<PAGE>

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

                                   FORM 10-QSB/A-2


[X]     Quarterly report filed under Section 13 or 15 (d) of the Securities
        Exchange Act of 1934 For the Quarterly Period Ended June 30, 2004

                                       or

[ ]     Transitional report filed under Section 13 or 15 (d) of the
        Exchange Act.

                           Commission File No. 0-32695

                                   Amaru, Inc.
                                  -------------
                 (Name of Small Business Issuer in its Charter)

          Nevada                                      88-0490089
         --------                                    ------------
State or other jurisdiction of            I.R.S. Employer Identification Number
incorporation or organization

             112 Middle Road, #08-01 Middland House, Singapore 188970
            -----------------------------------------------------------
                     (Address of principal executive office)

Issuer's telephone number: (011) (65) 6332 9287
                           --------------------

          610 Newport Center Drive, Suite 1400, Newport Beach, Ca. 92660
         ----------------------------------------------------------------
                            Issuer's previous address

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) been
subject to such filing requirements for the past ninety (90) days.

Yes [X]   No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: As of June 30, 2004, there were
20,000,000 shares of Common Stock, par value $.001 per share, and 143,000 Series
A convertible preferred shares, par value $0.001, outstanding.

Transitional Small Business Disclosure Format (check one):

Yes [ ]   No [X]











<PAGE>

                            AMARU, INC. & SUBSIDIARY

                          Form 10-QSB QUARTERLY Report
                   FOR THE SECOND QUARTER ENDED JUNE 30, 2004
                                TABLE OF CONTENTS

Forward-Looking Statements

PART I

Item 1.  Financial Statements                                                  4
Item 2.  Management's Discussion and Analysis or Plan of Operation            15
Item 3.  Controls and Procedures                                              19

PART II

Item 1.  Legal Proceedings                                                    19
Item 2.  Changes in Securities                                                19
Item 3.  Defaults Upon Senior Securities                                      19
Item 4.  Submission of Matters to a Vote of Security Holders                  19
Item 5.  Other Information                                                    19
Item 6.  Exhibits and Reports on Form 8-K                                     19

Signatures                                                                    20

                                       2










<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This Form 10-QSB contains forward-looking statements about the
business, financial condition and prospects of the Company that reflect
assumptions made by management and management's beliefs based on information
currently available to it. We can give no assurance that the expectations
indicated by such forward-looking statements will be realized. If any of
management's assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize, the Company's
actual results may differ materially from those indicated by the forward-looking
statements.

         The key factors that are not within the Company's control and that may
have a direct bearing on operating results include, but are not limited to, the
acceptance by customers of the Company's products and services, the Company's
ability to develop new products and services cost-effectively, the ability of
the Company to raise capital in the future, the development by competitors of
products or services using improved or alternative technology, the retention of
key employees and general economic conditions.

         There may be other risks and circumstances that management is unable to
predict. When used in this Form 10-QSB, words such as, "believes," "expects,"
"intends," "plans," "anticipates" "estimates" and similar expressions are
intended to identify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions. All
forward-looking statements are intended to be covered by the safe harbor created
by Section 21E of the Securities Exchange Act of 1934.

                                       3










<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            AMARU, INC. & SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004

                                TABLE OF CONTENTS

Balance Sheets                                                 5

Statements of Operations                                       6

Statement of Stockholders' Equity                              7

Statements of Cash Flows                                       8

Notes to Financial Statements                                  9

                                       4










<PAGE>


<TABLE>
                                       AMARU, INC. AND SUBSIDIARY
                                             BALANCE SHEETS

                                                                          JUNE 30, 2004
                                                                         (CONSOLIDATED)    DECEMBER 31,
                                                                           (UNAUDITED)         2003
                                                                           -----------     -----------
<S>                                                                        <C>             <C>
ASSETS
     Current assets
Cash and cash equivalents                                                  $   60,240      $   60,307
Accounts receivable                                                           213,823          14,097
Other receivables                                                               1,660          20,554
Prepaid expenses                                                                4,211          33,758
                                                                           -----------     -----------
     Total current assets                                                     279,934         128,716

    Non current assets
Property and equipment                                                         17,501          18,866
Product development costs (net)                                               238,458         297,402
Investment at equity                                                               --       1,403,493
License                                                                     2,420,227              --
Other                                                                           2,708           2,708
                                                                           -----------     -----------
   Total non current assets                                                 2,678,894       1,722,469
                                                                           -----------     -----------

Total assets                                                               $2,958,828      $1,851,185
                                                                           ===========     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities
Accounts payable                                                           $  251,845      $   64,738
Accounts payable- related parties                                             648,388         423,444
Line of credit                                                                 52,214          58,188
Term loan current portion                                                          --           5,007
Income tax payable                                                            112,835          36,994
Advances from parent                                                               --          55,518
                                                                           -----------     -----------
    Total current liabilities                                               1,065,282         643,889

    Shareholders' equity
Series A convertible preferred stock (par value $0.001) 5,000,000
  shares authorized: 143,000 and 0 shares issued and outstanding at
  June 30, 2004 and December 31, 2003,
  respectively                                                                    143              --
Common stock (par value $0.001) 200,000,000 shares authorized;
  20,000,000 shares issued and outstanding at June 30, 2004 and
  18,136,364 at December 31, 2003                                              20,000          18,136
Paid in capital                                                             1,254,581         867,292
Subscribed common stock, 400,000 and 337,513 shares at June 30, 2004
  and December 31, 2003 respectively                                           20,000         128,255
Retained earnings                                                             545,796         160,696
Comprehensive gain on currency translation                                     53,026          32,917
                                                                           -----------     -----------
   Total shareholders' equity                                               1,893,546       1,207,296
                                                                           -----------     -----------

Total liabilities and shareholders' equity                                 $2,958,828      $1,851,185
                                                                           ===========     ===========


        The accompanying notes to financial statements are an integral part of these statements

                                                   5
</TABLE>






<PAGE>


<TABLE>
                                                  AMARU, INC. AND SUBSIDIARY
                                                   STATEMENTS OF OPERATIONS
                               FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2004 AND 2003
                                                          (UNAUDITED)

                                                                    FOR THE SIX MONTHS ENDED       FOR THE THREE MONTHS ENDED
                                                                 -----------------------------   -----------------------------
                                                                JUNE 30, 2004                   JUNE 30, 2004
                                                                (CONSOLIDATED)   JUNE 30, 2003  (CONSOLIDATED)   JUNE 30, 2003
                                                                --------------   -------------  --------------   -------------
<S>                                                              <C>             <C>             <C>             <C>
Revenue:
  Licensing and advertising (including $900,000 to a related
    party in the quarter ended June 30, 2004)                    $  2,096,316    $      4,224    $  1,090,399    $      2,603
  E-commerce                                                           12,046              --              67              --
  Subscription and related services                                     3,998              --           3,998              --
  Other income                                                         11,851              --          (6,774)             --
                                                                 -------------   -------------   -------------   -------------
     Total revenue                                                  2,124,211           4,224       1,087,690           2,603

Cost of services (including $993,600 from a related party in
  the quarter ended June 30 2004 and $1,062,404 for the six
  months ended June 30, 2004)                                       1,120,861           9,631       1,004,827           2,834
                                                                 -------------   -------------   -------------   -------------
Gross profit (loss)                                                 1,003,350          (5,407)         82,863            (231)

Distribution costs                                                    213,416           4,605         204,443           1,350
Administrative expenses                                               291,491          98,959         110,629          47,296
                                                                 -------------   -------------   -------------   -------------
  Total expenses                                                      504,907         103,564         315,072          48,646

Income (loss) from operations                                         498,443        (108,971)       (232,209)        (48,877)

Other (income) expense:
  Finance expenses                                                        945           1,813             491             888
  Income taxes                                                        112,398              --         (46,774)             --
                                                                 -------------   -------------   -------------   -------------
Net income (loss)                                                $    385,100    $   (110,784)   $   (185,926)   $    (49,765)
                                                                 =============   =============   =============   =============

Earnings (loss) per share-basic and diluted
                                                                 $       0.02    $      (0.01)   $      (0.01)   $      (0.00)
                                                                 =============   =============   =============   =============
Weighted average number of common shares outstanding-basic
  and diluted                                                      19,538,961      17,727,273      20,000,000      17,727,273
                                                                 =============   =============   =============   =============

                    The accompanying notes to financial statements are an integral part of these statements

                                                               6
</TABLE>







<PAGE>


<TABLE>
                                                     AMARU, INC. AND SUBSIDIARY
                                                  STATEMENT OF SHAREHOLDERS' EQUITY

                              Series A Convertible
                                 Preferred Stock         Common Stock
                             ----------------------  --------------------
                                                                                                                            Total
                                                                           Additional                                       stock-
                                Number   Par Value   Number of  Par value    Paid-in    Subscribed   Retained  Translation  holders'
                              of Shares  ($0.001)      shares   ($0.001)     capital      stock      Earnings     gain      equity
                             -------------------------------------------------------------------------------------------------------
<S>                            <C>      <C>          <C>          <C>        <C>           <C>       <C>       <C>       <C>
Balance December 31, 2002          --   $     --     17,727,273   $17,727    $753,701      $82,844   $121,166  $ (4,475) $  970,963

Common stock issued for cash       --         --        409,091       409     113,591           --         --        --     114,000

Common stock subscribed at
  various dates                    --         --             --        --          --       45,411         --        --      45,411

Net income                         --         --             --        --          --           --     39,530        --      39,530

Comprehensive gain on
  currency translation             --         --             --        --          --           --         --    37,392      37,392
                                                                                                                         -----------
Comprehensive income                                                                                                         76,922
                             -------------------------------------------------------------------------------------------------------

Balance December 31, 2003          --         --     18,136,364    18,136     867,292      128,255    160,696    32,917   1,207,296

Shares issued for cash
  Feb. 10, 2004                    --         --      1,363,636     1,364     414,636     (128,255)        --        --     287,745

Reverse acquisition           143,000        143        500,000       500     (27,347)           --        --        --     (26,704)

Common Stock subscribed
  (400,000 shares)                 --         --             --        --          --       20,000         --        --      20,000

Net income                         --         --             --        --          --           --    385,100        --     385,100

Comprehensive gain on
  currency translation             --         --             --        --          --           --         --    20,109      20,109
                                                                                                                         -----------
Comprehensive income                                                                                                        405,209
                             -------------------------------------------------------------------------------------------------------
Balance June 30, 2004
(consolidated)(Unaudited)     143,000  $     143     20,000,000   $20,000  $1,254,581      $20,000   $545,796  $ 53,026  $1,893,546
                             =======================================================================================================


                       The accompanying notes to financial statements are an integral part of these statements

                                                                 7
</TABLE>






<PAGE>


<TABLE>
                                     AMARU, INC. AND SUBSIDIARY
                                      STATEMENTS OF CASH FLOWS
                          FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                            (UNAUDITED)

                                                                      FOR THE SIX MONTHS ENDED
                                                                  ---------------------------------
                                                                  JUNE 30, 2004
                                                                  (CONSOLIDATED)     JUNE 30, 2003
                                                                  --------------     --------------
<S>                                                               <C>                <C>
CASH FLOW FROM OPERATING ACTIVITIES
    Net income (loss)                                             $     385,100      $    (110,784)
    Adjustments to reconcile net income (loss)
    Amortization                                                         57,727             56,073
    Depreciation                                                          5,715             15,508
    Acquisition of license in exchange for account receivable        (1,016,734)                --
 Changes in operation assets and liabilities
    Accounts receivable                                                (199,726)              (286)
    Prepaid and other                                                    48,441              2,936
    Increase (decrease)accounts payable                                 209,183             (1,066)
    Increase (decrease) income tax payable                               75,841                (21)
                                                                  --------------     --------------
Net cash used in operating activities                                  (434,453)           (37,640)

CASH USED IN INVESTING ACTIVITIES
    Software development reduction                                        1,217                 --
    Acquisition of equipment                                             (4,350)                --
                                                                  --------------     --------------
Net cash used in investing activities                                    (3,133)                --

CASH PROVIDED FROM FINANCING ACTIVITIES
   Addition (payment) to related parties                                147,350             (1,568)
   Addition (payment) of line of credit and loans                       (10,981)             3,283
   Re-capitalization of M2B World Pte.Ltd                               (26,704)                --
   Proceeds from sale of stock                                          287,745             38,368
   Proceeds from stock subscriptions                                     20,000                 --
                                                                  --------------     --------------
Net cash provided from financing activities                             417,410             40,083

Effect of exchange rate changes on cash                                  20,109             (2,757)

Cash flow from all activities                                               (67)              (314)

Cash balance at beginning of period                                      60,307             57,700
                                                                  --------------     --------------

Cash balance at end of period                                     $      60,240      $      57,386
                                                                  ==============     ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest                                                      $         946      $       1,813
                                                                  ==============     ==============

    Income taxes                                                  $      36,405      $          --
                                                                  ==============     ==============


      The accompanying notes to financial statements are an integral part of these statements

                                                      8
</TABLE>






<PAGE>

                            AMARU, INC. & SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION AND REORGANIZATION
         ----------------------------------------

         The financial information included herein is 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 six months ended June 30, 2004, are not
         necessarily indicative of the results to be expected for the full year.

         The accompanying financial statements do not include footnotes and
         certain financial presentations 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, 2003, and Form 8-KA, filed on May 24, 2004.

         REORGANIZATION
         --------------

         As of February 25, 2004, the Company made an agreement which provides
         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. The
         agreement is for the 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 are 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
         Subsidiary.

         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.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         USE OF ESTIMATES
         ----------------

         The preparation of 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 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.


         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 two customers totaling 100% of these
         related revenues for June 30, 2004.

                                       9






<PAGE>


         The Company's operations are conducted over the world wide web and some
         purchases are made from locations outside of Singapore. However all
         transactions are recorded in Singapore

<TABLE>
<CAPTION>
                                    For the three months ended June 30          For the six months ended June 30
                                            2004              2003                      2004              2003
                                            ----              ----                      ----              ----
         <S>                                <C>                <C>                      <C>                <C>
         Sales outside of Singapore          -                 -                         -                 -
         Services purchased outside
         of Singapore (1)                   1,193,599          -                        1,262,404          -
</TABLE>

         At June 30, 2004 and 2003 all assets of the Company were located in
         Singapore.

         (1) Includes $993,600 and $1,062,404 purchased from a related party in
         Malaysia for the quarter ended June 30, 2004 and for the six months
         ended June 30, 2004 respectively (see Note 9)




         CASH AND CASH EQUIVALENTS
         -------------------------

         Cash on hand, in banks and short-term deposits are held to maturity and
         are carried at cost.

         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.

         For the purposes of the cash flow statement, cash and cash equivalents
         consist of cash on hand and deposits in banks, net of outstanding bank
         overdrafts.

         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. Content syndication revenue is recognized as the content is
         delivered. E-commerce commissions are recognized as received.
         Broad-band consulting services and on-line turnkey solutions are
         recognized as earned.

         To date the Company has only had revenues from licensing and
         advertising, E-commerce and subscriptions and related services.

         COSTS OF SERVICES
         -----------------

         The cost of services pertaining to 1) advertising and sponsorship
         revenue and 2) 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 are channel design and alteration, and hardware
         hosting and maintenance costs. All these costs are accounted for in the
         period incurred.


         LICENSING RIGHTS
         ----------------

         Licensing rights refers 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 recognized in the accounts over the life of
         the contract on a straight line basis. These contents are then streamed
         into the broad-band sites and the revenue earned from advertising,
         sponsorship and subscription are then recognized according to our
         policy on revenue.


         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.

         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 years.

                                       10






<PAGE>

         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 was 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

         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 in the six months
         ended June 30, 2004 and the year 2003.


         INVESTMENTS
         -----------

         Investments in unconsolidated subsidiaries in which the Company has a
         20% to 50% interest or otherwise exercises significant influence are
         carried at cost, adjusted for the Company's proportionate share of
         their undistributed earnings or losses.


         On December 27, 2002, the Company acquired a 9.76% interest in a joint
         venture entity, FSBM M2B Sdn Bhd, which it accounts for at cost. The
         investment of $2,708 is included in other assets at June 30,2004 and
         December 31,2003.

         On January 30, 2004, the Company acquired 100% of the outstanding
         common stock of CRE8 IP&P in exchange for $2,420,227 of accounts
         receivable from CRE8 International Limited. CRE8 IP&P was incorporated
         in the British Virgin Islands to hold a license to operate an
         E-commerce platform. The company anticipates that the acquisition of
         CRE8 IP&P will allow M2B World to provide on-line trading opportunities
         for consumers and companies to barter and/or purchase goods.

         The Company accounted for its acquisition of CRE8 IP&P under the
         purchase method of accounting and in accordance with SFAS No. 141
         "Business Combinations", which requires the acquirer to identify all of
         the assets acquired and liabilities assumed. As of January 30, 2004,
         CRE8 IP&P had no assets or liabilities on its books and has had no
         operations since its inception on July 25, 2002. However, the Company
         did identify a license owned by CRE8 IP&P that meets the separable and
         contractual recognition criteria of SFAS 141 for acquired intangible
         assets. The Company has allocated the entire cost of the acquisition of
         $2,420,227 to the license based on its fair value as determined by a
         third party valuation.

         CRE8 IP&P has recorded this license in its financial statements at
         $2,420,227 in accordance with SAB No. 54, "Push Down Basis Of
         Accounting Required In Certain Limited Circumstances". The license has
         an indefinite life and is not subject to amortization.


         ADVANCES FROM PARENT
         --------------------

         Advances from parent are unsecured, non-interest bearing and carry no
         fixed terms of repayment.

         FOREIGN CURRENCY TRANSLATION
         ----------------------------

         Transactions in foreign currencies are measured and recorded in the
         functional currency Singapore dollars using the exchange rate in effect
         at the date of the transaction. The reporting currency is U.S. dollars.
         At each 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 stockholders' equity as other comprehensive
         income and realized gains and losses are reflected in operations.


         ADVERTISING
         -----------

         The cost of advertising is expensed as incurred. For the quarter and
         the six months ended June 30, 2004 the company incurred advertising
         expenses of $200,271 and $200,705 respectively.


         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.

         EARNINGS(LOSS) PER SHARE
         ------------------------

         In February 1997, the Financial Accounting Standards Board (FASB)
         issued SFAS 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.

                                       11







<PAGE>

         FINANCIAL INSTRUMENTS
         ---------------------

         The carrying amounts for the Company's cash, other current assets,
         accounts payable, accrued expenses, notes payable, and other
         liabilities approximate their fair value.

3.       PROPERTY AND EQUIPMENT
         ----------------------

         Property and equipment consist of the following at June 30, 2004 and
         December 31,2003.



                                           December 31,    June 30,
                                               2003          2004
                                            ----------    ----------
         Office equipment                   $  58,857     $  63,041
         Furniture, fixture and fittings          396           562
                                            ----------    ----------

                                               59,253        63,603

         Accumulated depreciation             (40,387)      (46,102)
                                            ----------    ----------

                                            $  18,866     $  17,501
                                            ==========    ==========


         Depreciation expense was $24,689 the year ended December 31, 2003 and
         $5,715 for the six months ended June 30, 2004.

4.       PRODUCT DEVELOPMENT
         -------------------

         Product development consists of the following at December 31, 2003 and
         June 30, 2004:

                                          December 31,      June 30,
                                              2003            2004
                                           ----------      ----------
         Development expenditures          $ 595,413       $ 595,413

         Accumulated amortization           (298,011)       (356,955)
                                           ----------      ----------

                                           $ 297,402       $ 238,458
                                           ==========      ==========

         Amortization expense was $115,914 for the year ended December 31, 2003
         and $58,944 for the six months ended June 30, 2004.


                                       12







<PAGE>

5.       LINE OF CREDIT
         --------------

         The Company has a $58,188 line of credit, repayable on demand, used to
         fund the Group's short-term working capital requirements. The line of
         credit bears interest at prime lending rate plus 1% per annum (6% at
         December 31, 2003). This loan is secured by a certificate of deposit of
         $58,188 and a personal guarantee of a director. Interest is payable
         monthly. The outstanding balance was $58,188 at December 31, 2003 and
         $52,214 at June 30, 2004.

6.       COMMITMENTS AND CONTINGENCIES
         -----------------------------

         LEASES
         ------

         The Company leases its office space under a one year operating lease
         which expires in February 2005 with a monthly payment of $1,856. Rent
         expense totaled $10,344 for the year ended December 31, 2003 and $7,461
         for the six months ended June 30, 2004

         Future minimum lease payments due are as follows for the years ended
         December 31:

                       2004                          $     11,136
                       2005                                 3,712
                                                     -------------

                                                     $     14,848
                                                     =============

7.       CAPITAL STOCK
         -------------

         COMMON STOCK
         ------------

         On February 10, 2004 the Company issued 1,363,636 shares of $0.31 par
         value Series D common stock for a total cash capital contribution of
         $416,000.

         The Company received subscriptions for 400,000 shares of common stock
         valued at $20,000.

8.       INCOME TAXES
         ------------

         The Company files separate tax returns for Singapore and the United
         States of America. Reconciliation of the differences between the
         statutory tax and the effective income tax are as follows

                                                  For the six months ended
                                               June 30, 2004     June 30, 2003
                                              ---------------   ---------------

         U.S. Federal statutory tax                       -%                -%
         U.S. State taxes, net of federal tax             -%                -%
         Foreign statutory tax rate                    22.0%            (22.0%)
         Non-deductible items                          0.55%                -%
         Tax exemptions                                   -%                -%
                                              ---------------   ---------------
            Valuation allowance                           -%             22.0%
          Effective income tax rate                   22.55%                -%
                                              ===============   ===============

                                                  For the three months ended
                                               June 30, 2004     June 30, 2003
                                              ---------------   ---------------
         U.S. Federal statutory tax                       -%                -%
         U.S. State taxes, net of federal tax             -%                -%
         Foreign statutory tax rate                   (22.0%)           (22.0%)
         Non-deductible items                          1.86%                -%
         Tax exemptions                                   -%                -%
                                              ---------------   ---------------
            Valuation allowance                           -%             22.0%
         Effective income tax rate                   (20.14%)               -%
                                              ===============   ===============

                                       13







<PAGE>


         The components of income tax expense consist of the following for the
         six months ended June 30, 2004 and 2003:

                                         For the six months ended
                                    June 30, 2004        June 30, 2003
                                    -------------        -------------
         Current:

         Federal                    $         --         $         --
         State                                --                   --
         Foreign                         112,398                   --
                                    -------------        -------------

                                    $    112,398         $         --
                                    =============        =============

                                        For the three months ended
                                    June 30, 2004        June 30, 2003
                                    -------------        -------------
         Current:

         Federal                    $         --         $         --
         State                                --                   --
         Foreign                         (46,774)                  --
                                    -------------        -------------

                                    $    (46,774)        $         --
                                    =============        =============

         The Company operated primarily in Singapore and incurred no United
         States federal or state income taxes as of June 30, 2004 and 2003. The
         Company had no significant deferred tax assets or liabilities as of
         June 30, 2004 and 2003.


9.       RELATED PARTY TRANSACTIONS
         --------------------------

         During the quarter ended June 30, 2004 and 2003, the Company purchased
         services from a related party in the amount of $993,600 and $0,
         respectively. For the six months ended June 30, 2004 and 2003 the
         amount purchased from this related party was $1,062,404 and $0,
         respectively. The related party is FSBM M2B Sdn Bhd (FSBM) which is
         registered in Malaysia. FSBM is a joint venture between M2B World and
         FSBM Holdings Berhad (formerly known as Fujitsu System Business
         Malaysia Berhad. FSBM serves as a production base for M2B World, having
         digital post-production suites for content production and reporting.
         M2B World owns a 9.76% equity stake in FSBM.

         On December 29, 2004, the Company sold the 9.76% equity stake in FSBM
         M2B Sdn Bhd to a third party for $600,000 at a gain of $597,292.


10.      SUBSEQUENT EVENT
         -----------------
         Subsequent to June 30, 2004 the Company issued 500,000 shares of common
         stock for future services valued at $25,000.



                                       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

As of February 25, 2004 (the "Closing Date"), Amaru, Inc. (the "Company")
acquired M2B World Pte Ltd., a Singapore corporation ("M2B World") in exchange
for 19,500,000 newly issued "restricted" shares of common voting stock of the
Company and 143,000 "restricted" Series A Convertible Preferred Stock shares to
the M2B World shareholders on a pro rata basis for the purpose of effecting a
tax-free reorganization pursuant to sections 351, 354 and 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended ("IRC") pursuant to the Agreement and
Plan of Reorganization (the "Reorganization Agreement") by and between the
Company, M2B World and M2B World shareholders. As a condition of the closing of
the share exchange transaction, certain shareholders of the Company cancelled a
total of 1,457,500 shares of common stock. Each one (1) ordinary share of M2B
World has been exchanged for 1.3636363 shares of the Company's Common Stock and
100 shares of the Company's Series A Convertible Preferred Stock. Each share of
newly issued Company's Series A Convertible Preferred Stock can be converted to
38.461538 shares of the Company's common stock. Following the Closing Date,
there were 20,000,000 shares of the Company's Common Stock outstanding and
143,000 shares of the Company's Series A Convertible Preferred Stock
outstanding. Immediately prior to the Closing, there were 500,000 shares issued
and outstanding.

                                       15







<PAGE>

M2B World is in the business of broadband entertainment and education-on-demand,
streaming via computers, television sets, PDAs (Personal Digital Assistant) and
in the near future through third generation devices; 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 and E-commerce.

The restructuring and re-capitalization has been treated as a reverse
acquisition with M2B World becoming the accounting acquirer. The historical
financial statements prior to the closing of the transaction are those of M2B
World.

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

RESULTS OF OPERATIONS
---------------------

For the three months and six months ended June 30, 2004 compared with three
months and six months ended June 30, 2003

OVERVIEW

The key business focus of M2B will be to establish itself as the leading
provider and creator of a new generation of Entertainment-on-Demand,
Education-on-Demand and E-Commerce Channels on Broadband, and 3G (Third
Generation) devices.

M2B owns exclusive rights in the broadband media for various contents.M2B will
apply broadband technologies to facilitate its growth in the broadband and
internet sector.

Broadband technology is high speed, high-bandwidth two-way data, voice and video
communications, delivered at high transmission rates up to 12 Mbps. This will
encompass:

o        Digital Subscriber Line ( DSL) technology for delivery into computers
o        Set-top box technology for delivery into TV screens
o        Wireless technology for delivery into PDAs and 3G handphones

The immediate plan of M2B in the next three years is to launch high impact, rich
media, entertainment and education content channels globally over the broadband
and 3G, comprising:

o        On-line "Television" on subscription basis - Broadband access premium
         sites
o        Advertising and Sponsorship - supporting the online broadband
         subscription sites
o        On-line shopping malls - E-commerce platforms, and alongside the
         broadband sites, on an interactive basis.

M2B's broadband sites are to consist of:

o        ENTERTAINMENT SITES (CURRENT)

         Music, movies, glamour and fashion, lifestyle (hobbies, cooking,
         personalities), documentaries, sports, health and fitness, and others.

o        EDUCATION SITES

o        BUSINESS AND CORPORATE TRAINING (CURRENT)

         Management skills, communication skills, decision making, customer
         services and sales, motivation, presentation and writing skills,
         counseling and others.

o        SCHOOL LEARNING CURRICULUMS (FUTURE)

o        HEALTH AND WELLNESS (FUTURE)

         For the broadband, M2B plans to deliver both wire and wireless
         solutions, streaming via computers, TV sets, PDAs and 3G handphones.

                                       16



<PAGE>

At the same time M2B plans to launch e-commerce channels (portals) that provide
on-line shopping but with a difference, merging two leisure activities of
shopping and entertainment, delivering the ultimate on-line experience. The
entertainment channels will drive and promote the shopping portals, and vice
versa.


M2B World has a wholly owned subsidiary, M2B Commerce Limited ( formerly known
as CRE8 IP&P ), registered in the British Virgin Islands. The acquisition of the
entity, M2B Commerce Limited with the license to operate an E-Commerce Platform
augurs well for M2B World. With this license M2B World can operate an E-Commerce
platform in Singapore and also has the first right of refusal in certain Asian
countries.

Through this E-Commerce platform M2B World will be able to provide a massive
on-line trading opportunities for consumers and companies to barter and/or
purchase goods. The marketing of this E-Commerce platform can be done through
its entertainment channels

M2B World also operates online shopping portals along side broadband
entertainment sites, this gives M2B World the added advantage of being able to
inter-link the E-Commerce platform with the online shopping portal and broadband
entertainment sites to provide an interactive experience of the
consumers/viewers. This means that consumers/viewers can "pause" watching of
videos; in order to shop or go to the E-Commerce platform to conduct a trade.
The combination of this will provide M2B World with an attractive package to
offer to the consumers/ viewers and put the company on a competitive edge.

The intention therefore is for M2B World to transfer and consolidate all of its
online shopping portals under M2B Commerce Limited.

The online shopping portal together with the E-Commerce platform which comprised
E-Commerce business of M2B World is estimated to account for 10% of total
revenue with the rest coming from subscription, advertising and E-services. The
E-Commerce platform will likely be launch in the first quarter/early second
quarter of 2005.


M2B has built and installed its broadband streaming system complete with
firewalls, load balancing, bandwidth and consumer monitoring systems, and video
streaming, video storage and web servers in Singapore.

M2B has a joint venture with FSBM Holdings Berhad (formerly known as Fujitsu
System Business Malaysia Berhad) in Malaysia. The company is registered in
Malaysia as FSBM M2B Sdn Bhd. The joint venture has been given pioneer shares in
Malaysia, and its incentives include an investment tax allowance of up to five
years. The joint venture serves as the production base for M2B, having digital
post-production suites for content production and repurposing. M2B World owns a
9.76% equity stake in FSBM M2B Sdn Bhd.

M2B is currently developing its streaming applications to stream into television
sets, through a copper wire or telephone cable and via a set top box. Testing of
set top boxes was successfully completed in 2003.

By the end of 2003, M2B had developed a capability to stream wireless broadband
and have its own digitized entertainment sites for wireless broadband
applications. In 2004, M2B will be ready to launch its broadband content sites
in the modified form for the 2.75/3G handphones.

BUSINESS MODEL

The business model in the area of broadband entertainment and services is to
provide the company with multiple streams of revenue; from Channel and program
sponsorship (advertising and branding); on-line subscriptions; channel/portal
development (digital programming services); content aggregation and syndication;
broadband consulting services; on-line shopping turnkey solutions; E-commerce
commissions; and on-line dealership.

REVENUE

Revenues for the six months ended June 30, 2004 increased to $2,124,211 from
$4,224 for the six months ended June 30, 2003. The increase of $2,119,987
resulted primarily from advertising and content syndication arising out of the
launch of newly enhanced broadband sites. The company's process of constructing
and enhancing its broadband sites resulted in additional advertising revenue of
$1,087,690 for the three months ended June 30, 2004 compared to $2,603 for the
three months ended June 30, 2003.

Beginning August and September and for the last quarter of 2003, the company
launched new broadband sites in US and Singapore. These sites included Chinese
entertainment sites as well as business and corporate training sites, in the US
and Singapore. One more new movie site was also launched in Singapore.

At the same time in the first three quarters of 2003 the company enhanced its
existing broadband content and e-commerce sites, with better design and content
mix. Therefore no or negligible revenue was earned in the six months ended June
30, 2003.

These enhancements to the existing broadband sites, and the launch of the new
broadband sites as highlighted above, saw the first reasonably significant
revenues from advertising and content syndication materializing in the last
quarter of 2003.

By June 2004, the company had secured substantial advertising revenue as it
sought to grow its subscription and e-commerce revenues.

The company acquired substantial licensing rights to content to increase its
advertising revenues, and provide it with a rich content platform to begin
securing subscription revenues in the near future. At the same time the company
increase its marketing efforts by taking up online advertising of its broadband
sites.

The Company enhanced its fashion and glamour site. This international glamour
and fashion site, the US business and corporate training site and three other
international sites attracted the bulk of the advertising revenues.

                                       17



<PAGE>


COST OF SALES

The company's process of constructing and enhancing its broadband sites resulted
in additional advertising revenue of S$1,087,690 for the three months ended June
30,2004. The cost of sales incurred for these three months was $1,004,827
resulting mainly from the acquisition of contents license rights for the
broadband sites. As a proportion of revenue, the cost of sales accounted for
92%. This was lower than the proportion of the cost of sales to revenue for the
same three months ended June 30, 2003 of 110% (revenue consisting of $2,603 and
cost consisting of $2,834).The high percentage of cost of sales to revenue for
the three months ended June 30, 2003, was attributed to the low revenue as
during these three months the company was in the process of developing new
broadband sites and enhancing the existing broadband sites. The cost was
incurred for web design and maintenance of servers.

Similarly for the six months ended June 30, 2004, the revenue was $2,124,211
mainly from advertising and content syndication arising out of the launch of
newly enhanced broadband sites. In the same period the cost of sales was
$1,120,861. As a proportion of revenue it accounted for 53%. This was much lower
than the proportion of cost of sales to revenue for the six months ended June
30,2003 of 228%( revenue at $4,224 and cost at $9,631). This large percentage of
cost of sales to revenue was due to the low revenue as advertising and content
syndication revenue were not secured yet due to the new broadband sites being
not ready while the existing broadband sites were being enhanced. The cost of
sales incurred were for web design and maintenance of servers.


DISTRIBUTION EXPENSES

Distribution expenses for the six months ended June 30, 2004 increased to
$213,416 from $4,605 in the six months ended June 30, 2003. The significant
increase was due mainly to the marketing and promotion of the broadband sites on
an international basis. The main increase in distribution expenses was incurred
in the three months ended June 30, 2004 which accounted for $204,443 compared to
$1,350 for the three months ended June 30, 2003. These was due to the marketing
activities carried out mainly in these three months.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the six months ended June 30, 2004
increased to 291,491 from $98,959 for the six months ended June 30, 2003. The
increase of $192,532 resulted primarily from legal and other professional fees
paid in the six months ended June 30, 2004. The company incurred additional
administrative fees of $110,629 in the three months ended June 30, 2004 compared
to $47,296 for the three months ended June 30, 2003. The high administrative
expenses was due primarily to the reverse merger and reorganization of M2B World
and Amaru Inc.

OPERATING INCOME

For the six months ended June 30, 2004 , the profit from income was $498,443
which increased by $607,414 from a loss of $108,971 for the six months ended
June 30, 2003. For the three months ended June 30, 2004 the company incurred a
loss of $232,209 as compared to a loss of $48,877 in the three months ended June
30, 2003. The loss was attributed to the cost of acquisition of contents license
rights and the marketing and promotion of the broadband sites. The profit from
the three months ended March 31, 2004 more than offsets the loss in the three
months ended June 30, 2004 resulting in a profit for the six months ended June
30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash at US$60,240 at June 30 2004 as compared to cash of $60,307
at December 31, 2003.

The Company believes that cash generated from its operations will be able to
cover its daily running cost and overheads.

Cash generated from operations will not be able to cover the Company's intended
growth and expansion. The Company has plans in 2004 to expand its broadband
coverage by launching new broadband sites in North America and Asia.

In North America, the Company intends to launch new broadband entertainment and
business training content sites in 2004. As of June 2004, one new entertainment
site and one new business training site had been launched in North America. In
Asia, one new business training site had been launched in 2004. At least one new
broadband entertainment site is also planned for launching streaming content on
a world wide scale in 2004. In the area of E-commerce, the Company plans to
launch one new shopping mall for health and wellness products online.

The Company has completed its prototype content for 3G (third generations )
mobile phones. The Company is working with mobile operators on the possibility
of launching this new content in the later half of 2004 or first quarter of
2005.

To achieve its plans, the Company is seeking to fund its new growth activities
through equity financing. The Company plans to use the proceeds of such
financing for expansion of its operations.

In the six months ended June 30, 2004, M2bWorld Pte. Ltd. raised $416,000 of
equity financing to fund its growth activities prior to the acquisition of
Amaru, Inc.

                                       18



<PAGE>

ITEM 3. Controls and Procedures

Our President and Treasurer/Chief Financial Officer (the "Certifying Officer")
is responsible for establishing and maintaining disclosure controls and
procedures and internal controls and procedures for financial reporting for the
Company. The Certifying Officer has designed such disclosure controls and
procedures and internal controls and procedures for financial reporting to
ensure that material information is made known to him, particularly during the
period in which this report was prepared. The Certifying Officer has evaluated
the effectiveness of the Company's disclosure controls and procedures and
internal controls and procedures for financial reporting as of June 30, 2004
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.

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. Changes in securities and use of proceeds             NONE

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 8-K during the quarter: Form 8-K\A (Items 5 and 7) filed 5/24/04.

                                       19


<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: February 7, 2005
                                 By /s/ Colin Binny
                                    --------------------------------------------
                                    President

                                 By /s/ Francis Foong Keong Kwong
                                    --------------------------------------------
                                    Chief Financial Officer


                                       20