<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, 2007

                                       OR

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

                    For the transition period from to _______

                        Commission File Number 000-50065

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

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


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]       No [ ]

Indicate by check mark whether the registrant is 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                      154,098,528 shares
-----------------------------              ---------------------------------
          (Class)                          (Outstanding at June 15,2007)




<PAGE>

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


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

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

ITEM 2:  MANAGEMENTS 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                                              8


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

ITEM 1:  LEGAL PROCEEDINGS
ITEM 1A: RISK FACTORS
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS
ITEM 5: OTHER INFORMATION                                                     9
ITEM 6:  EXHIBITS                                                            10

SIGNATURES

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

                                                                          MARCH 31,    DECEMBER 31,
                                                                            2007           2006
                                                                        ------------   ------------

ASSETS
Current assets
Cash and cash equivalents                                               $  5,757,807   $  2,294,984
Accounts receivable, net                                                     413,244      2,106,647
Inventories                                                                1,617,962      1,689,634
Other current assets                                                         526,470        539,604
                                                                        ------------   ------------
     Total current assets                                                  8,315,483      6,630,869

Non-current assets
Property and equipment, net                                                1,266,620      1,215,744
Intangible assets, net                                                    29,101,035     28,886,883
Associate                                                                  4,907,539             --
Investments available for sale                                            11,805,405     12,158,351
                                                                        ------------   ------------
     Total non-current assets                                             47,080,599     42,260,978
                                                                        ------------   ------------

Total assets                                                            $ 55,396,082   $ 48,891,847
                                                                        ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses                                   $  1,910,515   $  2,101,970
Others payable                                                               105,784             --
Income taxes payable                                                          58,473         58,473
                                                                        ------------   ------------
     Total current liabilities                                             2,074,772      2,160,443

Deferred tax liabilities                                                   2,138,646      1,684,158
                                                                        ------------   ------------
     Total liabilities                                                     4,213,418      3,844,601

Minority interest                                                          3,016,115             --

Commitments                                                                       --             --

Stockholders' equity
Preferred stock (par value $0.001) 5,000,000 shares authorized;
     0 shares issued and outstanding at March 31, 2007 and
     December 31, 2006, respectively                                              --             --
Common stock (par value $0.001) 200,000,000 shares authorized;
     154,098,528 and 153,638,528 shares issued and outstanding at
     March 31, 2007 and December 31, 2006, respectively                      154,098        153,638
Additional paid-in capital                                                39,190,666     38,942,126
Subscribed common stock, 0 and 420,000 shares at March 31, 2007
     and December 31, 2006 respectively                                           --        189,000
Retained earnings                                                          2,915,158      2,084,908
Accumulated other comprehensive income                                     5,906,627      3,677,574
                                                                        ------------   ------------
     Total stockholders' equity                                           48,166,549     45,047,246

                                                                        ------------   ------------
Total liabilities and stockholders' equity                              $ 55,396,082   $ 48,891,847
                                                                        ============   ============


                      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, 2007   MARCH 31, 2006
                                                           --------------   --------------
Revenue:
   Entertainment                                            $      10,249    $   1,002,657
   Digit gaming                                                 5,476,826        5,873,694
   Other income                                                        --              786
                                                            -------------    -------------
     Total revenue                                              5,487,075        6,877,137

Cost of services                                               (5,423,501)      (5,788,393)
                                                            -------------    -------------
Gross profit                                                       63,574        1,088,744

Distribution costs                                               (309,647)        (247,434)
Administrative expenses                                        (1,672,296)        (633,677)
                                                            -------------    -------------
     Total expenses                                            (1,981,943)        (881,111)

(Loss) Income from operations                                  (1,918,369)         207,633

Other income:
   Interest received                                               13,682           17,582
   Gain on dilution of interest in subsidiary                   2,483,871               --
   Share of profit of associate                                     7,539               --
                                                            -------------    -------------
Income before income taxes                                        586,723          225,215
Benefit for income taxes                                          163,513           75,041
                                                            -------------    -------------
Net income                                                        750,236    $     300,256
                                                            =============    =============

Attributable to:
Equity holders of the company                                     830,250          300,256
Minority interest                                                 (80,014)              --
                                                            -------------    -------------
                                                                  750,236          300,256
                                                            =============    =============

Earnings per share
- basic and diluted                                         $       0.005    $       0.002
                                                            =============    =============
Weighted average number of common shares outstanding
- basic and diluted                                           153,784,306      134,776,864
                                                            =============    =============

                  See accompanying notes to consolidated financial statements

                                              F-3



<PAGE>

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


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

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

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

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

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

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

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

Net income                 --            --            --            --            --            --      1,250,529
Change in
  fair value
  of equity
  securities
  available for
  sale, net of tax         --            --            --            --            --            --             --

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

                                                                                          (CONTINUED ON NEXT PAGE)

                                                        F-4



<PAGE>

(CONTINUED FROM PREVIOUS PAGE)


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

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

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

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

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

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

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

Net income                 --            --            --     1,250,529
Change in
  fair value
  of equity
  securities
  available for
  sale, net of tax         --     3,664,647            --     3,664,647
                                                            -----------
Comprehensive
  income                                               --     4,915,176
                  -----------   -----------   -----------   -----------
Balance at
  December 31,
  2006            $    12,927   $ 3,664,647   $        --   $45,047,246
                  ===========   ===========   ===========   ===========

           See accompanying notes to consolidated financial statements

                                       F-4A



<PAGE>

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


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

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

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

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

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

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

Net income                        --             --             --             --             --             --         830,250

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

Comprehensive
  income                          --             --
                        ------------   ------------   ------------   ------------   ------------   ------------    ------------
                                  --             --    154,098,528   $    154,098   $ 39,190,666             --    $  2,915,158
                        ============   ============   ============   ============   ============   ============    ============

                                                                                                       (CONTINUED ON NEXT PAGE)

                                                               F-5



<PAGE>

(CONTINUED FROM PREVIOUS PAGE)


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

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

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

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

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

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

Net income                        --             --        (80,014)        750,236

Change in fair value
  equity securities
  available for sale,
  net of tax                      --      2,229,053             --       2,229,053
                                                                      ------------
Comprehensive
  income                                                        --       2,979,289
                        ------------   ------------   ------------    ------------
                        $     12,927   $  5,893,700   $  3,016,115    $ 51,182,664
                        ============   ============   ============    ============

           See accompanying notes to consolidated financial statements

                                       F-5A



<PAGE>

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


                                                                        FOR THE THREE MONTHS ENDED
                                                                      March 31, 2007  March 31, 2006
                                                                      --------------  --------------

CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                         $    750,236    $    300,256
    Share of profit of associate                                             (7,539)             --
    Adjustments to reconcile net income to cash and cash
    equivalents used or provided by operations:
    Amortization                                                            803,881         151,669
    Depreciation                                                            113,655          36,059
    Acquisition of investment in exchange for account receivable         (1,700,000)             --
    Gain on dilution of interest in subsidiary                           (2,483,871)             --
    Common stock issued for services                                         60,000              --

 Changes in operation assets and liabilities
    Accounts receivables                                                  1,693,403        (143,684)
    Inventories                                                              71,672              --
    Other receivables                                                        30,841         (71,323)
    Others current assets                                                   (17,707)        (99,167)
    Accounts payable and accrued expenses                                  (191,455)          5,705
    Other payables                                                          105,784              --
    Income tax payable                                                     (163,513)             --
                                                                       ------------    ------------
Net cash (used in) generated from operating activities                     (934,613)        179,515

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of equipment                                               (164,531)        (42,341)
    Deposit paid for an investment                                               --      (1,052,613)
    Acquisition of investment available for sale                                 --        (130,030)
    Acquisition of intangible assets                                     (1,018,033)     (3,089,026)
                                                                       ------------    ------------
Net cash used in by investing activities                                 (1,182,564)     (4,314,010)

CASH FLOWS FROM FINANCING ACTIVITIES
   Repayment of balances due to related party                                    --         (58,392)
   Proceeds from issuance of common stock                                        --       4,611,710
   Capital contributed by minority shareholders                           5,580,000              --
                                                                       ------------    ------------
Net cash provided by financing activities                                 5,580,000       4,553,318

Effect of exchange rate changes on cash and cash equivalents                     --              --
                                                                       ------------    ------------

Cash flows from all activities                                            3,462,823         418,823

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

Cash and cash equivalents at end of period                             $  5,757,807    $  5,195,642
                                                                       ============    ============


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


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


                     See accompanying notes to consolidated financial statements

                                                 F-6
</TABLE>



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         FOR THE THREE MONTHS ENDED
                           MARCH 31, 2007 AND 2006


1.    BASIS OF PRESENTATION

      1.1   Description of Business

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

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

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

      1.2   Basis of Presentation

            The financial statements included herein are unaudited. However,
            such information reflects all adjustments (consisting solely of
            normal occurring adjustments) which are, in the opinion of
            management, necessary for a fair statement of results for the
            interim periods. The results of operations for the three months
            ended March 31, 2007, are not necessarily indicative of the results
            to be expected for the full year.

            The accompanying financial statements do not include footnote and
            certain financial presentation normally required under generally
            accepted accounting principles, and, therefore, should be read in
            conjunction with the company's Annual report on Form 10-KSB for the
            year ended December 31, 2006.

      1.3   Recent Accounting Standards and Pronouncements

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

            The current Company policy classifies any interest recognized on an
            underpayment of income taxes as interest expense and classifies any
            statutory penalties recognized on a tax position taken as selling,
            general and administrative expense. There were no interest or
            selling, general and administrative expenses accrued or recognized
            related to income taxes for the three months ended March 31, 2007.
            The Company has not taken a tax position that would have a material
            effect 31 March, 2007 or during the prior three years applicable
            under FIN 48. It is determined not to be reasonably possible for the
            amounts of unrecognized tax benefits to significantly increase or
            decrease within 12 months of the adoption of FIN 48. The Company is
            currently subject to a three year statute of limitations by major
            tax jurisdictions.


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).


                                      F-7


<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


      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   Trade Accounts Receivable

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

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

            Licensing and advertising revenues were concentrated with Nil
            customers totalling O% of these related revenues for the three
            months ended March 31, 2007 and three customers totaling 100.0% of
            these related revenues for the three months ended March 31, 2006.

            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,
                                                          2007           2006
                                                      ------------  ------------

            Sales outside of the U.S.                  $ 5,487,030   $ 6,877,137

            Services purchased outside of the U.S.     $ 5,393,399   $ 5,773,846

      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.

      2.6   Property and Equipment

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

                                      F-8



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


      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 two to 18 years.

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

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

      2.8   Associate

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

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

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

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

      2.9   Investments

            The Company classifies its investments in marketable equity and debt
            securities as "available-for-sale", "held to maturity" or "trading"
            at the time of purchase in accordance with the provisions of
            Statement of Financial Accounting Standards ("SFAS") No. 115,
            "Accounting for Certain Investments in Debt and Equity Securities"
            ("SFAS No. 115"). There are no investments classified as trading or
            held-to-maturity as of March 31, 2007 and December 31, 2006.

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

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

                                      F-9



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


      2.10  Valuation of Long-Lived Assets

            The Company evaluates the carrying value of long-lived assets to be
            held and used, other than intangible assets with indefinite lives,
            when events or circumstances warrant such a review. No impairment
            losses were recorded for the three months ended March 31, 2007 and
            the year ended December 31, 2006.

      2.11  Advances from Related Party

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

      2.12  Foreign Currency Translation

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

      2.13  Revenues

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

      2.14  Costs of Services

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

      2.15  Income Taxes

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

      2.16  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.

      2.17  Financial Instruments

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

                                      F-10



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


      2.18  Advertising

            The cost of advertising is expensed as incurred. For the three
            months ended March 31, 2007 and 2006, the Company incurred
            advertising expenses of $205,429 and $190,130 respectively.

      2.19  Reclassifications

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


3.    RELATED PARTY TRANSACTIONS

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

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

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

                                                      MARCH 31,    DECEMBER 31,
                                                        2007          2006
                                                    ------------  ------------

      Marketing                                     $     42,216   $        --
                                                    ============   ===========


4.    OTHER CURRENT ASSETS

      Other current assets consist of the following:

                                                      MARCH 31,   DECEMBER 31,
                                                         2007         2006
                                                    ------------  ------------

      Prepayments                                   $   193,893   $    177,278
      Deposits                                          173,974        172,882
      Other receivables                                 158,603        189,444
                                                    ------------  ------------
                                                    $   526,470   $    539,604
                                                    ============  ============


5.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

                                                     MARCH 31,    DECEMBER 31,
                                                       2007          2006
                                                   ------------  ------------

      Office equipment                             $   736,979   $    721,085
      Motor vehicle                                     32,372         11,000
      Furniture, fixture and fittings                  583,036        556,069
      Set-top boxes                                    365,979        265,681
                                                   ------------  ------------
                                                     1,718,366      1,553,835
      Accumulated depreciation                        (451,746)      (338,091)
                                                   ------------  ------------
                                                   $ 1,266,620   $  1,215,744
                                                   ============  ============

      Depreciation expense was $113,655 for the three months ended March 31,
      2007 and $36,059 for the three months ended March 31, 2006.


                                      F-11



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


6.    INTANGIBLE ASSETS

      Intangible assets consist of the following:

                                                       MARCH 31,   DECEMBER 31,
                                                         2007          2006
                                                     ------------  ------------

      INDEFINITE LIVES
      Film library                                  $ 17,683,099   $ 17,674,378
      Software license                                 2,420,227      2,420,227
                                                     ------------  ------------
                                                      20,103,326     20,094,605

      DEFINITE USEFUL LIVES
      Film library                                    3,947,789       2,947,564
      Gaming license                                  7,090,000       7,090,000
      Product development expenditures                  678,616         669,529
                                                     ------------  ------------
                                                     11,716,405      10,707,093
      Accumulated amortization                       (2,718,696)     (1,914,815)
                                                     ------------  ------------
                                                      8,997,709       8,792,278

                                                     ------------  ------------
                                                   $  29,101,035   $ 28,886,883
                                                     ============  ============

      Amortization expense was $803,881 for the three months ended March 31,
      2007 and $151,669 for the three months ended March 31, 2006.


7.    ASSOCIATE

                                                       MARCH 31,   DECEMBER 31,
                                                         2007          2006
                                                     ------------  ------------

      Cost of investment in associate                $ 4,900,000   $         --
      Share of post-acquisition profit                     7,539             --
                                                     ------------  ------------
                                                     $ 4,907,539   $         --
                                                     ============  ============

      Details of the Group's associate at March 31, 2007 are as follows:

      Place of          Proportion of
      Name of           incorporation          ownership    Principal
      associate         and operation          interest     activity
      ---------         -------------          ---------    ---------
      MARCH 31,         DECEMBER 31,
        2007                2006
      ---------         -------------
                                                    %            %
      121 View Corporation
      British Virgin         29.9                 25.0          --
      (SEA) Ltd
      Islands

      One of the directors of the Company has interests in the associated
      company.

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

                                                       MARCH 31,   DECEMBER 31,
                                                         2007          2006
                                                     ------------  ------------

      Total assets                                   $ 9,381,105   $         --
      Total liabilities                                  (22,108)            --
                                                     ------------  ------------
      Net assets                                     $ 9,358,997   $         --
                                                     ============  ============

      Group's share of associate's net assets          2,798,340             --
                                                     ============  ============

      Revenue                                             64,451             --
                                                     ============  ============

      Profit for the year                                 26,855             --
                                                     ============  ============

      Group's share of associate's profit for the
      year                                                 7,539             --
                                                     ============  ============


                                      F-12



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


8.    INVESTMENTS AVAILABLE FOR SALE

      Investments available for sale consist of the following:

                                                       MARCH 31,   DECEMBER 31,
                                                         2007          2006
                                                     ------------  ------------

      Quoted equity securities                       $ 8,523,128   $  5,676,074
      Unquoted equity securities                       3,282,277      6,482,277
                                                     ------------  ------------
                                                     $11,805,405   $ 12,158,351
                                                     ============  ============

      The investments in quoted equity securities comprised of 36,428,571 common
      shares of Auston International Group Ltd (Auston). As of March 31, 2007,
      the market value of the shares was $0.23 (S$0.36).

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

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


9.    COMMITMENTS

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

                                                       MARCH 31,   DECEMBER 31,
                                                         2007          2006
                                                     ------------  ------------
      CAPITAL COMMITMENTS:
      Contracted but not provided for
             Film library                            $    471,124  $  4,254,372
             Set-top boxes                              2,562,000     2,562,000
             Other equipments                             328,000            --
                                                     ------------  ------------
                                                     $  3,361,124  $  6,816,372
                                                     ============  ============

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

      As of March 31, 2006, the Company has commitments for future minimum
      lease payments under non-cancellable operating leases (with initial or
      remaining lease terms in excess of one year) as follows:

                                                       OPERATING
                                                        LEASES
                                                      -----------
      Year ending December 31,
          2007                                            226,744
          2008                                            262,426
          2009                                            178,675
          2010                                            126,360
          2011                                             80,504
                                                      -----------
          Total minimum lease payments                $   874,709
                                                      ===========

      Rent expense totaled $71,379 for the three months ended March 31, 2007 and
      $32,217 for the three months ended March 31, 2006.


10.    CAPITAL STOCK

      (a)   Common stock issued for services

            On March 19, 2007, the Company issued 40,000 shares of common stock
            in a private placement at a price of $1.50 per share for a total
            amount of $60,000 for services rendered to the Company.

      (b)   Common stock issued to employees

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


                                      F-13



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006


11.   INCOME TAXES

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

      The Company had available approximately $4,847,587 of unused U.S. net
      operating loss carry-forwards at March 31, 2007, that may be applied
      against future taxable income. These net operating loss carry-forwards
      expire for U.S. income tax purposes beginning in 2026. There is no
      assurance the Company will realize the benefit of the net operating loss
      carry-forwards.

      SFAS No. 109 requires a valuation allowance to be recorded when it is more
      likely than not that some or all of the deferred tax assets will not be
      realized. As of March 31, 2007 the Company maintained a valuation
      allowance for the U.S. deferred tax asset due to uncertainties as to the
      amount of the taxable income from U.S. operations that will be realized.

      The Company had available approximately $950,091 of unused Singapore
      capital allowance carry-forwards at March 31, 2007, that may be applied
      against future Singapore taxable income indefinitely provided the company
      satisfies the shareholdings test for carry-forward of tax losses and
      capital allowances.


12.   SEGMENT REPORTING

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

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

<TABLE>
<S>     <C>
2007
                                   Entertainment    Digit Gaming       Other           Total
                                   ------------    ------------    ------------   ------------

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

Reconciliation :-

REVENUES
Total revenues for reportable segments                            $   5,487,075
Other revenue                                                     $          --
                                                                  -------------
         Total consolidated revenues                              $   5,487,075
                                                                  -------------

INTEREST REVENUE
Total interest revenue for reportable segments                    $      13,658
Corporate interest revenue                                        $          24
                                                                  -------------
         Total consolidated interest revenue                      $      13,682
                                                                  -------------

PROFIT OR LOSS
Total loss for reportable segments                                $  (1,777,826)
Corporate expenses                                                $    (126,861)
Gain on dilution of interest in subsidiary                        $   2,483,871
Share of profit of associate                                      $       7,539
                                                                  -------------
         Profit before income tax                                 $     586,723
                                                                  -------------

ASSETS
Total assets for reportable segments                              $  52,906,292
Other assets                                                      $   2,482,251
                                                                  -------------
         Total consolidated assets                                $  55,388,543
                                                                  -------------

EXPENDITURES FOR SEGMENT ASSETS
Total expenditures for assets for reportable segments             $   1,182,564
                                                                  -------------
</TABLE>

                                      F-14



<PAGE>

                          AMARU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                             MARCH 31, 2007 AND 2006

12.   SEGMENT REPORTING (Cont'd)

<TABLE>
<S>     <C>
2006
                                   Entertainment    Digit Gaming       Other           Total
                                   ------------    ------------    ------------   ------------

Revenues from external customers   $  1,002,657    $  5,873,694    $        786   $  6,877,137
Interest revenue                   $     17,582    $         --    $         --   $     17,582
Depreciation and amortization      $    113,089    $     74,639    $         --   $    187,728
Segment profit                     $    212,922    $     82,977    $        786   $    296,685
Segment assets                     $ 14,843,096    $  6,530,580    $  4,230,562   $ 25,604,238
Expenditures for segment assets    $  3,131,367    $         --    $         --   $  3,131,367

Reconciliation :-

REVENUES
Total revenues for reportable segments                             $   6,876,351
Other revenue                                                      $         786
                                                                   -------------
         Total consolidated revenues                               $   6,877,137
                                                                   -------------

INTEREST REVENUE
Total interest revenue for reportable segments                     $      11,471
Corporate interest revenue                                         $       6,111
                                                                   -------------
         Total consolidated interest revenue                       $      17,582
                                                                   -------------

PROFIT OR LOSS
Total profit for reportable segments                               $     296,685
Corporate expenses                                                 $     (71,470)
                                                                   -------------
         Profit before income tax                                  $     225,215
                                                                   -------------

ASSETS
Total assets for reportable segments                               $  21,373,676
Other assets                                                       $   4,230,562
                                                                   -------------
         Total consolidated assets                                 $  25,604,238
                                                                   -------------

EXPENDITURES FOR SEGMENT ASSETS
Total expenditures for assets for reportable segments              $   3,131,367
                                                                   -------------
</TABLE>

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

<TABLE>
<S>     <C>
      2007                               ASIA PACIFIC  UNITED STATES     OTHER          TOTAL
                                         ------------  -------------  ------------  ------------

      Revenues from external customers   $   5,487,030  $         45  $      -      $  5,487,075
      Property and equipment, net        $     893,249  $    277,971  $  95,400     $  1,266,620

      2006                               ASIA PACIFIC  UNITED STATES     OTHER          TOTAL
                                         ------------  -------------  ------------  ------------

      Revenues from external customers   $ 6,877,137   $           -  $        -    $ 6,877,137
      Property and equipment, net        $   305,844   $      52,633  $    85,000   $   443,477
</TABLE>

13.   SUBSEQUENT EVENTS

On April 20, 2007, M2B World Asia Pacific Pte. Ltd. subscribed for additional
interest in an investee company for $66,000.

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

On April 23, 2007, a supplier filed a lawsuit against M2B World, Inc. for breach
of contract for an amount of $72,649.

                                      F-15



<PAGE>

On July 10, 2007, the Company entered into an share sale and purchase agreement
(the "Agreement") by and between Tremax International Limited, a British Virgin
Islands corporation and the Company's wholly-owned subsidiary (the "Purchaser")
and Domaine Group Limited, a British Virgin Islands corporation (the "Vendor"),
and a 100% beneficial owner of CBBN Holdings Limited ("CBBN Holdings"). CBBN
Holdings is a 80% beneficial owner of Cosmactive Broadband Networks Co. Ltd
("CBN"). According to the terms of the Agreement, the Vendor shall sell, and the
Purchaser or its nominee(s) shall purchase the shares held by Vendor in CBBN
Holdings, in exchange for the issuance of 5,333,333 newly issued restricted
shares of common stock of the Company. CBN is a company registered in Taiwan,
the Republic of China. CBN is an internet cum broadband access provider to major
residential buildings in Taiwan and has a subscriber base of about 20,000 homes.


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

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

General

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

The Company is also in the business of digit gaming (lottery). The Company has
an 18 year license to conduct nation wide lottery in Cambodia. The Company
through its subsidiary, M2B Commerce Limited, signed an agreement with Allsports
Limited, a British Virgin Islands company to operate and conduct digit games in
Cambodia and to manage the digit games activities in Cambodia.

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


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

For the quarter ended March 31, 2007 compared with the quarter ended March 31,
2006

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

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

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

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

                                       1



<PAGE>

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

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

1.      Entertainment Services - Video on-Demand services such as for
        entertainment and education, providing the Company with advertising,
        subscriptions, online games and e-commerce ( B2B and B2C) revenues
2.      Digit Games
3.      E-Travel Services - Online Travel Portal


1. Entertainment Services
   ----------------------

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

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

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

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

                o       Television screens (Set top Box Technology)

                o       PCs (Digital Subscriber Line (DSL) Technology)

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

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

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

        The Company has built and installed its broadband streaming system
        complete with firewalls, load balancing, bandwidth and consumer
        monitoring systems, which include video streaming, video storage and web
        servers in Singapore and the U.S. The Company has also developed its
        streaming applications to stream into television sets, via a set top
        box.

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

        M2B offers consumers personalized entertainment through its wide range
        of broadband streaming channels available at WWW.M2BWORLD.COM.

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

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

        o       Adult Education - consumers view program on management skills,
                communication skills, decision making, customer services and
                sales, motivation, presentation and writing skills, counseling
                and others.

                                       2



<PAGE>

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

        1.      Advertising i.e. program and channel sponsorship

        2.      Online subscriptions

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

        4.      Content aggregation and syndication

        5.      Broadband consulting services and online shopping turnkey
                solutions

        6.      E-commerce services

        7.      Online games micro-payments

        Currently, the M2B Broadband websites include:

        1.      Entertainment Sites

                INTERNATIONAL AND U.S. SITES:

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

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

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

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

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

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

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

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

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

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

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

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

2.       Education Sites

                U.S. SITES:

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

                ASIAN SITES:

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

        3.      E-Commerce Sites

                INTERNATIONAL SITES:

                o       Starzmall.com - A One-Stop Shopping Paradise

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

                                       3



<PAGE>

        BROADBAND SERVICES

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

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

        In store video panels can also carry individualized messages together
        with customized content to reach consumers and target audiences within
        the premises. The Company plans to further introduce this integrated CMS
        and content solution to U.S. clients in 2007. Businesses and advertisers
        can then readily offer customers feature-rich content with this
        versatile and easy-to-use CMS designed to advance brand-building
        activities and widen the advertising options for customer outreach. This
        integrated solution underscores M2B's key strength in delivering content
        for viewing on PCs, 3G mobile phones, PDAs as well as television
        screens. This is another method by which M2B is continuing to meet the
        consumer shift toward on-demand and personalized media experiences
        whether at home or work and now additionally on video screens in stores,
        restaurants, clubs and other business or leisure outlets.

        DIGIT GAMES

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

        E-TRAVEL SERVICES

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

        According to PhoCusWright, a travel industry research provider, the
        online portion of those sales is growing particularly quickly in the
        U.S., Europe and the Asia-Pacific region, where combined online travel
        sales in those three geographic regions is estimated to top $115 billion
        this year. With eMarketer reporting that broadband currently reaches
        over 58 million households in Asia-Pacific alone, M2B World Travel
        Limited through its agreement with Amadeus, is now poised to immediately
        access and serve this consumer market.

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

        The video e-travel portal brings an extensive range of travel options to
        our viewers and gives the Company an entry into the travel and tourism
        market; it directly aggregates travel solutions from 500 airlines,
        58,000 hotel properties, some 42 car rental companies serving over
        30,000 locations, as well as widespread air, ferry, rail, cruise, and
        tour operators with proprietary video content, allowing customers to the
        site to view their travel destination, thus influencing their purchasing
        decision.

        The Company plans to launch the M2B travel site in 2007.  No assurances
        can be made that such plan will materialize as planned.

                                       4



<PAGE>

REVENUE

Revenue for the three months ended March 31, 2007 at $5,487,075 was lower than
revenue of $6,877,137 for the three months ended March 31, 2006 by $1,390,062
(20.2%).

Entertainment revenue for the three months ended 31 March 2007 at $10,249 was
lower than entertainment revenue of $1,002,657 for the three months ended March
31, 2006. The decrease in entertainment revenue by $992,408 was mainly due to
the reorganization and redesigning of the broadband sites as a part of the
restructuring of the Company.

Digit gaming revenue for the three months ended March 31, 2007 at $5,476,826 was
lower than $5,873,694 at March 31, 2006 by $396,868 mainly due to more holidays
in the first quarter of 2007 as compared to 2006.


COST OF SALES

Cost of sales for the three months ended March 31, 2007 was $5,423,501 which
decreased by $364,892 (6.3%) from $5,788,393 for the three months ended March
31, 2006.

As a proportion of revenue, the cost of sales for the three months ended March
31, 2007 was 98.8% (cost of sales at $5,423,501 and revenue of $5,487,075) as
compared to 84.2% for the three months ended March 31, 2006 (cost of sales at
$5,788,393 and revenue at $6,877,137).

The decrease in cost of sales of $364,892 (6.3%) was mainly attributed to the
cost of managing and operating the operations and game centers in Cambodia
for the digit games (lottery).


DISTRIBUTION EXPENSES

Distribution expenses for the three months ended March 31, 2007 at $309,647 was
higher by $62,213 (25.1%) as compared to the amount of $247,434 incurred for the
three months ended March 31, 2006.

The higher distribution expenses was attributed to increased spending on the
branding of the M2B brand, marketing and promoting the global Broadband TV which
increased by $15,299 (8.0%) from $190,130 for the three months ended March 31,
2006 to $205,429 for the three months ended March 31, 2007.


GENERAL AND ADMINISTRATIVE EXPENSES

Administration expenses for the three months ended March 31, 2007 at $1,672,296
at was higher by $1,038,619 (163.9%) as compared to the amount of $633,677
incurred for the three months ended March 31, 2006.

The increase in administrative expenses were attributed mainly to the increase
in:

o     Staff costs. Staff costs had increased by $307,164 (152.7%) from $201,193
      for the three months ended March 31, 2006 to $508,357 for the three months
      ended March 31, 2007 as a result of the increase in the number of
      professional employees hired to cater to the expanding and growing
      business; and

o     Depreciation and license amortization. The increase in depreciation was
      attributed to the leasehold improvements for the expansion of the offices,
      and laptops provided to staff to cater to the demands of the growing
      business. The increase in license amortization came from the the movie
      contents which have a definite life. The amount increased by $729,808
      (388.8%) from $187,728 for the three months ended March 31, 2006 to
      $917,536 for the three months ended March 31, 2007.


(LOSS) INCOME FROM OPERATIONS

The Company incurred a loss from operations of $1,918,369 for the three months
ended 31 March 2007 as compared to the income from operations of $207,633 for
the three months ended March 31, 2006 due to the significant reduction in
entertainment business for the three months ended March 31, 2007.


NET INCOME

Net income for the three months ended March 31, 2007 was $750,236 which
increased by $449,980 (149.9%) from $300,256 for the three months ended March
31, 2006.

The increase was mainly attributed to the gain on dilution of the Company's
interest in a subsidiary, M2B World Asia Pacific Pte. Ltd. by issuing shares to
the private investors at a premium. On January 3, 2007, M2B World Asia Pacific
Pte. Ltd., issued 7,778,014 shares of common stock through a private placement
at a price of $0.77 a share for a total amount of $6,000,000. This had
effectively reduced the Company's effective equity interest in M2B World Asia
Pacific Pte. Ltd. from 100% to 81.7%.

                                       5



<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash at $5,757,807 at March 31, 2007 as compared to cash of
$5,195,642 at March 31, 2006.

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

During the three months ended March 31, 2007, the Company had not entered into
any transactions using derivative financial instruments or derivative commodity
instruments. Accordingly the Company believes its exposure to market interest
rate risk is not material.

Cash generated from operations will not be able to cover the company's intended
growth and expansion. The Company has plans in 2007 to expand its broadband
coverage by launching new broadband sites in Asia Pacific region and Australia.
No assurances an be made that such plans will be carried out in a timely manner.

In North America, the Company had launched new broadband entertainment and
business training content sites in 2006. A new server farm had been built in the
US to handle the North American business and the global Broadband TV service

The Company is continuing to raise additional funds through its private
placement of its subsidiary's securities to fund its business expansion, however
no assurances can be made that the Company will raise sufficient funds as
planned.


NEW CONTRACTS

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

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

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


                                       6



<PAGE>

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        ABILITY TO EXPAND CUSTOMER BASE

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

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

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

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

        ABILITY TO ACQUIRE NEW MEDIA CONTENTS

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

        AVAILABILITY OF TECHNOLOGICALLY RELIABLE NEW GENERATION OF BROADBAND
        DEVICES

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

        CAPITAL INVESTMENT IN BROADBAND INFRASTRUCTURE BY GOVERNMENT AND TELCOS

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

        COMPETITION FROM BROADBAND CABLE AND TV NETWORKS OPERATORS

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

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

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

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


                                       7



<PAGE>

        LAW AND REGULATIONS GOVERNING INTERNET

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

        UNAUTHORIZED USE OF PROPRIETARY RIGHTS

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

        LAW AND REGULATIONS GOVERNING BUSINESS

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

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

        OUTBREAK OF BIRD FLU PANDEMIC OR SIMILAR PUBLIC HEALTH DEVELOPMENTS

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


ITEM 4: CONTROLS AND PROCEDURES

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

An evaluation was conducted under the supervision and with the participation of
the Company's management, including its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the Company's disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedure were effective as of March 31, 2007.. There has been no change in the
company's internal control over financial reporting that occurred during the
quarter ended March 31, 2007, that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.

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


                                       8



<PAGE>

PART 2:

ITEM 1:  LEGAL PROCEEDINGS

On April 23, 2007, a supplier filed a lawsuit against M2B World, Inc. for breach
of contract for an amount of $72,649.

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

During the quarter ended March 31, 2007, the Company issued 40,000 shares of
common stock through its private placement of shares of common stock at a
purchase price of $1.50 per share for a total amount of $60,000 to "accredited
investors", as that term is defined in Regulation D of the Securities Act of
1933.

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


ITEM 3:  DEFAULTS UPON SENIOR SECURITIES

         None

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

         None

ITEM 5:  OTHER INFORMATION

         None


                                       9




<PAGE>

ITEM 6:  EXHIBITS:

A - Exhibits:

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

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







                                       10




<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)


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


                                       11