<PAGE>


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


                               FORM 10-QSB/A



(X)    Quarterly report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 for the quarterly period ended September 30, 2006


( )    Transition report pursuant of Section 13 or 15(d) of the Securities
       Exchange Act of 1939 for the transition period ____ to______


                        COMMISSION FILE NUMBER 000-32695


                                   AMARU, INC.
             (Exact name of registrant as specified in its charter)


                  Nevada                                 88-0490089
---------------------------------------------  ---------------------------------
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
          incorporation or organization)


  112 Middle Road, #08-01 Midland House, Singapore 188970 (011) (65) 6332 9287
--------------------------------------------------------------------------------
    (Address of Principal Executive Offices, including Registrant's zip code
                              and telephone number)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports,), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]


The number of shares of the registrant's common stock as of October 19, 2006:
153,638,528 shares.



<PAGE>


The only amendment to this report is being made on the cover page by the
statement referred to above and marked as revised.




<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements                                   F-1
(a)      Consolidated Balance Sheets                                         F-2
(b)      Consolidated Statements of Operations                               F-3
(c)      Consolidated Statement of Changes in Shareholders' Equity           F-4
(d)      Consolidated Statements of Cash Flows                               F-5
(e)      Notes to Consolidated Financial Statements                          F-6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                             1

Item 3.  Controls and Procedures                                               7


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                     8

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds           8

Item 3.  Defaults On Senior Securities                                         8

Item 4.  Submission of Items to a Vote                                         8

Item 5.  Other Information                                                     8

Item 6.  Exhibits and Reports on Form 8K                                       8

SIGNATURES AND CERTIFICATES                                                    9



<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements


                                TABLE OF CONTENTS

Consolidated Balance Sheets                                                  F-2

Consolidated Statements of Operations                                        F-3

Consolidated Statement of Changes in Shareholders' Equity                    F-4

Consolidated Statements of Cash Flows                                        F-5

Notes to Consolidated Financial Statements                                   F-6



                                       F-1




<PAGE>

<TABLE>
<S>       <C>
                                   AMARU, INC. AND SUBSIDIARIES
                                   CONSOLIDATED BALANCE SHEETS
                                           (UNAUDITED)


                                                          SEPTEMBER 30,  DECEMBER 31,
                                                               2006          2005
                                                           -----------   -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                  $ 3,462,393   $ 4,776,819
Accounts receivable                                            400,580       842,371
Other receivable                                                80,699            --
Inventory                                                      695,352            --
Deposit for an investment                                    2,153,196            --
Prepayment to a supplier                                       549,000            --
Other current assets                                           497,288       247,566
                                                           -----------   -----------
     Total current assets                                    7,838,508     5,866,756

NON CURRENT ASSETS
Property and equipment, net                                 20,253,788     5,264,130
Product development, net                                        12,043        60,616
Investment at cost                                           4,079,664       441,206
Investments available for sale                               2,147,580     2,147,580
License, net                                                 9,129,253     6,964,671
                                                           -----------   -----------
     Total non current assets                               35,622,328    14,878,203
                                                           -----------   -----------

Total assets                                               $43,460,836   $20,744,959
                                                           ===========   ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses                      $   814,686   $   656,484
Advances from related parties                                       --        58,392
                                                           -----------   -----------
     Total current liabilities                                 814,686       714,876

NON-CURRENT LIABILITIES
Deferred tax liability                                         563,295       157,756
                                                           -----------   -----------
     Total liabilities                                       1,377,981       872,632

Commitments                                                         --            --

SHAREHOLDERS' EQUITY
Preferred stock (par value $0.001)
     5,000,000 shares authorized: 0 shares issued and
     outstanding at September 30, 2006 and December 31, 2005,
     respectively                                                   --            --
Common stock (par value $0.001) 200,000,000 shares
     authorized; 153,638,528 and 125,591,120 shares
     issued and outstanding at September 30, 2006 and
     December 31, 2005 respectively                            153,638       125,591
Additional paid-in capital                                  38,944,013    14,642,550
Subscribed common stock, 0 and 5,675,840 shares at
     September 30, 2006 and December 31, 2005 respectively          --     4,256,880
Retained earnings                                            2,972,277       834,379
Comprehensive gain on currency translation                      12,927        12,927
                                                           -----------   -----------
     Total shareholders' equity                             42,082,855    19,872,327
                                                           -----------   -----------
Total liabilities and shareholders' equity                 $43,460,836   $20,744,959
                                                           ===========   ===========

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

                                       F-2


<PAGE>

                                   AMARU, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (UNAUDITED)


                                          FOR THE NINE MONTHS ENDED         FOR THE THREE MONTHS ENDED
                                       ------------------------------    ------------------------------
                                        SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,
                                            2006            2005              2006            2005
                                       -------------    -------------    -------------    -------------
Revenue:
     Entertainment                   $     6,305,460    $   3,221,842   $    3,089,981     $    450,575
     Digit gaming                         17,310,828        8,475,652        6,216,485        6,511,161
     Other income                              9,794            2,002            8,650            1,061
                                       -------------    -------------    -------------    -------------
     Total revenue                        23,626,082       11,699,496        9,315,116        6,962,797

Cost of services                         (17,056,214)     (10,132,267)      (6,082,911)      (6,414,354)
                                       -------------    -------------    -------------    -------------
Gross profit                               6,569,868        1,567,229        3,232,205          548,443

Distribution costs                          (857,412)        (367,958)        (297,883)        (167,488)
Administrative expenses                   (3,278,355)      (1,135,291)      (1,596,344)        (515,884)
                                       -------------    -------------    -------------    -------------
Total expenses                            (4,135,767)      (1,503,249)      (1,894,227)        (683,372)
                                       -------------    -------------    -------------    -------------

Income (Loss) from operations              2,434,101           63,980        1,337,978         (134,929)

Other income:
     Interest income                         109,336            1,081           51,465               --
     Gain on disposal of equipment                --              151               --              151
                                       -------------    -------------    -------------    -------------
Income (Loss) before income taxes          2,543,437           65,212        1,389,443         (134,778)

(Provision for) Benefit from income
   taxes                                    (405,539)          36,379         (472,004)          37,623
                                       -------------    -------------    -------------    -------------
Net income (loss)                      $   2,137,898    $     101,591    $     917,439    $     (97,155)
                                       =============    =============    =============    =============


Earnings per share
   - basic and diluted                 $       0.015    $       0.001    $       0.006    $      (0.001)
                                       =============    =============    =============    =============

Weighted average number of common
     shares outstanding
   - basic and diluted                   146,563,354      115,270,812      153,605,863      121,524,608
                                       =============    =============    =============    =============


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

                                               F-3


<PAGE>

                                                   AMARU, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                                           (UNAUDITED)


                   PREFERRED STOCK             COMMON STOCK
                 --------------------         ---------------
                  NUMBER                                      ADDITIONAL     SUBSCRIBED                                    TOTAL
                    OF   PAR VALUE  NUMBER OF    PAR VALUE     PAID-IN        COMMON        RETAINED     TRANSLATION   SHAREHOLDERS'
                  SHARES  ($0.001)   SHARES      ($0.001)      CAPITAL        STOCK         EARNINGS        GAIN          EQUITY
                 ------   -------  -----------   ---------   ------------   ------------   ------------   ----------   ------------

Balance at
 December 31,
 2004                 --   $  --   108,800,000   $ 108,800   $  2,851,151   $         --   $    667,634   $    9,188   $  3,636,773

Common stock
 issued for cash      --      --    16,132,000      16,132     11,297,719             --             --           --     11,313,851

Common stock
 issued for
 repayment of
 account payable      --      --       580,000         580        434,420             --             --           --        435,000

Common stock issued
 for services         --      --        79,120          79         59,260             --             --           --         59,339

Common stock
 subscribed for
 cash (5,520,000
 shares)              --      --            --          --             --      4,140,000             --           --      4,140,000

Common stock
 subscribed for
 services
 (155,840 shares)      --     --            --          --             --        116,880             --           --        116,880

Net income            --      --            --          --             --             --        166,745           --        166,745

Comprehensive
 gain on currency
 translation          --      --            --          --             --             --             --        3,739          3,739
                                                                                                                       ------------
Comprehensive
 income               --      --            --          --             --             --             --           --        170,484

                    ----   -----   -----------   ---------   ------------   ------------   ------------   ----------   ------------
Balance at
 December 31,
 2005                 --      --   125,591,120     125,591     14,642,550      4,256,880        834,379       12,927     19,872,327

Common stock
 issued for cash      --      --    15,339,568      15,339     11,257,291             --             --           --     11,272,630

Common stock issued
 for services         --      --        40,000          40         59,960             --             --           --         60,000

Subscribed common
 stock issued         --      --     5,675,840       5,676      4,251,204     (4,256,880)            --           --             --

Common stock
 issued in
 exchange for
 acquisition of
 film library         --      --     6,992,000       6,992      8,733,008             --             --           --      8,740,000

Net income            --      --            --          --             --             --      2,137,898           --      2,137,898

Comprehensive
 gain on currency     --      --            --          --             --             --             --           --             --
 translation
                                                                                                                       ------------
Comprehensive
 income               --      --            --          --             --             --             --           --      2,137,898

                    ----   -----   -----------   ---------   ------------   ------------   ------------   ----------   ------------
Balance at September
 30, 2006             --   $  --   153,638,528   $ 153,638   $ 38,944,013   $         --   $  2,972,277   $   12,927   $ 42,082,855
                    ====   =====   ===========   =========   ============   ============   ============   ==========   ============


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

                                                              F-4




<PAGE>


                                   AMARU, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (UNAUDITED)


                                                                 FOR THE NINE MONTHS ENDED
                                                               ----------------------------

                                                               SEPTEMBER 30,   SEPTEMBER 30,
                                                                   2006            2005
                                                               ------------    ------------
Cash Flows from Operating Activities
Net income                                                    $   2,137,898   $     101,591
Adjustments to reconcile net income to cash and
     cash equivalents used in or provided by operations:
     Amortization                                                   283,991         210,741
     Depreciation                                                   579,915          74,291
     Gain on disposal of equipment                                       --            (151)
     Acquisition of investment in exchange for account
        receivable                                               (3,000,000)             --
     Common stock issued for services                                60,000              --
Changes in operation assets and liabilities
     Accounts receivable                                            441,791        (840,387)
     Other receivable                                               (80,699)        680,737
     Inventory                                                     (695,352)             --
     Other current assets                                          (798,722)       (190,799)
     Accounts payable and accrued expenses                          158,202          30,740
     Income tax payable                                             405,539              --
                                                               ------------    ------------
Net cash (used in) provided by operating activities                (507,437)         66,763

Cash Flows from Investing Activities
     Proceeds from disposal of equipment                                 --             151
     Software development reduction                                      --         (17,460)
     Acquisition of equipment                                    (6,829,573)     (3,302,773)
     Acquisition of license                                      (2,400,000)     (5,295,000)
     Acquisition of investments                                    (638,458)       (175,070)
     Deposit paid for an investment                              (2,153,196)              --
                                                               ------------    ------------
Net cash used in investing activities                           (12,021,227)     (8,790,152)

Cash Flows from Financing Activities
     Payable to related party                                       (58,392)        (91,042)
     Issuance of common stock for cash                           11,272,630       8,849,500
     Proceeds from stock subscription                                    --       1,500,000
                                                               ------------    ------------
Net cash provided by financing activities                        11,214,238      10,258,458

Effect of exchange rate changes on cash and cash equivalents             --           3,739
                                                               ------------    ------------
Net cash (used in) provided by all activities                    (1,314,426)      1,538,808

Cash and cash equivalents at beginning of period                  4,776,819         644,319
                                                               ------------    ------------
Cash and cash equivalents at end of period                        3,462,393       2,183,127
                                                               ============    ============

Supplemental Disclosure of Non-Cash Financing and Investing Activities:
Common stock in exchange for repayment of accounts payable     $         --    $    435,000
Common stock in exchange for acquisition of film library       $  8,740,000              --
                                                               ============    ============



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

                                              F-5
</TABLE>




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)

1   BASIS OF PRESENTATION AND REORGANIZATION

    1.1   Description of Business

          Amaru, Inc. (the "Company") through its subsidiaries under the M2B
          brand is in the Broadband Media Entertainment business, and a provider
          of interactive Entertainment-on-demand, Education-on-demand and
          E-commerce streaming over Broadband channels, Internet portals and
          Third-Generation (3G) devices globally. It has launched multiple
          Broadband TV and integrated shopping websites with over 100 channels
          of content designed and programmed to target specific viewer profiles
          and lifestyles of local and international audiences. The Company
          controls substantial content libraries for aggregation, distribution
          and syndication on Broadband and other media, sourced from Hollywood
          and major content providers around the world.

          The Company's business strategy is to be a diversified media company
          specializing in the interactive media industry, using the latest
          broadband, E-Commerce and communications technologies and access to
          international content and programming.

          The Company's goal is to provide on-line entertainment and education
          on-demand on Broadband channels, Internet portals, 3G devices and TV
          set-top boxes across the globe; for specific and identified viewer
          lifestyles, demographics and interests; and to tie the viewing
          experience to an on-line shopping experience. This is to enable two
          leisure activities to be rolled into one for the ultimate convenience
          and reaching out to a global viewing audience.

    1.2   Reorganization

          As of February 25, 2004, an agreement was entered into which provided
          for the reorganization of M2B World Pte. Ltd., a Singapore corporation
          with and into Amaru, Inc. (Amaru), a Nevada corporation, with M2B
          World Pte. Ltd. (M2B), becoming a wholly-owned subsidiary of Amaru.
          According to the agreement, there was an exchange of 100% of the
          outstanding Common Stock of M2B World Pte. Ltd. for 19,500,000 Common
          Shares and 143,000 Series A Convertible Preferred Shares of Amaru,
          which were each convertible into 38.461538 shares of Amaru common
          stock.

          The exchange was accounted for as a reverse acquisition. Accordingly,
          for financial statement purposes, M2B World Pte. Ltd. was considered
          the accounting acquiror and the related business combination was
          considered a recapitalization of M2B World Pte. Ltd. rather than an
          acquisition by the Company. The historical financial statements prior
          to the agreement will be those of M2B World Pte. Ltd. and the name of
          the consolidated Company going forward will be Amaru, Inc. and
          Subsidiaries.

          On this basis, the historical financial statements prior to February
          28, 2004 have been restated to be those of the accounting acquirer M2B
          World Pte. Ltd. The historical stockholders' equity prior to the
          reverse acquisition has been retroactively restated (a
          recapitalization) for the equivalent number of shares received in the
          acquisition after giving effect to any difference in par value of the
          issuer's and acquirer's stock.

    1.3   Basis of Presentation

          The financial statements included herein are unaudited. However, such
          information reflects all adjustments (consisting solely of normal
          occurring adjustments) which are, in the opinion of management,
          necessary for a fair statement of results for the interim periods. The
          results of operations for the nine months ended September 30, 2006,
          are not necessarily indicative of the results to be expected for the
          full year.

          The accompanying financial statements do not include footnote and
          certain financial presentation normally required under generally
          accepted accounting principles, and, therefore, should be read in
          conjunction with the Company's Annual Report on Form 10-KSB for the
          year ended December 31, 2005.

                                       F-6




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


2   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    2.1   Principles of Consolidation

          The consolidated financial statements reflect the accounts of Amaru,
          Inc. and its wholly owned subsidiaries. All significant intercompany
          accounts and transactions have been eliminated upon consolidation.


    2.2   Use of Estimates

          The preparation of consolidated financial statements in accordance
          with generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts of
          assets and liabilities and disclosure of contingent assets and
          liabilities at the date of the financial statements and the reported
          amounts of revenues and expenses during the reporting period. Actual
          results could differ from those estimates.

          Management has not made any subjective or complex judgments, the
          application of which would result in any material differences in
          reported results.


    2.3   Concentration of Credit Risk

          The credit risk is primarily attributable to the Company's trade
          receivables. The credit risk on liquid funds is limited because the
          counterparties are banks with high credit ratings assigned by
          international credit-rating agencies.

          Licensing and advertising revenues were concentrated with five
          customers totaling 100% of these related revenues for the nine months
          ended September 30, 2006 and 2005.

          The Company's operations are conducted over the world wide web and
          some purchases are made from locations outside of the U.S.


<TABLE>
<S>     <C>
                                                   FOR THE NINE MONTHS ENDED   FOR THE THREE MONTHS ENDED
                                                  -------------------------   --------------------------
                                                 September 30,   September 30,  September 30,  September 30,
                                                     2006           2005            2006            2005
                                                 ------------   -------------   ------------    -----------

          Sales outside of the U.S               $ 23,626,082   $  11,699,496   $  9,315,116   $  6,962,797

          Services purchased outside of the U.S  $ 17,056,214   $  10,132,267   $  6,082,911   $  6,414,354

</TABLE>

    2.4   Cash and Cash Equivalents

          Cash and cash equivalents are defined as cash on hand, demand deposits
          and short-term, highly liquid investments readily convertible to cash
          and subject to insignificant risk of changes in value.

          Cash in banks and short-term deposits are held to maturity and are
          carried at cost. For the purposes of the statement of cash flow, cash
          and cash equivalents consist of cash on hand and deposits in banks,
          net of outstanding bank overdrafts.


                                       F-7




<PAGE>
                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


    2.5   Revenues

          Subscription and related services revenues are recognized over the
          period that services are provided. Advertising and sponsorship
          revenues are recognized as the services are performed or when the
          goods are delivered. Licensing and content syndication revenue is
          recognized when the license period begins, and the contents are
          available for exploitation by customer, pursuant to the terms of the
          license agreement. Gaming revenue is recognized as earned net of
          winnings. E-commerce commissions are recognized as received. Broadband
          consulting services and on-line turnkey solutions are recognized as
          earned.

    2.6   Costs of Services

          The cost of services pertaining to advertising and sponsorship revenue
          and subscription and related services are cost of bandwidth charges,
          channel design and alteration, copyright licensing, and hardware
          hosting and maintenance costs. The cost of services pertaining to
          E-commerce revenue is channel design and alteration, and hardware
          hosting and maintenance costs. The cost of services pertaining to
          gaming is for managing and operating the operations and gaming
          centers. All these costs are accounted for in the period incurred.

    2.7   Licensing Rights

          Licensing rights refer to the rights to use the content. These rights
          are purchased for a specific period as determined in the contract. The
          costs of these rights are amortized in the accounts over the life of
          the contract on a straight line basis. These contents are then
          streamed into the broadband sites and the revenue earned from
          advertising, sponsorship and subscription are then recognized
          according to our policy on revenue.


    2.8   Trade and Other Receivables

          Trade receivables, which generally have 30 to 90 day terms, are
          recognized and carried at the original invoice amount less an
          allowance for any uncollectible amounts (if any). An estimate for
          doubtful debts is made when collection of the full amount is no longer
          probable. Bad debts are written off as incurred.

          The Company has reviewed trade and other receivables and determined
          that no allowance for doubtful accounts is required.


    2.9   Inventories

          Inventories are stated at the lower of cost and net realisable value.
          Cost comprises direct materials and, where applicable, direct labour
          costs and those overheads that have been incurred in bringing the
          inventories to their present location and condition. Cost is
          calculated using the first-in, first-out method. Net realisable value
          represents the estimated selling price less all estimated costs of
          completion and costs to be incurred in marketing, selling and
          distribution.


    2.10  Property and Equipment

          Property and equipment is stated at cost. Expenditures for major
          improvements are capitalized, while replacements, maintenance and
          repairs, which do not significantly improve or extend the useful life
          of the asset, are expensed when incurred.

          Depreciation of property and equipment is computed using the
          straight-line method over the estimated useful lives of the assets,
          which is three to five years.

          The film library which were purchased for a specific period are stated
          at cost and are amortized over the period of the contract, which is
          two to ten years. The film library which were purchased and have
          indefinite lives are not being amortized and are stated at cost.


    2.11  Product Development

          The Company capitalized the development and building cost related to
          the broad-band sites and infrastructure for the streaming system, most
          of which were developed in 2002. The Company projects that these
          development costs will be useful for up to five years before
          additional significant development needs to be done.


                                       F-8




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


    2.12  Impairment of Long-Lived Assets

          The Company reviews the carrying values of its long-lived and
          intangible assets for possible impairment whenever events or changes
          in circumstances indicate that the carrying amount of the assets may
          not be recoverable. No impairment losses were recorded for the nine
          months ended September 30, 2006 and 2005.


    2.13  Advances from Related Party

          Advances from related party are unsecured, non-interest bearing and
          payable on demand.


    2.14  Foreign Currency Translation

          Transactions in foreign currencies are measured and recorded in the
          functional currency U.S. dollars, using the Company's prevailing month
          exchange rate. The Company's reporting currency is also in U.S.
          dollars. At balance sheet date, recorded monetary balances that are
          denominated in a foreign currency are adjusted to reflect the rate at
          the balance sheet date and the income statement accounts using the
          average exchange rates throughout the period. Translation gains and
          losses are recorded in shareholders' equity as other comprehensive
          income and realized gains and losses from foreign currency
          transactions are reflected in operations.


    2.15  Investments

          The Company classifies its investments in marketable equity and debt
          securities as "available-for-sale", "held to maturity" or "trading" at
          the time of purchase in accordance with the provisions of Statement of
          Financial Accounting Standards ("SFAS") No. 115, "Accounting for
          Certain Investments in Debt and Equity Securities" ("SFAS No. 115").
          There are no investments classified as trading or held-to-maturity as
          of September 30, 2006 and December 31, 2005.

          Available-for-sale securities are carried at fair value with
          unrealized gains and losses, net of related tax, if any, reported as a
          component of other comprehensive income (loss) until realized.
          Realized gains and losses from the sale of available-for-sale
          securities are determined on a specific-identification basis. A
          decline in the market value of any available-for-sale security below
          cost that is deemed to be other than temporary will result in an
          impairment, which is charged to earnings.

          Available-for-sale securities that are not publicly traded or have
          resale restrictions greater than one year are accounted for at cost.
          The Company's cost method investments include companies involved in
          the broadband and entertainment industry. The Company uses available
          qualitative and quantitative information to evaluate all cost method
          investment impairments at least annually.


    2.16  Advertising

          The cost of advertising is expensed as incurred. For the nine months
          ended September 30, 2006 and 2005, the Company incurred advertising
          expenses of $629,573 and $194,634 respectively. For the three months
          ended September 30, 2006 and 2005, the Company incurred $207,742 and
          $95,290 of advertising expenses respectively.


    2.17  Income Taxes

          Deferred income taxes are reported using the liability method.
          Deferred tax assets are recognized for deductible temporary
          differences and deferred tax liabilities are recognized for taxable
          temporary differences. Temporary differences are the differences
          between the reported amounts of assets and liabilities and their tax
          bases. Deferred tax assets are reduced by a valuation allowance when,
          in the opinion of management, it is more likely than not that some
          portion or all of the deferred tax assets will not be realized.
          Deferred tax assets and liabilities are adjusted for the effects of
          changes in tax laws and rates on the date of enactment.

                                       F-9




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


    2.18  Earnings Per Share

          In February 1997, the Financial Accounting Standards Board (FASB)
          issued FAS No. 128 "Earnings Per Share" which requires the Company to
          present basic and diluted earnings per share, for all periods
          presented. The computation of earnings per common share (basic and
          diluted) is based on the weighted average number of shares actually
          outstanding during the period. The Company has no common stock
          equivalents, which would dilute earnings per share.


    2.19  Financial Instruments

          The carrying amounts of the Company's cash and cash equivalents, other
          current assets, accounts payable, accrued expenses, and other
          liabilities approximate their fair values.


    2.20  Reclassifications

          Certain amounts in the previous periods presented have been
          reclassified to conform with current period's financial statement
          presentation.


3   PROPERTY AND EQUIPMENT

    Property and equipment consists of the following:

                                                SEPTEMBER 30,      DECEMBER 31,
                                                     2006              2005
                                                ------------       ------------

    Office equipment                            $    722,984       $    431,791
    Film library                                  19,766,245          4,905,066
    Motor vehicle                                     11,000             11,000
    Furniture, fixture and fittings                  397,178             96,501
    Pony set-top boxes                               116,524                 --
                                                ------------       ------------
                                                  21,013,931          5,444,358
    Accumulated depreciation                        (760,143)          (180,228)
                                                ------------       ------------
                                                $ 20,253,788       $  5,264,130
                                                ============       ============

    Depreciation expense was $579,915 for the nine months ended September 30,
    2006 and $74,291 for the nine months ended September 30, 2005.


4   PRODUCT DEVELOPMENT

    Product development consists of the following:

                                                SEPTEMBER 30,      DECEMBER 31,
                                                    2006               2005
                                                ------------       ------------

    Development expenditures                    $   618,561        $    618,561
    Accumulated amortization                       (606,518)           (557,945)
                                                ------------       ------------
                                                $    12,043        $     60,616
                                                ============       ============

    Amortization expense was $48,573 for the nine months ended September 30,
    2006 and $105,157 for the nine months ended September 30, 2005.


                                      F-10




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


5   LICENSE

    License consists of the following:

                                                SEPTEMBER 30,       DECEMBER 31,
                                                    2006               2005
                                                ------------       ------------

    Software license                            $  2,420,227       $  2,420,227
    Gaming license                                 7,090,000          4,690,000
                                                ------------       ------------
                                                   9,510,227          7,110,227
    Accumulated amortization                        (380,974)          (145,556)
                                                ------------       ------------
                                                $  9,129,253       $  6,964,671
                                                ============       ============

    Amortization expense was $235,418 for the nine months ended September 30,
    2006 and $105,584 for the nine months ended September 30, 2005.


6   LEASES COMMITMENTS

    The Company leases a number of office spaces under operating leases. The
    leases typically run for an initial period of three years, with an option to
    renew the lease after that date.

    Rent expense totaled $150,723 for the nine months ended September 30, 2006
    and $55,141 for the nine months ended September 30, 2005.

    Minimum lease payments for the non-cancellable operating lease for the years
    ending December 31,

     2006                         $   75,592
     2007                         $  302,366
     2008                         $  262,426
     2009                         $  126,025
                                  ----------
     Total                        $  766,409
                                  ==========

7   GAMING SERVICES

    The Company's wholly owned subsidiary, M2B Commerce Limited, purchased the
    rights to a digit games license in Cambodia. The license is for a minimum
    period of 18 years commencing from June 1, 2005, with an option to extend
    for a further 5 years or such other period as may be mutually agreed.

                                      F-11




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


8   CAPITAL STOCK

    (a)   Common stock issued for cash

          In January and February 2006, the Company issued a total of 5,520,000
          shares of common stock for a value of $4,140,000. These shares were
          subscribed and paid for before December 31, 2005 pursuant to the
          Company's private placement.

          From January 23, 2006 to April 23, 2006, the Company issued 14,411,400
          shares of common stock through a private placement at a price of $0.75
          per share for a total amount of $10,808,550.

          From April 24, 2006 to April 26, 2006, the Company issued 808,000
          shares of common stock through its new private placement at a price of
          $1.25 per share for a total amount of $1,010,000.

          From July 3, 2006 to July 24, 2006, the Company issued 120,168 shares
          of common stock through private placement at a price of $1.50 per
          share for a total amount of $180,249.

          The total amount of cash raised through the private placement of
          shares of common stock in the nine months ended September 30, 2006 was
          $11,998,799.

          Consulting fees of $726,169 incurred in connection with the private
          placement were deducted from paid in capital.

    (b)   Common stock issued for acquisition of film library

          On April 27, 2006, the Company issued 6,992,000 shares of common stock
          through a private placement at a price of $1.25 per share for a total
          amount of $8,740,000 for the acquisition of film library.

    (c)   Common stock issued for services

          In January and February 2006, the Company issued a total of 155,840
          shares of common stock for value of $116,880 for services rendered.
          These shares were subscribed and paid for before December 31, 2005.

          On August 15, 2006, the Company issued 40,000 shares of common stock
          in a private placement at a price of $1.50 per share for a total
          amount of $60,000 for services to be rendered to the Company. Such
          services have been rendered as of September 30, 2006.

    (d)   Stock split

          On May 16, 2006, the Company effected a 1-for-4 forward stock split of
          its outstanding shares of common stock. A total of 38,369,590 shares
          of common stock of the Company issued and outstanding as of the
          effective date had been changed into shares of common stock of the
          Company at the ratio of 1 pre-split share to 4 post-split shares.
          After the forward stock split and as at September 30, 2006, the
          Company had 153,638,528 shares of common stock issued and outstanding.
          All references to per share amounts in the consolidated financial
          statements reflect the forward stock split.


9   INCOME TAXES

    The Company files separate tax returns for Singapore and the United States
    of America. The Company operated primarily in Singapore and incurred no
    United States federal or state income taxes as of September 30, 2006 and
    2005.

    The Company had available approximately $2,357,000 of unused Federal net
    operating loss carry-forwards at September 30, 2006, that may be applied
    against future taxable income. These net operating loss carry-forwards will
    expire for Federal purposes in 2025 and 2026. There is no assurance that the
    Company will realize the benefit of the net operating loss carry-forwards.

    SFAS No. 109 requires a valuation allowance to be recorded when it is more
    likely than not that some or all of the deferred tax assets will not be
    realized. At September 30, 2006, a valuation allowance for the full amount
    of the net United States deferred tax asset was established due to the
    uncertainties as to the amount of the taxable income that would be realized.

    The Company had available approximately $1,399,000 of unused Singapore
    capital allowance carry-forwards at September 30, 2006, that may be applied
    against future Singapore taxable income indefinitely provided the company
    satisfies the shareholdings test for carry-forward of tax losses and capital
    allowances.

                                      F-12






<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


10  SEGMENT REPORTING


    The Company classifies its business into reportable segments. The segments
    consists principally of entertainment and digit gaming. Information as to
    the operations of the Company in each of its business segments is set forth
    below based on the nature of the products and services offered.


    The Company has provided a summary of operating income by segment. The
    accounting policies of the business segments are the same as those described
    in the summary of significant accounting policies in Note 2.

<TABLE>
<S>     <C>
2006                                    ENTERTAINMENT    DIGIT GAMING        OTHER            TOTAL
                                        --------------  --------------   -------------  ---------------

Revenues from external customers        $   6,305,460   $  17,310,828    $      9,794   $   23,626,082
Interest revenue                        $      40,022   $          --    $         --   $       40,022
Depreciation and amortization           $     639,986   $     223,920    $         --   $      863,906
Segment profit                          $   2,765,175   $     193,651    $      9,794   $    2,968,620
Segment assets                          $  29,445,518   $   9,530,692    $  4,484,626   $   43,460,836
Expenditures for segment assets         $  17,969,573   $          --    $         --   $   17,969,573

Reconciliation:-
REVENUES
Total revenues for reportable segments                                                  $   23,616,288
Other revenue                                                                           $        9,794
                                                                                        ---------------
Total consolidated revenues                                                             $   23,626,082
                                                                                        ===============

INTEREST REVENUE
Total interest revenue for reportable segments                                          $       40,022
Corporate interest revenue                                                              $       69,314
                                                                                        ---------------
Total consolidated interest revenues                                                    $      109,336
                                                                                        ===============

PROFIT OR LOSS
Total profit for reportable segments                                                    $    2,968,620
Corporate expenses                                                                      $     (425,183)
                                                                                        ---------------
Profit before income tax                                                                $    2,543,437
                                                                                        ===============

ASSETS
Total assets for reportable segments                                                    $   38,976,210
Other assets                                                                            $    4,484,626
                                                                                        ---------------
Total consolidated assets                                                               $   43,460,836
                                                                                        ===============

EXPENDITURES FOR SEGMENT ASSETS
Total expenditures for assets for reportable segments                                   $   17,969,573
                                                                                        ===============



                                      F-13




<PAGE>

                           AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)


2005                                    ENTERTAINMENT    DIGIT GAMING        OTHER           TOTAL
                                        --------------  --------------   -------------  ---------------

Revenues from external customers        $   3,221,842   $   8,475,652    $     2,002    $   11,699,496
Interest revenue                        $       1,081   $          --    $        --    $        1,081
Depreciation and amortization           $     204,615   $      80,417    $        --    $      285,032
Segment profit                          $      76,993   $     160,826    $     2,002    $      239,821
Segment assets                          $   5,861,919   $   4,953,403    $ 4,032,612    $   14,847,934
Expenditures for segment assets         $   3,907,773   $   4,690,000    $        --    $    8,597,733

Reconciliation:-
REVENUES
Total revenues for reportable segments                                                  $   11,697,494
Other revenue                                                                           $        2,002
                                                                                        ---------------
Total consolidated revenues                                                             $   11,699,496
                                                                                        ===============

INTEREST REVENUE
Total interest revenue for reportable segments                                          $        1,081
Corporate interest revenue                                                              $           --
                                                                                        ---------------
Total consolidated interest revenues                                                    $        1,081
                                                                                        ===============

PROFIT OR LOSS
Total profit for reportable segments                                                    $      239,821
Corporate expenses                                                                      $     (174,609)
                                                                                        ---------------
Profit before income tax                                                                $       65,212
                                                                                        ===============

ASSETS
Total assets for reportable segments                                                    $   10,815,322
Other assets                                                                            $    4,032,612
                                                                                        ---------------
Total consolidated assets                                                               $   14,847,934
                                                                                        ===============

EXPENDITURES FOR SEGMENT ASSETS
Total expenditures for assets for reportable segments                                   $    8,597,733
                                                                                        ===============
</TABLE>


                                      F-14




<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE
COVERED BY AND TO QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. PROSPECTIVE SHAREHOLDERS SHOULD
UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING STATEMENT
CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE
FORWARD - LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR
FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND
THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE
FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE
TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF
WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD - LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD -
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL
EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S
RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD - LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH
STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER
PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.


GENERAL

M2B World is in the business of broadband entertainment and education-on-demand,
streaming via computers, television sets, PDAs (Personal Digital Assistant) and
the provision of broadband services. Its business includes channel and program
sponsorship (advertising and branding); online subscriptions, channel/portal
development (digital programming services); content aggregation and syndication,
broadband consulting services, broadband hosting and streaming services and
E-commerce.

The following discussion should be read in conjunction with selected financial
data and the consolidated financial statements and notes to consolidated
financial statements.


RESULTS OF OPERATIONS

The nine months and three months ended September 30, 2006 compared with the nine
months and three months ended September 30, 2005.


OVERVIEW

The Company, through its subsidiaries under the M2B brand name is in the
Broadband Media Entertainment business, and a provider of interactive
Entertainment-on-demand, Education-on-demand and E-commerce streaming over
Broadband channels, Internet portals, and 3G devices globally.

The Company has launched multiple Broadband TV websites with entertainment,
education and online shopping content, with over 100 channels designed to cater
to various consumer segments and lifestyles. Its content covers diverse genres
such as movies, dramas, comedies, documentaries, music, fashion, lifestyle,
education, and more. The Company markets its products globally through its "M2B"
brand name. The M2B brand has established its competitive edge by offering
access to an expansive range of content libraries for aggregation, distribution
and syndication on Broadband and other media, including rights for
merchandising, product branding, promotion and publicity.

                                        1




<PAGE>

Business Operations
-------------------

Our principal operations are carried out through the following three segments of
our business:

1.   ENTERTAINMENT SERVICES - Video on-Demand services for entertainment and
     education, providing the Company with advertising, subscriptions, online
     games and e-commerce (B2B and B2C) revenues.

2.   DIGIT GAMES

3.   E-TRAVEL SERVICES - Online Travel Portal


1.   ENTERTAINMENT SERVICES
     ----------------------

The Company provides online entertainment and education on-demand on Broadband
channels, Internet portals and 3G devices across the globe, for specific and
identified viewer lifestyles, demographics and interests; and includes the
viewing experience to an on-line shopping experience.

The Company uses Broadband technology to provide its services. Broadband
technology is defined as high speed, high-bandwidth, two-way data, voice and
video communications, delivered at high transmission rates. It allows the
following to be delivered:

o    Video-on-demand (VOD) services that enable individuals to select videos
     from a Central Server, on-demand 24 hours a day, 7 days a week, for viewing
     on:

        o  Television screens (Set top Box Technology)

        o  PCs (Digital Subscriber Line (DSL) Technology)

        o  Personal Digital Assistants(PDA), 3G handphones (Wireless Technology)

o    E-Commerce or online shopping - linked interactively to the VOD platforms
     on broadband. Consumers choose to buy products online with digital cash as
     they watch the videos.

The Company applies broadband technologies to facilitate its growth in the
broadband sector. Its main competitive advantage is derived from its ownership
of exclusive rights for various territories on broadband for its contents i.e.
movies and programs on lifestyles, education, business and glamour.

The Company has built and installed its broadband streaming system complete with
firewalls, load balancing, bandwidth and consumer monitoring systems, video
streaming, video storage and web servers in Singapore and in the US.

The Company has also developed its streaming applications to stream into
television sets, via a set top box.

The Company has developed a capability to stream wireless broadband and have its
own digitized entertainment sites for wireless broadband applications.

M2B offers consumers personalized entertainment through its wide range of
broadband streaming channels available at www.m2bworld.com.

The Company offers the following products on the VOD platform :

o    Entertainment - Consumers pay a monthly subscription for access to movies,
     music, glamour and fashion, lifestyle (hobbies, cooking, personalities),
     documentaries, sports, health and fitness and others. They can choose from
     a large number of different channels depending on their interests or
     lifestyle preferences.

o    Adult Education - Consumers pay a monthly subscription to view program on
     management skills, communication skills, decision making, customer services
     and sales, motivation, presentation and writing skills, counseling and
     others.

With this strategy, the Company generates diversified sources of revenue from:

a) Advertising i.e. program & channel sponsorship

b) Online subscriptions

c) Channel/portal development i.e. digital programming services

d) Content aggregation and syndication

                                        2




<PAGE>

e) Broadband consulting services and online shopping turnkey solutions

f) E-commerce services

g) Online gaming micro-payments


Currently, the M2B Broadband websites include:

1. ENTERTAINMENT SITES

     INTERNATIONAL AND US SITES:

     o   m2btv.com - an advertising and subscription based global broadband TV
         Service

     o   Star78.com - an advertising-based Family Entertainment site for
         international viewers

     o   Shine8.com - an advertising-based Lifestyle site for international
         viewers

     o   Jump29.com - an advertising-based Young Adults site for international
         viewers

     o   Dreamstage7.com - an advertising & subscription-based Glamour & Fashion
         site for international viewers

     o   Highfashion7.com - an advertising and subscription based designer
         Fashion site for international viewers

     o   Dragon78.tv - an advertising & subscription-based Mandarin
         Entertainment site for viewers in the US only

     o   Chinois78.com - an advertising and subscription based Mandarin
         Lifestyle site for viewers in the US only

     ASIAN SITES:

     o   Dimension88.com - an advertising & subscription-based Movie site in
         Singapore only

     o   Dragon78.com - an advertising & subscription-based Mandarin
         Entertainment site in Singapore only

     o   Joy Channel - a subscription based family entertainment site dedicated
         for United Power viewers in Japan only

     o   Ideas Broadband - four subscription based entertainment sites (Movie
         Mania, Executive Online, Glamour Galore, Dragon City providing 25
         channels) dedicated for Singapore Telecommunications Ltd Ideas
         Broadband viewers in Singapore only

     o   Trilogy - a subscription based 3G mobile phone entertainment site
         dedicated for Singapore Telecommunications Trilogy viewers in Singapore
         only

     o   Colours78.com - an advertising and subscription based Mandarin
         Lifestyle site in Singapore only

     o   HappyDigi.com - a subscription based Mandarin site in China only (Movie
         entertainment platform)


2. EDUCATION SITES

     US SITES:

     o   Wiz5.us - an advertising & subscription-based Business & Corporate
         Training site for viewers in the US only

     ASIAN SITES:

     o   Wiz5.com - an advertising & subscription-based Business & Corporate
         Training site for viewers in Singapore only



                                        3




<PAGE>

3. E-COMMERCE SITES

     INTERNATIONAL SITES:

     o   Starzmall.com - A One-Stop Shopping Paradise

     o   Trotteuse.com - A Second-Hand Branded Goods Mall

     o   Royalhive.com - A One-Stop Health and Beauty Mall


Broadband Services

a)   Global Broadband TV Service

     The Company through its wholly owned subsidiaries, M2B World, Inc.
     incorporated in the state of California and M2B World Asia Pacific Pte.
     Ltd. incorporated in Singapore, will be offering multiple TV channels,
     delivered live over the Internet, to homes that have a high-speed internet
     connection; directly to the TV Sets via an IP set top box.

     The service commenced operation in US and Singapore in July 2006 and it
     offers more than 50 channels to customers. Anyone subscribing to a local
     Internet service provider will be able to tune in to the service on a
     subscription basis. Subscribers will be provided with a set-top box that
     connects to their broadband modems instead of the cable TV point at home.
     They will be able to watch the programs on their TV sets. The Company plans
     to extend this service to broadband users worldwide in the later part of
     2006.

b)   Content Management System

     The Company launched a state-of-the-art automated Content Management System
     ("CMS") to enhance its advertising service offered to clients and to
     provide a new revenue source for the Company. The system allows for the
     highly specialized programming of video, animation, streaming and flash
     content to multiple destinations and was demonstrated at the Asia
     Television Forum (ATF 2005), a regional platform for media buyers and
     sellers. As a sponsor at the event, M2B World showcased the automated CMS
     on plasma screens, together with programming from the wide ranging M2B
     content library that includes movies, dramas, comedies, documentaries,
     music, fashion, lifestyle, learning and more.

     Linked by broadband networks and wireless set-top boxes to push content and
     scheduled advertising at physical premises, the CMS allows businesses the
     option of presenting targeted content on selected video displays in
     multiple locations, such as on different levels of a shopping mall, in
     various spots within a restaurant or club or on separate elevators in the
     same building.

     In store video panels can also carry individualized messages together with
     customized content to effectively reach consumers and target audiences
     within the premises. The Company plans to introduce this integrated CMS and
     content solution to U.S. clients in 2006. Businesses and advertisers can
     then readily offer customers feature-rich content with this versatile and
     easy-to-use CMS designed to advance brand-building activities and widen the
     advertising options for customer outreach. As a frontrunner in broadband
     media, this integrated solution underscores M2B's key strength in
     delivering content for viewing on PCs, 3G mobile phones, PDAs as well as
     television screens. This is another method by which M2B is continuing to
     effectively meet the consumer shift toward on-demand and personalized media
     experiences whether at home or work and now additionally on video screens
     in stores, restaurants, clubs and other business or leisure outlets.


2.   Digit Games
     -----------

In May 2005, the Company through its subsidiary, M2B Commerce Limited, signed an
agreement with Allsports Limited, a British Virgin Islands company to operate
and conduct digit games (lottery) in Cambodia and to manage the digit games
activities in Cambodia. The license to manage, conduct and operate the digit
games activities in Cambodia is for a period of eighteen years.

                                        4




<PAGE>

3.   E-Travel Services
     -----------------

In December 2005, the Company's subsidiary, M2B World Travel Limited., signed a
global agreement with Amadeus Global Travel Distribution, SA, a Spanish
corporation. Through the agreement, M2B will be able to offer direct access to
the extensive range of travel options available through the Amadeus network to
their viewers around the world. The agreement extends M2B's reach from broadband
streaming entertainment into the worldwide travel arena.

The World Travel & Tourism Council (WTTC) recently estimated that worldwide
spending for personal travel will hit $2.8 trillion in 2005. According to
PhoCusWright, the online portion of those sales is growing particularly quickly
in the US, Europe and the Asia-Pacific region, where combined online travel
sales in those three geographic regions is estimated to top $115 billion this
year. With eMarketer reporting that broadband currently reaches over 58 million
households in Asia-Pacific alone, M2B World Travel Ltd. through its agreement
with Amadeus, is now poised to immediately access and serve this consumer
market.

M2B World Travel Ltd. will now be able to offer consumers access to the huge
range of content available through the Amadeus system, including 500 airlines,
58,000 hotels, and a whole range of other travel content.

The M2B World Travel Website will consistently provide the most competitive
rates through its direct connection to the Amadeus System using the Elleipsis
TravelTalk(TM) integration platform, which allows M2B to access not only the
major travel providers, but an expanded roster of additional suppliers such as
low-cost carriers, cruise lines, and widened hotel distribution channels all
through one single, easy-to-use platform based on the M2B website,
www.m2bworld.com.

The innovative video e-travel portal brings an extensive range of travel options
to our viewers and giving the Company a powerful entry into the travel and
tourism market; effectively allowing consumers worldwide to tap the broad and
competitive options available no matter what their travel needs. The e-travel
portal by M2B World Travel directly aggregates travel solutions from 500
airlines, 58,000 hotel properties, some 42 car rental companies serving over
30,000 locations, as well as widespread air, ferry, rail, cruise, and tour
operators with proprietary video content, allowing customers to the site to view
their travel destination, thus influencing their purchasing decision.

The M2B travel site is expected to be launched by the end of 2006. No assurances
can be made that such plan will be materialized as planned.


REVENUE

The revenue for the nine months ended September 30, 2006 increased by
$11,926,586 (102%), from $11,699,496 for the nine months ended September 30,
2005 to $23,626,082 for the nine months ended September 30, 2006.

This increase in revenue for the nine months ended September 30, 2006 was mainly
contributed by the digit games in Cambodia which commenced operations in June
2005 and the licensing and advertising income.

The revenue for the three months ended September 30, 2006 increased by
$2,352,319 (34%), from $6,962,797 to $9,315,116 for the three months ended
September 30, 2005 and 2006, respectively. The increase was mainly contributed
by the licensing and advertising income which was slightly offset by the
decline in revenue from digit games.


COST OF SERVICES

Cost of services for the nine months ended September 30, 2006 was $17,056,214
which increased by $6,923,947 (68%) from $10,132,267 for the nine months ended
September 30, 2005.

The significant increase in cost of services of $6,923,947 for the nine months
ended September 30, 2006 was mainly attributed to the cost of managing and
operating the operations and game centers in Cambodia for digit games.

As a proportion of revenue, the cost of services for the nine months ended
September 30, 2006 was 72% (cost of services at $17,056,214 and revenue at
$23,626,082) as compared to 87% for the nine months ended September 30, 2005
(cost of services at $10,132,267 and revenue at $11,699,496).


                                        5




<PAGE>

Cost of services for the three months ended September 30, 2006 was $6,082,911
which decreased by $331,443 (5%) from $6,414,354 for the three months ended
September 30, 2005.

As a proportion of revenue, the cost of services for the three months ended
September 30, 2006 at 65% (cost of services at $6,082,911 and revenue at
$9,315,116) registered a decrease of 27 percentage points as compared to 92% for
the three months ended September 30, 2005 (cost of services at $6,414,354 and
revenue at $6,962,797).


DISTRIBUTION EXPENSES

Distribution expenses for the nine months ended September 30, 2006 of $857,412
was higher by $489,454 (133%) as compared to the amount of $367,958 incurred for
the nine months ended September 30, 2005.

The higher distribution expenses were attributed to increased spending on the
branding of the M2B brand, marketing and promoting the Global Broadband TV
Service which increased by $434,939 (223%) from $194,634 for the nine months
ended September 30, 2005 to $629,573 for the nine months ended September 30,
2006.

Distribution expenses for the three months ended September 30, 2006 at $297,883
were higher by $130,395 (78%) as compared to the amount of $167,488 for the
three months ended September 30, 2005.

The higher amount spent for the three months ended September 30, 2006 was
attributed to the higher expenditure on advertising and marketing which was
increased by $112,452 (118%) from $95,290 to $207,742 for the three months ended
September 30, 2005 and 2006, respectively.


GENERAL AND ADMINISTRATIVE EXPENSES

Administration expenses for the nine months ended September 30, 2006 at
$3,278,355 were higher by $2,143,064 (189%) as compared to the amount of
$1,135,291 incurred for the nine months ended September 30, 2005.

Administration expenses for the three months ended September 30, 2006 at
$1,596,344 were higher by $1,080,460 (209%) as compared to the amount of
$515,884 incurred for the three months ended September 30, 2005.

The increases in administration expenses for the nine months and three months
ended September 30, 2006 was attributed mainly to increases in:

o    Staff costs. Staff costs had increased by $674,015 (176%) from $382,172 for
     the nine months ended September 30, 2005 to $1,056,187 for the nine months
     ended September 30, 2006. Similarly, for the three months ended September
     30, 2006, staff cost had increased by $237,679 (112%) from $211,343 to
     $449,022 for the three months ended September 30, 2005 and 2006
     respectively. The increase in staff cost resulted from the increase in the
     number of professional employees hired to cater to the expanding and
     growing business.

o    Depreciation and license amortization attributed to the leasehold
     improvements for the expansion of the office and new editing suites to
     cater to the demands of the growing business. The increase in license
     amortization came from the on-line games license and gaming license in
     Cambodia. The amount increased by $578,874 (203%) and $305,894 (199%) for
     the nine months and three months ended September 30, 2006 as compared to
     the nine months and three months ended September 30, 2005 respectively.


NET INCOME

For the nine months ended September 30, 2006, net income was $2,137,898 which
increased by $2,036,307 (2,004%) from $101,591 for the nine months ended
September 30, 2005. For the three months ended September 30, 2006, net income
was $917,439 which increased by $1,014,594 (1,044%) from the net loss of $97,155
for the three months ended September 30, 2005.

The significant increase in net income for the nine months and three months
ended September 30, 2006 was due to the revenue generated from the licensing and
advertising income and lower cost of services offset by higher distribution
expenses and administrative expenses.

                                        6





<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash of $3,462,393 at September 30, 2006 as compared to cash of
$4,776,819 at December 31, 2005.

The Company does not finance its operations through short-term bank credit,
long-term bank loans nor leasing arrangements with financial institutions as it
believes that cash generated from its operations will be able to cover its daily
running cost and overheads.

During the nine months ended September 30, 2006, the Company had not entered
into any transactions using derivative financial instruments or derivative
commodity instruments. Accordingly the Company believes its exposure to market
interest rate risk and price risk is not material.

Cash generated from operations will not be able to cover the Company's intended
growth and expansion. The Company has plans in 2006 to expand its broadband
coverage by launching new broadband sites in North America, Europe and
Australia. No assurances can be made that such plans will be carried out in a
timely manner.

In North America, the Company intends to launch new broadband entertainment and
business training content sites in 2006. The server farm will be expanded in the
US to handle the North American business and the global Broadband TV service.
The Company plans to offer multiple TV channels, delivered live over the
Internet, to homes that have a high-speed internet connection. This service has
been made available in the US and Singapore in July 2006 with more than 40
channels available to customers. The Company intends to provide a similar
service to broadband users worldwide in later part of 2006. No assurances can be
made that such plans will be materialized as planned.

By the end of 2006, the Company plans to launch an innovative travel e-commerce
portal, marketing travel products through a revolutionary world first video
travel portal and providing distribution and technology solutions for the travel
industry. No assurances can be made that such plans will materialize as planned.

The Company is continuing to raise additional funds through its private
placement of equity to fund all business expansions and working capital. For the
nine months ended September 30, 2006, the Company raised a total of $11,272,630,
net of issuance costs of $726,169.

The Company believes that it can continue to raise funds through private
placement of its securities to fund its growth and expansion, however, no
assurances can be made that the Company will raise sufficient funds as planned.



ITEM 3.  Controls and Procedures

Our President and Treasurer/Chief Financial Officer (the "Certifying Officers")
are responsible for establishing and maintaining disclosure controls and
procedures and internal controls and procedures for financial reporting for the
Company. The Certifying Officers have designed such disclosure controls and
procedures and internal controls and procedures for financial reporting to
ensure that material information are made known to them, particularly during the
period in which this report was prepared. The Certifying Officers have evaluated
the effectiveness of the Company's disclosure controls and procedures and
internal controls and procedures for financial reporting as of September 30,
2006 and believes that the Company's disclosure controls and procedures and
internal controls and procedures for financial reporting are effective based on
the required evaluation. There have been no significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

                                        7





<PAGE>

PART II. OTHER INFORMATION

Item 1.  Legal proceedings

No disclosures are required pursuant to Item 103 of Regulation S-B, taking into
account Instruction 1 to that Item.


Item 2.  Unregistered sales of equity securities and use of proceeds

From January 23, 2006 to April 23, 2006, the Company issued 14,411,400 shares of
common stock at a price of $0.75 per share for a total amount of $10,808,550 to
"accredited investors", as that term is defined in Regulation D of the
Securities Act of 1933.

From April 27, 2006 to April 26, 2006, the Company issued 808,000 shares of
common stock through its new private placement of up to $10 million at a
purchase price of $1.25 per share for a total amount of $1,010,000 to
"accredited investors", as that term is defined in Regulation D of the
Securities Act of 1933.

From July 3, 2006 to July 24, 2006, the Company issued 120,168 shares of common
stock through private placement at a price of $1.50 per share for a total amount
of $180,249 to "accredited investors", as that term is defined in Regulation D
of the Securities Act of 1933.

Consulting fees of $726,169 incurred in connection with the private placement
were deducted from paid in capital. The use of the proceeds includes working
capital and business expansion of the Company.

The shares of the Company's common stock were issued and sold in reliance upon
the exemption provided by Section 4(2) and/or Regulation D/Regulation S of the
Securities Act of 1933.


Item 3.  Defaults on senior securities               NONE


Item 4.  Submission of items to a vote               NONE


Item 5.  Other information                           NONE


Item 6.

(a)  Exhibits
     --------

     Exhibit No.     Description

     Exhibit 31      CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
                     FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
                     SARBANES-OXLEY ACT

     Exhibit 32      CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
                     FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE
                     SARBANES-OXLEY ACT

(b) Reports on 8K during the quarter:

      Form 8-K filed on July 17, 2006

      Form 8-K filed on August 18, 2006

      Form 8-K filed on August 31, 2006

      Form 8-K filed on October 5, 2006

      Form 8-K filed on October 18, 2006



                                        8





<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.


                                   AMARU, INC.


Date: December 28, 2006


                                   By /s/ Colin Binny
                                      ------------------------------------------
                                      President



                                   By /s/ Bee Leng Ho
                                      ------------------------------------------
                                      Chief Financial Officer


                                        9