<PAGE>

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

                                   FORM 10-QSB


(X)      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the quarterly period ended March 31, 2007

( )      Transition report pursuant of Section 13 or 15(d) of the Securities
         Exchange Act of 1939 for the transition period ____ to______

                        COMMISSION FILE NUMBER 000-32695

                                   AMARU, INC.
             (Exact name of registrant as specified in its charter)

           Nevada                                         88-0490089
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

  112 Middle Road, #08-01 Midland House, Singapore 188970 (011)(65) 6332 9287
--------------------------------------------------------------------------------
    (Address of Principal Executive Offices, including Registrant's zip code
                              and telephone number)

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]


The number of shares of the registrant's common stock as of April 26, 2007:
154,098,528 shares.

Transitional Small Business Disclosure Format (check one):   Yes [ ]   No [X]



<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

PART I. FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements                                   F-1

(a)      Consolidated Balance Sheets                                         F-2
(b)      Consolidated Statements of Income                                   F-3
(c)      Consolidated Statement of Shareholders' Equity and
            Comprehensive Income                                             F-4
(d)      Consolidated Statements of Cash Flows                               F-6
(e)      Notes to Consolidated Financial Statements                          F-7

Item 2.  Management's Discussion and Analysis
         of Financial Condition and Results of Operations                     1

Item 3.  Controls and Procedures                                              7

PART II. OTHER INFORMATION                                                    7

Item 1.  Legal Proceedings                                                    7

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          7

Item 3.  Defaults On Senior Securities                                        7

Item 4.  Submission of Items to a Vote                                        7

Item 5.  Other Information                                                    7

Item 6.                                                                       7

(a) Exhibits (b) Reports on Form 8K

SIGNATURES AND CERTIFICATES                                                   8



<PAGE>

PART I. FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

                                TABLE OF CONTENTS

Consolidated Balance Sheets..................................................F-2

Consolidated Statements of Income............................................F-3

Consolidated Statement of Changes in Stockholders' Equity
    and Comprehensive Income.................................................F-4

Consolidated Statements of Cash Flows........................................F-6

Notes to Consolidated Financial Statements...................................F-7


                                      F-1

<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
Investments available for sale                                          16,705,405       12,158,351
                                                                       -----------      -----------
     Total non-current assets                                           47,073,060       42,260,978
                                                                       -----------      -----------

Total assets                                                           $55,388,543      $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

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                                                        2,907,619        2,084,908
Accumulated other comprehensive income                                   5,906,627        3,677,574
                                                                       -----------      -----------
     Total stockholders' equity                                         48,159,010       45,047,246
Minority interest                                                        3,016,115               --
                                                                       -----------      -----------
                                                                        51,175,125       45,047,246

                                                                       -----------      -----------
Total liabilities and stockholders' equity                             $55,388,543      $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                  --
                                                          -------------       -------------
Income before income taxes                                      579,184             225,215
Benefit for income taxes                                        163,513              75,041
                                                          -------------       -------------
Net income                                                      742,697       $     300,256
                                                          =============       =============

Attributable to:
Equity holders of the company                                   822,711             300,256
Minority interest                                               (80,014)                 --
                                                          -------------       -------------
                                                                742,697             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)

                                                                                              ACCUMULATED OTHER
                 PREFERRED STOCK              COMMON STOCK                                   COMPREHENSIVE INCOME
                -----------------  -------------------------------                        ------------------------         TOTAL
                 NUMBER    PAR                   PAR    ADDITIONAL  SUBSCRIBED            CURRENCY                         SHARE-
                   OF     VALUE     NUMBER OF   VALUE     PAID-IN     COMMON   RETAINED TRANSLATION FAIR VALUE MINORITY   HOLDERS'
                 SHARES  ($0.001)    SHARES    ($0.001)   CAPITAL     STOCK    EARNINGS   RESERVE    RESERVE   INTEREST    EQUITY
                -------- -------- ----------- -------- ----------- ---------- ---------- ---------- ---------- -------- ------------
Balance at
  December 31,
  2005               --       --  125,591,120 $125,591 $14,642,550 $4,256,880 $  834,379  $ 12,927  $       --       --   19,872,327

Common stock
  issued for
  cash               --       --   15,339,568   15,339  11,255,404         --         --        --          --       --  11,270,743

Common stock
  issued for
  services           --       --       40,000       40      59,960         --         --        --          --       --      60,000

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         --         --        --          --       --    8,740,000

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

Net income           --       --           --       --          --         --  1,250,529        --          --       --    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               --       --  153,638,528 $153,638 $38,942,126 $  189,000 $2,084,908  $ 12,927  $3,664,647 $      -- $45,047,246
                ======= ========  =========== ======== =========== ========== ==========  ========  ========== ========= ===========

                                    See accompanying notes to consolidated financial statements


                                                                 F-4


<PAGE>


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

                                                                                              ACCUMULATED OTHER
                 PREFERRED STOCK              COMMON STOCK                                   COMPREHENSIVE INCOME
                -----------------  -------------------------------                        ------------------------        TOTAL
                 NUMBER    PAR                   PAR    ADDITIONAL  SUBSCRIBED            CURRENCY    FAIR                SHARE-
                   OF     VALUE     NUMBER OF   VALUE     PAID-IN     COMMON   RETAINED TRANSLATION   VALUE   MINORITY   HOLDERS'
                 SHARES  ($0.001)    SHARES    ($0.001)   CAPITAL     STOCK    EARNINGS   RESERVE    RESERVE  INTEREST    EQUITY
                -------- -------- ----------- -------- ----------- ---------- ---------- --------- ---------- -------- ------------

Balance at
  December 31,
  2006               --      --  153,638,528 $153,638 $38,942,126 $  189,000 $2,084,908 $ 12,927 $3,664,647 $        -- $45,047,246

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

Common stock
  issued for
  services           --      --      40,000      40       59,960         --         --       --         --           --      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           --      --          --        --          --         --    822,711       --         --     (80,014)    742,697

Change in fair
  value equity
  securities
  available for
  sale, net of tax   --      --          --        --          --         --         --       --  2,229,053          --   2,229,053
                                                                                                                        -----------
Comprehensive
  income             --      --                                                                                      --   2,971,750

                ------- -------  ----------- -------- ----------- ---------- ---------- -------- ---------- ----------- -----------
                     --      --  154,098,528 $154,098 $39,190,666         -- $2,907,619 $ 12,927 $5,893,700 $ 3,016,115 $51,175,125
                ======= =======  =========== ======== =========== ========== ========== ======== ========== =========== ===========

                                    See accompanying notes to consolidated financial statements

                                                               F-5

<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                                                        $   742,697       $   300,256
    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
                                                                      ===========       ===========

                     See accompanying notes to consolidated financial statements

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.

                                                 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.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      2.1   Principles of Consolidation

            The consolidated financial statements include the financial
            statements of Amaru, Inc. and its subsidiaries. All significant
            intercompany balances and transactions have been eliminated in
            consolidation.

      2.2   Use of Estimates

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

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

      2.3   Cash and Cash Equivalents

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

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

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


                                      F-7
<PAGE>


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


      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.

      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. Intangible assets which were purchased for a
            specific period are stated at cost less accumulated amortization and
            impairment losses. 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.


                                      F-8
<PAGE>


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


      2.8   Investments

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

      2.9   Valuation of Long-Lived Assets

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

      2.10  Advances from Related Party

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

      2.11  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.

      2.12  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.

      2.13  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.


                                      F-9

<PAGE>

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


      2.14  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.

      2.15  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.

      2.16  Financial Instruments

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

      2.17  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.

      2.18  Reclassifications

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


3.    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
                                                     ============  ============


4.    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-10
<PAGE>

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


5.    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.


6.    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                       8,182,277      6,482,277
                                                     ------------  ------------
                                                     $16,705,405   $ 12,158,351
                                                     ============  ============

      The investments in quoted equity security 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 equity securities classified as available-for-sale, with a carrying
      value of $8,182,277 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.


7.    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.


                                      F-11
<PAGE>


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


7.    COMMITMENTS (Cont'd)

      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.


8.    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.


9.   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.


                                      F-12
<PAGE>

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


10.   SEGMENT REPORTING

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

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

<TABLE>
<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
                                                                  -------------
         Profit before income tax                                 $     579,184
                                                                  -------------

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

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



                                      F-13
<PAGE>

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


10.   SEGMENT REPORTING (Cont'd)

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
                                                                  -------------

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


      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>


                                      F-14
<PAGE>


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

11.   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>



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

                o       HappyDigi.com - a subscription based Mandarin site in
                        China only (Movie entertainment platform)

        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 $742,697 which
increased by $442,441 (147.4%) 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. Controls and Procedures

Our President and Treasurer/Chief Financial Officer (the "Certifying Officers")
are responsible for establishing and maintaining disclosure controls and
procedures and internal controls and procedures for financial reporting for the
Company. The Certifying Officers have designed such disclosure controls and
procedures and internal controls and procedures for financial reporting to
ensure that material information are made known to them, particularly during the
period in which this report was prepared. The Certifying Officers have evaluated
the effectiveness of the Company's disclosure controls and procedures and
internal controls and procedures for financial reporting as of March 31, 2007
and believes that the Company's disclosure controls and procedures and internal
controls and procedures for financial reporting are effective based on the
required evaluation. There have been no significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


PART II. OTHER INFORMATION

Item 1.  Legal proceedings

No disclosures are required pursuant to Item 103 of Regulation S-B, taking into
account Instruction 1 to that Item.

Item 2. 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 on senior securities                         NONE

Item 4. Submission of items to a vote                         NONE

Item 5. Other information


Item 6.

(a) Exhibits
    --------

    Exhibit No.            Description
    -----------            -----------
    Exhibit 31             CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
                           FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT

    Exhibit 32             CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
                           FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT

b) Reports on 8K during the quarter:

Form 8-K filed on January 9, 2007
Form 8-K filed on January 18, 2007
Form 8-K/A filed on January 18, 2007
Form 8-K/A filed on January 19, 2007
Form 8-K filed on January 23, 2007
Form 8-K filed on March 7, 2007
Form 8-K filed on April 11, 2007
Form 8-K filed on April 11, 2007
Form 8-K filed on May 4, 2007

                                       7



<PAGE>

SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   AMARU, INC.
Date: May 21, 2007
                               By  /s/ Colin Binny
                                   --------------------------------------------
                                   President, CEO & CFO

                                       8