<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, 2009

                                       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, #01-00 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 reporting  filer |_|     Accelerated filer  |_|
Non-accelerated filer|_|                   Smaller company |X|
  (Do not check if a smaller reporting

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 April 30, 2009)



<PAGE>

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                           AMARU, INC. AND SUBSIDARIES
                       2009 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-25

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

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK            7

ITEM 4:  CONTROLS AND PROCEDURES                                               9


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

ITEM 1:  LEGAL PROCEEDINGS                                                     11
ITEM 1A: RISK FACTORS                                                          11
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS            15
ITEM 3: DEFAULTS UPON SENIOR SECURITIES                                        15
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS                   15
ITEM 5: OTHER INFORMATION                                                      15
ITEM 6:  EXHIBITS                                                              15

SIGNATURES

</TABLE>



<PAGE>

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


                                                  MARCH 31,      DECEMBER 31,
                                                    2009             2008
                                                 ------------    ------------
                                                 (Unaudited)

ASSETS
Current assets
Cash and cash  equivalents                       $  1,056,420    $  1,484,945
Accounts receivable, net of allowance of
$110,918 and $1,055,855 at March 31, 2008 and
December 31, 2008 respectively                        133,302         134,710
Accounts receivable from sale of IPTV Platform      9,500,000       9,500,000
Equity securities held for trading                    170,329         179,620
Other current assets                                  566,376         230,293
Inventories                                           642,268         644,153
Investments available for sale                      2,402,613       2,402,613
                                                 ------------    ------------
Total current  assets                              14,471,308      14,576,334
                                                 ------------    ------------

Non-current assets
Property and equipment, net                           905,430       1,033,506
Intangible assets, net                             20,697,621      20,872,056
Investments available for sale                        616,136         616,136
                                                 ------------    ------------

Total non-current assets                           22,219,187      22,521,698
                                                 ------------    ------------
Total assets                                     $ 36,690,495    $ 37,098,032
                                                 ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses            $  1,586,061    $  1,319,897
Others  payable                                            --           5,458
Advances from related parties                              --          48,681
Capital lease payable - short term                     10,319          10,809
Income taxes payable                                    5,428           5,428
                                                 ------------    ------------
Total current liabilities                           1,601,808       1,390,273
                                                 ------------    ------------
Deferred tax liabilities                                   --              --
Convertible term loan                               2,339,045       2,307,796

Capital lease payable - long term                      42,131          46,831
                                                 ------------    ------------
Total non-current liabilities                       2,381,176       2,354,627
                                                 ------------    ------------

Total liabilities                                   3,982,984       3,744,900

Commitments                                                --              --

Stockholders' equity
Preferred stock (par value $0.001) 5,000,000               --              --
shares authorized;
0 shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively

Common stock (par value $0.001) 200,000,000           154,098         154,098
shares authorized;154,098,528 shares issued
and outstanding at March 31, 2009 and December
31, 2008, respectively

Additional paid-in capital                         39,190,666      39,190,666

Accumulated Deficit                               (10,273,917)     (9,726,413)
Accumulated other comprehensive income                968,406         968,406

Minority interest                                   2,668,258       2,766,375
                                                 ------------    ------------
Total stockholders' equity                         32,707,511      33,353,132
                                                 ------------    ------------

Total liabilities and shareholders' equity       $ 36,690,495    $ 37,098,032
                                                 ============    ============

           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,
                                                             2009              2008
                                                        --------------    --------------

Revenue:


Entertainment                                           $       16,813    $       34,993

Digit gaming                                                        --                --
                                                        --------------    --------------
Total revenue                                                   16,813            34,933

Cost of services                                               (55,053)         (163,045)
                                                        --------------    --------------

Gross loss                                                     (38,240)         (128,052)

Distribution costs                                             (32,681)         (986,116)

Administrative expenses                                       (533,705)       (1,038,502)
                                                        --------------    --------------
Total expenses                                                (566,386)       (2,024,618)
                                                        --------------    --------------


Loss from operations                                          (604,626)       (2,152,670)

Other (expenses) income

   Interest expenses                                           (31,771)             (543)

   Interest income                                                  67             5,443

   Gain on disposal of equipment                                    --             1,888

   Loss on disposal of investment available for sales               --          (397,755)

   Net change in fair value of financial assets at
   Fair value securities for trading                            (9,291)               --

   Share of loss of associate                                       --            (9,368)
                                                        --------------    --------------

Loss before income taxes                                      (645,621)       (2,553,005)

Benefit for income taxes                                            --            17,000

                                                        --------------    --------------
Net loss                                                $     (645,621)   $   (2,536,005)
                                                        ==============    ==============
Attributable to:
Equity holders of the company                                 (547,504)       (2,352,022)

Minority interest                                              (98,117)         (183,938)

                                                        --------------    --------------
Net (loss) income                                       $     (645,621)   $   (2,536,005)
                                                        ==============    ==============

Earnings per share
- basic and diluted                                     $       (0.004)   $       (0.016)
                                                        ==============    ==============
Weighted average number of common shares outstanding
- basic and diluted                                        159,431,861       159,431,861
                                                        ==============    ==============

             See accompanying notes to consolidated financial statements

                                         F-3




<PAGE>

                                                   AMARU, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                          FOR THE YEAR ENDED DECEMBER 31, 2008 and the three months ended March 31, 2009



                                 PREFERRED STOCK                COMMON STOCK
                           ---------------------------   ---------------------------
                              NUMBER          PAR           NUMBER           PAR                          SUBSCRIBED
                                OF           VALUE           OF            VALUE      ADDITIONAL PAID-     COMMON       ACCUMULATED
                              SHARES        ($0.001)        SHARES        ($0.001)       IN CAPITAL        STOCK          DEFICIT
                           ------------   ------------   ------------   ------------   --------------   ------------   ------------
Balance at December
    31, 2007                        --            --     159,431,861    $    159,431    $ 42,918,666    $         --   $  5,650,447

Net loss                            --             --             --              --              --              --    (15,376,860)

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

Common stock received in
Cancellation of exchange
for Repayment of investment         --             --     (5,333,333)         (5,333)     (3,728,000)             --             --

Comprehensive
    income                          --             --             --              --              --              --             --
                           ------------   ------------   -----------    ------------   --------------   ------------   ------------
Balance at December
    31, 2008                        --              --   159,431,861    $    154,098    $ 39,190,666    $         --   $ (9,726,413)
                           ============   ============   ============   ============   ==============   ============   ============

                                                                                                                      (CONTINUED)


                                   See accompanying notes to consolidated financial statements

                                                               F-4


<PAGE>



                                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                         --              --     (1,853,006)     (17,229,866)

Change in fair value
    of available
    for-sale-equity
    securities, net
    of tax                       --      (1,255,235)            --       (1,255,235)


Common stock received in
Cancellation of exchange for
Repayment of investment          --              --             --       (3,733,333)
                                                                        -----------
Comprehensive
    loss                         --              --             --      (22,218,434)
                        ------------   ------------    ------------    ------------
Balance at December
    31, 2008            $     12,927   $    955,479    $  2,766,375    $ 33,353,132
                        ============   ============    ============    ============





            See accompanying notes to consolidated financial statements

                                       F-4a




<PAGE>

                                                  AMARU, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                          FOR THE YEAR ENDED DECEMBER 31, 2008, and the three months ended March 31, 2009




                              PREFERRED STOCK                COMMON STOCK
                        ---------------------------   ---------------------------
                           NUMBER          PAR           NUMBER           PAR                          SUBSCRIBED
                             OF           VALUE           OF            VALUE      ADDITIONAL PAID-      COMMON       ACCUMULATED
                           SHARES        ($0.001)        SHARES        ($0.001)       IN CAPITAL         STOCK          DEFICIT
                        ------------   ------------   ------------   ------------   --------------    ------------   ------------
Balance at December
    31, 2008                      --             --    154,098,528   $    154,098   $   39,190,666    $         --   $ (9,726,413)

Net loss                          --             --             --             --               --              --       (547,504)



Comprehensive
    income                        --             --             --             --               --              --             --
                        ------------   ------------   ------------   ------------   --------------    ------------   ------------
Balance at March
    31, 2009                      --             --    154,098,528  $    154,098   $   39,190,666    $         --   $ (10,273,917)
                        ============   ============   ============   ============   ==============    ============   ============

                                                                                                                      (CONTINUED)


                                    See accompanying notes to consolidated financial statements

                                                               F-5


<PAGE>


                              ACCUMULATED OTHER
                            COMPREHENSIVE INCOME
                        ---------------------------
                          CURRENCY                                         TOTAL
                        TRANSLATION     FAIR VALUE     MINORITY        SHAREHOLDERS'
                          RESERVE        RESERVE       INTEREST          EQUITY
                        ------------   ------------  ------------      ------------
Balance at December
    31, 2008            $     12,927   $   955,479   $ 2,766,375       $ 33,353,132

Net loss                          --            --       (98,117)          (645,621)
                                                                        ------------
Comprehensive
    loss                          --            --              --         (645,621)
                        ------------   -----------    ------------      ------------

Balance at March
    31, 2009            $     12,927   $   955,479   $ 2,668,258       $ 32,707,511
                        ============   ============    ============    ============




            See accompanying notes to consolidated financial statements

                                       F-5a


<PAGE>


                                  AMARU, INC. & SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                FOR THE THREE MONTHS ENDED
                                                               -----------------------------
                                                               March 31, 2009  March 31, 2008
                                                                 -----------    -----------

                                                                  (Unaudited)    (Unaudited)


CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                     $  (645,621)   $(2,536,005)
    Share of loss (profit) of investment                                  --          9,368
    Adjustments to reconcile net income to cash and cash
    equivalents used or provided by operations:
    Amortization                                                     176,537        298,135
    Depreciation                                                     128,076        170,699
    Gain on disposal of equipment                                         --         (1,888)
    Loss on disposal of investment available for sales                    --        397,755
    Defer tax                                                             --        (17,000)
    Net change in fair value of financial assets at fair value
    Through profit or loss-held for trading                            9,291             --

 Changes in operation assets and liabilities
    Accounts receivables                                               1,408        597,207
    Inventories                                                        1,885          8,833
    Others current assets                                           (336,083)        72,444
    Accounts payable and accrued expenses                            266,164       (507,550)
    Other payables                                                    (5,458)        39,997
                                                                 -----------    -----------
Net cash used in operating activities                               (403,801)    (1,468,005)
                                                                 -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of equipment                                              --             --
    Proceeds from disposal of equipment                                   --          2,991
    Acquisition of intangible assets                                  (2,102)       (48,964)
    Proceeds from disposal of investment available for sale               --        400,587
                                                                 -----------    -----------
Net cash provided by (used in) investing activities                   (2,102)       354,614

                                                                 -----------    -----------
CASH PROVIDED FROM FINANCING ACTIVITIES
   Advance from related parties                                           --         11,890
   Repayment of related parties                                      (48,681)            --
   Repayments of obligations under finance leases                     (5,190)        (2,723)
   Receipts from convertible term loan                                31,249             --
                                                                 -----------    -----------
Net cash provided by (used in) financing activities                  (22,622)         9,167
                                                                 -----------    -----------
Effect of exchange rate changes on cash and cash equivalents              --          3,025
                                                                 -----------    -----------

Cash flows from all activities                                      (428,525)    (1,101,199)

Cash and cash equivalents at beginning of period                   1,484,945      2,322,541
                                                                 -----------    -----------

Cash and cash equivalents at end of period                       $ 1,056,420    $ 1,221,342
                                                                 ===========    ===========

                 See accompanying notes to consolidated financial statements

                                             F-6
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<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008

1.     BASIS OF PRESENTATION AND REORGANIZATION

         Amaru, Inc. (the "Company") is in the business of broadband
         entertainment-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 International Ltd, a British Virgin
         Islands company to operate and conduct digit games in Cambodia and to
         manage the digit games activities in Cambodia. The digit game lottery
         operations have been suspended by the government of Cambodia in March,
         2009, and it cannot be determined at this time whether the suspension
         of the digit games lottery is temporary or permanent, see Note 14.

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

         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 and pay per view services 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 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 game operations.

  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.


                                      F-7


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



         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 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.

         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-8


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  2.1    Principles of Consolidation

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

  2.2    Use of Estimates

         The preparation of the consolidated financial statements in accordance
         with generally accepted accounting principles requires management to
         make estimates and assumptions relating to the reported amounts of
         assets and liabilities and the disclosure of contingent assets and
         liabilities at the date of the consolidated financial statements and
         the reported amounts of revenues and expenses during the period.
         Significant items subject to such estimates and assumptions include
         carrying amount of property and equipment, intangibles, valuation
         allowances of receivables and inventories. Actual results could differ
         from those estimates.

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

  2.3    Cash and Cash Equivalents

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

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

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

  2.4    Accounts Receivable

         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
         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
         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-9


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



  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. As at March 31, 2009, the net inventories
         amount is $642,268 after allowing for $457,400 during the year ended
         December 31, 2008.

  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.

  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.

         The film library, which are classified as indefinite lives, relate to
         film library rights that are acquired for perpetuity by the Company.
         The film library, which are classified as having definite lives, relate
         to film library rights that are generally acquired for one to ten years
         by the Company.

  2.8    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 December 31, 2008 totaled
         $179,620 and December 31, 2007 totaled $2,924,000. The changes relate
         to fair value adjustments of $2,744,380 for the year ended December 31,
         2008 and $466,000 for the year ended December 31, 2007.

                                      F-10


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



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

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


  2.9    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 years ended December 31, 2008 and 2007.

  2.10   Fair Value

         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.

         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.

                                      F-11


<PAGE>


                             AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



          The following table shows how our investments are categorized.

 Fair Value Measurement at March 31, 2009 using:
 --------------------------------------------------

<TABLE>
<CAPTION>
<S>     <C>

                                               Prices or Fair Value    Quoted Prices in         Valuation
                                                  Measurements at       Active Markets          Techniques
                                                 March 31, 2009           (Level 1)              (Level 3)
Description                                              ($)                  ($)                   ($)
-----------------------------------------------------------------------------------------------------------
   Equity Securities Held for Trading                   170,329             170,329                    --

   Investments Available for Sale - Current           2,402,613                  --             2,402,613

   Investments Available for Sale - Non Current              --                  --               616,136
</TABLE>



         The table below sets forth a summary of changes in the fair value of
         the Company's Level 3 financial assets (Investments Available for Sale)
         for the year ended December 31, 2008.
<TABLE>
<CAPTION>
<S>     <C>

                                                                     For quarter ended
                                                                       March 31, 2009
                                                                     ------------------

          Balance at the beginning and end of the period                $ 3,018,749
</TABLE>

         The Company's equity securities held for trading is classified within
         Level 1 of the fair value hierarchy since they are valued using quoted
         market prices. The equity securities held for trading that are valued
         based on quoted market prices.

         The Company's investments available for sale are classified within
         Level 3 of the fair value hierarchy since they have valuation
         techniques that require inputs that are both significant to the fair
         value measurement and are unobservable.

         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.

  2.11   Advances from Related Party

         Advances from director and related party of $0 and $48,681 at March 31,
         2009 and December 31, 2008, respectively, are unsecured, non-interest
         bearing and payable on demand.

  2.12   Leases

         The Company is the lessee of equipment under a capital lease expiring
         in 2014. The assets and liabilities under capital leases are recorded
         at the lower of the present value of the minimum lease payments or the
         fair value of the asset. The assets are amortized over the lower of
         their related lease terms or their estimated productive lives.
         Amortization of assets under capital leases is included in depreciation
         expense for the quarter ended March 31, 2009 and 2008.

         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.

  2.13   Foreign Currency Translation

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


                                      F-12


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



  2.14   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. The digit game operations have been suspended. See Note 14.


  2.15   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. The
         license and operations has been suspended. See Note 14.

  2.16   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.

         During the year ended December 31, 2007, the Company adopted Financial
         Accounting Standards Board (FASB) Interpretation No. 48, "Accounting
         for Uncertainty in Income Taxes" (FIN 48), which supplements SFAS No.
         109, "Accounting for Income Taxes," by defining the confidence level
         that a tax position must meet in order to be recognized in the
         financial statements. The Interpretation requires that the tax effects
         of a position be recognized only if it is "more-likely-than-not" to be
         sustained based solely on its technical merits as of the reporting
         date. The more-likely-than-not threshold represents a positive
         assertion by management that a company is entitled to the economic
         benefits of a tax position, If a tax position is not considered
         more-likely-than-not to be sustained based solely on its technical
         merits. No benefits of the tax position are to be recognized. Moreover,
         the more-likely-than-not threshold must continue to be met in each
         reporting period to support continued recognition of a benefit. With
         the adoption of FIN 48, companies are required to adjust their
         financial statements to reflect only those tax positions that are
         more-likely-than-not to be sustained. Any necessary adjustment would be
         recorded directly to retained earnings and reported as a change in
         accounting principle.

         Upon adoption of FIN 48 as of January 1, 2007, the Company had no gross
         unrecognized tax benefits that, if recognized, would favorably affect
         the effective income tax rate in future periods. At December 31, 2007
         the amount of gross unrecognized tax benefits before valuation
         allowances and the amount that would favorably affect the effective
         income tax rate in future periods after valuation allowances were $0.
         These amounts consider the guidance in FIN 48-1, "Definition of
         Settlement in FASB Interpretation No. 48".The Company has not accrued
         any additional interest or penalties as a result of the adoption of FIN
         48.

         The Company files income tax returns in the United States federal
         jurisdiction and certain states in the United States and certain other
         foreign jurisdictions. With a few exceptions, the Company is no longer
         subject to U. S. federal, state or foreign income tax examination by
         tax authorities on income tax returns filed before December 31, 2004.
         U. S. federal. State and foreign income returns filed for years after
         December 31, 2004 are considered open tax years as of the date of these
         consolidated financial statements. No income tax returns are currently
         under examination by any tax authorities.

                                      F-13


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008, 2007 AND 2006



  2.17   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.

  2.18   Financial Instruments

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

  2.19   Advertising

         The cost of advertising is expensed as incurred. For the three months
         ended March 31, 2009 and 2008, the Company incurred advertising
         expenses of $13,181 and $32,281 respectively.


3.       EQUITY SECURITIES HELD FOR TRADING

                                                    March 31, December 31,
                                                      2009       2008
                                                    --------   --------

         Quoted equity security, at fair value      $170,329   $179,620
                                                    ========   ========

         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$9,291.

         The investments in quoted equity securities comprised of 34,000,000
         common shares of PT Agis at the market value of US$ 0.00501 and
         US$ 0.00528 per share as of March 31, 2009 and December 31, 2008,
         respectively.

         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,
                        2009         2008
                      --------     --------

Prepayments           $ 58,233     $ 70,108
Deposits               430,175       69,995
Other receivables       77,968       90,190
                      --------     --------
                      $149,573     $230,293
                      ========     ========


                                      F-14


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



5.       PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

                                                   MARCH 31,        DECEMBER 31,
                                                     2009              2008
                                                 -----------       -----------

          Office equipment                       $ 1,004,504       $ 1,004,504
          Motor vehicle                               91,190            91,190
          Furniture, fixture and fittings            313,208           313,208
          Pony set-top boxes                         843,946           843,946
                                                 -----------       -----------
                                                   2,252,848         2,252,848
          Accumulated depreciation                (1,347,418)       (1,219,342)
                                                 -----------       -----------
                                                 $   905,430       $ 1,033,506
                                                 ===========       ===========

         Depreciation expense was $128,076 for the three months ended March 31,
         2009 and $170,699 for the three months ended March 31, 2008.


6.       INTANGIBLE ASSETS

         Intangible assets consist of the following:

                                                 MARCH 31,         DECEMBER 31,
                                                   2009               2008
                                               ------------        ------------
          INDEFINITE LIVES
          Film library                         $ 17,765,818        $ 17,763,716
                                               ------------        ------------
                                                 17,765,818          17,763,716
                                               ------------        ------------
          DEFINITE USEFUL LIVES
          Film library                            5,400,410           5,400,410
          Gaming license                          7,090,000           7,090,000
          Product development expenditures          719,220             719,220
          Software license                           12,649              12,649
                                               ------------        ------------
                                                 13,222,279          13,222,279
          Accumulated amortization               (6,527,699)         (6,351,162)
                                               ------------        ------------
                                                  6,694,580           6,871,117
                                               ------------        ------------
                                                 24,460,398        $ 24,634,833
          Impairment loss                        (3,762,777)         (3,762,777)
                                               ------------        ------------
                                               $ 20,697,621        $ 20,872,056
                                               ============        ============

                                      F-15


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



         Amortization expense was $176,537 for the three months ended March 31,
         2009 and $298,135 for the three months ended March 31, 2008.

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

         FILM LIBRARY WITH INDEFINITE LIVES

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

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

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

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

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

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

         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.

                                      F-16


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



         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 $203 million to $340 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 license and operations
         has been suspended. See Note 14.

                                      F-17


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



7.       INVESTMENTS AVAILABLE-FOR-SALE

         Investments available-for-sale consist of the following:

                                              MARCH 31,        DECEMBER 31,
                                                 2009              2008
                                              ----------        ----------
                Non Current :
                  Quoted equity securities    $       --        $       --
                  Unquoted equity securities     616,136           616,136

                                              ----------        ----------
                                              $  616,136        $  616,136
                Current :
                  Unquoted equity securities   2,402,613         2,402,613

                                              ----------        ----------
                                              $3,018,749        $3,018,749
                                              ==========        ==========

         The unquoted equity securities classified as available-for-sale, with a
         carrying value of $3,018,749 as of March 31, 2009 and December 31,
         2008, are measured at cost less impairment losses as there is no quoted
         market price in an active market and other methods of determining fair
         value do not result in a reasonable estimate.

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

                                      F-18


<PAGE>


                            AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



8.       COMMITMENTS AND CONTINGENCIES

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

                                                 MARCH 31,        DECEMBER 31,
                                                    2009              2008
                                                 ----------        ----------
          CAPITAL COMMITMENTS:
          Contracted but not provided for
                 Film library                    $  108,000        $  111,687
                 Set-top boxes                    2,074,825         2,074,825
                 Contents                           110,171           110,171
                                                 ----------        ----------
                                                 $2,292,996        $2,303,069
                                                 ==========        ==========

         Capital Leases

         The following summarizes the Company's capital lease obligations at
         March 31, 2009 and 2008, respectively:

                                                          2009         2008
                                                        --------     --------
          Future minimum lease payments                 $ 62,914     $ 69,140

          Less: amounts representing interest            (10,464)     (11,500)
                                                        --------     --------
          Present value of net minimum lease payments     52,450       57,641

          Less: current portion                          (10,319)     (10,809)
                                                        --------     --------
                                                        $ 42,131     $ 46,832
                                                        ========     ========

         The Company is the lessee of equipment under capital leases expiring in
         various years through 2014. The assets and liabilities under capital
         leases are recorded at the lower of the present value of the minimum
         lease payments or the fair value of the asset. The assets are amortized
         over the lower of their related lease terms or their estimated
         productive lives. Depreciation of assets under capital leases is
         included in depreciation expense for 2008 and 2007. Interest rates on
         capitalized leases is fixed at 2.85%.

                                      F-19


<PAGE>


                            AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



Operating Leases

The Company leases facilities and equipment under operating leases expiring
through 2012. Total rental expense on operating leases for the three months
ended March 31, 2009 and 2008 was $37,319 and $75,465, respectively. As of March
31, 2009, the future minimum lease payments are as follows:

          For the Quarter Ended
          March 31,   Operating     Capital
                      ------        ------

          2009        93,103        10,319
          2010         4,205        10,319
          2011            --        10,319
          2012            --        21,493
                      ------        ------
                      97,308        52,450
                      ======        ======

Legal Proceedings

On September 15, 2008, M2B Commerce Limited filed a lawsuit in the Kingdom of
Cambodia for breach of the Performance and Maintenance Agreement dated May 20,
2005 between M2B Commerce Limited and Allsports International Ltd, by Allsports
International Ltd seeking damages in the total amount of $794,189 and calling
for the termination of the Performance and Maintenance Agreement.

On December 4, 2008, M2B Commerce Limited filed two further lawsuits in the
Kingdom of Cambodia against the owners of Allsports International Ltd, in
support of its earlier suit of September 15, 2008 against Allsports
International Ltd for breach of the Performance and Maintenance Agreement dated
May 20, 2005. One lawsuit was against the four principal officers of Allsports
International Ltd for breach of trust of the total amount of $794,189 owing to
M2B Commerce Limited. The other lawsuit was to get Allsports International Ltd
to transfer the shares of the Lottery Company to M2B Commerce Limited, in lieu
of the earlier lawsuit of September 15, 2008 which called for the termination of
the Performance and Maintenance Agreement.

On November 7, 2008, M2B World Asia Pacific Pte. Ltd was served a summons in
Singapore by M2B Game World Pte. Ltd, a company owned 81% by Auston
International Group Limited and 19% by M2B World Pte. Ltd, claiming a sum of
US$153,744 (S$235,229) in unpaid invoices in 2006. Following this, M2B World
Asia Pacific Pte. Ltd filed a counter claim to strike off this summons on the
basis that the invoices were non-existent and that M2B World Asia Pacific Pte.
Ltd was not yet incorporated as a company as of the date of the invoices
produced by M2B Game World Pte. Ltd.

On February 23, 2009, M2B World Pte Ltd was served a summons in Singapore by
Auston International Group Limited, claiming a sum of US$496,765 (S$760,050) to
be paid as shortfall in Guaranteed Profit to M2B Game World Pte. Ltd for
financial years 2006 and 2007, as part of the agreement for the acquisition of
M2B Game World in December 20, 2005 between M2B World Pte Ltd and Auston
International Group Limited. On March 20, 2009 in response to this summons, M2B
World Pte. Ltd filed a counter-claim against Auston International Group Limited
to claim damages amounting to US$1,568,172 and other damages as a result of
material breaches on the part of Auston International Group Limited to the
agreement of December 20, 2005 for the acquisition of M2B Game World Pte Ltd.


9.       INCOME TAXES

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

         The Company had available approximately $6,866,030 of unused U.S. net
         operating loss carry-forwards at March 31, 2009, 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, 2009 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 $5,712,896 of unused Singapore
         tax losses and capital allowance carry-forwards at March 31, 2009, that
         may be applied against future Singapore taxable income indefinitely
         provided the company satisfies the shareholdings test for carry-forward
         of tax losses and capital allowances.


                                      F-20


<PAGE>


                            AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



10. SEGMENT REPORTING

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

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

<TABLE>
<CAPTION>
<S>     <C>
As of March 31, 2009        ENTERTAINMENT      DIGIT GAMING         OTHER            TOTAL
                            -------------      ------------      ------------     ------------
Revenues from external
  customers                  $     16,813      $         --      $         --     $     16,813
Interest revenue             $         67      $         --      $         --     $         67
Interest expenses            $     31,771      $         --      $         --     $     31,771
Depreciation and
amortization                 $    304,613      $         --      $         --     $    304,613
Segment loss                     (559,705)     $     (5,786)     $         --         (565,491)
Segment assets               $ 34,279,015      $  2,409,363      $      2,117     $ 36,690,495
Expenditures for segment
assets                       $      2,102      $         --      $         --     $      2,102
</TABLE>


     Reconciliation:-
       REVENUES
       Total revenues for reportable segments             $  16,813
       Other revenue                                             --
                                                          ---------
       Total consolidated revenues                        $  16,813
                                                          =========

       INTEREST REVENUE
       Total interest revenue for reportable segments     $      67
       Corporate interest revenue                                --
                                                          ---------
       Total consolidated interest revenue                $      67
                                                          =========

       INTEREST EXPENSES
       Total interest revenue for reportable segments     $  31,771
       Corporate interest revenue                                --
                                                          ---------
       Total consolidated interest expenses               $  31,771
                                                          =========

       PROFIT OR LOSS
       Total (loss) for reportable segments               $(565,491)
       Corporate loss                                       (80,130)
                                                          ---------
       Loss before income tax                             $(645,621)
                                                          =========

                                      F-21


<PAGE>


                            AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



     ASSETS
     Total assets for reportable segments                      $36,688,378
     Other assets                                                    2,117
                                                               -----------
     Total consolidated assets                                 $36,690,495
                                                               ===========

     EXPENDITURES FOR SEGMENT ASSETS
     Total expenditures for assets for reportable segments     $     2,102
                                                               ===========

<TABLE>
<CAPTION>
<S>     <C>
As of March 31, 2008              ENTERTAINMENT     DIGIT GAMING         OTHER            TOTAL
                                  -------------     ------------      ------------     ------------
     Revenues from external
     customers                    $     34,993      $         --      $         --     $     34,993
     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)     $   (940,293)     $         --       (2,095,793)

     Segment assets               $ 49,447,894      $  6,395,520      $     50,929     $ 55,894,343

     Expenditures for segment
     assets                       $     48,964      $         --      $         --     $     48,964
</TABLE>

     Reconciliation:-
       REVENUES
       Total revenues for reportable segments                $    34,993
       Other revenue                                                  --
                                                             -----------
       Total consolidated revenues                           $    34,993
                                                             ===========

       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                  $(2,095,793)
       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                                $(2,553,005)
                                                             ===========

                                      F-22


<PAGE>


                            AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



ASSETS
Total assets for reportable segments                      $55,843,414
Other assets                                                   50,929
                                                          -----------
Total consolidated assets                                 $55,894,343
                                                          ===========

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

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

<TABLE>
<CAPTION>
<S>     <C>
As of March 31, 2009                   ASIA PACIFIC      UNITED STATES        OTHER             TOTAL
                                        ----------        ----------        ----------        ----------
Revenues from external customers        $   16,813        $       --        $       --        $   16,813
Property and equipment, net             $  892,008        $   13,422        $       --        $  905,430


As of March 31, 2008                   ASIA PACIFIC      UNITED STATES        OTHER             TOTAL
                                        ----------        ----------        ----------        ----------
Revenues from external customers        $   34,993        $       --        $       --        $   34,993
Property and equipment, net             $1,347,942        $  182,002        $   95,400        $1,625,344
</TABLE>


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,
                                                2009            2008
                                              --------        --------
Sales outside of the U.S.                     $ 16,813        $ 34,993

Services purchased outside of the U.S.        $ 55,053        $163,045


                                      F-23


<PAGE>


                             AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008


11.      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 a related pary:

                            MARCH 31,     MARCH 31,
                              2009          2008
                             ------        ------

           Marketing         $7,401        $   --
                             ======        ======


12.      SALE OF IPTV PLATFORM

         In April 2007 the Company through its subsidiary M2B World Holdings
         Limited entered into an agreement to sell its IPTV platform to a
         company in Indonesia (buyer) for $14,500,000. The total amount of the
         consideration was to be received in shares of the buyer and a 50% share
         of a newly incorporated entity. The Company has received $5,000,000 in
         cash and publicly-traded securities. The balance outstanding receivable
         of $9,500,000 is included as "Receivable from sale of IPTV platform" at
         March 31, 2009 and December 31, 2008, respectively, which comprises of
         two portions: the first portion of $2 million to be settled fully in
         publicly-traded shares of the buyer and the other portion of $7,500,000
         million will be reinvested in the form of joint venture with the buyer
         as stated in the terms of the sale agreement.

         On December 15, 2008, M2B World Holdings entered into a further
         agreement with PT Agis to set up a Joint Venture Company to launch
         WOWtv in Indonesia. The agreement with PT Agis TBK would give M2B World
         Holdings a 49 percent equity stake in the Joint Venture Company called
         PT WOW Television Management is in the process of completing this
         transaction and has determined that the entire amount of $9,500,000 is
         recoverable and no allowances are necessary. In accordance with the
         agreement, the JV company is expected to be capitalized and go into
         operations by July 2009. The Company is currently working out the
         implementation details with PT WOW Television.

                                      F-24


<PAGE>


                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2009 AND 2008



13.      PURCHASE OF CBBN HOLDINGS LIMITED

         The Company through its wholly owned subsidiary, Tremax International
         Limited, entered into a sale and purchase agreement dated July 10, 2007
         with Domaine Group Limited which has not yet been consummated. Per the
         agreement the Company through its wholly owned subsidiary, Tremax
         International Limited would transfer 5,333,333 shares of the Company
         valued at $3,733,333 which is included as "Prepayment on purchase" at
         June 30, 2008 and December 31, 2007, respectively, in exchange for
         Domaine Group Limited transferring its 100% shares in CBBN Holdings
         Limited, a company incorporated in the British Virgin Islands. The
         transaction has not been consummated and the agreement had expired and
         was not extended. The Management of the Company had decided not to
         proceed with this agreement.

         On January 22, 2009, the Company approved the termination and
         rescission of the Agreement where the seller failed to comply with the
         terms of the Agreement and did not deliver to the Company or Purchaser
         the consideration for the issuance of the Amaru Shares. The Company
         further approved the cancellation of the Amaru Shares.

14.      IMPAIRMENT OF DIGIT GAMES LICENSE

         On March 25, 2009, the Company was officially notified that the digit
         games were suspended by the Cambodia Government as part of the
         suspension of all lotteries in Cambodia. It cannot be determined at
         this time whether the suspension of the digit games is temporary or
         permanent, though the Government of Cambodia is currently closing the
         gaming business by the order of its Ministry of Economy and Finance.
         Due to the lack of access to the digit game operations, the digit games
         lottery operations resulting from the holding of the digit games
         lottery license were impaired as of December 31, 2008, and no revenues
         were received as of 31 March, 2009 since the Company's recognition
         criteria related to the associated revenues were not met.

15.      LOAN AND BORROWINGS

                                                March 31,    MARCH 31,
                                                  2009         2008
                                               -----------   --------

          Non-current

          Convertible loan                     $ 2,500,000         --
          Less: Future interest charges        ($  160,954)        --
                                               -----------   --------
                                               $ 2,339,046         --

         Term loans held by the Company at balance sheet date are as follows:

(a)      $2,500,000 represents a two years convertible loan drawn down by a
         subsidiary company. It bears interest at a fixed rate of 5.0% per
         annum. The loan allows the borrower the option to convert the loan into
         shares of the subsidiary company at the issue price of $0.942 per share
         at the end of the two years period. The loan commenced in July 2008 and
         will mature in June 2010.


                                      F-25


<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-on-demand, streaming
via computers, television sets, and 3G (Third Generation) devices and the
provision of broadband services. Its business includes channel and program
sponsorship (advertising and branding); online subscriptions, channel/portal
development (digital programming services); content aggregation and syndication,
broadband consulting services, 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. On March 25,
2009, the Company was notified that the digit games were suspended by the
Cambodia Government as part of the suspension of all lotteries in Cambodia. It
cannot be determined at this time whether the suspension of the digit games is
temporary or permanent, though the Government of Cambodia is currently closing
the gaming business by the order of its Ministry of Economy and Finance.

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


                                       1


<PAGE>


OVERVIEW

The business focus of the Company is Entertainment-on-Demand and E-Commerce
Channels on Broadband, and 3G (Third Generation) devices.

For the broadband, the Company delivers both wire and wireless solutions,
streaming via computers, TV sets, PDAs and 3G hand phones. At the same time the
Company launches e-commerce channels (portals) that provide on-line shopping but
with a difference, merging two leisure activities of shopping and entertainment.
The entertainment channels are designed to drive and promote the shopping
portals, and vice versa.

The Company's business model in the area of broadband entertainment includes
focuses on 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 game operations.

In fiscal 2008, 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. As of December 31, 2008, the Company disposed all of its
common shares in Auston. As of the date of this report, the Company holds no
shares in Auston.

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, which offices are currently being subleased (see
below). 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.

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. As of the date of this report, the Company had received
the list of content titles from Indie Vision Films, Inc for evaluation and
selection in order to convert its investment into content rights.

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, and remains as 1 staff as of the date of this report. The company has
transferred its server farm to the Singapore server farm to, optimize bandwidth
and support cost.

                                       2


<PAGE>


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%.

On July 8, 2008, M2B World Asia Pacific Pte Ltd signed a two year convertible
loan agreement with a third party to raise $2,500,000 in funding. The loan
allows the borrower to convert the loan into shares of the Company at the issue
price of $0.942 per share at the end of the two years period. The loan bears an
interest rate of 5.0% per annum, and will mature in June 2010.

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 game activities in
Cambodia, as an extension of the Company's entertainment operations. On March
25, 2009, the Company was notified that the digit game were suspended by the
Cambodia Government as part of the suspension of all lotteries in Cambodia. It
cannot be determined at this time whether the suspension of the digit game is
temporary or permanent, though the Government of Cambodia is currently closing
the gaming business by the order of its Ministry of Economy and Finance.

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.

M2B ENTERTAINMENT, INC.

M2B Entertainment, Inc. was incorporated on October 27, 2005. This subsidiary
will oversee the Company's Canadian market. As of June 30, 2008, 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 June 30, 2008 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.


                                       3


<PAGE>

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 company has entered into an agreement with Elleipsis, Inc to host the travel
site and the travel software platform in the US with effect from June 30, 2008,
The Company plans to have the travel service and the site operational before the
end of the year. The launch and operations of the travel service is subject to
funding considerations, and there can be no guarantee that the service can be
operational as planned.

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.

                                       4


<PAGE>


RESULTS OF OPERATIONS

REVENUE

Financial Statement

-        Revenue for the three months ended March 31, 2009 was $16,813 compared
         with $34,993 for the same period in 2008.

-        The Company's cash balance was $1,056,420 at March 31, 2009 compared
         with $1,484,945 at December 31, 2008.

Revenue

Revenue from entertainment for the three months ended March 31, 2009 at $16,813
was lower than revenue of $34,993 for the three months ended March 31, 2008 by
$18,180 (52%). It 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, 2009 was $55,053 which
decreased by $107,992 (66%) from $163,045 for the three months ended March 31,
2008.

As a proportion of revenue the cost of the services for the three months ended
March 31, 2009 was 327% (cost of sales at $55,053 and revenue of $ 16,813) as
compared to 466% (cost of sales at $163,045 and revenue of $34,993) for the
three months ended March 31, 2008.

The decrease in cost of services of $107,992 (66%) was significant and was
attributed to cost reduction measures to reduce operating costs.

DISTRIBUTION EXPENSES

Distribution expenses for the three months ended March 31, 2009 at $32,681 were
lower by $953,435 (97%) as compared to the amount of $986,116 incurred for the
three months ended March 31, 2008.

The lower distribution expenses were attributed to the write off of digit games
working capital amounting to $861,186 for the three month ended March 31, 2008,
and decreased spending on marketing and promoting the WOWtv and M2Btv services
which decreased by $19,100 (59%) from $32,281 for the three months ended March
31, 2008 to $13,181 for the three months ended March 31, 2009.

GENERAL AND ADMINISTRATIVE EXPENSES

Administration expenses for the three months ended March 31, 2009 at $533,705
were lowered by $504,797 (49 %) as compared to the amount of $1,038,502
incurred for the three months ended March 31, 2008.

The decrease in administrative expenses for the period ended March 31, 2009 was
attributed mainly to the decrease in:


o        Depreciation and amortization. Equipment depreciation and license
         amortization had decreased by $164,221 (35 %), from $468,834 for the
         three months ended March 31, 2008 to $ 304,613 for the period ended
         March 31, 2009. The decrease was mainly due to most of the intangible
         assets and equipment being fully amortized and allowed for during the
         year ended December 31, 2008.

o        Legal and professional fees. Fees had decreased by $72,785 (54%), from
         $134,219 for the three months ended March 31, 2008 to $61,434 for the
         three months ended March 31, 2009. The decrease was mainly due as a
         result of costs reduction measures to reduce operating costs

o        Staff costs. Staff costs had decreased by $155,838 (57%), from $270,396
         for the three months ended March 31, 2008 to $114,558 for the three
         months ended March 31, 2009. The decrease was mainly due as a result of
         costs reduction measures to reduce operating costs

                                       5


<PAGE>

(LOSS) INCOME FROM OPERATIONS

The Company incurred a loss from operations of $604,626 for the three months
ended March 31, 2009 as compared to the loss from operations of $2,152,670 for
the three months ended March 31, 2008 due mainly due as a result of costs
reduction measures to reduce operating costs

NET LOSS

Net loss for the three months ended March 31, 2009, was $645,621 which decreased
by $1,881,355 (74%) from net loss of $2,536,005 for the three months ended March
31, 2008. The decrease was mainly due as a result of costs reduction measures to
reduce operating costs.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash at $1,056,420 at March 31, 2009 as compared to cash of
$1,484,945 at December 31, 2008.

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, 2009, the Company had not entered into
any transactions using derivative financial instruments or derivative commodity
instruments. Accordingly the Company believes its exposure to market interest
rate risk is not material.

Cash generated from operations will not be able to cover the Company's intended
growth and expansion. The Company has plans in 2009 to expand its broadband
coverage by launching new broadband sites in Asia Pacific region and Australia.
No assurances can be made that such plans will be carried out in a timely
manner.

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

NEW CONTRACTS

o        On March 31, 2009, the Company signed an agreement with Beijing Baidu
         Network Science and Technology Co Ltd ("Baidu") to launch the WOWtv
         platform in China. The agreement was a strategic partnership with Baidu
         to provide content services to Baidu.com users.

o        On April 17,2009, the Company signed a strategic cooperation agreement
         with LTDnetwork Inc. who owns the brand name and music site called
         QTRAX. QTRAX is the world's first free and legal peer-to-peer music
         service. Both parties agreed to look into areas to promote each other's
         site to increase internet traffic and to exploit each other's content.

                                       6


<PAGE>


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 $3,189,078 and $3,198,369 in
marketable securities as of March 31, 2009 and December 31, 2008 respectively.

The Company does not believe that it faces material market risk with respect to
its cash and cash equivalents which totaled $1,056,420 and $1,484,945 at March
31, 2009 and December 31, 2008, 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.


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.


                                       7


<PAGE>


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

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

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

LAW AND REGULATIONS GOVERNING INTERNET

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

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.


                                       8


<PAGE>


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 N1H1 VIRUS FLU PANDEMIC OR SIMILAR PUBLIC HEALTH DEVELOPMENTS

Any future outbreak of the N1H1 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.

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,
2009 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.



                                       9


<PAGE>

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, 2009 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 this Report on Form 10-Q, to evaluate the
effectiveness of the design and operation of our disclosure controls and
procedures as of March 31, 2009, the 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, 2009. Specifically, its control environment
possibly may not sufficiently promote effective internal control over financial
reporting through the management structure to prevent a material misstatement.

Subsequent to March 31, 2009, 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.

The Company needs to complete implementing in 2009 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 2009 and the management believes that it is
taking the steps that will properly address any issue.

While we are taking immediate steps and dedicating substantial resources to
implement the internal controls, 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 predecessor registered public accountant had not conducted an
audit of the Company's controls and procedures regarding internal control over
financial reporting during the reporting period when the Company was an
accelerated filer. Consequently, the registered public accounting firm expressed
no opinion with regards to the effectiveness or implementation of the Company's
controls and procedures with regards to internal control over financial
reporting during that period of time. The Company's current registered public
accountant has not conducted an audit of the Company's controls and procedures
regarding internal control over financial reporting.


                                       10


<PAGE>


CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the period ended March 31,2009, 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.

                           PART II: OTHER INFORMATION


ITEM 1:  LEGAL PROCEEDINGS

On September 15, 2008, M2B Commerce Limited filed a lawsuit in the Kingdom of
Cambodia for breach of the Performance and Maintenance Agreement dated May 20,
2005 between M2B Commerce Limited and Allsports International Ltd, by Allsports
International Ltd seeking damages in the total amount of $794,189 and calling
for the termination of the Performance and Maintenance Agreement.

On December 4, 2008, M2B Commerce Limited filed two further lawsuits in the
Kingdom of Cambodia against the owners of Allsports International Ltd, in
support of its earlier suit of September 15, 2008 against Allsports
International Ltd for breach of the Performance and Maintenance Agreement dated
May 20, 2005. One lawsuit was against the four principal officers of Allsports
International Ltd for breach of trust of the total amount of $794,189 owing to
M2B Commerce Limited. The other lawsuit was to get Allsports International Ltd
to transfer the shares of the Lottery Company to M2B Commerce Limited, in lieu
of the earlier lawsuit of September 15, 2008 which called for the termination of
the Performance and Maintenance Agreement.

On November 7, 2008, M2B World Asia Pacific Pte. Ltd was served a summons in
Singapore by M2B Game World Pte. Ltd, a company owned 81% by Auston
International Group Limited and 19% by M2B World Pte. Ltd, claiming a sum of
US$153,744 (S$235,229) in unpaid invoices in 2006. Following this, M2B World
Asia Pacific Pte. Ltd filed a counter claim to strike off this summons on the
basis that the invoices were non-existent and that M2B World Asia Pacific Pte.
Ltd was not yet incorporated as a company as of the date of the invoices
produced by M2B Game World Pte. Ltd.

On February 23, 2009, M2B World Pte Ltd was served a summons in Singapore by
Auston International Group Limited, claiming a sum of US$496,765 (S$760,050) to
be paid as shortfall in Guaranteed Profit to M2B Game World Pte. Ltd for
financial years 2006 and 2007, as part of the agreement for the acquisition of
M2B Game World in December 20, 2005 between M2B World Pte Ltd and Auston
International Group Limited. On March 20, 2009 in response to this summons, M2B
World Pte. Ltd filed a counter-claim against Auston International Group Limited
to claim damages amounting to US$1,568,172 and other damages as a result of
material breaches on the part of Auston International Group Limited to the
agreement of December 20, 2005 for the acquisition of M2B Game World Pte Ltd.


ITEM 1A:  RISK FACTORS REPLACE THE RISK FACTORS WITH THOSE FROM THE AMENDED
          10-Q SINCE WE REVISED THEM

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.


                                       11


<PAGE>


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.

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.


                                       12


<PAGE>


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.

                                       13


<PAGE>


THE COMPANY DEPENDS ON KEY PERSONNEL.

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

THE COMPANY RELIES ON THIRD PARTIES.

If critical services and products that the Company sources from third prties,
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.

THE COMPANY COULD BE AFFECTED BY PIRACY IN ASIA.

The Company is in the process of expanding its services globally, and in
particular is entering specific countries in Asia with customized country sites.
These country sites are designated to suit viewership patterns and styles in the
countries they are launched in, and make use of the Company's content and
intellectual property rights to the content. The piracy of content is a
significant problem in many Asian countries, and it is not uncommon to see
movies and television dramas appearing on illegal internet sites, and sold as
pirated DVDs and VCDs. The extent of this piracy of content in the specific
countries that the Company is launching its sites will adversely affect to a
certain degree the amount of advertising and subscription revenues that the
Company intends to earn.

THE COMPANY COULD BE AFFECTED BY THE GLOBAL ECONOMIC DOWNTURN.

The global economy is undergoing a massive downturn in 2009, which commenced in
the second half of 2008. Many countries are faced with negative growth rates..
Where the media industry is concerned, major corporations have began to reduce
their advertising expenditures or even to cut back substantially all advertising
and promotional expenditures towards the later half of 2008. The Company is
heavily reliant on advertising and syndication revenues and expects to be
significantly affected in 2008 and 2009 by the downsizing in advertising spent,
especially in countries where the WOWtv service is expected to roll out.


                                       14


<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


                                       15


<PAGE>


                                   SIGNATURES

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


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


May 15, 2009                             /s/ Colin Binny
------------                             ---------------------------------------
Date                                     President, Chief Executive Officer and
                                         Chief Financial Officer



                                       16