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

                                   Form 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
      FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
      FOR THE TRANSITION PERIOD FROM __________ TO __________
      COMMISSION FILE NUMBER ________________________________


                                 ROO Group, Inc.
                                 ---------------
        (Exact name of small business issuer as specified in its charter)

             Delaware                                  11-3447894
      ---------------------                      -------------------------
 (State or other jurisdiction of            (IRS Employer Identification No.)
  incorporation or organization)


                            62 White Street, Suite 3A
                               New York, NY 10013
                               ------------------
                    (Address of principal executive offices)

                                 (646) 352-0260
                          (Issuer's telephone number)

                                 WITH COPIES TO:

                            Richard A. Friedman, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                                 (212) 930-9700

      Check  whether  the issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS

      State the number of shares  outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of May 13, 2005, the issuer
had 222,891,117 outstanding shares of Common Stock.

      Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                    Page
                         PART I - FINANCIAL INFORMATION

<S>       <C>                                                                        <C>
Item 1.   Financial Statements....................................................    2
                   Consolidated Balance Sheet.....................................    2
                   Consolidated Statements of Operations..........................    3
                   Consolidated Statements of Stockholders' Equity (Deficit)......    4
                   Consolidated Statements of Cash Flows..........................    5
                   Notes to Consolidated Financial Statements.....................    7
Item 2.   Management's Discussion and Analysis or Plan of Operation...............   17
Item 3.   Controls and Procedures.................................................   20

                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.......................................................   20
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.............   20
Item 3.   Defaults Upon Senior Securities.........................................   21
Item 4.   Submission of Matters to a Vote of Security Holders.....................   21
Item 5.   Other Information.......................................................   21
Item 6.   Exhibits and Reports on Form 8-K........................................   21

SIGNATURES........................................................................   23
</TABLE>

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

<TABLE>
<CAPTION>
ROO GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2005.
(UNAUDITED)
--------------------------------------------------------------------------------------
<S>                                                                    <C>
Assets:
Current Assets:
   Cash and Cash Equivalents                                           $       488,481
   Accounts Receivable                                                       1,174,384
   Related Party Loans                                                         318,299
   Other Current Assets                                                        243,665
                                                                       ---------------
   Total Current Assets                                                      2,224,829
                                                                       ---------------

Marketable Equity Securities - Available for Sale                               11,595
Property and Equipment - Net                                                   426,321
Other Loans                                                                     17,334
Deferred Tax Assets                                                             18,558
Content - Net                                                                  165,113
Software - Net                                                               1,059,448
Customer List - Net                                                            501,085
Goodwill                                                                     1,990,413
                                                                       ---------------
   Total Assets                                                        $     6,414,696
                                                                       ===============

Liabilities and Stockholders' Equity:
Current Liabilities:
   Bank Overdraft                                                      $       386,909
   Accounts Payable                                                            677,828
   Capital Leases                                                               34,217
   Accrued Expenses                                                            228,131
   Stockholder Loans Payable                                                   500,000
   Related Party Loans                                                             987
   Income Tax Payable                                                          100,858
   Accrued Employee Benefits                                                   122,918
   Other Current Liabilities                                                   696,326
                                                                       ---------------
   Total Current Liabilities                                                 2,748,174
                                                                       ---------------

Non Current Liabilities:
   Convertible Note                                                          2,708,311
   Capital Leases                                                               83,805
                                                                       ---------------
   Total Non-Current Liabilities                                             2,792,116
                                                                       ---------------
Commitments                                                                         --
                                                                       ---------------
Minority Interest                                                               32,902
                                                                       ---------------

Stockholders' Equity:
   Series A Preferred Shares, $0.0001 Par Value:
      Authorized 10,000,000 Shares; Issued
        and Outstanding 9,500,000                                                  950

   Common Stock, $.0001 Par Value: Authorized 500,000,000 shares;
     Issued and Outstanding 197,983,425                                         19,799

   Paid-in Capital                                                           8,512,783

   Accumulated Deficit                                                      (7,675,080)

   Accumulated Other Comprehensive Loss                                        (16,948)
                                                                       ---------------
   Total Stockholders' Equity                                                  841,504
                                                                       ---------------
   Total Liabilities and Stockholders' Equity                          $     6,414,696
                                                                       ===============
</TABLE>


The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.


                                       2
<PAGE>

<TABLE>
<CAPTION>
ROO GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
--------------------------------------------------------------------------------
(UNAUDITED)

                                                       Three Months Ended
                                                  -------------------------------
                                                            March 31,
                                                            ---------
                                                     2 0 0 5          2 0 0 4
                                                  -------------     -------------
<S>                                               <C>               <C>
Revenue                                           $   1,587,749     $       8,502
                                                  -------------     -------------
Expenses:
   Operations                                           933,647                --
   Research and Development                             144,110            62,630
   Sales and Marketing                                  435,932            52,503
   General and Administrative                           737,539            89,683
   General and Administrative (Non Cash)              1,140,456                --
                                                  -------------     -------------

   Total Expenses                                     3,391,684           204,816
                                                  -------------     -------------

   (Loss) from Operations                            (1,803,935)         (196,314)

Non Cash Cost of Capital                                     --          (433,747)

Interest Income                                              59                45

Interest Expense - Related Party                        (12,646)          (12,437)

Interest Expense - Other                                (87,879)           (4,952)

Interest Expense - (Non Cash)                          (351,020)               --
                                                  -------------     -------------

   Net (Loss) before Income Taxes                    (2,255,421)         (647,405)

Income Taxes                                             28,250                --
                                                  -------------     -------------

   Net (Loss) before Minority Interest               (2,283,671)         (647,405)

Minority Interest                                        13,000                --
                                                  -------------     -------------

   Net (Loss)                                     $  (2,296,671)    $    (647,405)
                                                  =============     =============

Basic and Diluted Net (Loss) Per Common Share     $       (0.01)    $          --
                                                  =============     =============
                                                                    -------------

Average Common Shares Outstanding                   196,383,425       158,043,355
                                                  =============     =============

Comprehensive Income(Loss):
   Net (Loss)                                     $  (2,296,671)    $    (647,405)
   Foreign Currency Translation                          (6,223)             (107)
   Fair Market Value Adjustment for Available
     for Sale Securities                                 (3,428)               --
                                                  -------------     -------------

   Comprehensive Income (Loss)                    $  (2,306,322)    $    (647,512)
                                                  =============     =============
</TABLE>


The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.


                                       3
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [DEFICIT]
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                               Other
                                            Series A         Preference                     Common           Additional
                                           Preference          Shares         Common         Stock             Paid-in
                                             Shares          Par Value         Stock        Par Value          Capital
                                            -----------     -----------     -----------     -----------     -----------
<S>                                           <C>           <C>             <C>             <C>             <C>
 Balance December 31, 2003                           --     $        --     157,669,130     $    15,767     $   393,341
 Issue of Shares for Services                        --              --         148,200              15          14,805
 Issue of Options for Services                       --              --              --              --         347,232
 Stock Issued in Private Placement                   --              --         954,547              95         141,420
 Foreign currency
   translation adjustment                            --              --              --              --              --
 Net (Loss) for Quarter                              --              --              --              --              --
                                            -----------     -----------     -----------     -----------     -----------
 Balance - March 31, 2004                            --     $        --     158,771,877     $    15,877     $   896,798
                                            ===========     ===========     ===========     ===========     ===========


 Balance December 31, 2004                           --     $        --     195,583,425     $    19,559     $ 6,910,989

 Grant of options for services                       --              --              --              --         190,456
Issue of Preference Shares
  for services                                2,000,000             200              --              --         199,800
Issue of Preference
  Shares as Performance Bonuses               7,500,000             750              --              --         749,250
Computed discount on
  convertible debt                                   --              --              --              --          32,338
Beneficial conversion feature of
  convertible debt                                   --              --              --              --         351,020
Foreign currency translation adjustment              --              --              --              --              --
Fair market value adjustment
  for available for sale securities                  --              --              --              --              --
Conversion by convertible note holders               --              --       2,400,000             240          78,930
Net (Loss) for Quarter                               --              --              --              --              --
                                            -----------     -----------     -----------     -----------     -----------
Balance - March 31, 2005                      9,500,000     $       950     197,983,425     $    19,799     $ 8,512,783
                                            ===========     ===========     ===========     ===========     ===========

<CAPTION>
                                                              Accumulated Other    Total
                                                                Comprehensive   Stockholders'
                                              Accumulated         Income           Equity
                                                Deficit           (Loss)         [Deficit]
                                              -----------      -----------      -----------
<S>                                           <C>              <C>              <C>
 Balance December 31, 2003                    $(1,152,642)     $   (12,938)     $  (756,472)
 Issue of Shares for Services                          --               --           14,820
 Issue of Options for Services                         --               --          347,232
 Stock Issued in Private Placement                     --               --          141,515
 Foreign currency
   translation adjustment                              --             (107)            (107)
 Net (Loss) for Quarter                          (647,405)              --         (647,405)
                                              -----------      -----------      -----------
 Balance - March 31, 2004                     $(1,800,047)     $   (13,045)     $  (900,417)
                                              ===========      ===========      ===========


 Balance December 31, 2004                    $(5,378,409)     $    (7,297)     $ 1,544,842

 Grant of options for services                         --               --          190,456
Issue of Preference Shares
  for services                                         --               --          200,000
Issue of Preference
  Shares as Performance Bonuses                        --               --          750,000
Computed discount on
  convertible debt                                     --               --           32,338
Beneficial conversion feature of
  convertible debt                                     --               --          351,020
Foreign currency translation adjustment                --           (6,223)          (6,223)
Fair market value adjustment
  for available for sale securities                    --           (3,428)          (3,428)
Conversion by convertible note holders                 --               --           79,170
Net (Loss) for Quarter                         (2,296,671)              --       (2,296,671)
                                              -----------      -----------      -----------
Balance - March 31, 2005                      $(7,675,080)     $   (16,948)     $   841,504
                                              ===========      ===========      ===========
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.


                                       4
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                    March 31,
                                                          ---------------------------
                                                            2 0 0 5         2 0 0 4
                                                          -----------     -----------
<S>                                                       <C>             <C>

Operating Activities:
    Net (Loss)                                            $(2,296,671)    $  (647,405)
                                                          -----------     -----------
    Adjustments to Reconcile Net (Loss) to Net Cash
        Provided by Operating Activities:
        Provision for Doubtful Accounts                         6,276              --
Depreciation                                                   34,631           2,187
        Amortization of Client Customer Lists                  40,628              --
        Amortization of Content                                49,607              --
        Amortization of Software                               57,788              --
        Non Cash Cost of Capital                                   --         433,747
        Non Cash Stock/Options for Consulting Services        390,456              --
        Non Cash Stock for Performance Bonuses                750,000              --
        Non Cash Interest on Convertible Note                 351,020              --
        Minority Interest in Reality                           13,000              --

    Changes in Assets and Liabilities:
        (Increase) Decrease in:
           Accounts Receivable                               (206,201)         (1,463)
           Other Assets                                        (7,516)             --

        Increase (Decrease) in:
           Accounts Payable                                   242,260          82,970
           Accrued Expenses                                  (198,376)             --
           Income Tax Payable                                  27,282              --
           Accrued Employee Benefits                            1,355              --
           Other Liabilities                                   63,000          16,515
                                                          -----------     -----------
           Total Adjustments                                1,615,210         533,956
                                                          -----------     -----------
    Net Cash (Used) By Operating Activities - Forward        (681,461)       (113,449)
                                                          -----------     -----------
Investing Activities:
    Capitalization of Content                                 (54,269)             --
    Purchase of Equipment                                     (58,278)         (7,285)
                                                          -----------     -----------
    Net Cash (Used) By Investing Activities - Forward     $  (112,547)    $    (7,285)
</TABLE>


The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.


                                       5
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                               ----------------------
                                                                      March 31,
                                                                2 0 0 5      2 0 0 4
                                                               ---------     ---------
<S>                                                            <C>           <C>
   Net Cash (Used) By Operating Activities - Forwarded         $(681,461)    $(113,449)
                                                               ---------     ---------

   Net Cash (Used) By Investing Activities - Forwarded          (112,547)       (7,285)
                                                               ---------     ---------

Financing Activities:
   Capital Contribution                                               --        69,820
   Bank Overdraft                                                121,362            --
   (Decrease) in Related Party Loans                            (139,681)           --
   Increase in Stockholder Loan                                       --        65,271
   (Decrease) in Stockholder Loan                                     --       (27,452)
   Convertible Note                                              914,347            --
   Conversion on Convertible Note                                 79,170            --
    Note Payable                                                      --         1,589
   (Decrease) in Capital Leases                                   (8,062)           --
                                                               ---------     ---------

   Net Cash Provided By Financing Activities                     967,136       109,228
                                                               ---------     ---------

Effect of Exchange Rate Changes on Cash                           (6,249)         (540)
                                                               ---------     ---------

   Net Increase in Cash                                          166,879       (12,046)

   Cash - Beginning of Periods                                   321,602        26,371
                                                               ---------     ---------

   Cash - End of Periods                                       $ 488,481     $  14,325
                                                               =========     =========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the years for:
     Income Taxes                                              $      --     $      --
     Interest                                                  $  55,485     $  17,389
</TABLE>


The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.


                                       6
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)

(1) Basis of Presentation

The accompanying  unaudited consolidated financial statements of ROO Group, Inc.
("ROO" or the  "Company")  have  been  prepared  in  accordance  with  generally
accepted  accounting  principles  for  interim  financial  information  and  the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they
do not include all  information  and  footnotes  required by general  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments  (consisting of normal recurring accruals)  considered  necessary in
order  to make  the  interim  financial  statements  not  misleading  have  been
included.  Results for the three months ended March 31, 2005 are not necessarily
indicative of the results that may be expected for the year ending  December 31,
2005.  These  interim  consolidated  financial  statements  should  be  read  in
conjunction with the consolidated  financial statements and footnotes thereto of
the Company and management's  discussion and analysis of financial condition and
results of operations included in the Company's annual report on Form 10-KSB for
the year ended December 31, 2004.

(2) Summary of Significant Accounting Policies

(A) Principles of Consolidation - The consolidated  financial statements include
the  accounts  of ROO  Group,  Inc.,  its  wholly  owned  subsidiary  ROO  Media
Corporation,  its wholly owned subsidiary Bickhams Media, Inc.  ("Bickhams") and
its  80%  subsidiary  Reality  Group  Pty.  Ltd.  ("Reality").  Included  in the
consolidation  with ROO Media  Corporation  are ROO Media  Corporation's  wholly
owned  subsidiary ROO Media  (Australia) Pty Ltd. and ROO Media  (Australia) Pty
Ltd.'s wholly owned  subsidiary  Undercover Media Pty Ltd.  ("Undercover"),  ROO
Media  Corporation's  76%-owned  subsidiary  ROO Media Europe Pty Ltd, ROO Media
Corporation's   wholly  owned  subsidiary  ROO  Broadcasting   Limited  and  ROO
Broadcasting  Limited's wholly owned subsidiary ROO TV Pty Ltd.  Included in the
consolidation  with  Bickhams is  Bickhams'  wholly owned  subsidiary  VideoDome
Networks.com, Inc.

(B) Management Estimates - The preparation of financial statements in conformity
with U.S. generally accepted  accounting  principles requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities,  disclosure of contingent assets and liabilities at the date of the
financial  statements,  and the reported amounts of revenues and expenses during
the reporting period.  Certain amounts included in the financial  statements are
estimated based on currently available  information and management's judgment as
to the outcome of future conditions and circumstances.  Changes in the status of
certain facts or circumstances could result in material changes to the estimates
used in the preparation of financial  statements and actual results could differ
from the estimates and assumptions. Every effort is made to ensure the integrity
of such estimates.


                                       7
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)

(2) Summary of Significant Accounting Policies (Continued)

(C) Foreign Currency Translation - Assets and liabilities of ROO Group's foreign
subsidiaries  are translated at current  exchange rates and related revenues and
expenses are  translated at average  exchange rates in effect during the period.
Resulting  translation  adjustments  are recorded as a component of  accumulated
comprehensive income (loss) in stockholders' equity.

(D) Fair value of Financial  Instruments - The carrying  amounts reported in the
balance  sheet  for cash and cash  equivalents,  accounts  receivable,  accounts
payable and accrued  liabilities  approximate  their fair values  because of the
immediate or short-term maturity of these financial instruments.

(E)  Impairment  of  Long-Lived  Assets - We review  our  long-lived  assets and
identifiable   intangibles   for  impairment   whenever  events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable. When such factors and circumstances exist, we compare the projected
undiscounted  future cash flows  associated  with the future use and disposal of
the  related  asset or group of assets  to their  respective  carrying  amounts.
Impairment,  if any, is measured as the excess of the  carrying  amount over the
fair value based on market value (when  available) or  discounted  expected cash
flows of those assets,  and is recorded in the period in which the determination
is made.

(F) Cash and Cash Equivalents - ROO considers all highly liquid investments with
original maturities of ninety days or less to be cash and cash equivalents. Such
investments are valued at quoted market prices.

(G)  Property  and  Equipment  -  Property  and  equipment  are  stated at cost.
Depreciation  is provided  for using the  straight-line  and  declining  balance
methods of accounting  over the  estimated  useful lives of the assets [See Note
5].

(H)  Intangible  Assets - Intangible  assets of the Company are recorded at cost
less accumulated amortization.  Amortization is computed using the straight-line
method over the estimated useful lives of the assets, with periods of up to five
years.  All  intangible  assets are  reviewed  for  impairment  annually or more
frequently if deemed necessary and no impairment write-offs were recorded.

(I) Risk Concentrations - Financial  instruments which potentially subject us to
concentrations  of credit risk consist  principally of cash and cash equivalents
and trade accounts receivable.  We place our cash and cash equivalents with high
credit quality institutions to limit credit exposure.  We believe no significant
concentration of credit risk exists with respect to these investments.

Concentrations  of credit risk with  respect to trade  accounts  receivable  are
limited  due to the wide  variety of  customers  who are  dispersed  across many
geographic   regions.   As  of  March  31,  2005,  one  customer  accounted  for
approximately  11.5% of our trade accounts  receivable  portfolio.  We routinely
assess the financial  strength of customers and,  based upon factors  concerning
credit risk, we establish an allowance for  uncollectible  accounts.  Management
believes that accounts  receivable credit risk exposure beyond such allowance is
limited. The allowance as of March 31, 2005 was $48,738.

We generally do not require collateral for our financial instruments.

(J) Revenue  Recognition - Revenues are derived  principally  from  professional
services,  digital media management and advertising.  Revenue is recognized when
service has been provided.

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"),  "Revenue  Recognition," which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements  filed with the SEC. SAB 101 outlines the basic criteria that must be
met to recognize revenue and provide guidance for disclosures related to revenue
recognition  policies.  Management believes that ROO Group's revenue recognition
practices  are in  conformity  with the  guidelines of SAB 101 as amended by SAB
104.


                                       8
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)

(2) Summary of Significant Accounting Policies (Continued)

(K) Earnings  (Loss) Per Share  Calculation - Net loss per share is based on the
weighted  average number of shares  outstanding  reflecting the shares issued in
the merger as outstanding for all periods presented.

Earnings  (Loss)  per  common  share  are  calculated  under the  provisions  of
Statement  of  Financial  Accounting  Standards  (SFAS) No. 128,  "Earnings  per
Share," which  establishes  standards for computing and presenting  earnings per
share.  SFAS No. 128 requires ROO Group to report both basic earnings (loss) per
share,  which  is  based  on  the  weighted  average  number  of  common  shares
outstanding  during the period,  and diluted earnings (loss) per share, which is
based on the  weighted  average  number of common  shares  outstanding  plus all
potential  dilutive  common  shares  outstanding.  Options and  warrants are not
considered in calculating  diluted  earnings (loss) per share since  considering
such  items  would  have an  anti-dilutive  effect.  Potential  shares  from the
conversion of Series A Preferred Stock are excluded as these are not convertible
for two years from the date of issuance.

(L) Stock-Based Compensation - We account for stock-based compensation utilizing
the  intrinsic  value method in  accordance  with the  provisions  of Accounting
Principles  Board  Opinion  No. 25 (APB  25),  "Accounting  for Stock  Issued to
Employees" and related Interpretations.  Accordingly, no compensation expense is
recognized  because the exercise prices of these employee stock options equal or
exceed the estimated fair market value of the  underlying  stock on the dates of
grant.

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 123R,  "Share-Based  Payment".  SFAS No. 123R is a revision of SFAS No. 123,
"Accounting  for Stock Based  Compensation",  and supersedes APB 25. Among other
items,  SFAS 123R eliminates the use of APB 25 and the intrinsic value method of
accounting,  and requires  companies to recognize the cost of employee  services
received in exchange for awards of equity  instruments,  based on the grant date
fair value of those awards, in the financial  statements.  The effective date of
SFAS 123R is the first reporting  period beginning after June 15, 2005, which is
third  quarter 2005 for calendar  year  companies,  although  early  adoption is
allowed.  SFAS  123R  requires  companies  to  adopt  its  requirements  using a
"modified   prospective"  method.  Under  the  "modified   prospective"  method,
compensation cost is recognized in the financial  statements  beginning with the
effective  date,  based on the  requirements  of SFAS  123R for all  share-based
payments  granted after that date, and based on the requirements of SFAS 123 for
all  unvested  awards  granted  prior to the  effective  date of SFAS 123R.  The
"modified  retrospective"  method also  permits  entities  to restate  financial
statements of previous periods based on proforma  disclosures made in accordance
with SFAS 123.

We currently  utilize a standard option pricing model (i.e.,  Black-Scholes)  to
measure  the fair value of stock  options  granted  to  employees  for  proforma
purposes.  While SFAS 123R permits entities to continue to use such a model, the
standard also permits the use of a "lattice"  model.  We have not yet determined
which model we will use to measure the fair value of employee stock options upon
the adoption of SFAS 123R.

SFAS 123R also requires that the benefits  associated with the tax deductions in
excess of  recognized  compensation  cost be reported as a financing  cash flow,
rather than as an operating cash flow as required under current  literature.  We
have not yet  determined  what effect,  if any,  this change will have on future
periods.

We currently expect to adopt SFAS 123R effective January 1, 2006.

(M) Non Cash Cost of Capital - During the three  month  periods  ended March 31,
2005 and 2004,  non cash cost of capital  included  options  issued for  capital
raising services and options attached to stock issued for cash which were valued
using the Black-Scholes method totaling $-0- and $433,747, respectively.


                                       9
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(2) Summary of Significant Accounting Policies (Continued)

(N)  Advertising  Expense  - Our  policy  is to  expense  advertising  costs  as
incurred.  We incurred no  significant  advertising  expense in the three months
ended March 31 2005 or 2004.


(3) Marketable Securities - At Fair Value

The Company has classified its investments in marketable securities as available
for sale in conformity with generally accepted accounting principles.

Cost and fair value of marketable  securities available for sale as of March 31,
2005 are as follows:

<TABLE>
<CAPTION>
                                           Unrealized    Unrealized
                            Cost              Gain         Losses       Fair Value
                        ------------    -------------  -------------   ------------
<S>                     <C>            <C>             <C>             <C>
Common Stock            $     25,338   $           --  $      13,743   $     11,595
                        ============   ==============  =============   ============
</TABLE>

Available for sale securities are valued at fair value,  with  unrealized  gains
and losses shown as a separate  component of stockholders'  equity. At March 31,
2005, stockholders' equity includes unrealized holding losses of $13,743.

Realized gains and losses are determined on the basis of sales price compared to
original  cost.  Cost is determined  under the specific  identification  method.
During the three months ended March 31, 2005,  sales proceeds and gross realized
gains and losses on securities classified as available for sale were:

                                                         2 0 0 5
                                                         -------

Sales Proceeds                                      $NIL
                                                    ==============

Gross Realized Losses                               $NIL
                                                    ==============

Gross Realized Gains                                $NIL
                                                    ==============

The unrealized  loss on marketable  securities,  which is included as a separate
component of stockholders' equity in the accompanying  balance sheet,  increased
by $3,428 during the three months ended March 31, 2005.


                                       10
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)


(4) Leases

The Company is a party to a number of noncancelable  lease agreements  primarily
involving office premises and computer equipment.  Computer equipment leases are
generally  for 3-year  periods and the lease of office  premises is for a 4-year
period ending April 2008. The office  premises lease has a renewal option for an
additional 3-year term.

The following is a schedule of future minimum  payments under capital leases and
operating  leases and obligations  under capital leases (present value of future
minimum rentals) as of March 31, 2005.

<TABLE>
<CAPTION>
Periods January to December                                         Operating
unless stated otherwise                           Capital           Property               Total
-----------------------                           -------           --------               -----
<C>                                          <C>                  <C>                <C>
2005 April-December                          $        39,366      $      258,174     $     297,540
2006                                                  23,575             183,483           207,058
2007                                                  32,613             136,252           168,865
2008                                                  32,907             120,200           153,107
2009                                                      --                 --                 --
2010 and Thereafter                                       --                 --                 --
                                             ---------------     ---------------     -------------
Total Minimum Lease Payments                         128,461     $       698,109     $     826,570
Less Amount Representing Interest                     10,439     ===============     =============
                                             ---------------
Total Obligations Under Capital Leases       $      118,022
                                             ===============
</TABLE>


Rent expense amounted to $59,136 and $4,292 for the three months ended March 31,
2005 and 2004, respectively.


                                       11
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)


(5) Property and Equipment

Property and equipment at March 31, 2005 consists of the following:

<TABLE>
<CAPTION>
                                     Plant and                  Motor
                                     Equipment                 Vehicles
                        Plant and     Capital        Motor     Capital       Computer        Other
                        Equipment      Lease       Vehicles     Lease        Software       Equipment       Total
                        ---------      -----       --------     -----        --------       ---------       -----
<S>                  <C>           <C>            <C>          <C>          <C>           <C>             <C>
Cost                 $  172,452    $   9,164      $   4,068    $ 107,446    $   35,400    $  203,494      $ 532,024
Accumulated
  Depreciation          (32,043)      (2,396)          (629)     (11,521)      (12,856)      (46,258)      (105,703)
                     ------------ ------------   ----------    ----------   ----------    -----------     ---------
  Net                $  140,409    $   6,768      $   3,439    $   95,925   $   22,544    $  157,236      $ 426,321
                     ============ ============   ==========    ==========   ==========    ===========     =========

Estimated Useful
  Life               10 years      3 years        6 years      7 years        2 years        5 years
</TABLE>


Depreciation expense (including amortization of capital lease assets) amounts to
$34,631  and  $2,187  for the  three  months  ended  March  31,  2005 and  2004,
respectively.

(6) Income Taxes

The provision (benefit) for income taxes consisted of the following:

                                               Three Months Ended
                                                    March 31,
                                             2 0 0 5          2 0 0 4
                                         --------------     ------------

Current:
   Australian Federal Tax Expense        $        4,721     $         --
Non-Current:
   Australian Federal Tax Expense                23,529               --
                                         --------------     ------------

   Totals                                $       28,250     $         --
                                         ==============     ============

The  reconciliation  of reported  income tax expense to the amount of income tax
expense that would result from applying  Australian  federal tax rates to pretax
income is as follows:

Statutory Federal Income Tax             $       28,021     $         --
Other (Non Allowable Deductions)                    229               --
                                         --------------     ------------

   Totals                                $       28,250     $         --
                                         ==============     ============

The components of deferred tax assets and liabilities were as follows:

Deferred Tax Assets:
   Provision Accounts                    $       15,096     $        --
   Depreciation                                    (186)             --
   Other Liabilities                              3,648              --
                                         --------------     -----------

   Totals                                $       18,558     $        --
                                         ==============     ===========


                                       12
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)


(7) Goodwill and Intangible Assets

Goodwill of $1,990,413  represents the excess of acquisition costs over the fair
value of net assets of the Reality acquisition.

At March 31, 2005 intangible assets include the following:

<TABLE>
<CAPTION>
                                  Customer List        Software          Content
<S>                             <C>                <C>               <C>
Cost                            $       650,054    $    1,155,761    $     302,402
Less Amortization                      (148,969)          (96,313)        (137,289)
                                ---------------    --------------   ---------------

  Totals                        $       501,085    $    1,059,448    $     165,113
                                ===============    ==============   ==============
</TABLE>

The customer lists were acquired as a component of the Reality  acquisition  and
are  being  amortized  over a 4 year  period on a  straight  line  basis.  It is
estimated that the aggregate annual amortization  expense for each of the next 3
years will be $162,510 for customer lists.  The software is being amortized over
a 5 year  period on a straight  line  basis.  It is  estimated  that the minimum
aggregate  annual  amortization  expense  for each of the  next 4 years  will be
$231,152  for  software.  Content  is  made  up of  digital  videos,  audio  and
photographs  and is capitalized at the cost of production.  Content is amortized
over a 2 year period on a straight line basis.  It is estimated that the minimum
amortization  of content  costs will total  $63,383 and  $145,050  for the years
ending December 31, 2006 and 2005, respectively.

There was no  amortization  expense  related to intangible  assets for the three
months ended March 31, 2004.

The Company's  policy is to regularly  review goodwill and intangible  assets to
determine if they have been permanently  impaired by adverse  conditions.  As at
March 31, 2005 management does not believe the goodwill or intangible  assets to
be impaired

(8) Shareholder Loan Payable

The Company has  periodically  received cash  advances from its Chief  Executive
Officer.  These  amounts are  recorded  as a loan  payable by the  Company.  The
interest  on the loan is 10% per annum and the  outstanding  balance as of March
31, 2005 was  $500,000.  Interest  expense for this loan  amounts to $12,646 and
$12,437 for the three months ended March 31, 2005 and 2004, respectively.


                                       13
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)


(9) Stock Issuances

On March 9, 2005,  the Board of Directors of the Company  amended the  Company's
Certificate  of  Incorporation  to  designate  the rights of Series A  Preferred
Stock.  The  Certificate  of  Designation  authorizes the Company to issue up to
10,000,000  shares of Series A Preferred  Stock, par value $.0001 per share. The
Series  A  Preferred  Stock  has a  stated  value of  $.0001  and a  liquidation
preference  over the  Company's  common  stock and any other  class or series of
capital  stock  whose  terms  expressly  provide  that the  holders  of Series A
Preferred  Stock  should  receive  preferential  payment.  Holders  of  Series A
Preferred Stock are entitled to vote on all matters submitted to shareholders of
the Company  and are  entitled to ten votes for each share of Series A Preferred
Stock owned.  Holders of shares of Series A Preferred  Stock vote  together with
the holders of common stock on all matters and do not vote as a separate class.

Beginning  two years from the date of issuance of the Series A Preferred  Stock,
each one share of Series A Preferred Stock is convertible,  at the option of the
holder, into two shares of the Company's common stock.  However,  holders cannot
convert  any  share of  Series A  Preferred  Stock  if the  market  price of the
Company's common stock is below $0.40 per share.

On March 17, 2005, ROO Group,  Inc. (the "Company")  issued  6,000,000 shares of
Series A Preferred  Stock to its Chief  Executive  Officer,  Robert  Petty,  and
1,500,000  shares of Series A Preferred  Stock to its Chief  Financial  Officer,
Robin  Smyth.  These shares have been valued at the  equivalent  number (2:1) of
common shares  valued as at the issue date to a combined  valuation of $750,000.
These shares were issued as a performance bonus to Messrs.  Petty and Smyth for,
among other things, their role in helping expand and grow the Company's business
operations. These shares were issued pursuant to the exemption from registration
provided by Rule 506 under the Securities Act of 1933.

Also on March 17, 2005, the Company  issued an aggregate of 2,000,000  shares of
Series A  Preferred  Stock to two  accredited  investors  as  consideration  for
investor  relations  services.  These shares have been valued at the  equivalent
number  (2:1)  of  common  shares  valued  as at the  issue  date to a  combined
valuation of $200,000.  These shares were issued  pursuant to the exemption from
registration provided by Rule 506 under the Securities Act of 1933.

On March 1, 2005 the Company issued 7,000,000 options to Strategic Growth,  Inc.
with an exercise  price of 20 cents  valued  under the  Black-Scholes  method as
$190,456 as payment for investor relations consulting services.

On February 1, 2005 the Company issued 300,000 shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0377 per share to reduce the amount owing on the convertible  notes
by a total of $11,310.

On February 10, 2005 the Company issued 300,000 shares of common stock converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0370 per share to reduce the amount owing on the convertible  notes
by a total of $11,100.

On February 18, 2005 the Company issued 300,000 shares of common stock converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0344 per share to reduce the amount owing on the convertible  notes
by a total of $10,320.

On March 1, 2005 the Company  issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0314 per share to reduce the amount owing on the convertible  notes
by a total of $9,420.

On March 4, 2005 the Company  issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0314 per share to reduce the amount owing on the convertible  notes
by a total of $9,420.

On March 9, 2005 the Company  issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0314 per share to reduce the amount owing on the convertible  notes
by a total of $9,420.

On March 18, 2005 the Company issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0303 per share to reduce the amount owing on the convertible  notes
by a total of $9,090.

On March 29, 2005 the Company issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0303 per share to reduce the amount owing on the convertible  notes
by a total of $9,090.


                                       14
<PAGE>

(10) Callable Secured Convertible Notes

On September 10, 2004, the company entered into a Securities  Purchase Agreement
with AJW Offshore,  Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New
Millennium  Capital  Partners II, LLC for the sale of (i) $3,000,000 in callable
secured  convertible notes and (ii) warrants to purchase 3,000,000 shares of our
common stock.

The investors were obligated to provide us with the funds as follows:

o     $1,000,000 was disbursed on September 13, 2004;
o     $1,000,000 was disbursed on November 26, 2004; and
o     $1,000,000 was disbursed on February 9, 2005.

The callable  secured  convertible  notes bear  interest at 8%, mature two years
from the date of issuance,  and are  convertible  into our common stock,  at the
investors' option, at the lower of:

o     $0.20; or
o     65% of the average of the three  lowest  intraday  trading  prices for the
      common  stock on the  Over-The-Counter  Bulletin  Board for the 20 trading
      days before but not including the conversion date.

Upon  placement  of the first,  second  and third  $1,000,000  callable  secured
convertible  notes and the  issuance  of the first,  second and third  1,000,000
detachable  warrants the Company  recorded  this event under the guidance of the
Emerging  Issues Task Force (EITF) issue number 00-27  "Application of issue No.
98-5 to Certain Convertible Instruments".

The Company computed the value of the beneficial  conversion feature as $585,040
for first  placement,  $469,804  for the second  placement  and $351,020 for the
third  placement and these were charged to interest  expense during the 3 months
to March 31, 2005. The Company also recorded a discount of $46,576 for the first
placement,  $43,006 for the second placement and $32,338 for the third placement
for the  detachable  warrants  issued in conjunction  with the callable  secured
convertible notes. The convertible note is shown net of the unamortized discount
on the balance sheet.  The discount is being  amortized on a straight line basis
over the life of the callable secured  convertible notes.  Amortization  expense
for the discount amounted to $13,304 and $0 for the three months ended March 31,
2005 and 2004 respectively.


                                       15
<PAGE>

ROO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(UNAUDITED)
--------------------------------------------------------------------------------


(11) Subsequent Events

On April 6, 2005 the Company  issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0288 per share to reduce the amount owing on the convertible  notes
by a total of $8,640.

On April 13, 2005 the Company issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0252 per share to reduce the amount owing on the convertible  notes
by a total of $7,560.

On April 20, 2005 the Company issued  300,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0222 per share to reduce the amount owing on the convertible  notes
by a total of $6,660.

On April 29, 2005 the Company issued  4,807,692 shares of common stock converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0208 per share to reduce the amount owing on the convertible  notes
by a total of $100,000.

On May 9, 2005 the  requirements  of the second  milestone in the stock purchase
agreement with Bickhams Media and Daniel and Vardit  Aharonoff dated November 1,
2004 being Commercial  Launch of combined platform ROO Media and VideoDome Media
Manager platform having been met the Company  authorized the payment of $100,000
and that 2,000,000 shares of common stock of the Corporation be issued.

On May 10, 2005 the Company issued  6,900,000  shares of common stock  converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0138 per share to reduce the amount owing on the convertible  notes
by a total of $95,220.

On May 13, 2005 the Company issued  10,300,000  shares of common stock converted
under the callable secured  convertible  notes  agreement.  The stock issued was
valued at $0.0121 per share to reduce the amount owing on the convertible  notes
by a total of $124,630.

On May 12, 2005, ROO Group, Inc. (the "Company") entered into a letter agreement
with the holders of the Company's  outstanding  $3,000,000  principal  amount of
callable secured  convertible notes (the "Notes").  In consideration for the sum
of $200,000  cash,  the note holders  agreed not to convert any amount due under
the Notes at a  conversion  price  less than  $0.10 per share for a period of 60
calendar days after the date such Holders are paid the $200,000. The $200,000 is
to be applied as follows:  (1) $142,857 to the outstanding  principal balance on
the Notes,  and (2) $57,143 as the redemption  premium,  in accordance  with the
terms of the Notes. These amounts will be paid to each note holder in accordance
with  each  note  holder's  proportionate   ownership  of  the  total  aggregate
$3,000,000  principal  amount  of the  Notes.  In  addition,  the  note  holders
consented  to a loan  from  Robert  Petty,  the  Company's  Chairman  and  Chief
Executive Officer, to the Company in the amount of $600,000 on the same terms of
the currently  outstanding  $500,000 debt owed by the Company to Mr. Petty.  All
terms and  provisions of the Notes will remain in full force and effect,  except
that in the event that the Company does not raise $7,000,000  within 60 calendar
days of the letter then the conversion discount will be adjusted to be 50%.

                               . . . . . . . . . .


                                       16
<PAGE>


Item 2. Management's Discussion and Analysis or Plan of Operation.

Set forth  below is a  discussion  of the  financial  condition  and  results of
operations  for the three  months ended March 31, 2005 and 2004.  The  following
discussion  should be read in conjunction  with the information set forth in the
consolidated  financial  statements  and the  related  notes  thereto  appearing
elsewhere in this quarterly report.

Certain statements  contained herein may constitute  forward-looking  statements
within the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.
Because such  statements  include risks and  uncertainties,  actual  results may
differ  materially  from those  expressed  or  implied  by such  forward-looking
statements as a result of certain factors,  including, but not limited to, risks
associated  with  the  integration  of  businesses   following  an  acquisition,
competitors with broader product lines and greater resources, emergence into new
markets, the termination of any of our significant  contracts,  our inability to
maintain  working  capital  requirements  to  fund  future  operations,  or  our
inability to attract and retain highly qualified management, technical and sales
personnel.

We operate as a digital media company in the business of providing  products and
solutions to a global base of clients  enabling the  broadcast of topical  video
content from their Internet websites.  We specialize in providing the technology
and content  required  for video to be played on  computers  via the Internet as
well as  emerging  broadcasting  platforms  such as set top boxes  and  wireless
devices  (i.e.,  mobile  phones  and  PDAs).  Our core  activities  include  the
aggregation  of  video  content,   media  management,   traditional  and  online
advertising, hosting, and content delivery.

RESULTS OF  OPERATIONS - THREE MONTHS ENDED MARCH 31, 2005 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 2004

NET REVENUES

Total net  revenues  increased  by  $1,579,247  from $8,502 for the three months
ended March 31, 2004 to $1,587,749 for the three months ended March 31, 2005, an
increase of 18,575%.  The increase  over the period  reflects  the  inclusion of
revenues  of  Reality  Group Pty Ltd.  and the  increasing  sales  revenue  from
operations.

OPERATING EXPENSES

OPERATIONS.  Operating expenses have no comparable amounts in the previous year.
The operating expenses for the three months ended March 2005 were $933,647.  The
primary reasons for the inclusion of operating  expenses as a separate  category
stems from the  inclusion of the  operations  of Reality  Group Pty Ltd. and the
commercialization  of our  products.  These  expenses  are  primarily  the costs
directly associated with the generation of revenues. They include content costs,
photography and production costs and printing of finished materials.

RESEARCH AND DEVELOPMENT. Research and development expenses consist primarily of
salaries and related  personnel  costs,  consulting fees associated with product
development,  and costs of technology acquired from third parties to incorporate
into products  currently under  development.  Research and development  expenses
were  $144,110 for the three  months  ended March 31, 2005,  an increase of 130%
from $62,630 for the three months ended March 31, 2004. The increase in expenses
was due  primarily to the increase in activities to bring our products to market
and  the  inclusion  of the  research  and  development  expenses  of  Videodome
Networks, Inc


                                       17
<PAGE>

SALES AND MARKETING.  Sales and marketing expenses consist primarily of expenses
for advertising sales and marketing  consultants,  expenditures for advertising,
and promotional  activities and expenses to bring our products to market.  These
expenses increased by $383,429 from $52,503 for the three months ended March 31,
2004 to $435,932 for the three months ended March 31, 2005, an increase of 730%.
This  increase  was due  primarily  to the  inclusion of the revenues of Reality
Group Pty Ltd. and increased costs in the marketing of our products.

We believe  that  additional  sales and  marketing  personnel  and  programs are
required  to  remain  competitive.  Therefore,  we  expect  that our  sales  and
marketing expenses will continue to increase for the foreseeable future.

GENERAL  AND  ADMINISTRATIVE.   General  and  administrative   expenses  consist
primarily  of expenses for  management,  finance and  administrative  personnel,
legal,  accounting,  consulting  fees,  and  facilities  costs.  These  expenses
increased by  $1,788,312  from $89,683 for the three months ended March 31, 2004
to $1,877,995  for the three months ended March 31, 2005, an increase of 1,994%.
This  increase  was due  primarily to  providing  administrative  support to the
increased activity of operations, expenses relating to acquisitions not included
in the  corresponding  period and the valuation of preference shares and options
issued that were of a non cash nature.

INTEREST INCOME

Interest  income  totaled  $59 in the three  months  ended  March 31,  2005,  an
increase of $14 or 31% from $45 in the three months ended March 31, 2004.

INTEREST EXPENSE, RELATED PARTY

Interest expense,  related party,  includes interest charges on our indebtedness
to Robert Petty, our Chief Executive Officer. The expense increased by $210 from
$12,437  for the three  months  ended  March 31,  2004 to $12,647  for the three
months ended March 31, 2005, an increase of 2%.

NET LOSS FROM OPERATIONS

Net loss from  operations  was  $2,255,421  for the three months ended March 31,
2005,  compared to a net loss of $647,405  for the three  months ended March 31,
2004, an increase of 248%.  The net loss is due to the increase in activities to
develop   products   for  future   revenue   generation   and  the  increase  in
administrative  expenses to support these  activities.  Net loss from operations
for the three  months  ended  March 31,  2005  included  $1,491,470  which  were
expensed items relating to the valuation of preference shares and options issued
and the beneficial  conversion feature of the callable secured convertible notes
all of which were of a non cash nature.

LIQUIDITY AND CAPITAL RESOURCES

From ROO Media Corporation's  inception through March 31, 2005, we have financed
our activities through funding from a loan facility from Robert Petty, our Chief
Executive  Officer,  through private  placements and a debt financing  through a
convertible note.

Net cash used in  operating  activities  was $681,461 for the three months ended
March 31, 2005,  compared to $113,449 for the three months ended March 31, 2004,
an increase of 501%.  The increase in net cash used in operating  activities  is
primarily the result of our net operating losses.

Net cash used in  investing  activities  was $112,547 for the three months ended
March 31, 2005, compared to net cash used in investing  activities for the three
months  ended March 31, 2004 of $7,285,  an increase of $105,262 or 1,445%.  The
increase in net cash used in investing activities is primarily the result of the
purchase of equipment and the capitalization of content costs.

Net cash  provided by  financing  activities  was  $967,136 for the three months
ended March 31, 2005  compared to $109,228  for the three months ended March 31,
2004,  an increase of $857,908  or 785%.  The  increase in net cash  provided by
financing activities was primarily due to a debt financing through a convertible
note.  The  Company  entered  into a  Securities  Purchase  Agreement  with four
accredited  investors on September  10, 2004 for the sale of (i)  $3,000,000  in
callable  secured  convertible  notes and (ii)  warrants to  purchase  3,000,000
shares  of  common  stock.  On  February  9,  2005,  the  third  tranche  of the
transaction  closed and the  Company  issued an  aggregate  principal  amount of
$1,000,000  callable  secured  convertible  notes and  warrants  to  purchase an
aggregate of 1,000,000 shares of common stock to four accredited investors.  The
Company received gross proceeds of $1,000,000 from this transaction.


                                       18
<PAGE>

The callable  secured  convertible  notes bear  interest at 8%, mature two years
from the date of issuance,  and are  convertible  into our common stock,  at the
investors' option, at the lower of: (i) $0.20; or (ii) 65% of the average of the
three lowest  intraday  trading  prices for the common stock on the OTC Bulletin
Board for the 20 trading days before but not including the conversion date.

The  warrants  are  exercisable  until five years from the date of issuance at a
purchase price of $0.10 per share.  The investors may exercise the warrants on a
cashless  basis if the shares of common  stock  underlying  the warrants are not
then registered pursuant to an effective  registration  statement.  In the event
the investors  exercise the warrants on a cashless basis,  then the Company will
not receive any proceeds.  In addition,  the exercise price of the warrants will
be  adjusted  in the event the  Company  issues  common  stock at a price  below
market,  with  the  exception  of any  securities  issued  as of the date of the
warrants or issued in connection  with the callable  secured  convertible  notes
issued pursuant to the Securities Purchase Agreement.

As of March 31,  2005,  we had a working  capital  deficiency  of  approximately
$523,000.  Our cash balance as of March 31, 2005 of $488,481 is, in management's
opinion,  not  sufficient to ensure our  continued  operation and the payment of
debts until our business is profitable  and generating  sufficient  cash flow to
meet our liquidity  requirements,  of which there can be no assurance. We do not
expect additions to property and equipment to be material in the near future.

We  anticipate  that our  liquidity  needs over the next 12 months will  require
additional  financings.  If cash generated from  operations is  insufficient  to
satisfy our liquidity  requirements,  we may seek to sell  additional  equity or
debt securities or obtain a credit  facility.  The sale of additional  equity or
convertible  debt  securities  could  result  in  additional   dilution  to  our
stockholders.  The incurrence of  indebtedness  would result in increased  fixed
obligations  and could result in  operating  covenants  that would  restrict our
operations.  We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.

EXCHANGE RATE RISK

We conduct our operations in primary  functional  currencies:  the United States
dollar,  the British pound,  the Euro and the Australian  dollar.  Historically,
neither  fluctuations in foreign  exchange rates nor changes in foreign economic
conditions have had a significant  impact on our financial  condition or results
of operations.  We currently do not hedge any of our foreign currency  exposures
and are therefore subject to the risk of exchange rate fluctuations.  We invoice
our international  customers  primarily in U.S. dollars,  except in Europe,  the
United Kingdom and Australia, where we invoice our customers primarily in euros,
pounds and Australian dollars,  respectively. We are exposed to foreign exchange
rate  fluctuations  as  the  financial  results  of  foreign   subsidiaries  are
translated  into U.S.  dollars  in  consolidation  and as our  foreign  currency
consumer  receipts  are  converted  into U.S.  dollars.  Our exposure to foreign
exchange rate fluctuations also arises from payables and receivables to and from
our  foreign  subsidiaries,   vendors  and  customers.   Foreign  exchange  rate
fluctuations  did not have a  material  impact on our  financial  results in the
three months ended March 31, 2005 and 2004.

GOING CONCERN

The accompanying  consolidated  financial statements have been prepared assuming
that we will continue as a going concern,  which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.  We
have incurred net operating  losses of  approximately  $2,255,000  for the three
months  ended March 31,  2005,  compared to $647,000  for the three months ended
March 31, 2004. Additionally, as of March 31, 2005, we had a net working capital
deficiency  of  approximately  $523,000 and negative  cash flows from  operating
activities of approximately $681,000.  Since ROO Media Corporation's  inception,
we have  incurred  losses,  had an  accumulated  deficit,  and have  experienced
negative  cash flows from  operations.  The  expansion  and  development  of our
business may require additional capital. This condition raises substantial doubt
about our ability to continue as a going concern.  Our  management  expects cash
flows from operating activities to improve in the second quarter of fiscal 2005,
primarily  as a result of an  increase  in sales,  and plans to raise  financing
through various  methods to achieve their business plans,  although there can be
no assurance thereof. The accompanying  consolidated financial statements do not
include any adjustments  that might be necessary should we be unable to continue
as a going  concern.  If we fail to  generate  positive  cash  flows  or  obtain
additional financing when required, we may have to modify, delay or abandon some
or all of our business and expansion plans.


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<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet  arrangements that are reasonably likely to
have a current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.

Item 3. Controls and Procedures.

      As of the end of the  period  covered  by this  report,  we  conducted  an
evaluation,  under  the  supervision  and with the  participation  of our  chief
executive  officer and chief  financial  officer of our disclosure  controls and
procedures  (as defined in Rule  13a-15(e)  and Rule  15d-15(e)  of the Exchange
Act).  Based  upon  this  evaluation,  our  chief  executive  officer  and chief
financial  officer  concluded  that our  disclosure  controls and procedures are
effective  to ensure  that  information  required to be  disclosed  by us in the
reports that we file or submit  under the  Exchange Act is recorded,  processed,
summarized and reported,  within the time periods  specified in the Commission's
rules  and  forms.  There was no change  in our  internal  controls  or in other
factors that could affect these controls during our last fiscal quarter that has
materially affected,  or is reasonably likely to materially affect, our internal
control over financial reporting.

                                     PART II

Item 1. Legal Proceedings.

      We are not currently a party to, nor is any of our property  currently the
subject of, any pending legal  proceeding.  None of our  directors,  officers or
affiliates is involved in a proceeding adverse to our business or has a material
interest adverse to our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

      On March 1, 2005 the Company issued 7,000,000 options to Strategic Growth,
Inc. with an exercise price of 20 cents valued under the Black-Scholes method as
$190,456 as payment for investor relations consulting services.

      On March  17,  2005,  the  Company  issued  6,000,000  shares  of Series A
Preferred  Stock to its Chief  Executive  Officer,  Robert Petty,  and 1,500,000
shares of Series A Preferred Stock to its Chief Financial Officer,  Robin Smyth.
These shares have been valued at the  equivalent  number (2:1) of common  shares
valued as at the issue date to a combined  valuation of  $750,000.  These shares
were issued as a performance  bonus to Messrs.  Petty and Smyth for, among other
things, their role in helping expand and grow the Company's business operations.
These shares were issued pursuant to the exemption from registration provided by
Rule 506 under the Securities Act of 1933.

      Also on March 17,  2005,  the Company  issued an  aggregate  of  2,000,000
shares of Series A Preferred Stock to two accredited  investors as consideration
for investor relations services. These shares have been valued at the equivalent
number  (2:1)  of  common  shares  valued  as at the  issue  date to a  combined
valuation of $200,000.  These shares were issued  pursuant to the exemption from
registration provided by Rule 506 under the Securities Act of 1933.

      The  Company  entered  into a  Securities  Purchase  Agreement  with  four
accredited  investors on September  10, 2004 for the sale of (i)  $3,000,000  in
callable  secured  convertible  notes and (ii)  warrants to  purchase  3,000,000
shares  of  common  stock.  On  February  9,  2005,  the  third  tranche  of the
transaction  closed and the  Company  issued an  aggregate  principal  amount of
$1,000,000  callable  secured  convertible  notes and  warrants  to  purchase an
aggregate of  1,000,000  shares of common  stock to four  accredited  investors.
These  issuances  were exempt from  registration  pursuant to Rule 506 under the
Securities Act of 1933.

      The callable  secured  convertible  notes bear  interest at 8%, mature two
years from the date of issuance,  and are convertible  into our common stock, at
the investors' option, at the lower of: (i) $0.20; or (ii) 65% of the average of
the  three  lowest  intraday  trading  prices  for the  common  stock on the OTC
Bulletin  Board for the 20 trading days before but not including the  conversion
date.


                                       20
<PAGE>

      The warrants are exercisable until five years from the date of issuance at
a purchase price of $0.10 per share.  The investors may exercise the warrants on
a cashless  basis if the shares of common stock  underlying the warrants are not
then registered pursuant to an effective  registration  statement.  In the event
the investors  exercise the warrants on a cashless basis,  then the Company will
not receive any proceeds.  In addition,  the exercise price of the warrants will
be  adjusted  in the event the  Company  issues  common  stock at a price  below
market,  with  the  exception  of any  securities  issued  as of the date of the
warrants or issued in connection  with the callable  secured  convertible  notes
issued pursuant to the Securities Purchase Agreement.

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.

      References to "the Company" in the following  exhibit list mean ROO Group,
Inc., a Delaware corporation.

Exhibit
Number                                            Description

--------------------------------------------------------------------------------

3.1       Certificate of Designation, Powers, Preferences and Rights of Series
          A Preferred Stock, filed with the State of Delaware on March 9, 2005
          (Incorporated  by reference to Form 8-K,  filed with the  Securities
          and Exchange Commission on March 14, 2005)
4.1       Securities  Purchase  Agreement,  dated  September  10, 2004, by and
          among  ROO  Group,  Inc.  and  AJW  Offshore,  Ltd.,  AJW  Qualified
          Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
          II,  LLC  (Incorporated  by  reference  to Form 8-K,  filed with the
          Securities and Exchange Commission on September 16, 2004)
4.2       Callable  Secured  Convertible  Note issued to AJW  Offshore,  Ltd.,
          dated February 3, 2005 (Incorporated by reference to Form 8-K, filed
          with the Securities and Exchange Commission on February 15, 2005)
4.3       Callable Secured  Convertible Note issued to AJW Qualified Partners,
          LLC, dated February 3, 2005  (Incorporated by reference to Form 8-K,
          filed with the  Securities  and Exchange  Commission on February 15,
          2005)
4.4       Callable Secured Convertible Note issued to AJW Partners, LLC, dated
          February 3, 2005  (Incorporated by reference to Form 8-K, filed with
          the Securities and Exchange Commission on February 15, 2005)
4.5       Callable Secured  Convertible Note issued to New Millennium  Capital
          Partners II, LLC, dated February 3, 2005  (Incorporated by reference
          to Form 8-K, filed with the  Securities  and Exchange  Commission on
          February 15, 2005)
4.6       Stock  Purchase  Warrant  issued  to to AJW  Offshore,  Ltd.,  dated
          February 3, 2005  (Incorporated by reference to Form 8-K, filed with
          the Securities and Exchange Commission on February 15, 2005)
4.7       Stock Purchase Warrant issued to AJW Qualified Partners,  LLC, dated
          February 3, 2005  (Incorporated by reference to Form 8-K, filed with
          the Securities and Exchange Commission on February 15, 2005)
4.8       Stock Purchase  Warrant issued to AJW Partners,  LLC, dated February
          3, 2005  (Incorporated  by  reference  to Form 8-K,  filed  with the
          Securities and Exchange Commission on February 15, 2005)
4.9       Stock Purchase Warrant issued to New Millennium Capital Partners II,
          LLC, dated February 3, 2005  (Incorporated by reference to Form 8-K,
          filed with the  Securities  and Exchange  Commission on February 15,
          2005)


                                       21
<PAGE>

4.10      Registration  Rights  Agreement,  dated as of September 10, 2004, by
          and among ROO Group,  Inc. and AJW  Offshore,  Ltd.,  AJW  Qualified
          Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
          II,  LLC  (Incorporated  by  reference  to Form 8-K,  filed with the
          Securities and Exchange Commission on September 16, 2004)
31.1      Certification by Chief Executive Officer, required by Rule 13a-14(a)
          or Rule  15d-14(a)  of the  Exchange  Act,  promulgated  pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002.
31.2      Certification by Chief Financial Officer, required by Rule 13a-14(a)
          or Rule  15d-14(a)  of the  Exchange  Act,  promulgated  pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002.
32.1      Certification by Chief Executive Officer, required by Rule 13a-14(b)
          or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63
          of Title 18 of the  United  States  Code,  promulgated  pursuant  to
          Section 906 of the Sarbanes-Oxley Act of 2002.
32.2      Certification by Chief Financial Officer, required by Rule 13a-14(b)
          or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63
          of Title 18 of the  United  States  Code,  promulgated  pursuant  to
          Section 906 of the Sarbanes-Oxley Act of 2002.


                                       22
<PAGE>

                                   SIGNATURES

      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.


                                      ROO GROUP, INC.


      Dated:   May 16, 2005           By:   /s/ Robert Petty
                                           -----------------------------------
                                           Robert Petty
                                           Chief Executive Officer


      Dated:   May 16, 2005           By:   /s/ Robin Smyth
                                           -----------------------------------
                                           Robin Smyth
                                           Chief Financial Officer


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