>

2. Amendment to the Company's Bylaws to increase the number of authorized
   directors to a range between four and seven.

      For            Against          Abstentions          Broker Nonvotes
   -----------------------------------------------------------------------
   30,709,368                                                 1,040,279

3. Amendment to the Company's Amended and Restated Articles of Incorporation to
   increase the number of authorized shares of Common Stock from 100,000,000 to
   275,000,000, to designate a par value for the Common Stock and Series A
   Preferred stock, and to effect a 2-for-1 stock split of the outstanding
   shares of Common Stock and correspondingly reduce the Common Stock's per
   share liquidation preference.

      For            Against          Abstentions          Broker Nonvotes
   -----------------------------------------------------------------------
   30,659,368                                                 1,090,279

4. Approval of the Company's 2000 Employee Stock Purchase Plan.

      For            Against          Abstentions          Broker Nonvotes
   -----------------------------------------------------------------------
   30,659,368                                                 1,090,279

5. Amendment to the Company's 1995 Stock Option Plan to increase the number of
   shares authorized for grant under the plan to 9,000,000 (on a pre-stock split
   basis).

      For            Against          Abstentions          Broker Nonvotes
   -----------------------------------------------------------------------
   30,659,368                                                 1,090,279

6. Ratification of appointment of PricewaterhouseCoopers LLP as the Company's
   independent auditors for the fiscal year ending December 31, 2000.

      For            Against          Abstentions          Broker Nonvotes
   -----------------------------------------------------------------------
   30,659,368                                                 1,090,279

         After being properly announced at the May 3, 2000 meeting, the annual
meeting of the Company's shareholders was adjourned and continued on May 22,
2000. At the continuation of the annual meeting, the Company's shareholders
approved the following matter by the following vote:

7. Amendment to the Company's Amended and Restated Articles of Incorporation to
   approve the automatic conversion of the Series A Preferred stock upon the
   closing of an initial public offering on a non-U.S. exchange.

  Class of Stock            For        Against    Abstentions    Broker Nonvotes
--------------------------------------------------------------------------------
Common                  26,837,000                                  1,090,279
Series A Preferred      13,402,431


                                       16

<PAGE>   17

ITEM 5.  OTHER INFORMATION --- NOT APPLICABLE.

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

         (a) Exhibits

             27    Financial Data Schedule

         (b) Reports on Form 8-K

             None

                            [SIGNATURE PAGE FOLLOWS]


                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                 OZ.COM



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

Date: June 19, 2001


                                       17