<PAGE>

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

                                    FORM 10-Q

                                    Mark one:
                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         For Quarter Ended September 30, 2007

                                       OR

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

                    For the transition period from to _______

                        Commission File Number 000-50065

                                   Amaru, Inc.
--------------------------------------------------------------------------------
              (Exact name of registrant as specified in its charter.)

             Nevada                                   88-0490089
           ----------                                 ----------
    (State of Incorporation)              (IRS Employer Identification No.)


             112 Middle Road, #08-01 Midland House, Singapore 188970
            --------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code  (011)(65) 6332 9287
                                                    -------------------

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 an accelerated filer (as
defined in Rule 12b-2 Of the Exchange Act.

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]


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock $0.001 par value                      159,431,861 shares
-----------------------------              ---------------------------------
          (Class)                          (Outstanding at September 30, 2007)


<PAGE>

                           AMARU, INC. AND SUBSIDARIES
                       2007 Quarterly Report on Form 10-Q

                                TABLE OF CONTENTS


PART 1:  FINANCIAL INFORMATION
--------------------------------------------------------------------------------

ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets                                                 F-2
Consolidated Statements of Income                                           F-3
Consolidated Statements of Stockholders' Equity and Comprehensive
  Income                                                                  F-4,5
Consolidated Statements of Cash Flows                                       F-6
Notes to Consolidated Financial Statements                          F-7 to F-23

ITEM 2:  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION         1-8
         AND RESULTS OF OPERATIONS

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        9-10

ITEM 4:  CONTROLS AND PROCEDURES                                             11


PART 2:  OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1:  LEGAL PROCEEDINGS                                                   12
ITEM 1A: RISK FACTORS                                                  12 to 14
ITEM 2:  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS         15
ITEM 3:  DEFAULTS UPON SENIOR SECURITIES                                     15
ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS                15
ITEM 5:  OTHER INFORMATION                                                   15
ITEM 6:  EXHIBITS                                                            15

SIGNATURES                                                                   16


                                       F-1


<PAGE>
<TABLE>
<S>     <C>
                                           AMARU, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS


                                                                         SEPTEMBER 30,  DECEMBER 31,
                                                                            2007           2006
                                                                         ------------   ------------
ASSETS                                                                    (UNAUDITED)    (AUDITED)
Current assets
Cash and cash equivalents                                               $  2,602,380   $  2,294,984
Accounts receivable, net                                                   4,616,353      2,106,647
Equity securities held for trading                                         5,934,000             --
Other current assets                                                       4,250,964        539,604
Inventories                                                                1,154,854      1,689,634
                                                                        ------------   ------------
     Total current assets                                                 18,558,551      6,630,869

Non-current assets
Property and equipment, net                                                1,570,200      1,215,744
Intangible assets, net                                                    28,919,099     28,886,883
Associate                                                                  4,957,288             --
Available-for-sale of equity securities                                    9,105,413     12,158,351
                                                                        ------------   ------------
     Total non-current assets                                             44,552,000     42,260,978
                                                                        ------------   ------------

Total assets                                                            $ 63,110,551   $ 48,891,847
                                                                        ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses                                   $  2,367,116   $  2,101,970
Other payables                                                               157,100             --
Advance from related party                                                   100,695             --
Finance lease liabilities                                                     10,477             --
Income taxes payable                                                           5,428         58,473
                                                                        ------------   ------------
     Total current liabilities                                             2,640,816      2,160,443

Non-current liabilities
Deferred tax liabilities                                                   2,718,624      1,684,158
Hire purchase creditor                                                        58,498             --
                                                                        ------------   ------------
     Total non-current liabilities                                         2,777,122      1,684,158
                                                                        ------------   ------------
Total liabilities                                                          5,417,938      3,844,601

Minority interests                                                         4,174,850             --

Commitments                                                                       --             --

Stockholders' equity
Preferred stock (par value $0.001) 5,000,000 shares authorized;
     0 shares issued and outstanding at September 30, 2007 and
     December 31, 2006, respectively                                              --             --
Common stock (par value $0.001) 200,000,000 shares authorized;
     159,431,861 and 153,638,528 shares issued and outstanding at
     September 30, 2007 and December 31, 2006, respectively                  159,431        153,638
Additional paid-in capital                                                42,918,666     38,942,126
Subscribed common stock, 0 and 420,000 shares at September 30, 2007
     and December 31, 2006, respectively                                          --        189,000
Retained earnings                                                          6,747,032      2,084,908
Accumulated other comprehensive income                                     3,692,634      3,677,574
                                                                        ------------   ------------
     Total stockholders' equity                                           53,517,763     45,047,246
                                                                        ------------   ------------
Total liabilities and stockholders' equity                              $ 63,110,551   $ 48,891,847
                                                                        ============   ============

                       See accompanying notes to consolidated financial statements

                                                   F-2


<PAGE>

                                                  AMARU, INC. & SUBSIDIARIES
                                              CONSOLIDATED STATEMENTS OF INCOME
                                                         (UNAUDITED)

                                                              FOR THE NINE MONTHS ENDED         FOR THE THREE MONTHS ENDED
                                                            ------------------------------    ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,
                                                                2007             2006             2007              2006
                                                            -------------    -------------    -------------    -------------
Revenue:
   Entertainment                                            $  15,036,991    $   6,305,460    $       2,302    $   3,089,981
   Digit gaming                                                16,481,642       17,310,828        6,021,851        6,216,485
   Other income                                                        --            9,794               --            8,650
                                                            -------------    -------------    -------------    -------------
     Total revenue                                             31,518,633       23,626,082        6,024,153        9,315,116


Cost of services                                              (17,553,771)     (17,056,214)      (6,261,636)      (6,082,911)
                                                            -------------    -------------    -------------    -------------
Gross profit (loss)                                            13,964,862        6,569,868         (237,483)       3,232,205

Distribution costs                                               (677,357)        (857,412)        (171,704)        (297,883)
Administrative expenses                                        (5,152,899)      (3,278,355)      (1,631,683)      (1,596,344)
                                                            -------------    -------------    -------------    -------------
     Total expenses                                            (5,830,256)      (4,135,767)      (1,803,388)      (1,894,227)


Income (loss) from operations                                   8,134,606        2,434,101       (2,040,871)       1,337,978


Other expenses:
   Interest expenses                                                 (678)              --             (507)              --
   Interest income                                                 36,489          109,336           10,388           51,465
   Loss on disposal of equipment                                     (152)              --               --               --
   Gain on dilution of interest in subsidiary                   2,483,871               --               --               --
   Net change in fair value of financial assets
    at fair value through Profit or Loss-held for trading      (4,002,000)              --       (8,322,000)              --
   Share of loss of associate                                      (8,827)              --           (6,397)              --
                                                            -------------    -------------    -------------    -------------
Income (loss) before income taxes                               6,643,309        2,543,437      (10,346,745)       1,389,443
(Provision) Benefit for income taxes                             (902,464)        (405,539)         683,968         (472,004)
                                                            -------------    -------------    -------------    -------------
Net income (loss)                                           $   5,740,845    $   2,137,898    $  (9,662,777)   $     917,439
                                                            =============    =============    =============    =============


Attributable to:
Equity holders of the Company                               $   4,662,124    $   2,137,898    $  (7,966,020)   $     917,439
Minority interests                                              1,078,721               --       (1,696,757)              --
                                                            -------------    -------------    -------------    -------------
Net income (loss)                                           $   5,740,845    $   2,137,898    $  (9,662,277)   $     917,439
                                                            =============    =============    =============    =============

Net income per share
- basic and diluted                                         $        0.01    $        0.01    $       (0.06)   $        0.01
                                                            =============    =============    =============    =============
Weighted average number of common shares outstanding
- basic and diluted                                           155,577,356      146,563,354      158,794,180      153,605,863
                                                            =============    =============    =============    =============



                                 See accompanying notes to consolidated financial statements

                                                             F-3


<PAGE>

                                         AMARU, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                                  (UNAUDITED)



                        PREFERRED STOCK            COMMON STOCK
                   ------------------------  ------------------------
                     NUMBER         PAR                      PAR       ADDITIONAL   SUBSCRIBED
                       OF          VALUE      NUMBER OF      VALUE      PAID-IN       COMMON       RETAINED
                     SHARES       ($0.001)     SHARES       ($0.001)    CAPITAL       STOCK        EARNINGS
                   -----------  -----------  -----------  -----------  -----------  -----------   -----------

Balance at
  December 31,
  2005                      --           --  125,591,120  $   125,591  $14,642,550  $ 4,256,880   $   834,379

Common stock
  issued for
  cash                      --           --   15,339,568       15,339   11,255,404           --            --

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

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           --            --

Common stock
  subscribed
  for services
  (420,000 shares)          --           --           --           --           --      189,000            --

Net income                  --           --           --           --           --           --     1,250,529

Change in
  fair value
  of available
  for-sale-equity
  securities
  net of tax                --           --           --           --           --           --            --


Comprehensive
  income                    --           --           --           --           --           --            --
                   -----------  -----------  -----------  -----------  -----------  -----------   -----------
Balance at
  December 31,
  2006                      --           --  153,638,528  $   153,638  $38,942,126  $   189,000   $ 2,084,908
                   ===========  ===========  ===========  ===========  ===========  ===========   ===========

                          See accompanying notes to consolidated financial statements

                                                     F-4a
continued below:


<PAGE>
continued from above

                          AMARU, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                   (UNAUDITED)


                       ACCUMULATED OTHER
                     COMPREHENSIVE INCOME
                   ------------------------
                     CURRENCY                                TOTAL
                    TRANSLATION  FAIR VALUE    MINORITY   SHAREHOLDERS'
                      RESERVE      RESERVE     INTEREST      EQUITY
                    -----------  -----------  -----------  -----------

Balance at
  December 31,
  2005              $    12,927  $        --  $        --  $19,872,327

Common stock
  issued for
  cash                       --           --           --   11,270,743

Common stock
  issued for
  services                   --           --           --       60,000

Subscribed
  common stock
  issued                     --           --           --           --

Common stock
  issued in
  exchange for
  acquisition
  of film library            --           --           --    8,740,000

Common stock
  subscribed
  for services
  (420,000 shares)           --           --           --      189,000

Net income                   --           --           --    1,250,529

Change in
  fair value
  of available
  for-sale-equity
  securities
  net of tax                 --    3,664,647           --    3,664,647
                                                           -----------

Comprehensive
  income                     --           --           --    4,915,176
                    -----------  -----------  -----------  -----------
Balance at
  December 31,
  2006              $    12,927  $ 3,664,647  $        --  $45,047,246
                    ===========  ===========  ===========  ===========

           See accompanying notes to consolidated financial statements

                                      F-4b



<PAGE>

                                                 AMARU, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                                          (UNAUDITED)


                                  PREFERRED STOCK             COMMON STOCK
                            --------------------------  --------------------------
                               NUMBER         PAR                         PAR       ADDITIONAL     SUBSCRIBED
                                 OF          VALUE       NUMBER OF       VALUE        PAID-IN        COMMON       RETAINED
                               SHARES       ($0.001)       SHARES       ($0.001)      CAPITAL        STOCK        EARNINGS
                            ------------  ------------  ------------  ------------  ------------  ------------   ------------

Balance at
  December 31,
  2006                                --            --   153,638,528  $    153,638  $ 38,942,126  $    189,000   $  2,084,908

Subscribed common
  Stock issued                        --            --       420,000           420       188,580      (189,000)            --

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

Common stock issued
  In exchange for
  Prepayment of investment            --            --     5,333,333         5,333     3,728,000            --             --


Contribution from
  minority interest                   --            --            --            --            --            --             --

Gain on dilution of
  interest in
  subsidiary                          --            --            --            --            --            --             --

Net income                            --            --            --            --            --            --      4,662,124

Change in fair value
  of available-for-sale
  equity securities
  net of tax                          --            --            --            --            --            --             --

Comprehensive
  income                              --            --            --            --            --            --             --
                            ------------  ------------  ------------  ------------  ------------  ------------   ------------
Balance at
September 30,                         --            --   159,431,861  $    159,431  $ 42,918,666            --   $  6,747,032
 2007                       ============  ============  ============  ============  ============  ============   ============

                                  See accompanying notes to consolidated financial statements

                                                             F-5a
continued below

<PAGE>
continued from above

                             AMARU, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                      (UNAUDITED)

                                 ACCUMULATED OTHER
                                COMPREHENSIVE INCOME
                              --------------------------
                               CURRENCY                                     TOTAL
                              TRANSLATION    FAIR VALUE    MINORITY     STOCKHOLDERS'
                                RESERVE       RESERVE      INTEREST        EQUITY
                              ------------  ------------  ------------   ------------

Balance at
  December 31,
  2006                        $     12,927  $  3,664,647  $         --   $ 45,047,246

Subscribed common
  Stock issued                          --            --            --             --

Common stock issued
  for services                          --            --            --         60,000

Common stock issued
  In exchange for
  Prepayment of investment              --            --            --      3,733,333


Contribution from
  minority interest                     --            --     5,580,000      5,580,000

Gain on dilution of
  interest in
  subsidiary                            --            --    (2,483,871)    (2,483,871)

Net income                              --            --     1,078,721      5,740,845

Change in fair value
  of available-for-sale
  equity securities
  net of tax                            --        15,060            --         15,060
                                                                         ------------
Comprehensive
  income                                --            --            --      5,755,905
                              ------------  ------------  ------------   ------------
Balance at
September 30,                 $     12,927  $  3,679,707  $  4,174,850   $ 57,692,613
 2007                         ============    ==========   ===========   ============

              See accompanying notes to consolidated financial statements

                                         F-5b




<PAGE>

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

                                                                     FOR THE NINE MONTHS ENDED
                                                                   ----------------------------
                                                                   SEPTEMBER 30,   SEPTEMBER 30,
                                                                       2007            2006
                                                                   ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                     $  5,740,845    $  2,137,898
    Adjustments for:
    Amortization                                                      2,308,179         716,125
    Depreciation                                                        406,141         147,781
    Loss on disposal of equipment                                           152              --
    Acquisition of investment in exchange for account receivable    (11,636,000)     (3,000,000)
    Gain on dilution of interest in a subsidiary                     (2,483,871)             --
    Net change in fair value of financial assets at fair value
     through Profit or Loss-held for trading                          4,002,000              --
    Common stock issued for services                                     60,000          60,000
    Common stock issued in exchange for prepayment of investment      3,733,333              --
    Deferred tax                                                        902,464              --
    Share of loss of associate                                            8,827              --

Changes in operation assets and liabilities
    Accounts receivable                                              (2,509,706)        441,791
    Inventories                                                         534,780        (695,352)
    Other current assets                                             (3,711,360)       (879,421)
    Accounts payable and accrued expenses                               265,146         158,202
    Other payables                                                      157,100              --
    Income taxes payable                                                (53,045)        405,539
                                                                   ------------    ------------
Net cash used in operating activities                                (2,275,015)       (507,437)

CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from disposal of equipment                                     691              --
    Acquisition of equipment                                           (761,440)       (708,393)
    Acquisition of associate                                            (66,115)             --
    Acquisition of investments                                               --        (638,458)
    Acquisition of intangible assets                                 (2,340,395)     (8,521,180)
    Deposit paid for an investment                                           --      (2,153,196)
                                                                   ------------    ------------
Net cash used in investing activities                                (3,167,259)    (12,021,227)

CASH FLOWS FROM FINANCING ACTIVITIES
   Repayment of balances due to related party                                --         (58,392)
   Proceeds from related party                                          100,695              --
   Proceeds from hire purchase creditor                                  68,975              --
   Proceeds from issuance of common stock                                    --      11,272,630
   Capital contributed by minority shareholders                       5,580,000              --
                                                                   ------------    ------------
Net cash provided by financing activities                             5,749,670      11,214,238

Effect of exchange rate changes on cash and cash equivalents                 --              --
                                                                   ------------    ------------
Cash flows from all activities                                          307,396      (1,314,426)

Cash and cash equivalents at beginning of period                      2,294,984       4,776,819
                                                                   ------------    ------------

Cash and cash equivalents at end of period                         $  2,602,380    $  3,462,393
                                                                   ============    ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES:
Acquisition of investments (1)                                     $ 11,636,000              --
                                                                   ============    ============
Common stock in exchange for acquisition of film library           $         --    $  8,740,000
                                                                   ============    ============
Common stock in exchange for prepayment of investment                 3,733,333              --
                                                                   ============    ============
Subscribed common stock issued                                     $         --    $  4,256,880
                                                                   ============    ============

(1)    On February 15, 2007, the Company through its subsidiary, M2B World Asia Pacific Pte. Ltd
       subscribed for additional 4% interest in an investment for $1.7 million in exchange for
       the settlement of an accounts receivables from the investee company.

       On June 27, 2007, M2B World Holdings Limited, a wholly owned subsidiary of M2B World Asia
       Pacific Pte. Ltd, received $2.7 million in quoted equity securities in exchange for
       accounts receivable from a company, as part of the sales and purchase agreement with the
       company. Subsequent to June 27, 2007, the remaining shares were received.

(2)    On July 11, 2007, Tremax International Limited, a wholly owned subsidiary of Amaru Inc,
       issued 5,333,333 shares of common stock in exchange for an investment in a company, as
       part of the sales and purchase agreement with the company.

                   See accompanying notes to consolidated financial statements

                                               F-6

</TABLE>

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


1.    BASIS OF PRESENTATION

      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 multiple 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 and 3G devices
            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   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, 2007, 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, 2006.


                                       F-7

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


      1.3   Recent Accounting Standards and Pronouncements

            In 2006, the FASB issued Interpretation No. 48 (FIN 48), "
            Accounting for Uncertainty in Income Taxes - an Interpretation of
            FASB Statement No. 109 Accounting for Income Taxes." FIN 48
            clarifies the accounting for uncertainty in income taxes recognized
            in an enterprise's financial statements in accordance with SFAS 109.
            FIN 48 also prescribes a recognition threshold and measurement
            attribute for the financial statement recognition and measurement of
            a tax position taken or expected to be taken in a tax return. FIN 48
            provides guidance on de-recognition, classification, interest and
            penalties, accounting in interim periods, disclosure and transition.
            The Company adopted FIN 48 as of January 1, 2007, as required.

            The current Company policy classifies any interest recognized on an
            underpayment of income taxes as interest expense and classifies any
            statutory penalties recognized on a tax position taken as selling,
            general and administrative expense. There were no interest or
            selling, general and administrative expenses accrued or recognized
            related to income taxes for the nine months ended September 30,
            2007. The Company has not taken a tax position that would have a
            material effect on September 30, 2007 or during the prior three
            years applicable under FIN 48. It is determined not to be reasonably
            possible for the amounts of unrecognized tax benefits to
            significantly increase or decrease within 12 months of the adoption
            of FIN 48. The Company is currently subject to a three year statute
            of limitations by major tax jurisdictions.




                                       F-8

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006



2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      2.1   Principles of Consolidation

            The consolidated financial statements include the financial
            statements of Amaru, Inc. and its majority owned subsidiaries. All
            significant intercompany balances and transactions have been
            eliminated in consolidation. In addition, the Company evaluates its
            relationships with other entities to identify whether they are
            variable interest entities as defined by FASB Interpretation No. 46
            (R) Consolidation of Variable Interest Entities ("FIN 46R") and to
            assess whether it is the primary beneficiary of such entities. If
            the determination is made that the Company is the primary
            beneficiary, then that entity is included in the consolidated
            financial statements in accordance with FIN 46(R).


      2.2   Use of Estimates

            The preparation of the consolidated financial statements in
            accordance with generally accepted accounting principles requires
            management to make estimates and assumptions relating to the
            reported amounts of assets and liabilities and the disclosure of
            contingent assets and liabilities at the date of the consolidated
            financial statements and the reported amounts of revenues and
            expenses during the period. Significant items subject to such
            estimates and assumptions include carrying amount of property and
            equipment, intangibles, valuation allowances of receivables and
            inventories. 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   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 consolidated statements of
            cash flows, cash and cash equivalents consist of cash on hand and
            deposits in banks, net of outstanding bank overdrafts.

            The Company monitors its liquidity risk and maintains a level of
            cash and cash equivalents deemed adequate by management to finance
            the Company's operations and to mitigate the effects of fluctuations
            in cash flows.






                                       F-9



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


      2.4   Trade Accounts Receivable

            Trade accounts receivable, which generally have 30 to 90 days terms,
            are recorded at the invoiced amount less an allowance for any
            uncollectible amounts (if any) and do not bear interest. Amounts
            collected on trade accounts receivable are included in net cash
            provided by operating activities in the consolidated statements of
            cash flows. The allowance for doubtful accounts is the Company's
            best estimate of the amount of probable credit losses in the
            Company's existing accounts receivable. Account balances are charged
            off against the allowance after all means of collection have been
            exhausted and the potential for recovery is considered remote. Bad
            debts are written off as incurred. The Company does not have any
            off-balance sheet credit exposure related to its customers.

            The Company's primary exposure to credit risk arises through its
            trade accounts receivable. The credit risk on liquid funds is
            limited because the counterparties are banks with high credit
            ratings assigned by international credit-rating agencies.

            Entertainment revenues were concentrated with one customer totaling
            99.8% of these related revenues for the nine months ended September
            30, 2007 and four customers totaling 96.7% of these related revenues
            for the nine months ended September 30, 2006.

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

<TABLE>
<S>                 <C>
                                              FOR THE NINE MONTHS ENDED   FOR THE THREE MONTHS ENDED
                                            --------------------------    --------------------------

                                            SEPTEMBER 30,   SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
                                                2007            2006          2007          2006
                                            ------------    -----------   ------------  ------------

            Sales outside of the U.S.        $31,518,290    $23,626,082     $ 6,024,096   $  9,315,116

            Services purchased outside      $ 17,449,405    $17,056,214     $ 6,189,248   $  6,082,911
            of the U.S.
</TABLE>

      2.5   Inventories

            Inventories are carried at the lower of cost and net realizable
            value. Cost is calculated using first-in, first-out ("FIFO") method
            and comprises all costs of purchase, costs of conversion and other
            costs incurred in bringing the inventories to their present location
            and condition. Inventories comprised primarily of finished products
            used in the Company's IPTV service.

      2.6   Property and Equipment

            Property and equipment are stated at cost. Depreciation is computed
            using the straight-line method over the estimated useful lives of
            the assets for financial reporting purposes. Expenditures for major
            renewals and betterments that extend the useful lives are
            capitalized. Expenditures for normal maintenance and repairs are
            expensed as incurred. The cost of assets sold or abandoned and the
            related accumulated depreciation are eliminated from the accounts
            and any gains or losses are reflected in the accompanying
            consolidated statement of income of the respective period. The
            estimated useful lives of the assets range from 3 to 5 years.

                                      F-10



<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


      2.7   Intangible Assets

            Intangible assets consist of film library, gaming and software
            license and product development costs. Intangible assets which were
            purchased and have indefinite lives are stated at cost less
            impairment losses and are tested for impairment at least annually
            in accordance with the provisions of FASB Statement No. 142,
            Goodwill and Other Intangible Assets.

            Intangible assets which were purchased for a specific period are
            stated at cost less accumulated amortization and impairment losses.
            Such intangible assets are reviewed for impairment in accordance
            with FASB Statement No. 144, Accounting for Impairment or Disposal
            of Long-Lived Assets. Such intangible assets are amortized over the
            period of the contract, which is two to 18 years.

            Included in the gaming license are the rights to a digit games
            license in Cambodia. The license is for a minimum period of 18 years
            commencing from September 1, 2005, with an option to extend for a
            further 5 years or such other period as may be mutually agreed.

            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 as product development costs.
            The Company projects that these development costs will be useful for
            up to five years before additional significant development needs to
            be done.

      2.8   Associate

            An associate is an entity over which the Company has significant
            influence and that is neither a subsidiary nor an interest in a
            joint venture. Significant influence is the power to participate in
            the financial and operating policy decisions of the investee but is
            not control or joint control over those policies.

            The results and assets and liabilities of associates are
            incorporated in these financial statements using the equity method
            of accounting. Under the equity method, investments in associates
            are carried in the consolidated balance sheet at cost as adjusted
            for post-acquisition changes in the Company's share of the net
            assets of the associate, less any impairment in the value of
            individual investments. Losses of an associate in excess of the
            group's interest in that associate (which includes any long-term
            interests that, in substance, form part of the Company's net
            investment in the associate) are not recognised, unless the group
            has incurred legal or constructive obligations or made payments on
            behalf of the associate.

            Any excess of the cost of acquisition over the Company's share of
            the net fair value of the identifiable assets, liabilities and
            contingent liabilities of the associate recognised at the date of
            acquisition is recognised as goodwill. The goodwill is included
            within the carrying amount of the investment and is assessed for
            impairment as part of the investment. Any excess of the Company's
            share of the net fair value of the identifiable assets, liabilities
            and contingent liabilities over the cost of acquisition, after
            reassessment, is recognised immediately in the consolidated profit
            and loss statement.

            Where a group entity transacts with an associate of the group,
            profits and losses are eliminated to the extent of the group's
            interest in the relevant associate.


                                      F-11



<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


      2.9   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").

            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.






                                      F-12


<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006

      2.10  Valuation of Long-Lived Assets

            The Company evaluates the carrying value of long-lived assets to be
            held and used, other than intangible assets with indefinite lives,
            when events or circumstances warrant such a review. No impairment
            losses were recorded for the nine months ended September 30, 2007
            and the three months ended September 30, 2007.

      2.11  Investments at fair value through profit or loss

            An instrument is classified as at fair value through profit or loss
            if it is held for trading or is designated as such upon initial
            recognition. Financial instruments are designated as fair value
            through profit or loss if the Company manages such investments and
            makes purchase and sales decisions based on their fair value. Upon
            initial recognition, attributable transaction costs are recognised
            in the income statement when incurred. Financial instruments at fair
            value through profit or loss are measured at fair value, and changes
            therein are recognized in the income statement.


      2.12  Advances from Related Party

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


      2.13  Leases

            Leased assets in which the Company assumes substantially all the
            risks and rewards of ownership are classified as finance leases.
            Upon initial recognition, property, plant and equipment acquired
            through finance leases are capitalized at the lower of its fair
            value and the present value of the minimum lease payments.
            Subsequent to recognition, the asset is accounted for in accordance
            with the accounting policy applicable to that asset. Leased assets
            are depreciated over the shorter of the lease term and their useful
            lives. Lease payments are apportioned between finance expense and
            reduction of the lease liability. The finance expense is allocated
            to each period during the lease term so as to produce a constant
            periodic rate of interest on the remaining balance of the liability.
            Contingent lease payments are accounted for by revising the minimum
            lease payments over the remaining term of the lease when the lease
            adjustment is confirmed.


      2.14  Foreign Currency Translation

            Transactions in foreign currencies are translated at foreign
            exchange rates ruling at the dates of the transactions. Monetary
            assets and liabilities denominated in foreign currencies at the
            balance sheet date are translated into US dollars at foreign
            exchange rate ruling at that date. Non-monetary assets and
            liabilities measured at cost in a foreign currency are translated
            using exchange rates at the date of the transaction. Foreign
            currency transaction gains and losses are included in determining
            net income and were not significant.

      2.15  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 revenue
            are recognized as earned.

      2.16  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
            it was incurred.



                                      F-13



<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006



      2.17  Income Taxes

            Deferred income taxes are determined using the liability method in
            accordance with Statement of Financial Accounting Standards ("SFAS")
            No. 109, Accounting for Income Taxes. Deferred tax assets and
            liabilities are recognized for the future tax consequences
            attributable to differences between the financial statement carrying
            amounts of existing assets and liabilities and their respective tax
            bases. Deferred income taxes are measured using enacted tax rates
            expected to apply to taxable income in years in which such temporary
            differences are expected to be recovered or settled. The effect on
            deferred income taxes of a change in tax rates is recognized in the
            statement of income of the period that includes the enactment date.
            In addition, a valuation allowance is established to reduce any
            deferred tax asset for which it is determined that it is more likely
            than not that some portion of the deferred tax asset will not be
            realized.


    2.18    Earnings (Loss) 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 for the Company's cash, other current assets,
            accounts payable, accrued expenses and other liabilities approximate
            their fair value.


    2.20    Advertising

            The cost of advertising is expensed as incurred.  For the nine
            months ended September 30, 2007 and 2006, the Company incurred
            advertising expenses of $408,857 and $629,573 respectively. For
            the three months ended September 30, 2007 and 2006, the Company
            incurred advertising expenses of $91,420 and $207,742 respectively.





                                      F-14



<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


     2.21  Reclassifications

            Certain amounts in the previous periods presented have been
            reclassified to conform to the current year financial statement
            presentation.



3.  EQUITY SECURITIES HELD FOR TRADING INVESTMENT

                                                   SEPTEMBER 30,    DECEMBER 31,
                                                       2007             2006
                                                   ------------     ------------
    Quoted equity security, at fair value          $  5,934,000     $        --
                                                   ============     ============

    The fair value of quoted security is based on the quoted closing market
    price on the date of Sale and Purchase agreement. The investment in quoted
    equity security at fair value includes an impairment loss of US$4 million.

    The investments in quoted equity securities comprised of 69,000,000 common
    shares of PT Agis at the market value of $0.086 per share.

    The Company's equity securities held for trading investment is denominated
    in Indonesian Ruppiah.

4.  OTHER CURRENT ASSETS

    Other current assets consist of the following:

                                                   SEPTEMBER 30,   DECEMBER 31,
                                                       2007            2006
                                                   -------------   ------------

      Prepayments                                  $     202,076        177,278
      Prepayment for investment                        3,733,333             --
      Deposits                                           193,483        172,882
      Other receivables                                  122,072        189,444
                                                   -------------   ------------
                                                   $   4,250,964        539,604
                                                   =============   ============

5.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

                                                   SEPTEMBER 30,   DECEMBER 31,
                                                       2007            2006
                                                   -------------   ------------

      Office equipment                             $     781,254        721,085
      Motor vehicle                                      112,563         11,000
      Furniture, fixture and fittings                    589,773        556,069
      Set-top boxes                                      830,828        265,681
                                                   -------------   ------------
                                                       2,314,418      1,553,835
      Accumulated depreciation                          (744,218)      (338,091)
                                                   -------------   ------------
                                                   $   1,570,200   $  1,215,744
                                                   =============   ============


      Depreciation expense was $406,141 for the nine months ended September 30,
      2007 and $147,781 for nine months ended September 30, 2006.



                                      F-15


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


6.    INTANGIBLE ASSETS

      Intangible assets consist of the following:

                                                   SEPTEMBER 30,   DECEMBER 31,
                                                       2007            2006
                                                   -------------   ------------
      INDEFINITE LIVES
      Film library                                 $  17,729,172   $ 17,674,378
      Software license                                 2,420,227      2,420,227
                                                   -------------   ------------
                                                      20,149,399     20,094,605

      DEFINITE USEFUL LIVES
      Film library                                     5,224,078      2,947,564
      Gaming license                                   7,090,000      7,090,000
      Product development expenditures                   678,616        669,529
                                                   -------------   ------------
                                                      12,992,694     10,707,093
      Accumulated amortization                        (4,222,994)    (1,914,815)
                                                   -------------   ------------
                                                       8,769,700      8,792,278
                                                   -------------   ------------
                                                   $  28,919,099   $ 28,886,883
                                                   =============   ============

      Intangible assets purchased and have indefinite lives are stated at cost
      less impairment losses are tested for impairment at least annually in
      accordance with the provisions of FASB Statement No. 142, Goodwill and
      Other Intangible Assets.

      FILM LIBRARY WITH INDEFINITE LIVES

      Intangible assets of the Company which have been classified as having
      indefinite useful lives relate to film library rights acquired for
      perpetuity by the Company.

      Film costs are stated at the lower of estimated net realizable value
      determined on an individual film basis, or cost. Film costs represent the
      acquisition of film rights for cash.

      The Company maintains distribution rights to these films for which it has
      no financial obligations to third parties.

      The Company is currently directing all its time and efforts towards
      building its broadband business.

      The Company evaluates the recoverability of its long lived assets in
      accordance with the provisions of Statement of Financial Accounting
      Standards No. 142 "Goodwill and the Intangible Assets," in which
      intangible assets purchased and which have indefinite lives are stated at
      cost less impairment losses and are tested for impairment at least
      annually.

      Recoverable amount is the higher of fair value less costs to sell and
      value in use. In assessing value in use, the estimated future cash flows
      are discounted to their present value using a pre-tax discount rate that
      reflects current market assessments of the time value of money and the
      risks specific to the asset. The use of a discounted cash flow model often
      involves the use of significant estimates and assumptions. Estimates are
      based upon assumptions about future demand and market conditions and can
      vary significantly. When necessary, the Company uses internal cash flow
      estimates, quoted market prices or appraisals, as appropriate, to
      determine fair value. If the recoverable amount of an asset is estimated
      to be less than its carrying amount, the carrying amount of the asset is
      reduced to its recoverable amount. An impairment loss is recognized
      immediately in the profit and loss statement, unless the relevant asset is
      carried at a revalued amount, in which case the impairment loss is treated
      as a revaluation decrease.

                                      F-16


<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006



      The estimation of fair value is in accordance with AICPA Statement of
      Position 00-2, Accounting by Producers and Distributors of Film. Actual
      results may differ from estimates and as a result the estimation of fair
      values may be adjusted in the future.

      Valuations were performed for the assessments of impairment of the
      Company's 100% ownership of the film library, which reflected a higher
      value from its cost. The methods of valuation used by the Company
      consisted of a discounted cash flow model, as well as sales transactions
      comparison method and market earnings/multiples method. Based on careful
      analysis of information available, the estimation for the investment value
      of the film library currently ranges from $400 million to $663 million.


      ASSETS WITH DEFINITE USEFUL LIVES

      Intangible assets which were purchased for a specific period are stated at
      cost less accumulated amortization and impairment losses. Such intangible
      assets are reviewed for impairment in accordance with FASB Statement No.
      144, Accounting for Impairment or Disposal of Long-Lived Assets. Such
      intangible assets are amortized over the period of the contract, which is
      two to 18 years.

      Included in the gaming license are 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. 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 as product
      development costs. The Company projects that these developments costs will
      be useful for up to five years before additional significant development
      needs to be done.

      Amortization expense was $2,308,179 for the nine months ended September
      30, 2007 and $716,125 for the nine months ended September 30, 2006.


7.    ASSOCIATE
                                                     SEPTEMBER 30, DECEMBER 31,
                                                         2007          2006
                                                   -------------   ------------

      Fair value of investment in associate        $   3,693,650   $         --
      Goodwill                                         1,272,465             --
      Share of post-acquisition loss                      (8,827)            --
                                                   -------------   ------------
                                                   $   4,957,288   $         --
                                                   =============   ============

      Details of the Company's associate at September 30, 2007 are as follows:

      Name of Business: 121 View Corporation (SEA) Ltd

      Place of Incorporation: British Virgin Islands

      Principle of Activity: Digital signage solutions

      Proportion of        :        SEPTEMBER 30, 2007    DECEMBER 31, 2006
      Ownership Interest            ------------------    -----------------
                                         30.1%                   25.0%

      One of the directors of the Company has interests in the associated
      company and one of the directors of the Company is also a director in the
      associated company.

      On April 20, 2007, M2B World Asia Pacific Pte. Ltd subscribed for
      additional 0.2% interest in the investee company, for an investment of
      $66,115.


                                      F-17



<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006



      Summarised financial information in respect of the Company's associate is
      set out below:

                                                     SEPTEMBER 30, DECEMBER 31,
                                                         2007          2006
                                                   -------------   ------------

      Total assets                                 $   9,658,949   $         --
      Total liabilities                                 (297,502)            --
                                                   -------------   ------------
      Net assets                                   $   9,361,447   $         --
                                                   =============   ============
      Company's share of associate's net assets    $   2,817,796             --
                                                   =============   ============
      Revenue                                      $     152,684             --
                                                   =============   ============

      Loss for the period                          $     (27,537)            --
                                                   =============   ============
      Company's share of associate's loss for
      the period                                   $      (8,827)            --
                                                   =============   ============


8.    AVAILABLE-FOR-SALE EQUITY SECURITIES

      Available-for-sale equity securities consist of the following:

                                                   SEPTEMBER 30,   DECEMBER 31,
                                                        2007           2006
                                                   -------------   ------------

      Quoted equity securities                     $   5,823,136   $  5,676,074
      Unquoted equity securities                       3,282,277      6,482,277
                                                   -------------   ------------
                                                   $   9,105,413   $ 12,158,351
                                                   =============   ============


      The investments in quoted equity securities comprised of 36,428,571 common
      shares of Auston International Group Ltd (Auston). As of September 3,
      0007, the market value of the Auston shares was $0.16 per share.

      The unquoted equity securities classified as available-for-sale, with a
      carrying value of $3,282,277 and $6,482,277 as of September 30, 2007 and
      December 31, 2006, respectively, are measured at cost less impairment
      losses as there is no quoted market price in an active market and other
      methods of determining fair value do not result in a reasonable estimate.

      The Company explores other alternatives and considers using other
      valuation techniques to establish the fair value. Valuation techniques
      include using recent arm's length market transactions between
      knowledgeable and willing parties. However, as the key investments held by
      the Company operate in Singapore, there are no established markets in
      Singapore for similar investments for the Company to obtain comparables
      and observable data to carry out a reliable fair valuation.



                                      F-18


<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006

9.    COMMITMENTS

      As of the balance sheet date, the Company has the following capital
      commitments:

                                                   SEPTEMBER 30,   DECEMBER 31,
                                                        2007           2006
                                                   -------------   ------------
      CAPITAL COMMITMENTS:
      Contracted but not provided for
             Film library                          $   4,294,375   $  4,254,372
             Set-top boxes                             2,567,340      2,562,000
             Other equipments                            499,863             --
                                                   -------------   ------------
                                                   $   7,361,578  $   6,816,372
                                                   =============  =============


      The Company has several noncancelable operating leases, primarily for
      office spaces, that expire over the next five years.

      As of September 30, 2007, the Company has commitments for future minimum
      lease payments under non-cancellable operating leases (with initial or
      remaining lease terms in excess of one year) as follows:

                                                       OPERATING
                                                        LEASES
                                                      -----------
      Year ending December 31,
          2007                                            111,149
          2008                                            463,796
          2009                                            189,729
                                                      -----------
          Total minimum lease payments                $   764,674
                                                      ===========

      Rent expense totaled $252,585 for the nine months ended September 30, 2007
      and 150,723 for the nine months ended September 30, 2006.

10.   CAPITAL STOCK

      (a)   Common stock issued for services

            On March 19, 2007, 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 rendered to the Company.

      (b)   Common stock issued to employees

            On December 20, 2006, 420,000 shares of common stock were approved
            for issuance at a price of $0.45 a share to its employees. These
            shares were issued on March 2, 2007 to the employees for their
            services to the Company pursuant to the Company's 2004 Equity
            Compensation Plan (the "Plan"). The shares of common stock issued to
            the employees pursuant to the Plan have been registered on the
            registration statement on Form S-8.

      (c)   Common stock issued for acquisition of investment

            On July 11, 2007, 5,333,333 shares of common stock of the Company
            were approved for issuance for the acquisition of an equity
            investment in a company. The market value of the Company's shares at
            July 11, 2007 was $0.70 per share.






                                      F-19


<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006



11.   INCOME TAXES

      The Company files separate tax returns for Singapore and the United
      States of America.

      The Company had available approximately $5,234,949 of unused U.S. net
      operating loss carry-forwards at September 30, 2007, that may be applied
      against future taxable income. These net operating loss carry-forwards
      expire for U.S. income tax purposes beginning in 2026. There is no
      assurance 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. As of September 30, 2007 the Company maintained a valuation
      allowance for the U.S. deferred tax asset due to uncertainties as to the
      amount of the taxable income from U.S. operations that will be realized.

      The Company had available approximately $nil of unused Singapore capital
      allowance carry-forwards at September 30, 2007, 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.


12.   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>
2007
                                   Entertainment    Digit Gaming       Other           Total
                                   ------------    ------------    ------------   ------------
Revenues from external customers   $ 15,036,991    $ 16,481,642     $        --    $ 31,518,633
Interest revenue                   $     36,489    $          --    $        --    $     36,489
Interest expenses                  $        678    $          --    $        --    $        678
Depreciation and amortization      $  2,490,403    $     223,917    $        --    $  2,714,320
Segment profit                     $  8,135,309    $     320,323    $        --    $  8,455,632
Segment assets                     $ 53,361,216    $   7,325,817    $ 2,423,518    $ 63,110,551
Expenditures for segment assets    $  3,101,835    $         --     $        --    $  3,101,835
</TABLE>



                                      F-20

<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006




Reconciliation :-

REVENUES
Total revenues for reportable segments                            $  31,518,633
Other revenue                                                     $          --
                                                                  -------------
         Total consolidated revenues                              $  31,518,633
                                                                  -------------
INTEREST REVENUE
Total interest revenue for reportable segments                    $      36,459
Corporate interest revenue                                        $          30
                                                                  -------------
         Total consolidated interest revenue                      $      36,489
                                                                  -------------
INTEREST EXPENSES
Total interest expenses for reportable segments                   $         678
Corporate interest expenses                                       $          --
                                                                  -------------
         Total consolidated interest revenue                      $         678
                                                                  -------------
PROFIT OR LOSS
Total loss for reportable segments                                $   8,455,632
Corporate expenses                                                $    (285,367)
Gain on dilution of interest in subsidiary                        $   2,483,871
Loss on valuation for held for trade investment                   $  (4,002,000)
Share of loss of associate                                        $      (8,827)
                                                                  -------------
         Income before income tax                                 $   6,643,309
                                                                  -------------
ASSETS
Total assets for reportable segments                              $  60,687,033
Other assets                                                      $   2,423,518
                                                                  -------------
         Total consolidated assets                                $  63,110,551
                                                                  -------------
EXPENDITURES FOR SEGMENT ASSETS
Total expenditures for assets for reportable segments             $   3,101,835
                                                                  -------------


                                      F-21


<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006


12.   SEGMENT REPORTING (Cont'd)

<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
Interest expense                   $         --     $         --   $       --      $         --
Depreciation and amortization      $    639,986     $    223,920   $       --      $    863,906
Segment profit                     $  2,765,175     $    193,651   $      9,974    $  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
</TABLE>

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 revenue                      $     109,336
                                                                  -------------
PROFIT OR LOSS
Total profit for reportable segments                              $   2,968,620
Corporate expenses                                                $    (425,183)
                                                                  -------------
         Income 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
                                                                  -------------

      Following table presents revenues earned from customers located in
      different geographic areas. Property and equipment is grouped by its
      location.

<TABLE>
<S>     <C>
      2007                               ASIA PACIFIC  UNITED STATES      OTHER          TOTAL
                                         ------------   ------------   ------------   ------------
      Revenues from external customers   $ 31,518,290   $        343   $         --   $ 31,518,633
      Property and equipment, net        $  1,244,145   $    230,655   $     95,400   $  1,570,200


      2006                               ASIA PACIFIC  UNITED STATES      OTHER          TOTAL
                                         ------------   ------------   ------------   ------------
      Revenues from external customers   $ 23,625,998   $         84   $         --   $ 23,626,082
      Property and equipment, net        $    738,611   $     174,199  $     85,000   $    997,810

</TABLE>



                                      F-22


<PAGE>
                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2007 AND 2006



13.   RELATED PARTY TRANSACTIONS

      Related parties are entities with common direct or indirect shareholders
      and/or directors. Parties are considered to be related if one party has
      the ability to control the other party or exercise significant influence
      over the other party in making financial and operating decisions.

      Some of the Company's transactions and arrangements are with the related
      party and the effect of these on the basis determined between the party is
      reflected in these financial statements. The balances are unsecured,
      interest-free and repayable on demand unless otherwise stated.

      During the period, the Company entered into the following transactions
      with the associate:




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

                   SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,  SEPTEMBER 30,
                      2007             2006            2007           2006
                   -------------   -------------   -------------  -------------
      Marketing    $     110,537   $          --   $      28,088  $          --
                   =============   =============   =============  =============


14.   SUBSEQUENT EVENTS

      On November 1, 2007, the Company sub-leased the office premises of M2B
      World Inc, a wholly owned subsidiary of the Company in Los Angeles,
      California as part of its efforts to streamline its operations and reduce
      operating costs. The staffing of M2B World Inc was also reduced from 9
      staff to 1 staff as of October 31, 2007.




                                      F-23


<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

The Company 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 Company is also in the business of digit gaming (lottery). The Company has
an 18 year license to conduct nation wide lottery in Cambodia. 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 in
Cambodia and to manage the digit games activities in Cambodia.

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


OVERVIEW

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

For the broadband, the Company delivers both wire and wireless solutions,
streaming via computers, TV sets, PDAs and 3G hand phones.

At the same time the Company launches e-commerce channels (portals) that provide
on-line shopping but with a difference, merging two leisure activities of
shopping and entertainment. The entertainment channels are designed to drive and
promote the shopping portals, and vice versa.

The Company's business model in the area of broadband entertainment includes
both education on-demand and e-services, which would provide the Company with
multiple streams of revenue. Such revenues would be derived from advertising and
branding (channel and program sponsorship); on-line subscriptions; online games
micro-payments; channel/portal development (digital programming services);
content aggregation and syndication; broadband consulting services; on-line
shopping turnkey solutions; broadband hosting and streaming services; E-commerce
commissions and on-line dealerships; and digit games operations.


                                        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 such as 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 on-demand on Broadband channels,
      Internet portals and 3G devices across the globe, for specific and
      identified viewer lifestyles, demographics and interests. Entertainment
      and web visit experience is maintained throughout from the initial viewing
      experience to on-line shopping and payment checkout 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.

      SERVICES: Broadband technology allows us to deliver the following
      services::

      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 hand phones (Wireless
                  Technology)

            o     E-Commerce or online shopping - linked interactively to the
                  VOD platforms on broadband. Consumers choose to buy products
                  online 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 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, which include video streaming, video storage and web servers in
      Singapore and the U.S. 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.



                                        2


<PAGE>


PRODUCTS: We offer the following products on the VOD platform:

      o     Entertainment - Consumers access movies, music, glamour and fashion,
            lifestyle (hobbies, cooking, and 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     E-Commerce - Consumers can purchase products online, view product
            videos and make payments online.


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

      1.    Advertising i.e. program and channel sponsorship

      2.    Online subscriptions

      3.    Channel/portal development i.e. digital programming services

      4.    Content aggregation and syndication

      5.    Broadband consulting services and online shopping turnkey solutions

      6.    E-commerce services

      7.    Online games micro-payments

      Currently, the Company is in the process of revamping it's Broadband
      websites. The current Broadband websites and products, which may change
      from time to time are highlighted below.

      WOWtv - Web TV service

      WOWtv, a broadband entertainment web TV service, has embarked on launching
      its site across the Asia Pacific, streaming more than 50 channels of
      Hollywood and Asian entertainment via video on-demand, providing
      E-commerce services and an original online games platform. Its video
      on-demand content covers diverse genres such as movies, television dramas,
      variety shows, documentaries, fashion, lifestyle, sports, edutainment and
      more.

      Beginning with Singapore and Indonesia, WOWtv is set to launch across the
      Asia Pacific, expanding its growing presence to an additional 5
      territories, namely Australia, China, Japan, Taiwan and Malaysia within
      the next 12 months. No assurance can be given that such plans will
      materialize as planned.

      Leveraging on the Strengths of WOWtv

      WOWtv is a cutting-edge, innovative platform that will establish a first
      mover advantage to become the first Pan-Asian broadband entertainment
      services provider. Its strengths and competitive advantages include:

      Content Aggregation, Distribution and Syndication - with the technology
      and expertise to stream with high clarity and also manage operations and
      costs well.

      Premium Content Portfolio - with a vast library of worldwide broadband
      rights of film and content, copyright ownership and exclusivity on the
      majority of broadband titles.

      The content portfolio is also wide, with a classic library of 5,000 titles
      over more than 50 channels.

      Strong relationships in Asia and Hollywood - with good connections to
      enable it to make further in-roads to content acquisition.

      Broadband Distribution Deals - with secured major broadband distribution
      deals with major media companies.

      Experience in Online Games - with exclusive licenses to several Korean
      game titles for several Asian markets.

      Marketing Strategy of WOWtv

      WOWtv's marketing strategy is to offer viewers a plethora of video
      on-demand entertainment over three segments on its website, where
      consumers will get a chance to sample its products and services in
      different tiers - FREE, BASIC and VALUE.

      To date, WOWtv has more than 15,000 registered subscribers - since its
      soft launch in August 2007.


                                        3



<PAGE>

      M2Btv - Global Broadband TV (IPTV) Service

      The Company offers multiple TV channels, delivered live over the Internet,
      to television sets in homes that have a high-speed internet connection and
      IP set top boxes.

      The service has been in operation in Singapore Since the second half of
      2006 and more than 50 channels are made available to customers. Anyone
      subscribing for a broadband access with local Internet service provider is
      able to tune in to the service on a subscription basis. Subscribers are
      provided with a set-top box that connects to their broadband modems
      instead of the cable TV point at home. They are able to watch the programs
      on their television sets.


      BROADBAND SERVICES

      The Company has an 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 programming of video,
      animation, streaming and flash content to multiple destinations.

      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.



                                        4


<PAGE>



      In store video panels can also carry individualized messages together with
      customized content to reach consumers and target audiences within the
      premises. This is another method by which M2B is continuing to 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.

      DIGIT GAMES

      The Company has an 18-year license to conduct nation wide lottery in
      Cambodia. The Company also signed an agreement with Allsports Limited, a
      British Virgin Islands company, to operate, administer, and manage the
      lottery digit games activities in Cambodia.

      E-TRAVEL SERVICES

      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 continues 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 through its broadband streaming entertainment into the worldwide
      travel arena.

      The M2B World Travel Website aims to provide 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.

      The video e-travel portal brings an extensive range of travel options to
      our viewers and gives the Company an entry into the travel and tourism
      market; it 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 Company plans to launch the M2B travel site in 2007, and the service
      is subject to the Company completing the set up of its server farm to host
      the travel platform. No assurances can be made that such plan will
      materialize as planned.






                                        5


<PAGE>


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

For the nine months and three months ended September 30, 2007 compared with the
nine months and three months ended September 30, 2006, respectively.



Financial Statement

- Revenue for the quarter ended September 30, 2007 was $6,024,153 compared with
  $9,315,116 for the same period in 2006.

- Net loss for the quarter ended September 30, 2007 was $9,662,777 compared with
net income of $917,439 for the same period in 2006.

- The Company's cash balance was $2,602,380 at September 30, 2007 compared with
$2,294,984 at December 31 2006.


Revenue

Revenue for the nine months ended September 30, 2007 increased by $7,892,551
(33.41%), from $23,626,082 for the nine months ended September 30, 2006 to
$31,518,633 for the nine months ended September 30, 2007. The revenue for the
three months ended September 30, 2007 decreased by $3,290,963 (35.33%), from
$9,315,116 to $6,024,153 for the three months ended September 30, 2006 and 2007,
respectively.

This increase in revenue for the nine months ended September 30, 2007 was mainly
contributed by the entertainment segment which included the completion and
delivery of the IPTV platform in Indonesia. This resulted in a revenue of $15
million in the nine months ended September 30, 2007. The completion and delivery
of the IPTV platform in Indonesia comprised of the hardware, software and
middleware, and supply and programming of content.

The digit games in Cambodia incurred a decrease in revenue of $829,186 (a drop
of 4.79%) for the nine months ended September 30, 2007 from $17,310,828 in
September 30, 2006 to $16,481,642 in September 30, 2007, mainly due to more
holidays and increased competition from new digit games players in the market in
the first nine months of 2007 as compared to the same period in 2006.

The decrease in the revenue for the three months ended September 30, 2007 was
mainly due to the decrease in the entertainment segment as compared to the three
months ended September 30, 2006, revenue by the entertainment segment reduced by
$3,096,329(99.93%) from $3,098,631 in the three months ended September 30, 2006
as compared to $2,302 in the three months ended September 30, 2007. The Company
was unable to secure any new advertising or content syndication contracts for
the three months ended September 2007 as it had done in the same three months
ended September 2006.


Cost of Sales

Cost of sales for the nine months ended September 30, 2007 was $17,553,771 which
increased by $497,557 (2.92%) from $17,056,214 for the nine months ended
September 30, 2006.

Cost of sales for the three months ended September 30, 2007 was $6,261,636 which
increased by $178,725 (2.94%) from $6,082,911 for the three months ended
September 30, 2006.

Increase in cost of sales of $497,557 and $178,725 for the nine months and three
months ended September 30, 2007 respectively was mainly attributed to the
delivery of the IPTV platform in Indonesia, which included the hardware,
software and middleware, and supply and programming of content, and the launch
of the new web TV service (called WOWtv) in Singapore.

As a proportion of revenue, the cost of sales for the nine months ended
September 30, 2007 was 56% as compared to 72% for the nine months ended
September 30, 2006. This was due to an increase in the entertainment segment
revenue resulting from the delivery of the IPTV platform in Indonesia.

As a proportion of revenue, the cost of sales for the three months ended
September 30, 2007 was 104% as compared to 65% for the three months ended
September 30, 2006. This was due to the decrease in the entertainment segment
revenue for the three months ended September 30, 2007.
















Distribution Expenses

Distribution expenses for the nine months ended September 30, 2007 at $677,357
were lower by $180,055 (21%) as compared to the amount of $857,412 incurred for
the nine months ended September 30, 2006.

The lower distribution expenses were attributed to decreased spending for
marketing and promotions which decreased by $220,716 (35%), from $629,573 for
the nine months ended September 30, 2006 to $408,857 for the nine months ended
September 30, 2007.



Distribution expenses for the three months ended September 30, 2007 at $171,704
were lower by $126,179 (72.36%) as compared to the amount of $297,883 for the
three months ended September 30, 2006.

The lower amount spent for the three months ended September 30, 2007 was
attributed to the lower expenditure on advertising and marketing, which
decreased by $116,322, (56%) from $207,742 to $91,420 for the three months ended
September 30, 2006 and 2007, respectively.





                                        6


<PAGE>

General And Administrative Expenses

Administration expenses for the nine months ended September 30, 2007 at
$5,152,899 were higher by $1,874,544 (57.18%) as compared to the amount of
$3,278,355 incurred for the nine months ended September 30, 2006.

Administration expenses for the three months ended September 30, 2007 at
$1,631,684 were higher by $35,340 (2.21%) as compared to the amount of
$1,596,344 incurred for the three months ended September 30, 2006.

The increase in administrative expenses for the nine months and three months
ended September 30, 2007 was attributed mainly to increases in:

o     Depreciation and license amortization had increased by $1,850,414 (214%),
      from $863,906 for the nine months ended September 30, 2006 to $2,714,320
      for the nine months ended September 30, 2007. For the three months ended
      September 30, 2007, depreciation and licensing cost had increased by
      $358,901 (78%) from $459,718 to $818,619 for the three months ended
      September 30, 2006 and 2007 respectively. The increase was mainly
      attributed to the increase in license amortization of the movies content
      which have a definite life and which were acquired for the newly launch
      Broadband TV service.

o     Staff costs. Staff costs had increased by $296,928 (33%) from $886,668 for
      the nine months ended September 30, 2006 to $1,183,596 for the nine months
      ended September 30, 2007. For the three months ended September 30, 2007,
      staff cost had decreased by $13,492 (3.3%) from $408,642 to $395,150 for
      the three months ended September 30, 2006 and 2007 respectively. The
      overall increase in staff cost for the nine months period ended September
      30, 2007 resulted from the increase in the number of professional
      employees hired. Staff costs were however trimmed and lowered in the third
      quarter for the three months ended September 30, 2007 in order to maintain
      cost efficient operations.


Income From Operations

The Company reported an income from operations of $8,134,606 for the nine months
ended September 30, 2007 as compared to the income from operations of $2,434,101
for the nine months ended September 30, 2006. For the three months ended
September 30, 2007, the loss from operations was $2,040,871 as compared to the
gain of $1,337,978 for the three months ended September 30, 2006. The
significant increase in the income from operations for the nine months ended
September 30, 2007 was due to the significant increase in the entertainment
segment revenue for the nine months ended September 30, 2007. However there was
a drop in the entertainment segment revenue for the three months ended September
30, 2007 as compared to the three months ended September 30, 2006.


Net Income

For the nine months ended September 30, 2007, net income was $5,740,845 which
increased by $3,602,947 (169%) from $2,137,898 for the nine months ended
September 30, 2006. For the three months ended September 30, 2007, net loss was
$9,662,777 which decreased by $10,580,216 (1,153%) from net income of $917,439
for the three months ended September 30, 2006.


The significant increase in net income for the nine months ended September 30,
2007 was mainly attributed to increase in the entertainment segment revenue. The
increase was partly attributed to the gain on dilution of the Company's interest
in a subsidiary, M2B World Asia Pacific Pte. Ltd. by issuing shares to the
private investors at a premium. The increase in net income was partly offset by
the loss of the fair value of an investment (equity securities) held for
trading, due to a drop in the market value of the shares.


The decrease for the three months ended June 30, 2007 was mainly attributed to
the net loss of the fair value of an investment (equity securities) which
resulted in a loss of $8,322,000 in the fair value of the investment, due to a
drop in the market value of the shares.



                                        7


<PAGE>


Liquidity And Capital Resources

The Company had cash of $2,602,380 at September 30, 2007 as compared to cash of
$2,294,984 at December 31, 2006.

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

During the three months ended September 30, 2007, 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 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 2007 to expand its broadband
coverage by launching new broadband sites in Asia Pacific region and Australia.
No assurances can be made that such plans will be carried out in a timely
manner.

The Company intends to raise additional funds, to fund its business expansion,
however no assurances can be made that the Company will raise sufficient funds
as planned.


NEW CONTRACTS

On January 3, 2007, M2B World Asia Pacific Pte Ltd, issued 7,778,014 shares of
common stock through a private placement at a price of $0.77 a share for a total
amount of $6,000,000. This had effectively reduced the Company's effective
equity interest in M2B World Asia Pacific Pte. Ltd. from 100% to 81.7%.

On January 15, 2007, the Company through its subsidiary, Amaru Holdings Limited
(Amaru Holdings), a British Virgin Islands corporation, entered into a sale and
purchase agreement together with other sellers (the "Agreement") with Auston
International Group Ltd., a Singapore company (Auston) to sell to Auston its
majority owned subsidiary, M2B World Asia Pacific Pte Ltd., together with its
subsidiary, M2B World Holdings Limited (collectively, M2B Asia). Auston is a
company trading on the Singapore Stock Exchange. The Agreement provides for the
sale of 42,459,978 shares of M2B World Asia Pacific Pte. Ltd., its total issued
and outstanding capital. As the consideration for M2B World Asia Pacific Pte.
Ltd. shares, Auston agreed to issue a total of 660 million new ordinary shares
of Auston to M2B World Asia Pacific Pte. Ltd. shareholders. The Auston shares
are valued at S$0.25 per share.

The Agreement is subject to certain conditions precedent, including, but not
limited to the shareholder approval of the transaction by Auston shareholders,
the approval of the Singapore Stock Exchange and other related regulatory
approvals of both parties.

Amaru Holdings is required to deliver a valuation report by an independent
auditor to Auston confirming that the value of the assets of M2B World Asia
Pacific Pte. Ltd. is no less than that of the amount of consideration to be paid
by Auston.

On April 23, 2007, M2B World Holdings Limited ("M2B World"), a British Virgin
Islands corporation entered into a sale and purchase agreement (the "Agreement")
with P T Agis TBK, a company incorporated in Indonesia ("Agis") to sell to Agis
certain assets, including the domain name under which the IPTV business will
operate in Indonesia and the transfer and license of IPTV platform
(collectively, the "Assets"). M2B World is a wholly-owned subsidiary of M2B
World Asia Pacific Pte Ltd. which is a 81.7% owned by Amaru Holdings Limited.
Amaru Holdings Limited is a wholly-owned subsidiary of Amaru Inc., a Nevada
corporation (the "Company"). Agis is trading on the Indonesia Stock Exchange.
The Agreement provides for the consideration of US$15 million for the sale of
the Assets based on the mutually agreed valuation of such Assets. Such
consideration is to be provided through the issuance of 75 million of Agis
shares at an agreed price of IDR 1300 per share, and such number of shares of a
to be formed investment holding wholly-owned subsidiary of Agis that shall equal
to 50% of beneficial holdings of such subsidiary. The sale had been completed by
September 30, 2007.

On July 10, 2007, the Company together with one of the subsidiaries of the
Company, Tremax International Limited entered into a sale and purchase agreement
(the "Agreement") with Domaine Group Limited, a British Virgin Islands
corporation (the "Vendor"), for the acquisition of CBBN Holdings Limited ("CBBN
Holdings"). CBBN Holdings is a 80% beneficial owner of Cosmactive Broadband
Networks Co. Ltd ("CBN"), which is a broadband service provider incorporated in
Taiwan. The purchase consideration shall be satisfied in full by the issuance
of 5,333,333 of common stock of the Company.



                                        8



<PAGE>


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      ABILITY TO EXPAND CUSTOMER BASE

      The Company's future operating results depend on our ability to expand our
      customer base for broadband services and e-commerce portals. An increase
      in total revenue depends on our ability to increase the number of
      broadband and e-commerce portals, in the US, Europe and Asia. The degree
      of success of this depends on

      o     our efforts to establish independent broadband sites in countries
            where conditions are suitable.

      o     our ability to expand our offerings of content in entertainment and
            education, to include more niche channels and offerings.

      o     our ability to provide content beyond just personal computers but to
            encompass television, wireless application devices and 3G hand
            phones.

      ABILITY TO ACQUIRE NEW MEDIA CONTENTS

      The continued ability of the Company to acquire rights to new media
      contents, at competitive rates, is crucial to grow and sustain the
      Company's business.

      AVAILABILITY OF TECHNOLOGICALLY RELIABLE NEW GENERATION OF BROADBAND
      DEVICES

      The growth of demand for broadband services is dependent on the wide
      availability of technologically reliable new generation of broadband
      devices, at affordable prices to prospective customers of broadband
      services. The early and widespread availability and market adoption of new
      generation broadband devices, will significantly impact demand for
      broadband services and the growth of the Company's business.

      CAPITAL INVESTMENT IN BROADBAND INFRASTRUCTURE BY GOVERNMENT AND TELCOS

      The growth of demand for broadband services is dependent on the capital
      investment in broadband infrastructure by governments and Telcos. A
      significant source of demand for the Company's broadband services could be
      from homes and enterprises with access to high-speed broadband
      connections. The ability of countries to invest in public broadband
      infrastructure to offer public accessibility is subject to countries'
      economic health. The Company's prospects for business growth in Asia
      especially would be impacted by overall economic conditions in the
      territories that we seek to expand into.

      COMPETITION FROM BROADBAND CABLE AND TV NETWORKS OPERATORS

      The competition of services provided by broadband cable network operators
      and TV networks. As traditional TV networks and cable TV operators provide
      alternate supply of entertainment and on-demand broadband services, they
      are in competition with the Company, for market share. The Company,
      nevertheless, will continue to leverage on its advantage of ownership
      rights to its own portfolio of media content and its ability to provide
      broadband services over both the cable and wireless networks, at
      competitive rates.

      The Company's business is reliant on complex information technology
      systems and networks. Any significant system or network disruption could
      have a material adverse impact on our operations and operating results.
      The Company's nature of business is highly dependent on the efficient and
      uninterrupted operation of complex information technology systems
      networks, may they, either be that of ours, or our Telco/ ISP partners.

      All information technology systems are potentially vulnerable to damage or
      interruption from a variety of sources, including but not limited to
      computer viruses, security breach, energy blackouts, natural disasters and
      terrorism, war and telecommunication failures.

      System or network disruptions may arise if new systems or upgrades are
      defective or are not installed properly. The Company has implemented
      various measures to manage our risks related to system and network
      disruptions, but a system failure or security breach could negatively
      impact our operations and financial results.

      LAW AND REGULATIONS GOVERNING INTERNET

      Increased regulation of the Internet or differing application of existing
      laws might slow the growth of the use of the Internet and online services,
      which could decrease demand for our services. The added complexity of the
      law may lead to higher compliance costs resulting in higher costs of doing
      business.


                                        9



<PAGE>


      UNAUTHORIZED USE OF PROPRIETARY RIGHTS

      Our copyrights, patents, trademarks, including our rights to certain
      domain names are very important to M2B's brand and success. While we make
      every effort to protect and stop unauthorized use of our proprietary
      rights, it may still be possible for third parties to obtain and use the
      intellectual property without authorization. The validity, enforceability
      and scope of protection of intellectual property in Internet-related
      industries remain uncertain and still evolving. Litigation may be
      necessary in future to enforce these intellectual property rights. This
      will result in substantial costs and diversion of the Company's resources
      and could disrupt its business, as well as have a material adverse effect
      on its business.

      LAW AND REGULATIONS GOVERNING BUSINESS

      As the Company continues to expand its business internationally across
      different geographical locations there are risks inherent including:

        1)      Trade barriers and changes in trade regulations
        2)      Local labor laws and regulations
        3)      Currency exchange rate fluctuations
        4)      Political, social or economic unrest
        5)      Potential adverse tax regulation
        6)      Changes in governmental regulations


      OUTBREAK OF BIRD FLU PANDEMIC OR SIMILAR PUBLIC HEALTH DEVELOPMENTS

      Any future outbreak of the bird flu pandemic or similar adverse public
      health developments may have a material adverse effect on the Company's
      business operations, financial condition and results of operations.





                                       10


<PAGE>


ITEM 4: CONTROLS AND PROCEDURES

The Company's management is responsible for establishing and maintaining
adequate internal control over the Company's financial reporting, as such term
is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

An evaluation was conducted under the supervision and with the participation of
the Company's management, including its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the Company's disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedure were effective as of September 30, 2007. There has been no change in
the Company's internal control over financial reporting that occurred during the
quarter ended September 30, 2007, that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.

The Company's annual report on Form 10-KSB for the year ended December 31, 2006
did not include (nor does this quarterly report on Form 10-Q include) an
attestation report of the Company's registered public accounting firm regarding
internal control over financial reporting. Management's report in the annual
report was not subject to attestation by the Company's registered public
accounting firm pursuant to rules of the Securities and Exchange Commission that
permit the Company to provide only management's report in the annual report.









                                       11




<PAGE>


PART 2:  OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

On April 23, 2007, a company which provided public relations services filed a
lawsuit against M2B World, Inc. for breach of contract for an amount of $72,649.
In the opinion of Management, the outcome of this legal proceeding will not
have a material effect on the Company's consolidated financial statements.

ITEM 1A:  RISK FACTORS

An investment in the Company's common stock involves a high degree of risk. One
should carefully consider the following risk factors in evaluating an investment
in the Company's common stock. If any of the following risks actually occurs,
the Company's business, financial condition, results of operations or cash flow
could be materially and adversely affected. In such case, the trading price of
the Company's common stock could decline, and one could lose all or part of
one's investment. One should also refer to the other information set forth in
this report, including the Company's consolidated financial statements and the
related notes.

THE COMPANY CONTINUES TO USE SIGNIFICANT AMOUNTS OF CASH FOR ITS BUSINESS
OPERATIONS, WHICH COULD RESULT IN US HAVING INSUFFICIENT CASH TO FUND THE
COMPANY'S OPERATIONS AND EXPENSES UNDER OUR CURRENT BUSINESS PLAN. THE COMPANY
IS ALSO HOLDING A CONSIDERABLE AMOUNT OF QUOTED EQUITY SECURITIES THAT IS
AVAILABLE-FOR-SALE OR HELD FOR TRADING.

The Company's liquidity and capital resources remain limited. There can be no
assurance that the Company's liquidity or capital resource position would allow
us to continue to pursue its current business strategy. The Company's quoted
equity securities held as assets are dependent on the market value. Any
fluctuations or downturn in the securities market could adversely affect the
value of these equity securities held. As a result, without achieving growth in
its business along the lines it has projected, it would have to alter its
business plan or further augment its cash flow position through cost reduction
measures, sales of assets, additional financings or a combination of these
actions. One or more of these actions would likely substantially diminish the
value of its common stock .

THE MARKET MAY NOT BROADLY ACCEPT THE COMPANY'S BROADBAND WEBSITES AND SERVICES,
WHICH WOULD PREVENT THE COMPANY FROM OPERATING PROFITABLY.

The Company must be able to achieve broad market acceptance for its Broadband
websites and services, at a price that provides an acceptable rate of return
relative to the Company-wide costs in order to operate profitably. There is no
assurance that the market will develop sufficiently to enable the Company to
operate its Broadband business profitably. Furthermore, there is no assurance
that any of the Company's services will become generally accepted, nor is there
any assurance that enough paying users and advertisers will ultimately be
obtained to enable us to operate these business profitably.

BROADBAND USERS MAY FAIL TO ADOPT THE COMPANY'S BROADBAND SERVICES.

The Company's Broadband services are targeted to the growing market of Broadband
users worldwide to deliver content and E-commerce in an efficient, economical
manner over the Broadband networks. The challenge is to make the Company's
business attractive to consumers, and ultimately, profitable. To do so has
required, and will require, the Company to invest significant amounts of cash
and other resources. There is no assurance that enough paying users and
advertisers will ultimately be obtained to enable the Company to operate the
business profitably.

FAILURE TO SIGNIFICANTLY INCREASE THE COMPANY'S USERS AND ADVERTISERS MAY RESULT
IN FAILURE TO ACHIEVE CRITICAL MASS AND REVENUE TO BUILD A SUCCESSFUL BUSINESS.

The Company incurs significant up-front costs in connection with the acquisition
of content, and bandwidth and network charges. The plan is to obtain recurring
revenues in the form of subscription and advertising fees to use the Broadband
services, either paid by the users or advertisers.

There is no assurance as to whether the Company will be able to maintain, or
whether and how quickly the Company will be able to increase its user base, or
whether the Company will be able to generate recurring subscription and
advertising fees to such a level that would enable this line of business to
continue to operate profitably. If the Company is not successful in these
endeavors, the Company could be required to revise its business model, exit or
reduce the scale of the business, or raise additional capital.




                                       12




<PAGE>

COMPETITION IN THE BROADBAND BUSINESS IS EXPECTED TO INCREASE, WHICH COULD CAUSE
THE BUSINESS TO FAIL.

The Company's Broadband services are targeted to the end user market. As the
Broadband penetration rates increase globally, an increasing number of
well-funded competitors have entered the market. Companies that compete with the
Company's business include telecommunications, cable, content management and
network delivery companies.

The Company may face increased competition as these competitors partner with
others or develop new Broadband websites and service offerings to expand the
functionality that they can offer to their customers. These competitors may,
over time, develop new technologies and acquire content that are perceived as
being more secure, effective or cost efficient than the Company. These
competitors could successfully garner a significant share of the market, to the
exclusion of the Company. Furthermore, increased competition could result in
pricing pressures, reduced margins, or the failure of the business to achieve or
maintain market acceptance, any one of which could harm the business.

THE INABILITY TO SUCCESSFULLY EXECUTE TIMELY DEVELOPMENT AND INTRODUCTION OF NEW
AND RELATED SERVICES AND TO IMPLEMENT TECHNOLOGICAL CHANGES COULD HARM THE
BUSINESS.

The evolving nature of the Broadband business requires the Company to
continually develop and introduce new and related services and to improve the
performance, features, and reliability of the existing services, particularly in
response to competitive offerings.

The Company has under development new features and services for its businesses.
The Company may also introduce new services. The success of new or enhanced
features and services depends on several factors - primarily market acceptance.
The Company may not succeed in developing and marketing new or enhanced features
and services that respond to competitive and technological developments and
changing customer needs. This could harm the business.

CAPACITY LIMITS ON THE COMPANY'S TECHNOLOGY AND NETWORK HARDWARE AND SOFTWARE
MAY BE DIFFICULT TO PROJECT, AND THE COMPANY MAY NOT BE ABLE TO EXPAND AND/OR
UPGRADE ITS SYSTEMS TO MEET INCREASED USE, WHICH WOULD RESULT IN REDUCED
REVENUES.

While the Company has ample through-put capacity to handle its customers'
requirements for the medium term, at some point it may be required to materially
expand and/or upgrade its technology and network hardware and software. The
Company may not be able to accurately project the rate of increase in usage of
its network. In addition, it may not be able to expand and/or upgrade its
systems and network hardware and software capabilities in a timely manner to
accommodate increased traffic on its network. If the Company does not
appropriately expand and/or upgrade our systems and network hardware and
software in a timely fashion, it may lose customers and revenues.

INTERRUPTIONS TO THE DATA CENTERS AND BROADBAND NETWORKS COULD DISRUPT BUSINESS,
AND NEGATIVELY IMPACT CUSTOMER DEMAND FOR THE COMPANY.

The Company's business depends on the uninterrupted operation at the data
centers and the broadband networks run by the various service providers. The
data centers may suffer for loss, damage, or interruption caused by fire, power
loss, telecommunications failure, or other events beyond the Company. Any damage
or failure that causes interruptions in the Company's operations could
materially harm business, financial conditions, and results of operations.

In addition, the Company's services depends on the efficient operation of the
Internet connections between customers and the data centers. The Company depends
on Internet service providers efficiently operating these connections. These
providers have experienced periodic operational problems or outages in the past.
Any of these problems or outages could adversely affect customer satisfaction
and customers could be reluctant to use our Internet related services.

THE COMPANY MAY NOT BE ABLE TO ACQUIRE NEW CONTENT, OR MAY HAVE TO DEFEND ITS
RIGHTS IN INTELLECTUAL PROPERTY OF THE CONTENT THAT IS USED FOR ITS SERVICES
WHICH COULD BE DISRUPTIVE AND EXPENSIVE TO ITS BUSINESS.

The Company may not be able to acquire new content, or may have to defend its
intellectual property rights or defend against claims that it is infringing the
rights of others, where its content rights are concerned. Intellectual property
litigation and controversies are disruptive and expensive. Infringement claims
could require us to develop non-infringing services or enter onto royalty or
licensing arrangements. Royalty or licensing arrangements, if required, may not
be obtainable on terms acceptable to the Company. The business could be
significantly harmed if the Company is not able to develop or license new
content. Furthermore, it is possible that others may license substantially
equivalent content, thus enabling them to effectively compete against us.




                                       13



<PAGE>


THE COMPANY DEPENDS ON KEY PERSONNEL.

The Company depends on the performance of its senior management team. Its
success depends on its ability to attract, retain, and motivate these
individuals. There are no binding agreements with any of its employees that
prevent them from leaving the Company at any time. There is competition for
these people. The loss of the services of any of the key employees or failure to
attract, retain, and motivate key employees could harm the business.

THE COMPANY RELIES ON THIRD PARTIES.

If critical services and products that the Company sources from third parties,
such as content and network services were to no longer be made available to the
Company or at a considerably higher price than it currently pays for them, and
suitable alternatives could not be found, the business could be harmed.

THE COMPANY COULD BE AFFECTED BY GOVERNMENT REGULATION.

The list of countries to which our solutions and services could not be exported
could be revised in the future. Furthermore, some countries may in future impose
restrictions on streaming of broadband contents and related services. Failure to
obtain the required governmental approvals would preclude the sale or use of
services in international markets and therefore, harm the Company's ability to
grow sales through expansion into international markets.

While regulations in almost all countries in which our business currently
operates generally permit the broadband services, such regulations in future may
not be as favorable and may impede our ability to develop business.









                                       14


<PAGE>


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 19, 2007, the Company issued 40,000 shares of common stock through its
private placement of shares of common stock at a purchase price of $1.50 per
share for a total amount of $60,000 to "accredited investors", as that term is
defined in Regulation D of the Securities Act of 1933.

On July 11, 2007, the Company issued 5,333,333 million shares of common stock at
a market value of $0.70 per share for a total amount of $3,733,333. The shares
were issued to Domaine Group Limited, a company incorporated in the British
Virgin Islands and is the legal and beneficial owner of the 100% of the entire
issued and paid up capital of CBBN Holdings Limited, which the Company intends
to acquire.

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 UPON SENIOR SECURITIES

         None

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

         None

ITEM 5:  OTHER INFORMATION

         None

ITEM 6:  EXHIBITS:

A - Exhibits:

Exhibit 31             CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
                       CERTIFICATION PURSUANT TO SECTION 906
                       OF THE SARBANES-OXLEY ACT

Exhibit 32             CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
                       FINANCIAL OFFICER PURSUANT TO RULE 13A-14(b) OF THE
                       EXCHANGE ACT AND 18 U.S.C. SECTION 1350, AS ADOPTED
                       PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT





                                       15



<PAGE>

SIGNATURES

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


                                         Amaru, Inc.
                                         ---------------------------------------
                                         (Registrant)


October 31, 2007                         /s/ Colin Binny
----------------                         ---------------------------------------
Date                                     President, CEO & CFO






                                       16