Surprised or dumbfounded, as reflected in the rounded of your lips when you're bewildered by an awkward person or scene.
(The expression is very popularly used among teens in Hong Kong)
1) The folk kept talking crap in front of the boss and apparently she wasn't aware that she was making a fool of herself. I was just O-mouthed...
2) I was O-mouthed to see that stray dog taking a shXt in my courtyard!! Gee!!!!!!!!