<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 March 31, 2008

                                       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 (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 a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated    Accelerated filer |X|   Non-accelerated filer |_|
filer |_|                                    (Do not check if a smaller
                                             reporting company

Smaller reporting company |_|


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 March 31, 2008)



<PAGE>

                           AMARU, INC. AND SUBSIDARIES
                       2008 Quarterly Report on Form 10-Q
                                Table of Contents


PART I:  FINANCIAL INFORMATION
--------------------------------------------------------------------------------

ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets                                                  F-2
Consolidated Statements of Income                                            F-3
Consolidated Statement of Stockholders' Equity and
  Comprehensive Income                                                F-4 to F-5
Consolidated Statements of Cash Flows                                        F-6
Notes to Consolidated Financial Statements                           F-7 to F-29

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS                                 1

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK            6

ITEM 4:  CONTROLS AND PROCEDURES                                               8


PART II:  OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1:  LEGAL PROCEEDINGS                                                   10
ITEM 1A: RISK FACTORS                                                        10
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS          13
ITEM 3: DEFAULTS UPON SENIOR SECURITIES                                      13
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS                 13
ITEM 5: OTHER INFORMATION                                                    13
ITEM 6:  EXHIBITS                                                            13

SIGNATURES




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


                                                        MARCH 31,    DECEMBER 31,
                                                          2008          2007
                                                       -----------   -----------
                                                       (Unaudited)

ASSETS
Current assets
 Cash and cash equivalents                             $ 1,874,739   $ 2,322,541

 Accounts receivable, net of allowance of
   $108,815 and $54,154 at March 31, 2008 and
   December 31, 2007 respectively                       10,023,590    10,244,589
 Equity securities held for trading                      2,924,000     2,924,000
 Other current assets                                    4,174,503     4,246,947
 Inventories                                             1,148,415     1,157,248
 Investments available for sale                          2,402,613     2,402,613
                                                       -----------   -----------
Total current assets                                    22,547,860    23,297,938
                                                       -----------   -----------

Non-current assets
 Property and equipment, net                             1,625,344     1,797,146
 Intangible assets, net                                 25,443,895    25,693,066
 Associate                                               4,932,915     4,942,283
 Investments available for sale                          2,373,934     4,911,345
                                                       -----------   -----------

Total non-current assets                                34,376,088    37,343,840
                                                       -----------   -----------
Total assets                                           $56,923,948   $60,641,778
                                                       ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
 Accounts payable and accrued expenses                 $ 2,561,063   $ 3,068,613
 Others payable                                            140,002       100,005
 Advances from related parties                             167,203       155,313
 Finance lease liabilities                                  11,237        10,746
 Income taxes payable                                        5,428         5,428
                                                       -----------   -----------

Total current liabilities                                2,884,933     3,340,105
                                                       -----------   -----------
Deferred tax liabilities                                 1,199,068     1,672,801
Hire purchase creditor                                      57,117        57,306
                                                       -----------   -----------

Total non-current liabilities                            1,256,185     1,730,107
                                                       -----------   -----------
Total liabilities                                        4,141,118     5,070,212

Minority interest                                        4,435,398     4,619,381

Commitments                                                     --            --

Stockholders' equity
 Preferred stock (par value $0.001) 5,000,000
   shares authorized; 0 shares authorized;
   0 shares issued and outstanding at March
   31, 2008 and December 31, 2007, respectively                 --            --
 Common stock (par value $0.001) 200,000,000
   shares authorized;159,431,861 and 159,431,861
   shares issued and outstanding at March 31,
   2008 and December 31, 2007, respectively                159,431       159,431
 Additional paid-in capital                             42,918,666    42,918,666
 Retained earnings                                        4,328,030     5,650,447
Accumulated other comprehensive income                     941,305     2,223,641
                                                       -----------   -----------
Total stockholders' equity                              52,782,830    55,571,566
                                                       -----------   -----------

Total liabilities and shareholders' equity             $56,923,948   $60,641,778
                                                       ===========   ===========


           See accompanying notes to consolidated financial statements

                                       F-2



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

                                                          FOR THE THREE MONTHS ENDED
                                                        ------------------------------
                                                          MARCH 31,          MARCH 31,
                                                            2008              2007
                                                        -------------    -------------

Revenue:
 Entertainment                                          $      34,993    $      10,249
 Digit gaming                                               5,593,754        5,476,826
                                                        -------------    -------------
Total revenue                                               5,628,747        5,487,075

Cost of services                                           (5,588,380)      (5,423,501)
                                                        -------------    -------------

Gross profit                                                   40,367           63,574

Distribution costs                                           (124,930)        (309,647)
Administrative expenses                                    (1,038,502)      (1,672,296)
                                                        -------------    -------------
Total expenses                                             (1,163,432)      (1,981,943)
                                                        -------------    -------------

(Loss) Income from operations                              (1,123,065)      (1,918,369)

Other expenses (income)
   Interest expenses                                              543               --
   Interest income                                             (5,443)         (13,682)
   Gain on disposal of equipment                               (1,888)              --
   Loss on disposal of investment available for sales         397,755               --
   Gain on dilution of interest in subsidiary                      --       (2,483,871)
   Share of loss (profit) of associate                          9,368           (7,539)
                                                        -------------    -------------
(Loss) Income before income taxes                          (1,523,400)         586,723

Benefit for income taxes                                       17,000          163,513
                                                        -------------    -------------
Net (loss) income                                          (1,506,400)   $     750,236
                                                        =============    =============
Attributable to:
Equity holders of the company                              (1,322,417)         830,250
Minority interest                                            (183,983)         (80,014)
                                                         -------------    -------------
Net (loss) income                                          (1,506,400)         750,236
                                                        =============    =============
Earnings per share
- basic and diluted                                     $      (0.009)   $       0.005
                                                        =============    =============
Weighted average number of common shares outstanding
- basic and diluted                                       159,431,861      153,784,306
                                                        =============    =============


              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,
  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                             --            --            --            --            --            --      3,565,539

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

Comprehensive
  income
                              -----------   -----------   -----------   -----------   -----------   -----------    -----------
Balance at
December 31,
  2007                                 --            --   159,431,861   $   159,431   $42,918,666            --    $ 5,650,447
                              ===========   ===========   ===========   ===========   ===========   ===========    ===========

                                                                                                       (CONTINUED ON NEXT PAGE)

                                                              F-4


<PAGE>

(CONTINUED FROM PREVIOUS PAGE)


                                   ACCUMULATED OTHER
                                 COMPREHENSIVE INCOME
                              ---------------------------
                               CURRENCY                                         TOTAL
                              TRANSLATION     FAIR VALUE       MINORITY      SHAREHOLDERS'
                                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                            --             --      (2,483,872)     (2,483,872)

Net income                              --             --       1,523,253       5,088,792

Change in fair value
  of available for-sale-
  equity securities,
  net of tax                            --     (1,453,933)             --      (1,453,933)
                                                                             ------------
Comprehensive
  income                                                                        3,634,859
                              ------------   ------------    ------------    ------------
Balance at
  December 31,
  2007                        $     12,927   $  2,210,714    $  4,619,381    $ 55,571,566
                              ============   ============    ============    ============

                See accompanying notes to consolidated financial statements

                                           F-4A


<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,
  2007                        --            --   159,431,861   $   159,431   $42,918,666   $        --   $ 5,650,447

Net loss                      --            --            --            --            --            --    (1,322,417)

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

Comprehensive
  income
                     -----------   -----------   -----------   -----------   -----------   -----------   -----------
Balance at March
  31, 2008                    --            --   159,431,861   $   159,431   $42,918,666   $        --   $ 4,328,030
                     ===========   ===========   ===========   ===========   ===========   ===========   ===========

                                                                                                   (CONTINUED BELOW)


(CONTINUED FROM ABOVE)


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

Balance at
  December 31,
  2007               $     12,927    $  2,210,714    $  4,619,381    $ 55,571,566


Net loss                       --              --        (183,983)     (1,506,400)

Change in
  fair value
  of available
  for-sale- equity
  securities,
  net of tax                   --      (1,282,336)             --      (1,282,336)
                                                                     ------------
Comprehensive
  income                                                               (2,788,736)
                     ------------    ------------    ------------    ------------

Balance at March
  31, 2008           $     12,927    $    928,378    $  4,435,398    $ 52,782,830
                     ============    ============    ============    ============


           See accompanying notes to consolidated financial statements

                                      F-5


<PAGE>

                                  AMARU, INC. & SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                   FOR THE THREE MONTHS ENDED
                                                                   --------------------------
                                                                  March 31, 2008  March 31, 2007
                                                                   -----------    -----------
                                                                   (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                              $(1,506,400)   $   750,236
    Share of loss (profit) of associate                                  9,368         (7,539)
    Adjustments to reconcile net income to cash and cash
      equivalents used or provided by operations:
    Amortization                                                       298,135        803,881
    Depreciation                                                       170,699        113,655
    Gain on disposal of equipment                                       (1,888)            --
    Loss on disposal of investment available for sales                 397,755             --
    Defer tax                                                          (17,000)      (163,513)
    Acquisition of investment in exchange for account receivable            --     (1,700,000)
    Gain on dilution of interest in subsidiary                              --     (2,483,871)
    Common stock issued for services                                        --         60,000

 Changes in operation assets and liabilities
    Accounts receivables                                               220,999     (1,693,403)
    Inventories                                                          8,833         71,672
    Other receivables                                                       --         30,841
    Others current assets                                               72,444        (17,707)
    Accounts payable and accrued expenses                             (507,550)      (191,455)
    Other payables                                                      39,997        105,784
                                                                   -----------    -----------
Net cash used in operating activities                                 (814,608)      (934,613)
                                                                   -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of equipment                                                --       (164,531)
    Proceeds from disposal of equipment                                  2,991             --
    Acquisition of software and film library                           (48,964)            --
    Acquisition of intangible assets                                        --     (1,018,033)
    Proceeds from disposal of investment available for sale            400,587             --
                                                                   -----------    -----------
Net cash generated from (used in) investing activities                 354,614     (1,182,564)
                                                                   -----------    -----------
CASH PROVIDED FROM FINANCING ACTIVITIES
   Advance from related parties                                         11,890             --
   Repayments of obligations under finance leases                       (2,723)            --
   Capital contributed by minority shareholders                             --      5,580,000
                                                                   -----------    -----------
Net cash provided by financing activities                                9,167      5,580,000
                                                                   -----------    -----------
Effect of exchange rate changes on cash and cash equivalents             3,025             --
                                                                   -----------    -----------

Cash flows from all activities                                        (447,802)     3,462,823

Cash and cash equivalents at beginning of period                     2,322,541      2,294,984
                                                                   -----------    -----------

Cash and cash equivalents at end of period                         $ 1,874,739    $ 5,757,807
                                                                   ===========    ===========


SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
 INVESTING ACTIVITIES:
Acquisition of investments (1)                                     $        --    $ 1,700,000
                                                                   ===========    ===========


(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 investment for $1.7
      million in exchange for the settlement of an accounts receivable from the
      investee company.


                  See accompanying notes to consolidated financial statements

                                              F-6
</TABLE>

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007

1. BASIS OF PRESENTATION AND REORGANIZATION

    1.1 Description of Business

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

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

       The Company's goal is to provide on-line entertainment-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 Recent Accounting Standards and Pronouncements

       In June 2006, the Financial Accounting Standards Board ("FASB") issued
       Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
       Interpretation of FASB Statement No. 109, Accounting for Income Taxes
       ("FIN 48"), to create a single model to address accounting for
       uncertainty in tax positions. FIN 48 clarifies the accounting for income
       taxes by prescribing a minimum recognition threshold a tax position is
       required to meet before being recognized in the financial statements. FIN
       48 also provides guidance on derecognition, measurement, classification,
       interest and penalties, accounting in interim periods, disclosure and
       transition. FIN 48 is effective for fiscal years beginning after December
       15, 2006. The Company adopted FIN 48 on January 1, 2007. The adoption of
       FIN 48 did not have an impact on the Company's opening retained earnings.

       In September 2006, the FASB issued Statement of Financial Accounting
       Standard ("SFAS") No. 157, "Fair Value Measurements" ("SFAS No. 157").
       SFAS No. 157 clarifies the principle that fair value should be based on
       the assumptions market participants would use when pricing an asset or
       liability and establishes a fair value hierarchy that prioritizes the
       information used to develop those assumptions. Under the standard, fair
       value measurements would be separately disclosed by level within the fair
       value hierarchy. In February 2008, the FASB issued two Staff Positions
       that amend SFAS No. 157. The first FASB Staff Position (FSP), No. FAS
       157-1, excludes from the scope of SFAS No. 157 accounting pronouncements
       that address fair value measurements for purposes of lease classification
       and measurement. The second FSP, No. FAS 157-2, delays the effective date
       of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities,
       except for items that are recognized or disclosed at fair value in the
       financial statements on a recurring basis (at least annually). SFAS 157
       is effective for the Company on January 1, 2008, except for nonfinancial
       assets and nonfinancial liabilities

                                       F-7

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007

       that are not recognized or disclosed at fair value on a recurring basis
       for which its effective date is January 1, 2009. The adoption of this
       statement did not have a material impact on its Consolidated Financial
       Statements.

       Financial assets recorded at fair value on the Consolidated Balance
       Sheets are categorized as follows:

       Level 1:      Quoted prices (unadjusted) in active markets for identical
                     assets or liabilities, as applicable, that the reporting
                     entity has the ability to access at the measurement date.

       Level 2:      Quoted prices in markets, other than quoted prices
                     included in Level 1, that are not active or inputs that
                     are observable either directly or indirectly for
                     substantially the full term of the asset or liability, as
                     applicable, Level 2 inputs include the following:

                     a) Quoted prices for similar assets or liabilities in
                        active markets;
                     b) Quoted prices for identical or similar assets or
                        liabilities in non-active markets;
                     c) Inputs other than quoted market prices which are
                        observable for the asset or liability; and
                     d) Inputs that are derived principally from or corroborated
                        by observable market data by correlation or other means.

       Level 3:      Prices or valuation techniques that require inputs which
                     are both unobservable and significant to the overall fair
                     value measurement of the asset or liability, as applicable.
                     They may reflect management's own assumptions about the
                     assumptions a market participant would use in pricing the
                     asset or liability.

       The following table shows how our investments are categorized.

<TABLE>

            <c>
                                          FAIR VALUE MEASUREMENT AT MARCH 31, 2008 USING:
                                   ---------------------------------------------------------------
                                        FAIR VALUE        QUOTED PRICES IN
                                     MEASUREMENTS AT       ACTIVE MARKETS    PRICES OR VALUATION
                                      MARCH 31, 2008          (LEVEL 1)      TECHNIQUES (LEVEL 3)
DESCRIPTION                                ($)                   ($)                 ($)
                                  ----------------------------------------------------------------

   Equity Securities Held for
     Trading                            2,924,000            2,924,000                     --

   Investments Available for Sale       3,896,883            1,494,270              2,402,613
</TABLE>

       In February 2007, the FASB issued Statement of Financial Accounting
       Standards No. 159, The Fair Value Option for Financial Assets and
       Financial Liabilities. SFAS No. 159 permits entities to choose to measure
       many financial assets and financial liabilities at fair value. Unrealized
       gains and losses on items for which the fair value option has been
       elected are reported in net income. SFAS No. 159 is effective for fiscal
       years beginning after November 15, 2007 and interim periods within those
       fiscal years. Upon adoption of this Statement, the Company did not elect
       SFAS No. 159 option for existing financial assets and liabilities and
       therefore adoption of SFAS No. 159 did not have any impact on its
       Consolidated Financial Statements.


                                       F-8

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


       In December 2007, the FASB issued Statement of Financial Accounting
       Standards No. 141 (revised 2007), Business Combinations ("SFAS 141R").
       SFAS 141R established principles and requirements for how an acquiring
       company recognizes and measures in its financial statements the
       identifiable assets acquired, the liabilities assumed, any noncontrolling
       interest if the acquired company and the goodwill acquired. SFAS 141R
       also established disclosure requirements to enable the evaluation of the
       nature and financial effects of the business combination. SFAS 141R is
       effective for fiscal periods beginning after December 15, 2008. The
       Company is currently evaluating the impact that SFAS 141R will have on
       its financial position and results of operations.

       In December 2007, the FASB issued Statement of Financial Accounting
       Standards No. 160, Noncontrolling Interests in Consolidated Financial
       Statements-an amendment of Accounting Research Bulletin No. 51 ("SFAS .
       160"). SFAS 160 establishes accounting and reporting standards of
       ownership interests in subsidiaries held by parties other than the
       parent, the amount of consolidated net income attributable to the parent
       and to the noncontrolling interest, changes in a parent's ownership
       interest and the valuation of retained noncontrolling equity investments
       when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure
       requirements that clearly identify and distinguish between the interests
       of the parent and the interests of the noncontrolling owners. SFAS 160 is
       effective for fiscal periods beginning after December 15, 2008. The
       Company is currently evaluating the impact that SFAS 160 will have on its
       financial position and results of operations.

       In March 2008, the FASB issued SFAS No. 161, "Disclosures about
       Derivative Instruments and Hedging Activities -- an amendment of FASB
       Statement No. 133". This statement amends SFAS No. 133 by requiring
       enhanced disclosures about an entity's derivative instruments and hedging
       activities, but does not change SFAS No. 133's scope or accounting. SFAS
       No. 161 requires increased qualitative, quantitative and credit-risk
       disclosures about the entity's derivative instruments and hedging
       activities. SFAS 161 is effective for fiscal years, and interim periods
       within those fiscal years, beginning after November 15, 2008, with
       earlier adoption permitted. The Company is currently evaluating the
       impact that SFAS 161 will have on its financial position and results of
       operations.




                                       F-9


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007



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.





                                      F-10

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007



    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.

    2.4 Trade Accounts Receivable

       Trade accounts receivable, which generally have 30 to 90 day 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.



                                      F-11


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


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


                                                     FOR THE THREE MONTHS ENDED
                                                  -----------------------------
                                                    MARCH 31,         MARCH 31,
                                                     2008               2007
                                                  -----------       -----------
       Sales outside of the U.S.                  $ 5,628,747       $ 5,487,030
       Services purchased outside of the U.S.     $ 5,588,380       $ 5,393,399

    2.5 Inventories

       Inventories are carried at the lower of cost or 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-12

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


    2.7 Intangible Assets

       Intangible assets consist of film library, gaming and software licence
       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 2 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 development costs will be useful for up to 5 years
       before additional significant development needs to be done.

    2.8 Associate

       An associate is an entity over which the group 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 group'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.


                                      F-13


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


       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.

    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"). Equity
       securities held for trading as of March 31, 2008 and December 31, 2007
       totaled $2,924,000.

       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-14


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


    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 three months ended March 31, 2008 and the year ended
       December 31, 2007.

    2.11 Investments at fair value through profit and 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.

       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.


                                      F-15


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


    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 its was incurred.

    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.

                                      F-16

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


    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 three months
       ended March 31, 2008 and 2007, the Company incurred advertising expenses
       of $32,281 and $205,429 respectively.

    2.21 Reclassifications

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



                                      F-17

<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


3. EQUITY SECURITIES HELD FOR TRADING
                                                    March 31,       December 31,
                                                      2008             2007
                                                   -----------      -----------
       Quoted equity security, at fair value       $ 2,924,000      $ 2,924,000
                                                   ===========      ===========

       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$0.48 million.

       The investments in quoted equity securities comprised of 34,000,000
       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:

                                                      MARCH 31,     DECEMBER 31,
                                                        2008            2007
                                                     ----------     ----------
       Prepayments                                   $  110,833     $  169,641
       Prepayments for investment                     3,733,333      3,733,333
       Deposits                                         170,460        171,095
       Other receivables                                159,877        172,878
                                                     ----------     ----------
                                                     $4,174,503     $4,246,947
                                                     ==========     ==========

5. PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

                                                    MARCH 31,       DECEMBER 31,
                                                      2008              2007
                                                   -----------      -----------
      Office equipment                             $ 1,141,039      $ 1,148,013
      Motor vehicle                                    112,563          112,563
      Furniture, fixture and fittings                  602,655          596,790
      Set-top boxes                                    842,437          842,494
                                                   -----------      -----------
                                                     2,698,694        2,699,860
      Accumulated depreciation                      (1,073,350)        (902,714)
                                                   -----------      -----------
                                                   $ 1,625,344      $ 1,797,146
                                                   ===========      ===========

       Depreciation expense was $170,699 for the three months ended March 31,
       2008 and $113,655 for the three months ended March 31, 2007.

                                      F-18

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


6. INTANGIBLE ASSETS

       Intangible assets consist of the following:

                                                  MARCH 31,        DECEMBER 31,
                                                    2008               2007
                                                 ------------      ------------
       INDEFINITE LIVES
       Film library                              $ 17,761,052      $ 17,759,080
                                                 ------------      ------------
                                                   17,761,052        17,759,080
                                                 ------------      ------------
       DEFINITE USEFUL LIVES
       Film library                                 5,377,464         5,331,930
       Gaming license                               7,090,000         7,090,000
       Product development expenditures               720,679           719,220
       Software license                                12,649            12,649
                                                 ------------      ------------
                                                   13,200,792        13,153,799
       Accumulated amortization                    (5,517,949)       (5,219,813)
                                                 ------------      ------------
                                                    7,682,843         7,933,986
                                                 ------------      ------------
                                                 $ 25,443,895      $ 25,693,066
                                                 ============      ============

       Amortization expense was $298,135 for the three months ended March 31,
       2008 and $803,881 for the three months ended March 31, 2007.

       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.


                                      F-19

<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


       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.

       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 on January 4, 2007 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 2 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.


                                      F-20

<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007

7. ASSOCIATE

                                                    MARCH 31,       DECEMBER 31,
                                                      2008             2007
                                                   -----------      -----------
Fair value of investment in associate              $ 3,693,650      $ 3,693,650
Goodwill                                             1,272,465        1,272,465
Share of post-acquisition loss                         (33,200)         (23,832)
                                                   -----------      -----------
                                                   $ 4,932,915      $ 4,942,283
                                                   ===========      ===========

Details of the Company's associate as at March 31, 2008 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             MARCH 31, 2008         DECEMBER 31, 2007
      Ownership Interest:       ----------------       -----------------
                                     30.1%                   30.1%

       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.


                                      F-21


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007



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


                                                      MARCH 31,     DECEMBER 31,
                                                        2008            2007
                                                     -----------    -----------

Total assets                                         $ 9,332,844    $ 9,353,100
Total liabilities                                        (26,055)       (23,562)
                                                     -----------    -----------
Net assets                                           $ 9,306,789    $ 9,329,538
                                                     ===========    ===========

Company's share of associate's net assets            $ 2,801,343    $ 2,808,191
                                                     ===========    ===========

Revenue                                              $     1,080    $   163,574
                                                     ===========    ===========

Loss for the period                                  $   (21,806)   $   (77,735)
                                                     ===========    ===========

Company's share of associate's loss for the period   $    (9,368)   $   (23,832)
                                                     ===========    ===========



                                      F-22

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007



8. INVESTMENTS AVAILABLE-FOR-SALE

Investments available-for-sale consist of the following:

                                                    MARCH 31,       DECEMBER 31,
                                                      2008             2007
                                                    ----------      ----------
Non Current :
  Quoted equity securities                          $1,494,270      $4,031,681
  Unquoted equity securities                           879,664         879,664
                                                    ----------      ----------
                                                    $2,373,934      $4,911,345
Current :
  Unquoted equity securities                         2,402,613       2,402,613
                                                    ----------      ----------
                                                     4,776,547      $7,313,958
                                                    ==========      ==========

The investments in quoted equity securities comprised of 29,428,571 common
shares of Auston International Group Ltd (Auston). As of March 31, 2008, the
market value of the Auston shares was S$0.07 (2007: S$0.16) per share.

The unquoted equity securities classified as available-for-sale, with a carrying
value of $879,664 as of March 31, 2008 and December 31, 2007, 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-23


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


9. COMMITMENTS

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

                                                      MARCH 31,     DECEMBER 31,
                                                        2008           2007
                                                     ----------     ----------
       CAPITAL COMMITMENTS:
       Contracted but not provided for
             Film library                            $  121,605     $  118,073
             Set-top boxes                           $2,074,825      2,074,825
                                                     ----------     ----------
                                                     $2,196,430     $2,192,898
                                                     ==========     ==========

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

       As of March 31, 2008, 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,
          2008                                              $   250,469
          2009                                                  147,573
          2010                                                   19,157
                                                            -----------
          Total minimum lease payments                      $   417,199
                                                            ===========

       Rent expense totaled $75,465 for the three months ended March 31, 2008
       and $71,379 for the three months ended March 31, 2007.







                                      F-24

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007



10. INCOME TAXES

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

       The Company had available approximately $5,910,356 of unused U.S. net
       operating loss carry-forwards at March 31, 2008, 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 March 31, 2008 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 $4,561,391 of unused Singapore
       tax losses and capital allowance carry-forwards at March 31, 2008, 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.

11. 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>
2008                               ENTERTAINMENT   DIGIT GAMING      OTHER          TOTAL
                                   ------------    ------------   ------------   ------------
Revenues from external customers   $     34,993    $  5,593,754   $         --   $  5,628,747
Interest revenue                   $      5,443    $         --   $         --   $      5,443
Interest expenses                  $        543    $         --   $         --   $        543
Depreciation and amortization      $    394,195    $     74,639   $         --   $    468,834
Segment profit (loss)              $ (1,155,500)   $     89,312   $         --   $ (1,066,188)
Segment assets                     $ 49,447,894    $  7,425,125   $     50,929   $ 56,923,948
Expenditures for segment assets    $     48,964    $         --   $         --   $     48,964



                                      F-25

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007

Reconciliation:-
  REVENUES
  Total revenues for reportable segments                           $  5,628,747
  Other revenue                                                    $         --
                                                                   ------------
  Total consolidated revenues                                      $  5,628,747
                                                                   ============

  INTEREST REVENUE
  Total interest revenue for reportable segments                   $      5,443
  Corporate interest revenue                                       $         --
                                                                   ------------
  Total consolidated interest revenue                              $      5,443
                                                                   ============

  INTEREST EXPENSES
  Total interest revenue for reportable segments                   $        543
  Corporate interest revenue                                       $         --
                                                                   ------------
  Total consolidated interest expenses                             $        543
                                                                   ============

  PROFIT OR LOSS
  Total (loss) for reportable segments                             $ (1,066,188)
  Corporate loss                                                   $    (50,089)
  Loss on disposal of investment available for sale                $   (397,755)
  Share of loss of associate                                       $     (9,368)
                                                                   ------------
  Loss before income tax                                           $ (1,523,400)
                                                                   ============

  ASSETS
  Total assets for reportable segments                             $ 56,873,019
  Other assets                                                     $     50,929
                                                                   ------------
  Total consolidated assets                                        $ 56,923,948
                                                                   ============

  EXPENDITURES FOR SEGMENT ASSETS
  Total expenditures for assets for reportable segments            $     48,964
                                                                   ============



2007                               ENTERTAINMENT   DIGIT GAMING       OTHER          TOTAL
                                   ------------    ------------   ------------   ------------
Revenues from external customers   $     10,249    $  5,476,826   $         --   $  5,487,075
Interest revenue                   $     13,682    $         --   $         --   $     13,682
Depreciation and amortization      $    842,897    $     74,639   $         --   $    917,536
Segment profit (loss)              $ (1,842,101)   $     64,275   $         --   $ (1,777,826)
Segment assets                     $ 45,544,336    $  7,361,956   $  2,482,251   $ 55,388,543
Expenditures for segment assets    $  1,182,564    $         --   $         --   $  1,182,564

</TABLE>




                                      F-26


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


Reconciliation:-

         REVENUES
         Total revenues for reportable segments                    $  5,487,075
         Other revenue                                                       --
                                                                   ------------
                 Total consolidated revenues                       $  5,487,075
                                                                   ============
         INTEREST REVENUE
         Total interest revenues for reportable segments           $     13,658
         Corporate interest revenue                                          24
                                                                   ------------
                 Total consolidated interest revenue               $     13,682
                                                                   ============
         PROFIT OR LOSS

         Total loss for reportable segments                        $ (1,777,826)
         Corporate expenses                                        $   (126,861)
         Gain on dilution of interest in subsidiary                $  2,483,871
         Share of loss of associate                                $      7,539

                                                                   ------------
                 Profit before income tax                          $    586,723

                                                                   ------------
         ASSETS
         Total assets for reportable segments                      $ 52,906,292
         Other assets                                              $  2,482,251

                                                                   ------------
                 Total consolidated assets                         $ 55,388,543
                                                                   ============
         EXPENDITURES FOR SEGMENT ASSETS
         Total expenditures for assets for reportable segments     $  1,182,564
                                                                   ============



                                      F-27

<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


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

<TABLE>
<S>            <C>
2008                               ASIA PACIFIC   UNITED STATES     OTHER           TOTAL
                                   ------------   ------------   ------------   ------------
Revenues from external customers   $  5,628,747   $         --   $         --   $  5,628,747
Property and equipment, net        $  1,347,942   $    182,002   $     95,400   $  1,625,344


2007                               ASIA PACIFIC   UNITED STATES     OTHER           TOTAL
                                   ------------   ------------   ------------   ------------
Revenues from external customers   $  5,487,030   $         45   $         --   $  5,487,075
Property and equipment, net        $    893,249   $    277,971   $     95,400   $  1,266,620


</TABLE>

                                      F-28


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2008 AND 2007


12. 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 Group entered into the following transactions with
       the associate:

                                                      MARCH 31,      MARCH 31,
                                                       2008            2007
                                                    ------------   ------------
      Associate :
       Marketing                                    $         --   $     42,216
                                                    ============   ============


13. SUBSEQUENT EVENTS

       On April 9, 2008, the Company disposed 5,000,000 common shares of Auston
       International Group Ltd (Auston) at S$ 0.072 per share.

       On April 10, 2008, the Company disposed a further of 5,000,000 common
       shares of Auston at S$ 0.07 per share.



                                      F-29

<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 0F 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.


                                       1

<PAGE>

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, Education-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.

       In fiscal 2007, the business was reorganized under the following entities
       to spearhead the expansion of the Company's business and focus on
       specific growth areas and territories.

       M2B WORLD PTE. LTD.

       M2B World Pte. Ltd. was incorporated on April 3, 2003. This subsidiary
       used to oversee the management and operation of the Company as a whole
       and oversees the Asian business. With effect from September 1, 2006, the
       Company's Asian business was overseen by another subsidiary, M2B World
       Asia Pacific Pte. Ltd.

       The Company took an investment on May 16, 2005 for a 9.1% equity position
       with a company called Activ Lifestyle Pte Ltd in Singapore to help
       facilitate Amaru Inc.'s diversification into the health and wellness
       market. On September 27, 2005, the Company raised its investment in Activ
       Lifestyle Pte Ltd to 12.6%. This was further increased to 17.4% as of
       December 31, 2006.

       In December 2005, M2B World Pte. Ltd. sold 81% equity interests of its
       wholly-owned subsidiary, M2B Game World Pte. Ltd. to Auston International
       Group Ltd (Auston), a public listed company in Singapore, in exchange for
       27% equity interest in Auston. On March 13 and 14, 2007, the Company
       disposed off 7,000,000 common shares of Auston International Group Ltd
       (Auston) at S$0.08 per share. As of December 31, 2007, the Company's
       equity interest in Auston was at 10.40%. As of this date of this report,
       the Company's equity interest in Auston shares stands at 4.73%

       Subsequent to March 31, 2008, the Company disposed 5,000,000 common
       shares of Auston International Group Ltd at S$0.072 per share and a
       further 5,000,000 common shares of Auston at S$0.07 per share.

       M2B WORLD, INC.

       M2B World, Inc., a California corporation, was incorporated on January
       24, 2005. This subsidiary handles and oversees the Company's business in
       the U.S. The Company has leased a new office on Sunset Boulevard, West
       Hollywood that came into effect in August 2006. In October 2007, M2B
       World Inc reduced its staffing and in November 2007 sub-leased its
       premise as part of the Company's cost reduction measures.

       This subsidiary oversees the new global Broadband TV (IPTV) service. A
       new server farm was set up in the U.S. in San Jose California in December
       2005 to expand the broadband streaming infrastructure; in order to handle
       the business in North America and also the global IPTV service.

                                        2


<PAGE>


       On May 27, 2005, M2B World, Inc. entered into an agreement with Indie
       Vision Films, Inc., a California corporation, to purchase 20% of the
       beneficial ownership of Indie Vision Films, Inc. The investment will
       allow M2B World, Inc. to access the library of programs of Indie Vision
       Films, Inc. The Company is currently into negotiations with Indie Vision
       Films, Inc to convert its investment into content rights, thereby giving
       up its 20% share of beneficial ownership in lieu of library rights that
       the Company could exploit commercially for international use.

       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. The company is in the process of
       consolidating the server farm with the Singapore server farm to, optimize
       bandwidth and support cost.

       M2B WORLD ASIA PACIFIC PTE. LTD.

       M2B World Asia Pacific Pte Ltd was incorporated in the Republic of
       Singapore on 1 August 2006 for the purposes of handling all the business
       operations of the Company in the Asia Pacific region. This company had
       taken over the Asian business operations as well as the assets and
       liabilities of M2B World Pte. Ltd. with effect from September 1, 2006.

       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 81.6%.

       M2B COMMERCE LIMITED

       M2B Commerce Limited, a company incorporated in the British Virgin
       Islands on July 25, 2002, focuses on e-commerce and digit gaming, with a
       branch in Cambodia that oversees the digit gaming operation in Cambodia.

       The Company has an agreement with Allsports Limited, a British Virgin
       Islands company to operate, administer, and manage the lottery digit
       games activities in Cambodia, as an extension of the Company's
       entertainment operations.

       The company had entered into an investment agreement on January 12, 2006,
       with Khoo Kim Leng, the beneficial owner of Dai Long Co., Ltd, which
       holds a valid casino license and freehold land and intends to develop and
       operate an integrated resort in the Kingdom of Cambodia. The resort will
       feature a hotel, guest house, shopping arcade, entertainment and
       amusement center and some gaming tables. As of December 31, 2006, the
       company had invested $2,402,613 in relation to this investment. The
       resort was completed and is in operation subsequent to the balance sheet
       date. The Company however intends to divest its stake in the resort, and
       has already put up its investment for sale in the market, as the
       investment is not related to the Company's core business.

       M2B ENTERTAINMENT, INC.

       M2B Entertainment, Inc. was incorporated on October 27, 2005. This
       subsidiary will oversee the Company's Canadian market. As of December 31,
       2007, this subsidiary is dormant.

       M2B AUSTRALIA PTY LTD

       M2B Australia Pty Ltd was incorporated on June 15, 2005. This subsidiary
       handles and oversees the Company's business in Australia. As of December
       31, 2007, this subsidiary is dormant.

       M2B WORLD TRAVEL SINGAPORE PTE. LTD.

       M2B World Travel Singapore Pte Ltd was incorporated in the Republic of
       Singapore on March 7, 2006. This subsidiary of M2B World Travel Limited
       launches a global online travel platform which offers global e-travel
       services.

       The Company has completed the development of an online travel engine and
       travel web applications for integration with suppliers of travel
       information and travel services; and incorporating travel features with
       current media operations under the M2B brand name.

       M2B World Travel Limited signed a global agreement with Amadeus Global
       Travel Distribution, SA, a Spanish corporation. Through the agreement,
       the company will be able to offer direct access to the extensive range of
       travel options available through the Amadeus network to viewers around
       the world.

       The launch and operations of the travel service is subject to funding
       considerations and the set up of the server farm to host the system.

                                        3

<PAGE>

       AMARU HOLDINGS LIMITED AND M2B WORLD HOLDINGS LIMITED

       Amaru Holdings Limited and M2B World Holdings Limited are incorporated in
       the British Virgin Islands on February 21, 2005 and June 15, 2006,
       respectively. Amaru Holdings Limited focuses on content syndication and
       distribution in areas other than Asia Pacific region. M2B World Holdings
       Limited focuses on content syndication and distribution in Asia Pacific
       region and is a subsidiary of M2B World Asia Pacific Pte. Ltd.

       TREMAX INTERNATIONAL LIMITED AND M2B WORLD TRAVEL LIMITED

       Tremax International Limited and M2B World Travel Limited are both
       incorporated in the British Virgin Islands on June 8, 2006 and May 3,
       2005 respectively. Both companies are investment holdings companies.

       On July 10, 2007, 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 is satisfied in full by the issuance of 5,333,333 of common
       stock of the Company.

       CBN is a company registered in Taiwan, the Republic of China. CBN is an
       internet cum broadband access provider to major residential buildings in
       Taiwan. The Company believes that acquisition of CBN will be beneficial
       to the Company, because CBN has a subscriber base of about 20,000 homes
       and should be able to provide the Company with a ready subscriber base to
       roll out its services. In 2006, CBN had a revenue of $2.5 millions and
       fixed assets of $1.8 millions in network and systems to enable services
       to the homes.

       The investment is pending the approval of the regulatory authorities in
       Taiwan, which is a requirement for foreign investments in Taiwan.

       RESULTS OF OPERATIONS

       REVENUE

       Financial Statement

       -      Revenue for the three months ended March 31, 2008 was $5,628,747
              compared with $5,487,075 for the same period in 2007.

       -      The Company's cash balance was $1,874,739 at March 31, 2008
              compared with $5,757,807 at March 31, 2007.

       Revenue

       Revenue for the three months ended March 31, 2008 at $5,628,747 was
       higher than revenue of $5,487,075 for the three months ended March 31,
       2007 by $141, 672 (2.58%).

       Digit gaming revenue for the three months ended March 31, 2008 at
       $5,593,754 was higher than $5,476,826 at March 31, 2007 by $116,928
       (2.13%) mainly due to increase in lottery sales.

       Entertainment revenue for the three months ended March 31, 2008 at
       $34,993 was higher than entertainment revenue of $10,249 for the three
       months ended March 31, 2007. The increase in entertainment of $24,744
       (241.43%) was insignificant mainly due to no new advertising or content
       syndication contracts being secured.

       Cost of Services

       Cost of services for the three months ended March 31, 2008 was $5,588,380
       which increased by $164,879 (3.04%) from $5,423,501 for the three months
       ended March 31, 2007.

       As a proportion of revenue the cost of the services for the three months
       ended March 31, 2008 was 99.3% (cost of sales at $5,588,380 and revenue
       of $ 5,628,747) as compared to 98.8% (cost of sales at $5,423,501 and
       revenue of $5,487,075) for the three months ended March 31, 2007.

       The increase in cost of services of $164,879 (3.04%) was not significant
       and was attributed to the cost of managing and operating the
       entertainment segment.


                                        4

<PAGE>

       DISTRIBUTION EXPENSES

       Distribution expenses for the three months ended March 31, 2008 at
       $124,930 were lower by $184,717 (59.65%) as compared to the amount of
       $309,647 incurred for the three months ended March 31, 2007.

       The lower distribution expenses were attributed to decreased spending on
       marketing and promoting the WOWtv and M2Btv services which decreased by
       $173,148 (84.3%) from $145,429 for the three months ended March 31, 2007
       to $32,281 for the three months ended March 31, 2008.

       GENERAL AND ADMINISTRATIVE EXPENSES

       Administration expenses for the three months ended March 31, 2008 at
       $1,038,502 were lowered by $633,794 (37.9%) as compared to the amount of
       $1,672,296 incurred for the three months ended March 31, 2007.

       The decrease in administrative expenses for the period ended March 31,
       2008 was attributed mainly to the decrease in:

       o      Amortization. License amortization had decreased by $505,746
              (62.91%), from $803,881 for the three months ended March 31, 2007
              to $298,135 for the period ended March 31, 2008. The decrease was
              mainly due to most of the intangible assets being fully
              depreciated during end of December 31, 2007.

       o      Staff costs. Staff costs had decreased by $146,434 (37.80%), from
              $387,435 for the three months ended March 31, 2007 to $241,001 for
              the three months ended March 31, 2008. The decrease was mainly due
              as a result of costs reduction measures to reduce operating costs

       (LOSS) INCOME FROM OPERATIONS

       The Company incurred a loss from operations of $1,123,065 for the three
       months ended March 31, 2008 as compared to the loss from operations of
       $1,918,369 for the three months ended March 31, 2007 due to the
       significant decrease in the general and administrative expenses for the
       period.

       NET (LOSS) INCOME

       Net loss for the three months ended March 31, 2008, was $1,506,400 which
       decreased by $2,256,636 (300.79%) from net income of $750,236 for the
       three months ended March 31, 2007.

       The decrease was mainly attributed to the gain of $2,483,871 as of March
       31, 2007 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. On January 3, 2007, M2B World Asia Pacific Pte. Ltd., issued
       7,778,014 shares of common stock through 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%. The decrease was further attributed to the
       loss of $397,755 as of March 31, 2008 on the disposal of investments
       available for sale.

       LIQUIDITY AND CAPITAL RESOURCES

       The Company had cash at $1,874,739 at March 31, 2008 as compared to cash
       of $5,757,807 at March 31, 2007.

       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 March 31, 2008, 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.

                                       5

<PAGE>


       Cash generated from operations will not be able to cover the Company's
       intended growth and expansion. The Company has plans in 2008 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.


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The primary objective of our investment activities is to preserve
       principal while concurrently maximizing the income we receive from our
       investments without significantly increasing risk. Some of the securities
       that we may invest in may be subject to market risk. This means that a
       change in prevailing interest rates may cause the principal amount of the
       investment to fluctuate. For example, if we hold a security that was
       issued with a fixed interest rate at the then-prevailing rate and the
       prevailing interest rate later rises, the current value of the principal
       amount of our investment will decline. To minimize this risk in the
       future, we intend to maintain our portfolio of cash equivalents and
       short-term investments in a variety of securities, including commercial
       paper, money market funds, high-grade corporate bonds, government and
       non- government debt securities and certificates of deposit. In general,
       money market funds are not subject to market risk because the interest
       paid on such funds fluctuates with the prevailing interest rate. The
       Company held $7,700,547 and $10,237,958 in marketable securities as of
       March 31, 2008 and December 31, 2007 respectively.

       The Company does not believe that it faces material market risk with
       respect to its cash and cash equivalents which totaled $1,874,739 and
       $2,322,541 at March 31, 2008 and December 31, 2007, respectively.

       The Company has no long-term obligations or hedging activities.

       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.



                                        6

<PAGE>



       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.



                                        7

<PAGE>

       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.

       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.


ITEM 4: CONTROLS AND PROCEDURES

       EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

       A system of disclosure controls and procedures (as defined in Rule
       13a-15(e) under the Securities Exchange Act of 1934, as amended [the
       "Exchange Act"]) are controls and other procedures that are designed to
       provide reasonable assurance that the information that the Company is
       required to disclose in the reports that it files or submits under the
       Exchange Act is recorded, processed, summarized and reported within the
       time periods specified in the SEC's rules and forms, and that such
       information is accumulated and communicated to the Company's management,
       including the Chief Executive Officer and Chief Financial Officer, as
       appropriate to allow timely decisions regarding required disclosure.
       There are inherent limitations to the effectiveness of any system of
       disclosure controls and procedures, including the possibility of human
       error and the circumvention or overriding of the controls and procedures.
       Accordingly, even effective disclosure controls and procedures can only
       provide reasonable assurance of achieving their control objectives, and
       management necessarily is required to use its judgment in evaluating the
       cost-benefit relationship of possible controls and procedures. In
       addition, the design of any system of controls is based in part upon
       certain assumptions about the likelihood of future events, and there can
       be no assurance that any design will succeed in achieving its stated
       goals under all potential future conditions. Moreover, over time,
       controls may become inadequate because of changes in conditions, or the
       degree of compliance with policies or procedures may deteriorate. Because
       of the inherent limitations in a control system, misstatements due to
       error or fraud may occur and not be detected.

                                        8

<PAGE>

       Notwithstanding the issues described below, the current management has
       concluded that the consolidated financial statements for the periods
       covered by and included in the Quarterly Report on Form 10-Q for the
       period ended March 31, 2008 are fairly stated in all material respects in
       accordance with generally accepted accounting principles in the United
       States for each of the periods presented herein.

       MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

       Section 404 of the Sarbanes-Oxley Act of 2002 requires that management
       document and test the Company's internal control over financial reporting
       and include in the Quarterly Report on Form 10-Q for the period ended
       March 31, 2008 a report on management's assessment of the effectiveness
       of our internal control over financial reporting.

       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). Internal control over
       financial reporting is a process designed to provide reasonable assurance
       regarding the reliability of financial reporting and the preparation of
       financial statements for external purposes in accordance with United
       States of America generally accepted accounting principles. A Company's
       internal control over financial reporting includes those policies and
       procedures that (i) pertain to the maintenance of records that, in
       reasonable detail, accurately and fairly reflect the transactions and
       dispositions of the assets of the company; (ii) provide reasonable
       assurance that transactions are recorded as necessary to permit
       preparation of financial statements in accordance with generally accepted
       accounting principles and that receipts and expenditures of the Company
       are being made only in accordance with authorization of management and
       directors of the Company and (iii) provide reasonable assurance regarding
       the prevention or timely detection of unauthorized acquisition, use or
       disposition of the Company's assets that could have a material effect on
       our consolidated financial statements.

       In connection with the preparation of the Quarterly Report on Form 10-Q
       for the period ended March 31, 2008 to evaluate the effectiveness of the
       design and operation of our disclosure controls and procedures as of
       March 31, 2008, the Company's management did not complete the assessment
       of the effectiveness of the Company's internal control over financial
       reporting, implementing the criteria set forth by the Committee of
       Sponsoring Organizations (COSO) of the Treadway Commission in "Internal
       Control-Integrated Framework". Management has concluded as a result that
       its disclosure controls and procedures may not be effective at the
       reasonable assurance level as of March 31, 2008. Specifically, its
       control environment possibly may not sufficiently promote effective
       internal control over financial reporting through the management
       structure to prevent a material misstatement.

       The Company needs to complete implementing the internal controls based on
       the criteria established in Internal Control -- Integrated Framework
       issued by the COSO. The management is fully committed to implement the
       internal controls based on these criteria in 2008 and the management
       believes that it is taking the steps that will properly address any
       issue.

       Subsequent to March 31, 2008, the Company plans to hire a Chief Financial
       Officer and is utilizing several full time accounting contractors serving
       in senior and staff level accounting positions. The Company is actively
       recruiting high-level competent accounting personnel.

       While we are taking immediate steps and dedicating substantial resources
       to implement the internal controls based on the criteria established in
       Internal Control - Integrated Framework issued by the COSO, they will not
       be considered fully implemented until the new and improved internal
       controls operate for a period of time, are tested and are found to be
       operating effectively.

       The Company's registered public accountant has not conducted an audit of
       the Company's controls and procedures regarding internal control over
       financial reporting. Consequently, the registered public accounting firm
       expresses no opinion with regards to the effectiveness or implementation
       of the Company's controls and procedures with regards to internal control
       over financial reporting.

       CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

       There have been no changes in the Company's internal control over
       financial reporting during the most recently completed fiscal quarter
       that have materially affected, or are reasonably likely to materially
       affect, the Company's internal control over financial reporting.

                                        9

<PAGE>

PART II:  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, which has been further amended to include Amaru, Inc.
       as a co-defendant. The lawsuit was settled by the parties in April, 2008.

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.

                                       10

<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 depend 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.


                                       11

<PAGE>

       THE COMPANY DID NOT COMPLETE THE ASSESSMENT OF THE EFFECTIVENESS OF THE
       COMPANY'S INTERNAL CONTROL OVER FINANCIAL REPORTING, SET FORTH BY THE
       COMMITTEE OF SPONSORING ORGANIZATIONS (COSO) OF THE TREADWAY COMMISSION
       IN "INTERNAL CONTROL-INTEGRATED FRAMEWORK".

       Section 404 of the Sarbanes-Oxley Act of 2002 requires that management
       document and test the Company's internal control over financial reporting
       and include in the Annual Report on Form 10-K and this Quarterly Report
       on Form 10-Q report on management's assessment of the effectiveness of
       our internal control over financial reporting.

       In connection with the preparation of the Annual Report on Form 10K and
       this Quarterly Report on Form 10-Q, to evaluate the effectiveness of the
       design and operation of our disclosure controls and procedures as of
       March 31, 2008, the Company's management did not complete the assessment
       of the effectiveness of the Company's internal control over financial
       reporting, implementing the criteria set forth by the Committee of
       Sponsoring Organizations (COSO) of the Treadway Commission in "Internal
       Control-Integrated Framework".

       While the Company is taking immediate steps and dedicating substantial
       resources to implement the internal controls based on the criteria
       established in Internal Control - Integrated Framework issued by the
       COSO, they will not be considered fully implemented until the new and
       improved internal controls operate for a period of time, are tested and
       are found to be operating effectively.

       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.


                                       12

<PAGE>


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

       None

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:

         Exhibit 31.1      CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSANT
                           TO SECTION 302 OF THE SARBANES-OXLEY ACT

         Exhibit 31.2      CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSANT
                           TO SECTION 302 OF THE SARBANES-OXLEY ACT

         Exhibit 32.1      CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSANT
                           TO SECTION 906 OF THE SARBANES-OXLEY ACT

         Exhibit 32.2      CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSANT
                           TO SECTION 906 OF THE SARBANES-OXLEY ACT




                                       13

<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)


May 7, 2008                              /s/ Colin Binny
----------------                         ---------------------------------------
Date                                     President, Chief Executive Officer and
                                         Chief Financial Officer