Edgar Filing: AMARU INC

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

FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
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: 0-28560

AMARU, INC.
(Name of small business issuer in its charter)

NEVADA 88-0490089
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

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

(011) (65) 63329287
(Issuer's telephone number, including area code)

Securities registered under Section 12(b) of the Act:
Title of each class Name of exchange on which registered
NONE NONE

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, $0.001 PAR VALUE
(Title of Class)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year: $3,984,981.

The aggregate market value of the voting common equity held by non-affiliates of
the registrant computed by reference to the closing sale price of the common
stock as of March 10, 2005 was $64,416,084.

The number of shares outstanding of the registrant's only class of common stock,
$0.001 par value per share, was 27,250,000 as of March 10, 2005.
The registrant has no outstanding non-voting common equity.

DOCUMENTS INCORPORATED BY REFERENCE:
NONE

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

TABLE OF CONTENTS

PART 1

Item 1. Description of Business 3

Item 2. Description of Property 7

Item 3. Legal Proceedings 8

Item 4. Submission of Matters to a Vote of Security Holders 8

PART II

Item 5. Market for Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities 8

Item 6. Management's Discussion and Analysis or Plan of Operation 9

Item 7. Financial Statements 13

Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 14

Item 8A. Controls and Procedures 14

Item 8B. Other Information 14

PART III

Item 9. Directors and Executive Officers of the Registrant 15

Item 10. Executive Compensation 16

Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 17

Item 12. Certain Relationships and Related Transactions 18

Item 13. Exhibits 18

Item 14. Principal Accountant Fees and Services 19

Item 1. DESCRIPTION OF BUSINESS

BACKGROUND

Amaru, Inc. (the "Company" or "Amaru") was incorporated under the laws of the
state of Nevada in September, 1999. The Company's corporate offices are located
at 112 Middle Road, #08-01 Midland House, Singapore 188970; telephone (65)
63329287. The Company, through its operating subsidiary, M2B World Pte Ltd., a
Singapore corporation ("M2B World"), is the leading provider of interactive
video-on-demand streaming and e-commerce over Broadband channels, Internet
portals and Third-Generation (3G) devices. Prior to the acquisition of M2B
World, the Company has been in the developmental stage since inception and had
no operating history other than organizational matters.

As of February 25, 2004 (the "Closing Date"), Amaru acquired M2B World Pte Ltd.,
a Singapore corporation in exchange for 19,500,000 newly issued "restricted"
shares of common voting stock of the Company and 143,000 "restricted" Series A
Convertible Preferred Stock shares to the M2B World shareholders on a pro rata
basis for the purpose of effecting a tax-free reorganization pursuant to
sections 351, 354 and 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended ("IRC") pursuant to the Agreement and Plan of Reorganization (the
"Reorganization Agreement") by and between the Company, M2B World and M2B World
shareholders. As a condition of the closing of the share exchange transaction,
certain shareholders of the Company cancelled a total of 1,457,500 shares of
common stock. Each one (1) ordinary share of M2B World has been exchanged for
1.3636363 shares of the Company's Common Stock and 100 shares of the Company's
Series A Convertible Preferred Stock. Each share of newly issued Company's
Series A Convertible Preferred Stock can be converted to 38.461538 shares of the
Company's common stock. Following the Closing Date, there were 20,000,000 shares
of the Company's Common Stock outstanding and 143,000 shares of the Company's
Series A Convertible Preferred Stock outstanding. Immediately prior to the
Closing, there were 500,000 shares issued and outstanding.

The restructuring and re-capitalization has been treated as a reverse
acquisition with M2B World becoming the accounting acquirer. The historical
financial statements prior to the closing of the transaction are those of M2B
World.

COMPANY OVERVIEW

Business Overview

The Company through its wholly owned subsidiary, M2B World, is one of the
significant participants in the Broadband entertainment business. The Company is
the leading provider of interactive video-on-demand streaming and e-commerce
over Broadband channels, Internet portals and Third-Generation (3G) devices. It
has launched multiple Broadband TV and integrated shopping websites with over
100 channels of content designed and programmed to effectively 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.

Business Strategy

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. The Company's
diversified operations are intended to generate multiple revenue streams. The
Company's goal is that its earnings are not over-reliant on any one single
revenue source. The Company's growth plan for the coming years includes a long
term success strategy that focuses on multiple growth areas and territories.
This growth balance in our business is to be achieved by paying close attention
to our acquisition of content rights and distribution over the broadband
networks.

Broadband technology is high speed, high-bandwidth, two-way data, voice and
video communications, delivered at high transmission rates up to 12 Mbps. It
allows the following to be delivered:

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 handphones
(Wireless Technology)

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

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

The Company's key product offerings on the VOD platform are:

a) Entertainment - Consumers pay a monthly subscription for access to
movies, music, glamour and fashion, lifestyle (hobbies, cooking,
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.

b) Adult Education - consumers pay a monthly subscription to view programs
on management skills, communication skills, decision making, customer
services and sales, motivation, presentation and writing skills,
counseling and others.

With this strategy, the Company plans to effectively generate diversified
sources of revenue from:

1. advertising i.e. program & 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. online games micro-payments and licensing
7. E-commerce commissions and online dealerships

The Company's operating subsidiary, M2B World's operations, sales and marketing
functions are based out of Singapore and located at 112 Middle Road, #08-01
Midland House. The corporate website is located at www.m2bworld.com.

COMPANY BUSINESS PLAN

The Company's immediate plan in the next three years is to launch high impact,
rich media, entertainment and education content channels globally over the
broadband and 3G, comprising of:

o On-line "Television" on subscription basis - Broadband access
premium sites
o Advertising and Sponsorship - supporting the online broadband
subscription sites
o On-line shopping malls - E-commerce platforms, and alongside
the broadband sites, on an interactive basis.

In addition to expanding our entertainment sites, our proposed broadband sites
for 2005 consist of:

a) Education sites in support of School Learning Content. Sites will
offer educational material for pre-school and primary level kids,
including fun learning programs, mathematics, English, Mandarin and
general knowledge.

b) Massively Online Multiple Player Games (MMOGS) - players of all ages
will have access to online games that can be played with players from
all over the world.

c) Health and Wellness Sites will offer health, fitness and beauty
content ( yoga, pilates, dieting, health foods) integrated with a
health and beauty shopping platform for international viewers and
shoppers.

d) "E-bay" type site which will be an electronic market place for
business-to-business and business-to-consumer trade exchange.

The Company has built and installed its broadband streaming system complete with
firewalls, load balancing, bandwidth and consumer monitoring systems, video
streaming, video storage and web servers in Singapore.

The Company has currently developed its streaming applications to stream into
television sets, through a copper wire or telephone cable and via a set top box.
Testing of set top boxes was successfully completed in 2003.

The Company has developed a capability to stream wireless broadband and have its
own digitized entertainment sites for wireless broadband applications. By the
end of 2004, M2B had successfully participated in trial runs with major telcos
in Asia on launching its broadband contents in the modified form for 2.75/3G
handphones.

The Company plans to restructure its operations in the next twelve months to
meet fully its global expansion initiatives. The restructuring plans include the
formation of three new wholly owned subsidiaries of Amaru Inc., in addition to
the existing subsidiary, and the setting up of a representative office in China.

The Company plans to reorganize its businesses in fiscal year 2005 under the
following entities:

a) M2B WORLD PTE LTD (SINGAPORE). This subsidiary will continue
to oversee the management and operation of the company as a
whole and oversee the Asian business.

b) M2B WORLD INC.(USA) incorporated on January 24, 2005. This
subsidiary will handle and oversee the Company's business in
the USA. The company has leased a new office on Sunset
Boulevard, West Hollywood that comes into effect from April 1,
2005.

c) M2B GAME WORLD PTE LTD (SINGAPORE) incorporated on January 24,
2005. This company will function as a wholly owned subsidiary
company of M2B World Pte Ltd and will handle the venture into
online games. The Company has already secured an online games
franchise for six countries.

d) AMARU HOLDINGS LIMITED (BVI) incorporated in the British
Virgin Islands on February 21, 2005. All rights and licenses
for the entertainment and education content (like movies,
dramas, lifestyles, corporate training, and others) will be
held under this company.

e) M2B COMMERCE LIMITED(BVI). M2B World has a wholly owned
subsidiary, M2B Commerce Limited, registered in the British
Virgin Islands. M2B World intends to consolidate all its
e-commerce operations and possibly launch new "e-bay" type
initiatives under M2B Commerce Limited. With effect from
January 11, 2005 ownership of this company has been
transferred from M2B World Pte Ltd to Amaru Inc. and is wholly
owned directly under Amaru Inc.

f) A CHINA REPRESENTATIVE OFFICE has been set up in Shanghai.
This representative office will be under M2B World Pte Limited
and handle the Company's China business. The representative
office has leased office space in the Shui On Plaza on Huai
Hai Zhong Road in Central Shanghai with effect from March 15
2005.

The existing and newly incorporated subsidiary companies are intended to
spearhead the expansion of the Company's business in fiscal 2005 and provide
focus in specific growth areas and specific territories. In addition to the
above, the Company plans to expand further in the last two quarters of fiscal
2005, by setting up subsidiary companies in Canada, United Kingdom and
Australia.

MARKET

The advent of broadband technology and ever-increasing bandwidth has pushed for
the next generation of online on-demand broadband entertainment as one of the
most desirable applications that will meet the increasingly demanding and
bandwidth hungry consumers and enterprise. Such technology can be further
enhanced by the coupling of value added services, namely Internet telephony
communication services and E-Commerce, together with the Broadband entertainment
sites.

The market consists of both the consumers and the enterprise. The demand from
consumers is rich media content, on demand, highly interactive, fast and on the
fly. On the other hand the enterprise must reach out to this and the next
generation through the new medium, or be left behind.

To meet this demand, the Company has strategic relationships with major
production houses, and access to major distributors worldwide. This is expected
to put the Company in a very strong position in acquiring high quality, original
video content. Such strategic positioning has resulted in the Company acquiring
exclusive content on broadband, for multiple countries and for dedicated time
periods.

The Company intends to continue to maximize on its key strength, the packaging
of our content. The Company believes that it will shape the delivery of its
content in the most cost effective manner and innovative way of utilizing
technology.

BUSINESS RISKS

o 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, not
only in Asia but also in the US and Europe. The degree of
success of this depends on

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

2) our ability to expand our offerings of content in
entertainment and education, to include more niche
channels and offerings like online games and

3) Our ability to provide content beyond just personal
computers but to encompass television, wireless
application devices and 3G handphones

o 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

o 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.

o 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.

o 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.

o 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 and 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.

COMPETITION

The Company, as a major content aggregator for programs on broadband, faces keen
competition especially in the acquisition of content for its channels. It
competes with free-to-air channels, cable operators as well as other broadband
entertainment providers for distribution rights of programs in terms of price,
quality and variety.

Traditional TV networks and cable TV operators today provide alternate sources
of entertainment and education in a broadcast mode. In future, these networks
may also extend their reach to the video-on-demand broadband service. This may
put them directly in competition with us, although their entry costs will likely
be higher, and both the technical and manpower capabilities existing in these
traditional companies will make it somewhat difficult for them to transit into
new broadband media.

The Company also competes within the industry for advertising revenue and
viewers. More generically, the Company faces competition from other leisure
entertainment activities from Video CDs (especially in Asia), DVDs to cinemas
and home theatres.

In the subscription based online gaming business, the Company's subsidiary, M2B
Game World faces vigorous competition from the numerous games that are
distributed free over the internet. More generically, it also competes with
console based games made for products like Playstation and X-Box.

EMPLOYEES

As of December 31, 2004 we had 13 employees of which 7 are full time and 6 are
part time employees. All the employees are currently based in Singapore.
Commencing April 2005, more employees will be recruited and sent to the US and
China to start and manage the offices there.

Item 2. DESCRIPTION OF PROPERTY

The headquarters for operations and management is located in Singapore in an
office space of about 4,000 square feet. We entered into a three years operating
lease paying a monthly rent of $4,294. The lease will be due for renewal in
another 3 years and the rent will be based on the open market rates.

Two offices were also opened in the US and China. The office in the US consists
of about 200 square feet and is situated on Sunset Boulevard, West Hollywood and
is scheduled to open on April 1, 2005. The office in China consists of about 120
square feet and is situated in Shui On Plaza, Huai Hai Zhong Road in Central
Shanghai and was opened on March 15, 2005.

We believe that our existing facilities are adequate to meet our current needs
and that suitable additional or alternative space will be available in the
future on commercially reasonable terms, although we have no assurance that
future terms would be as favorable as our current terms.

The Company has not invested in any real property at this time nor does the
Company intend to do so. The Company has no formal policy with respect
to investments in real estate or investments with persons primarily engaged in
real estate activities.

Item 3. LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the year ended December 31, 2004 and quarter ended December 31, 2004, no
matters were submitted to a vote of our common stockholders.

Item 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

PUBLIC MARKET

Our common stock trades on the Pink Sheets Electronic Quotation System under the
symbol "AMRU". As of March 10, 2005 there were 89 holders of our common stock.

DIVIDENDS

The Company does not expect to pay any dividends at this time. The payment of
dividends, if any, will be contingent upon the Company's revenues and earnings,
if any, capital requirements, and general financial condition. The payment of
any dividends will be within the discretion of the Company's Board of Directors
and may be subject to restrictions under the terms of any debt or other
financing arrangements that the Company may enter into in the future. The
Company presently intends to retain all earnings, if any, for use in the
Company's business operations and accordingly, the Board does not anticipate
declaring any dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

On February 10, 2004, M2B World issued 1,363,636 shares of $0.31 par value
Series D common stock for a total cash capital contribution of $287,745 prior to
the acquisition by the Company.

On October 1, 2004, Amaru Inc. issued 100,000 "restricted" shares of common
stock for services valued at $5,000. The shares were issued without registration
in reliance upon the exemption provided by Section 4(2) of the Securities Act.

On October 25, 2004, a total of 143,000 shares of Series A Preferred Stock was
converted to 5,500,000 shares of common stock of Amaru Inc.

On October 28, 2004 Amaru Inc. issued 300,000 shares of common stock through
private placement at a price of $2.80 per share.

On November 20, 2004 Amaru Inc. issued 100,000 shares of common stock through
private placement at a price of $2.80 per share.

On December 10, 2004 Amaru Inc. issued 200,000 shares of common stock through
private placement at a price of $3 per share.

On December 11, 2004 Amaru Inc. issued 100,000 shares of common stock through
private placement at a price of $3 per share.

The shares issued in the private placements set forth above were issued in
reliance upon the exemption from registration set forth in Section 4(2) of the
Securities Act and Regulation D (Rules 505 and/or 506) promulgated under the
Securities Act. The shares were offered and sold to investors who were
"accredited investors" as defined in the Securities Act.
Appropriate investment representations were obtained and the securities were
issued with restrictive legends.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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,
and broadband consulting services and E-commerce.

As of February 25, 2004 (the "Closing Date"), the Company acquired M2B World in
exchange for 19,500,000 newly issued restricted" shares of common voting stock
of the Company and 143,000 "restricted" Series A Convertible Preferred Stock
shares to the M2B World shareholders on a pro rata basis for the purpose of
effecting a tax-free reorganization pursuant to sections 351, 354 and
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended ("IRC") pursuant
to the Agreement and Plan of Reorganization (the "Reorganization Agreement") by
and between the Company, M2B World and M2B World shareholders. As a condition of
the closing of the share exchange transaction, certain shareholders of the
Company cancelled a total of 1,457,500 shares of common stock. Each one (1)
ordinary share of M2B World has been exchanged for 1.3636363 shares of the
Company's Common Stock and 100 shares of the Company's Series A Convertible
Preferred Stock. Each share of newly issued Company's Series A Convertible
Preferred Stock can be converted to 38.461538 shares of the Company's common
stock. Following the Closing Date, there were 20,000,000 shares of the Company's
Common Stock outstanding and 143,000 shares of the Company's Series A
Convertible Preferred Stock outstanding. Immediately prior to the Closing, there
were 500,000 shares issued and outstanding.

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 year ended December 31, 2004 compared with the year ended December 31,
2003

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.

The Company owns exclusive rights in the broadband media for various content.
The Company intends to apply broadband technologies to facilitate its growth in
the broadband and internet sector.

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 has a license to operate an E-commerce platform in Singapore and the
first right of refusal in certain Asian countries. This E-commerce platform will
enable the Company to provide an extensive on-line trading opportunities for
consumers and companies to barter and/or purchase goods. The marketing of this
E-commerce platform can be done through its entertainment channels.

The Company's business model in the area of broadband entertainment includes
both education and services, which would provide the Company with multiple
streams of revenue. Such revenues would be derived from channel and program
sponsorship (advertising and branding), 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, E-commerce commissions and on-line dealerships.

The Company's Broadband Sites

As of December 31, 2004, the following Broadband sites were set up both in the
United States and abroad to cater to different market segments.

1. ENTERTAINMENT

International sites:
o Star78.com - an advertising-based Family Entertainment site
o Shine8.com - an advertising-based Lifestyle site
o Jump29.com - an advertising-based Young Adults site
o Dreamstage7.com - an advertising & subscription-based Glamour
& Fashion site
o Dimension88.com - an advertising & subscription-based Movie
site
o Dragon78.com - an advertising & subscription-based Mandarin
Entertainment site

US Sites:
o Dragon78.tv - an advertising & subscription-based Mandarin
Entertainment site

2. EDUCATION SITES

International Sites:
o Wiz5.com - an advertising & subscription-based Business &
Corporate Training site

US Sites:
o Wiz5.US - an advertising & subscription-based Business &
Corporate Training site

3. E-COMMERCE SITES

International Sites:
o Starzmall, A One-Stop Shopping Paradise
o Trotteuse, A Second-Hand Branded Goods Mall

REVENUE

The revenue for the year ended December 31, 2004 was $3,984,981.

Licensing and advertising revenue which is the main component of operating
revenue for the year ended December 31, 2004 increased to $3,896,284 from
$998,238 for the year ended December 31, 2003. The increase of $2,898,046 (
290%) resulted primarily from advertising and content syndication arising out of
the launch of newly enhanced broadband sites. Beginning August, September and
the last quarter of 2003, the Company launched new broadband sites in US and
Singapore. These sites included Chinese entertainment sites as well as business
and corporate training sites, in the US and Singapore. One more new movie site
was also launched in Singapore.

These enhancements to the existing broadband sites, and the launch of the new
broadband sites as highlighted above, saw the first reasonably significant
revenues from advertising and content syndication materializing in the last
quarter of 2003. This also accounted for the bulk of the revenue for the year
ended December 31, 2003.

During the year 2004, the Company had secured substantial advertising revenue as
it sought to grow its subscription and e-commerce revenues. The Company acquired
licensing rights to content to increase its advertising revenues, and provide it
with a rich content platform to begin securing subscription revenues in the near
future. At the same time the company increased its marketing efforts by taking
up online advertising of its broadband sites.

The Company enhanced its fashion and glamour site. This international glamour
and fashion site, the US business and corporate training site and three other
international sites attracted the bulk of the advertising revenues.

COST OF SALES

The cost of sales incurred for the year ended December 31, 2004 was $3,053,715
which was higher than the year ended December 31, 2003 of $475,525 by $2,578,190
(542%). The increase in cost on a year to year comparison was due to the
acquisition of content license rights for the broadband sites in 2004. In 2004
acquisition of contents license rights was done throughout the year while in
2003 the acquisition of contents license rights only took place at the end of
the third quarter and the fourth quarter. In 2003 the acquisition took place
towards the end of the year in preparation for the launch of newly enhanced
broadband sites and new broadband sites in August, September and last quarter of
2003.
In 2004 higher costs were also attributed to costs incurred in the development
of the on-line games sites, 3G (third generation ) content sites and the
Singapore Telecommunications broadband sites.

As a proportion of revenue the cost of sales for the year ended December 31,
2004 was 77% as compared to the same proportion of 47% for the year ended
December 31, 2003. In the year 2003, a large content syndication and advertising
contract was secured in the fourth quarter which resulted in the revenue of
about $1 million for the quarter and also the year. On the cost side, cost
started to come in only in the last two quarters of the year when the company
embarked on the acquisition of contents license rights for the launch of its
newly enhanced broadband sites and new sites. The low cost and high revenue in
the year 2003 resulted in the low 47% of cost as a proportion of revenue.

DISTRIBUTION EXPENSES

Distribution expenses for the year ended December 31, 2004 increased to $283,532
from $182,236 for the year ended December 31, 2003. The increase of $101,296
(56%) was due mainly to the marketing and promotion of the broadband sites on an
international basis in 2004. The main increase in distribution expenses over the
year ended December 31, 2004 was mainly in the three months from April to June
2004. The amount incurred of $204,443 in these three months accounted for 72% of
the distribution costs of $283,532.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the year ended December 31, 2004
increased to $580,023 from $284,026 for the year ended December 31, 2003. The
increase of $295,997 (104%) resulted primarily from legal and other professional
fees paid in the year ended December 31, 2004.

The high legal and other professional fees incurred in the year ended December
31,2004 was due to the compliance required of a publicly listed company. These
expenses were not incurred for the year ended December 31, 2003 since the
Company was not reporting during the period then ended.

OPERATING INCOME

For the year ended December 31, 2004, the income from operations was $67,711
which was close to the income from operations of $63,956 for the year ended
December 31, 2003.

The operating income margin for the year ended December 31, 2004 at 1.7% was
lower than the operating income margin of 6.3% for the year ended December 31,
2003. Though revenue was higher in the year 2004 as compared to year ended 2003,
costs in the year ended 2004 was also higher than costs in the year 2003.

The Company has to incur higher cost in 2004 due to 1) acquisition of richer and
better mix of contents for its broadband sites 2)marketing and promotion of the
broadband sites on an international basis 3)legal and professional fees in
complying with the requirements of a publicly listed company 4)development of
its on-line games site, 3G (third Generation )content sites and Singapore
Telecommunications (Singtel) broadband sites to be rolled out in 2005. The
development of these sites were undertaken in line with the company's intended
diversification of its business in the broadband sector. These higher costs
eroded the profit margin in 2004 resulting in a decrease from 6.3% for year
ended December 31, 2003 to 1.7% for the year ended December 31, 2004.

GAIN ON SALE OF INVESTMENTS

On 29 December, 2004, the Company sold the entire 9.76% equity stake in FSBM M2B
Sdn Bhd to a third party for $600,000 at a gain of $597,292.

FSBM M2B Sdn Bhd is a joint venture between M2B World and FSBM Holdings Berhad (
formerly known as Fujitsu System Business Malaysia Berhad).

NET INCOME

Net income increased from $39,530 for the year ended December 31, 2003 to
$512,295 for the year ended December 31, 2004. The increase of $472,765 (1,196%)
was attributed mainly to the gain on disposal of investments of $597,292.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash at $644,319 at December 31 2004 as compared to cash of
$60,307 at December 31, 2003.

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 fiscal year ended December 31, 2004, the Company has not entered into
any transactions using derivative financial instruments or derivative commodity
instruments nor held any marketable equity securities of publicly traded
companies. Accordingly the Company believes its exposure to market interest rate
risk and price 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 2005 to expand its broadband
coverage by launching new broadband sites in North America and Europe.

In North America, the Company intends to launch new broadband entertainment and
business training content sites in 2005. As of September 2004, one new
entertainment site and one new business training site had been launched in North
America. In Asia, one new business training site had been launched in 2004. In
the area of E-commerce, the company plans to launch one new shopping mall for
health and wellness products online in the first half of 2005.

The Company has completed its prototype content for 3G (third generations)
mobile phones. The Company is working with telecommunication companies and
mobile operators on the possibility of launching this new content in the first
half of 2005.

The Company was also in the process of developing its new on-line games sites
for launching in the first half of 2005. This was the result of the Company's
acquisition of an on-line games franchise for six countries in the second
quarter of 2004.

To achieve its plans, the Company is seeking to fund its new growth activities
through equity financing. The Company plans to use the proceeds of such
financing for expansion of its operations.

In the quarter ended December 31, 2004 the Company raised $1,629,870 of equity
financing to fund its growth activities through the private placement of its
securities.

For the year ended December 31, 2004, the Company raised a total of $1,917,615.

The Company believes that it can continue to raise funds through private
placement of its securities to fund its growth and expansion.

NEW CONTRACTS

The Company has entered into three significant contracts in the last six months
ended December 31, 2004 namely:

o The provision of four broadband entertainment site with 26
channels for an exclusive high megabit broadband service with
one of the major Telecommunication companies in Asia, namely
Singapore Telecommunications (Singtel). The launch of the four
new broadband sites was successfully completed in March 2005.

o The acquisition of an on-line games franchise in six countries
(Australia, New Zealand Philippines, Thailand, Indonesia and
Singapore) with an on-line games company in Asia, namely MOL
AccessPortal Berhad. The Company will enter the on-line games
market to enhance its entertainment sites on the broadband.
The Company expects to launch the first of these on-line games
sites by the second quarter of 2005 through M2B Game World Pte
Ltd.

o The launch of an international fashion and glamour site with
an on-line games company in Asia, namely MOL AccessPortal
Berhad. This business will be carried out through M2B Commerce
Limited.

In additional, the Company signed two other contracts with a Korean company for
the distribution of set-top boxes worldwide, and supply of content. The Company
intends to enhance its broadband entertainment services by allowing its viewers
to have the option of watching its content via the television sets in 2005.

Item 7. FINANCIAL STATEMENTS

Our consolidated financial statements are included herein.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

1. Report of Independent Registered Public Accounting Firm F-1

2. Consolidated Financial Statements

Consolidated Balance sheet as of December 31, 2004 and 2003 F-2

Consolidated Statement of Operations for the years ended
December 31, 2004 and 2003 F-3

Consolidated Statement of Stockholders' Equity and
Comprehensive Loss for the year ended December 31, 2004
and 2003 F-4

Consolidated Statements of Cash Flows for the years ended
December 31, 2004 and 2003 F-5

Notes to Consolidated Financial Statements F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Amaru, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of Amaru, Inc. and
Subsidiary (the Company) as of December 31, 2004, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year then
ended. We have also audited the balance sheet of M2B World Pte. Ltd. as of
December 31, 2003 and the related statements of operations, stockholders' equity
and cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the 2004 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Amaru, Inc. and Subsidiary as of December 31, 2004 and the consolidated results
of its operations and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the 2003 financial statements present fairly, in all material
respects, the financial position of M2B Word Pte. Ltd. as of December 31, 2003
and the results of its operations and cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/ MENDOZA BERGER & COMPANY, LLP

Irvine, California
March 17, 2005 except for Note 10 which is dated April 4, 2005.

F-1

AMARU, INC. AND SUBSIDIARY
BALANCE SHEETS

DECEMBER 31,
2004 DECEMBER 31,
(CONSOLIDATED) 2003
--------------- ---------------

ASSETS
Current assets
Cash and cash equivalents $ 644,319 $ 60,307
Accounts receivable 239 14,097
Other receivables 680,737 20,554
Prepaid expenses 5,576 33,758
--------------- ---------------
Total current assets 1,330,871 128,716

Non current assets
Property and equipment 520,360 18,866
Product development costs (net) 181,948 297,402
Investment, at equity -- 1,403,493
License 2,420,227 --
Other assets -- 2,708
--------------- ---------------
Total non current assets 3,122,535 1,722,469
--------------- ---------------

Total assets $ 4,453,406 $ 1,851,185
=============== ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 126,345 $ 64,738
Accounts payable - related parties 473,792 423,444
Line of credit -- 58,188
Term loan current portion -- 5,007
Deferred tax liability 36,760 --
Income tax payable -- 36,994
Advances from related parties 179,736 55,518
--------------- ---------------
Total current liabilities 816,633 643,889

Commitments -- --

Shareholders' equity
Series A convertible preferred stock (par value $0.001)
5,000,000 shares authorized: 0 shares issued and
outstanding at December 31, 2004 and 2003, respectively -- --
Common stock (par value $0.001) 200,000,000 shares authorized;
27,200,000 shares issued and outstanding at December 31, 2004
and 18,136,364 at December 31, 2003 27,200 18,136
Paid in capital 2,932,751 867,292
Subscribed common stock, 0 and 337,513 shares at December 31,
2004 and 2003, respectively -- 128,255
Retained earnings 667,634 160,696
Comprehensive gain on currency translation 9,188 32,917
--------------- ---------------
Total shareholders' equity 3,636,773 1,207,296
--------------- ---------------

Total liabilities and shareholders' equity $ 4,453,406 $ 1,851,185
=============== ===============

The accompanying notes are an integral part of these financial statements.

F-2

AMARU, INC. AND SUBSIDIARY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

FOR THE YEAR ENDED
-------------------------------------
DECEMBER 31, 2004 DECEMBER 31,
(CONSOLIDATED) 2003
----------------- ---------------

Revenue:
Licensing and advertising (including $2,700,000 to a
related party for the year ended December 31,
2004 and $0 for the year ended December 31, 2003) $ 3,896,284 $ 998,238
E-commerce 12,046 --
Subscription and related services 5,123 4,569
Other income 71,528 2,936
---------------- ----------------
Total revenue 3,984,981 1,005,743

Cost of services (Includes $2,966,350 and $423,444 from a
related party for the year ended December 31, 2004
and December 31, 2003 respectively) 3,053,715 475,525
---------------- ----------------
Gross profit (loss) 931,266 530,218

Distribution costs 283,532 182,236
Administrative expenses 580,023 284,026
---------------- ----------------
Total expenses 863,555 466,262

Income (loss) from operations 67,711 63,956

Other (income) expense:
Expenses related to public listing 152,582 --
Gain on sale of investment (597,292) --
Finance expenses 1,964 3,874
---------------- ----------------
Income (loss) before income tax provision/(benefit) 510,457 60,082

Income taxes provision/(benefit) (1,838) 20,552
---------------- ----------------
Net income (loss) $ 512,295 $ 39,530
================ ================

Earnings (loss) per share-basic and diluted $ 0.02 $ --
================ ================

Weighted average number of common shares
outstanding-basic and diluted 21,297,410 17,772,228
================ ================

The accompanying notes are an integral part of these financial statements.

F-3

AMARU, INC. AND SUBSIDIARY
STATEMENT OF SHAREHOLDERS' EQUITY

Series A Convertible
Preferred Stock Common Stock Accumulated
----------------------- ------------------------------ Total
Additional stock-
Number Par Value Number of Par value Paid-in Subscribed Retained Translation holders'
of Shares ($0.001) shares ($0.001) capital stock Earnings gain equity
-------------------------------------------------------------------------------------------------------

Balance December 31, 2002 -- $ -- 17,727,273 $17,727 $753,701 $82,844 $121,166 $ (4,475) $ 970,963

Common stock issued for cash -- -- 409,091 409 113,591 -- -- -- 114,000

Common stock subscribed at
various dates -- -- -- -- -- 45,411 -- -- 45,411

Net income -- -- -- -- -- -- 39,530 -- 39,530

Comprehensive gain on
currency translation -- -- -- -- -- -- -- 37,392 37,392
-----------
Comprehensive income 76,922
-------------------------------------------------------------------------------------------------------

Balance December 31, 2003 -- -- 18,136,364 18,136 867,292 128,255 160,696 32,917 1,207,296

Shares issued for cash
Feb. 10, 2004 -- -- 1,363,636 1,364 414,636 (128,255) -- -- 287,745

Reverse acquisition 143,000 143 500,000 500 (27,347) -- -- -- (26,704)

Stock issued for services -- -- 1,000,000 1,000 49,000 -- -- -- 50,000

Common stock issued for cash -- -- 700,000 700 1,629,170 -- -- -- 1,629,870

Stock converted (143,000) (143) 5,500,000 5,500 -- -- (5,357) -- --

Net income -- -- -- -- -- -- 512,295 -- 512,295

Comprehensive loss on
currency translation -- -- -- -- -- -- -- (23,729) (23,729)
-----------
Comprehensive income 488,566
-------------------------------------------------------------------------------------------------------
Balance December 31, 2004
(consolidated) -- $ -- 27,200,000 $27,200 $2,932,751 $ -- $667,634 $ 9,188 $3,636,773
=======================================================================================================

The accompanying notes are an integral part of these financial statements.

F-4

AMARU, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

FOR THE YEAR ENDED
--------------------------------------
DECEMBER 31, 2004 DECEMBER 31,
(CONSOLIDATED) 2003
----------------- ----------------

CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) $ 512,295 $ 39,530
Adjustments to reconcile net income (loss)
Amortization 121,142 115,914
Depreciation 14,339 24,689
Loss on disposition of fixed assets 7,823 7,530
(Gain) loss on sale of investment (597,292) --
Acquisition of license in exchange for
account receivable (1,016,734) (1,403,493)

Common stock issued for services 50,000 --

Changes in operation assets and liabilities
Accounts receivable 13,858 522,680
Prepaid and other receivables (632,001) 16,414
Accounts payable and accrued expenses 111,955 479,460
Income tax payable (234) 21,064
---------------- ----------------
Net cash used in operating activities (1,414,849) (176,212)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (523,656) (2,360)
Acquisition of equipment (5,688) (16,635)

Proceeds from sales of investment 600,000 --
---------------- ----------------
Net cash provided by (used in) investing activities 70,656 (18,995)

CASH FLOWS FROM FINANCING ACTIVITIES
Addition to related parties 124,218 1,726
Proceeds from (payments on) line of credit (58,188) 12,858
Net payments on bank term loan (5,007) (13,573)
Re-capitalization of M2B World Pte. Ltd. (26,704) --
Issuance of common stock for cash 1,917,615 159,411
---------------- ----------------
Net cash provided by financing activities 1,951,934 160,422

Effect of exchange rate changes on cash (23,729) 37,392
---------------- ----------------
Cash flow from all activities 584,012 2,607

Cash balance at beginning of period 60,307 57,700
---------------- ----------------
Cash balance at end of period $ 644,319 $ 60,307
================ ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 1,964 $ 3,874
================ ================

Income taxes $ 103,974 $ 0
================ ================

Write off of fully depreciated fixed assets $ -- $ 50,413
================ ================

The accompanying notes are an integral part of these financial statements.

F-5

AMARU, INC. & SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

1. BASIS OF PRESENTATION AND REORGANIZATION
-------------------------------------------

DESCRIPTION OF BUSINESS
-----------------------

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 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.

REORGANIZATION
--------------

As of February 25, 2004, an agreement was entered into which provides for the
reorganization of M2B World Pte. Ltd., a Singapore corporation with and into
Amaru, Inc. (Amaru), a Nevada corporation, with M2B World Pte. Ltd. (M2B),
becoming a wholly-owned subsidiary of Amaru. The agreement is for the exchange
of 100% of the outstanding Common Stock of M2B World Pte. Ltd. for 19,500,000
common shares and 143,000 Series A convertible preferred shares of Amaru, which
are each convertible into 38.461538 shares of Amaru common stock.

The exchange was accounted for as a reverse acquisition. Accordingly for
financial statement purposes, M2B World Pte. Ltd. was considered the accounting
acquiror and the related business combination was considered a recapitalization
of M2B World Pte. Ltd. rather than an acquisition by the Company. The historical
financial statements prior to the agreement will be those of M2B World Pte. Ltd.
and the name of the consolidated Company going forward will be Amaru, Inc. and
Subsidiary.

On this basis, the historical financial statements prior to February 28, 2004
have been restated to be those of the accounting acquirer M2B World Pte. Ltd.
The historical stockholders' equity prior to the reverse acquisition has been
retroactively restated (a recapitalization) for the equivalent number of shares
received in the acquisition after giving effect to any difference in par value
of the issuer's and acquirer's stock.

F-6

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------

PRINCIPLES OF CONSOLIDATION
---------------------------

The consolidated financial statements include the accounts of Amaru Inc and its
wholly owned subsidiary. All significant transactions among the consolidated
entities have been eliminated upon consolidation.

USE OF ESTIMATES
----------------

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities and the reported amounts of revenues and
expenses during the reporting period. 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.

CONCENTRATION OF CREDIT RISK
----------------------------

The credit risk is primarily attributable to the Company's trade receivables.
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 three customers
totaling 100% of these related revenues for the year ended December 31, 2004 and
one customer totaling 100% of these related revenues for the year ended December
31, 2003.

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

For the years
ended December 31
--------------------------
2003 2004
----------- -----------

Sales outside of Singapore $ -- $ --

Services purchased outside
of Singapore (1) $ 423,444 $3,166,350

At December 31, 2003 and 2004 all assets of the Company were located in
Singapore.

(1) Includes $423,444 and $2,966,350 purchased from a related party in
Malaysia for the year ended December 31, 2003 and 2004, respectively
(see Note 9)

CASH AND CASH EQUIVALENTS
-------------------------

Cash on hand, in banks and short-term deposits are held to maturity and are
carried at cost.

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.

For the purposes of the cash flow statement, cash and cash equivalents consist
of cash on hand and deposits in banks, net of outstanding bank overdrafts.

F-7

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. Content syndication
revenue is recognized as the content is delivered. E-commerce commissions are
recognized as received. Broad-band consulting services and on-line turnkey
solutions are recognized as earned.

To date the Company has only had revenues from licensing and advertising,
E-commerce and subscriptions and related services.

COSTS OF SERVICES
-----------------

The cost of services pertaining to 1) advertising and sponsorship revenue and 2)
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 are channel design and
alteration, and hardware hosting and maintenance costs. All these costs are
accounted for in the period incurred.

LICENSING RIGHTS
----------------

Licensing rights refers to the rights to use the content. These rights are
purchased for a specific period as determined in the contract. The costs of
these rights are recognized in the accounts over the life of the contract on a
straight line basis. These contents are then streamed into the broad-band sites
and the revenue earned from advertising, sponsorship and subscription are then
recognized according to our policy on revenue.

TRADE AND OTHER RECEIVABLES
---------------------------

Trade receivables, which generally have 30 to 90 day terms, are recognized and
carried at the original invoice amount less an allowance for any uncollectible
amounts (if any). An estimate for doubtful debts is made when collection of the
full amount is no longer probable. Bad debts are written off as incurred.

The Company has reviewed trade and other receivables and determined that no
allowance for doubtful accounts is required.

PROPERTY AND EQUIPMENT
----------------------

Property and equipment is stated at cost. Expenditures for major improvements
are capitalized, while replacements, maintenance and repairs, which do not
significantly improve or extend the useful life of the asset, are expensed when
incurred.

Depreciation of property and equipment is computed using the straight-line
method over the estimated useful lives of the assets, which is three to twenty
years.

PRODUCT DEVELOPMENT
-------------------

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

IMPAIRMENT OF LONG-LIVED ASSETS
-------------------------------

The Company reviews the carrying values of its long-lived and intangible assets
for possible impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable. No impairment
losses were recorded in the years ended December 31, 2004 and December 31, 2003.

F-8

INVESTMENTS
-----------

Investments in unconsolidated subsidiaries in which the Company has a 20% to 50%
interest or otherwise exercises significant influence are carried at cost,
adjusted for the Company's proportionate share of their undistributed earnings
or losses.

On December 27, 2002, the Company acquired a 9.76% interest in a joint venture
entity, FSBM M2B Sdn Bhd, which it accounted for at cost. The investment of
$2,708 is included in other assets at December 31, 2003.

On December 29, 2004, the Company sold the entire 9.76% equity stake in FSBM M2B
Sdn Bhd to a third party for $600,000 at a gain of $597,292.

On January 30, 2004, the Company acquired 100% of the outstanding common stock
of CRE8 IP&P in exchange for $2,420,227 of accounts receivable from CRE8
International Limited. CRE8 IP&P was incorporated in the British Virgin Islands
to hold a license to operate an E-commerce platform. The company anticipates
that the acquisition of CRE8 IP&P will allow M2B World to provide on-line
trading opportunities for consumers and companies to barter and/or purchase
goods.

The Company accounted for its acquisition of CRE8 IP&P under the purchase method
of accounting and in accordance with SFAS No. 141 Business Combinations", which
requires the acquirer to identify all of the assets acquired and liabilities
assumed. As of January 30, 2004, CRE8 IP&P had no assets or liabilities on its
books and has had no operations since its inception on July 25, 2002. However,
the Company did identify a license owned by CRE8 IP&P that meets the separable
and contractual recognition criteria of SFAS 141 for acquired intangible assets.
The Company has allocated the entire cost of the acquisition of $2,420,227 to
the license based on its fair value as determined by a third party valuation.

CRE8 IP&P has recorded this license in its financial statements at $2,420,227 in
accordance with SAB No. 54, "Push Down Basis Of Accounting Required In Certain
Limited Circumstances". The license has an indefinite life and is not subject to
amortization.

ADVANCES FROM PARENT
--------------------

Advances from parent are unsecured, non-interest bearing and carry no fixed
terms of repayment.

FOREIGN CURRENCY TRANSLATION
----------------------------

Transactions in foreign currencies are measured and recorded in the functional
currency Singapore dollars using the exchange rate in effect at the date of the
transaction. The reporting currency is U.S. dollars. At each balance sheet date,
recorded monetary balances that are denominated in a foreign currency are
adjusted to reflect the rate at the balance sheet date and the income statement
accounts using the average exchange rates throughout the period. Translation
gains and losses are recorded in stockholders' equity as other comprehensive
income and realized gains and losses are reflected in operations.

ADVERTISING
-----------

The cost of advertising is expensed as incurred. For the year ended December 31,
2004 the company incurred advertising expenses of $209,944.

INCOME TAXES
------------

Deferred income taxes are reported using the liability method. Deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.

F-9

EARNINGS (LOSS) PER SHARE
-------------------------

In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS
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.

FINANCIAL INSTRUMENTS
---------------------

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

RECLASSIFICATIONS
-----------------

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

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

The Company has adopted accounting pronouncements issued before December 31,
2004, that are applicable to the Company. The Company has determined as of
December 31, 2004 there are no recent pronouncements that if adopted would have
a material effect on the financial statements.

3. PROPERTY AND EQUIPMENT
-------------------------

Property and equipment consist of the following:

December 31, December 31,
2003 2004
-------------- --------------

Office equipment $ 58,857 $ 65,078
Film Library -- 500,000
Furniture, fixture and fittings 396 4,578
-------------- --------------
59,253 569,656

Accumulated depreciation (40,387) (49,296)
-------------- --------------

$ 18,866 $ 520,360
============== ==============

Depreciation expense was $24,689 the year ended December 31, 2003 and
$14,339 for the year ended December 31, 2004.

4. PRODUCT DEVELOPMENT
----------------------

Product development consists of the following:

December 31, December 31,
2003 2004
-------------- --------------

Development expenditures $ 595,413 $ 601,101

Accumulated amortization (298,011) (419,153)
-------------- --------------

$ 297,402 $ 181,948
============== ==============

Amortization expense was $115,914 for the year ended December 31, 2003
and $121,142 for the year ended December 31, 2004.

F-10

5. LINE OF CREDIT
-----------------

The Company has a line of credit ($61,267 for year ended December 31, 2004 and
$58,188 for year ended December 31, 2003), repayable on demand, used to fund the
Group's short-term working capital requirements. The line of credit bears
interest at prime lending rate plus 1% per annum (6% at December 31, 2004 and
December 31, 2003). This line of credit is secured by a certificate of deposit
and interest is payable monthly. The outstanding balance was $58,188 at December
31, 2003 and nil at December 31, 2004.

6. COMMITMENTS
--------------

LEASES
------

The Company leases its office space under a one year operating lease
which expires in February 2005 with a monthly payment of $1,856. Rent
expense totaled $23,858 for the year ended December 31, 2003 and 18,946
for the year ended December 31, 2004.

The Company renewed its lease and took on a larger office space of
about 4,000 square feet effective February 17, 2005 at a monthly rental
of $4,294. The lease expires on February 16,2008.

Minimum lease payments for the noncancellable operating leases for the
years ending December 31,

2005 2006 2007 2008 Total
-------------- -------------- --------------- --------------- ---------------

$ 40,793 $ 51,528 $ 51,528 $ 6,441 $ 150,290
============== ============== =============== =============== ===============

7. CAPITAL STOCK
----------------

COMMON STOCK
------------

On February 10, 2004 the M2B issued 1,363,636 shares of $0.31 par value Series D
common stock for a total cash capital contribution of $287,745 prior to the
reverse acquisition.

On July 13, 2004, Amaru Inc issued 900,000 shares of common stock for services
valued at $45,000.

On October 1, 2004, Amaru Inc issued 100,000 shares of common stock for services
valued at $5,000.

On October 25, 2004, a total of 143,000 shares of Series A Preferred Stock was
converted to 5,500,000 shares of common stock of Amaru Inc.

On October 28, 2004 Amaru Inc issued 300,000 shares of common stock through
private placement at a price of $2.80 per share for a total amount of $840,000.

On November 20, 2004 Amaru Inc issued 100,000 shares of common stock through
private placement at a price of $2.80 per share for a total amount of $280,000.

On December 10, 2004 Amaru Inc issued 200,000 shares of common stock through
private placement at a price of $3 per share for a total amount of $600,000.

On December 11, 2004 Amaru Inc issued 100,000 shares of common stock through
private placement at a price of $3 per share for a total amount of $300,000.

Costs of $390,130 associated with the issuance of common stock were deducted
from additional paid-in capital during the year ended December 31, 2004.

F-11

8. INCOME TAXES
---------------

The Company files separate tax returns for Singapore and the United States of
America. Reconciliation of the differences between the statutory tax and the
effective income tax are as follows:

For the year ended
-------------------------------
December 31, December 31,
2003 2004
-------------- --------------

U.S. Federal statutory tax --% (30.0%)
U.S. State taxes, net of federal tax --% --
Foreign statutory tax rate 22.0% 20.0%
Non-deductible items and other 23.4% (16.9%)
Tax exemptions (11.2%) (3.7%)
Valuation allowance --% 30.0%
-------------- --------------
Effective income tax rate 34.2% (0.6%)
============== ==============

The components of income tax expense consist of the following:

For the year ended
-------------------------------
December 31, December 31,
2003 2004
-------------- --------------
Current:

Federal $ -- $ (49,500)
State -- --
Foreign 20,552 (1,838)
Valuation allowance -- 49,500
-------------- --------------
$ 20,552 $ (1,838)
============== ==============

The Company operated primarily in Singapore and incurred no United States
federal or state income taxes as of December 31, 2004 and 2003.

The Company had available approximately $330,000 of unused Federal net operating
loss carry-forwards at December 31, 2004, that may be applied against future
taxable income. These net operating loss carry-forwards expire for Federal
purposes in 2024. There is no assurance that 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. At December 31, 2004, a valuation allowance for the full amount of the
net deferred tax asset was established due to the uncertainties as to the amount
of the taxable income that would be realized.

9. RELATED PARTY TRANSACTIONS
-----------------------------

For the year ended December 31, 2004 and 2003 the amount purchased from this
related party was $2,966,350 and 423,444 respectively. The related party is FSBM
M2B Sdn Bhd ( FSBM ) which is registered in Malaysia. FSBM is a joint venture
between M2B World and FSBM Holdings Berhad (formerly known as Fujitsu System
Business Malaysia Berhad). FSBM served as a production base for M2B World,
having digital post-production suites for content production. M2B World owns a
9.76% equity stake in FSBM

On December 29, 2004, the Company sold the entire 9.76% equity stake in FSBM M2B
Sdn Bhd to a third party for $600,000 at a gain of $597,292.

F-12

10. SUBSEQUENT EVENT
--------------------

Amaru Holdings Limited, a wholly owned subsidiary of Amaru Inc., registered in
the British Virgin Islands was incorporated on February 21, 2005.

M2B World Inc, a wholly owned subsidiary of Amaru Inc, registered in California
was incorporated on January 24, 2005.

M2B Game World Pte Ltd, a wholly owned subsidiary of M2B World Pte Ltd
registered in Singapore was incorporated on January 24, 2005. The ultimate
holding company of M2B Game World Pte Ltd is Amaru Inc.

The ownership of M2B Commerce Limited was transferred from M2B World Pte Ltd to
Amaru Inc and be wholly owned directly under Amaru Inc with effect from January
11, 2005.

A representative office of M2B World Pte Ltd was set up in Shanghai on March 22,
2005.

On February 1, 2005 Amaru Inc issued 50,000 shares of common stock through
private placement at a price of $3 per share.

On March 31, 2005 Amaru Inc. received $450,000 through a private placement at a
price of $3 per share to issue 150,000 shares of common stock. The shares have
not been issued as of the date of the report.

On April 4, 2005 Amaru Inc. received $300,000 through a private placement at a
price of $3 per share to issue 100,000 shares of common stock. The shares have
not been issued as of the date of the report.

F-13

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Board of Directors of the Company approved the engagement of Mendoza,
Berger & Co. LLP. ("MB") on November 17, 2003 to serve as the Company's
independent public auditor and to conduct the audit of the Company's financial
statements for the fiscal year 2003. The decision resulted from the fact that
William D. Lindberg, the Company's previous auditor resigned for personal
reasons.

The audit reports provided by the Company's previous auditor, William D.
Lindberg, C.P.A., for the previous fiscal years did not contain any adverse
opinion or disclaimer of opinion nor was any report modified as to uncertainty,
audit scope or accounting principles. There have been no past disagreements
between the Company and William D. Lindberg, C.P.A., on any matter of accounting
principles or practices, financial statement disclosure or auditing, scope or
procedure.

Item 8A. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively) have concluded,
based on their evaluation as of December 31, 2004, that the design and operation
of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934, as amended ("Exchange Act")) are effective
to ensure that information required to be disclosed by us in the reports filed
or submitted by us under the Exchange Act is accumulated, recorded, processed,
summarized and reported to our management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding
whether or not disclosure is required.

During the quarter ended December 31, 2004, there were no changes in
our internal controls over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting.

Item 8B. OTHER INFORMATION

Sales of Unregistered Securities

On October 1, 2004, Amaru Inc issued 100,000 "restricted" shares of common stock
for services valued at $5,000. The shares were issued without registration in
reliance upon the exemption provided by Section 4(2) of the Securities Act.

On October 25, 2004, a total of 143,000 shares of Series A Preferred Stock was
converted to 5,500,000 shares of common stock of Amaru Inc.

On October 28, 2004 Amaru Inc issued 300,000 shares of common stock through
private placement at a price of $2.80 per share.

On November 20, 2004 Amaru Inc issued 100,000 shares of common stock through
private placement at a price of $2.80 per share.

On December 10, 2004 Amaru Inc issued 200,000 shares of common stock through
private placement at a price of $3 per share.

On December 11, 2004 Amaru Inc issued 100,000 shares of common stock through
private placement at a price of $3 per share.

Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our directors, executive officers and key employees as of December 31, 2004 were
as follows :

Name Age Position
---- --- --------

Colin St.Gerard Binny 50 Chairman of the Board, Chief Executive
Officer and Director

Francis Keong Kwong Foong 44 Chief Financial Officer

Colin Binny has served as the Chairman of the Board, Chief Executive Officer and
Director since 2000. Mr. Binny held various senior management positions with
local and global companies over the last 25 years. He is also the Chairman of
M2B Media Group and the Chairman of Metromedia Productions, a regional event
company. From 1996 through 1999, Mr. Binny was the President and CEO of UTV
International ( Singapore ). Mr. Binny obtained his marine engineering diploma
from the Singapore Polytechnic in 1975.

Francis Foong Keong Kwong, has served as the Company's Chief Financial Officer
since October 1, 2004. Prior to joining M2B World, Mr. Foong was a Principal
Consultant with Quality Vision Consultants. Prior to being a Principal
Consultant, Mr. Foong had worked 19 years as a finance professional. >From 1993
to 1996 he was Financial Controller of Natco Singapore Pte Ltd, a subsidiary of
a large oil and gas company based in Houston. From November 2002 to February
2003 he was the Asean/ India Financial Controller for IBM Business Consulting
Services. From May 1996 to November 2002 he was the Regional Finance Director
for PwC East Asia Consulting (IBM Consulting merged with PwC East Asia
Consulting in November 2002). He managed the regional finance function based in
Singapore and the finance departments in the eight countries of China, Taiwan,
Hong Kong, Thailand, Philippines, Malaysia, Singapore and Indonesia. >From the
years 1999 to 2002 he sat in the East Asia Board of Directors acting as a
financial adviser to the Business sector leaders on business decisions, risks
management and financial analysis on various business and strategy issues. Mr.
Foong received Bachelor of Accountancy, National University of Singapore, is a
Member, Singapore Institute of Certified Public Accountants since 1987. In 2004
he became a Fellow of the Institute. Mr. Foong received Master in Business
Administration, University of Hull (UK) in 1995.

COMMITTEES

The Company does not currently have standing audit, nominating or compensation
committees of the Board of Directors, or committees performing similar
functions.

CODE OF BUSINESS CONDUCT AND ETHICS

Our code of business conduct and ethics, as approved by our board of
directors, can be obtained from our Website, at www.m2bworld.com.

We intend to satisfy the disclosure requirement under Item 10 of Form
8-K relating to amendments to or waivers from provisions of the code that relate
to one or more of the items set forth in Item 406(b) of Regulation S-B, by
describing on our Internet Website, within five business days following the date
of a waiver or a substantive amendment, the date of the waiver or amendment, the
nature of the amendment or waiver, and the name of the person to whom the waiver
was granted.

Information on our Internet website is not, and shall not be deemed to
be, a part of this report or incorporated into any other filings we make with
the Securities and Exchange Commission.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, requires our executive officers and directors, and persons who
beneficially own more than 10% of a registered class of our common stock, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission, or the SEC. These officers, directors and
stockholders are required by SEC regulations to furnish us with copies of all
such reports that they file.

Based solely upon a review of copies of such reports furnished to us
during the fiscal year ended December 31, 2004 and thereafter, or any written
representations received by us from reporting persons that no other reports were
required, we believe that, during our fiscal 2004, all Section 16(a) filing
requirements applicable to our reporting persons were met.

Item 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the annual and
long-term compensation for services rendered during the last three fiscal years
to our company in all capacities as an employee by our Chief Executive Officer
and our other executive officers whose aggregate cash compensation exceeded
$100,000 (collectively, the "named executive officers") during fiscal 2004 shown
below. Sahra Partida was the sole officer and director of the Company in fiscal
year 2003 and 2002. She did not receive any compensation for her services as the
director and/or officer of the Company in fiscal years 2003 and 2002.

Name and Principal Position Year Salary (1) Annual Awards (2) Bonus(3) Other Compensation(4)
--------------------------- ---- ---------- ----------------- -------- ---------------------

Colin Binny, CEO 2004 60,534 - - 7,500
2003 27,831
2002 68,181

Francis Foong, CFO 2004 12,883 - - 5,000

1. No officers received or will receive any bonus or other annual
compensation other than salaries during fiscal year 2004,
other than stated above.
2. No officers received or will receive any long term incentive
plan payouts or other payouts during fiscal year 2004.
3. Bonus awarded based on performance
4. Shares issued as compensation for services rendered to the
Company. On July 13, 2004, 150,000 shares of common stock were
issued to Colin Binny, the Company's CEO for services rendered
valued at $7,500 pursuant to the Company's 2004 Equity
Compensation Plan. On October 1, 2004, 100,000 shares of
"restricted" common stock were issued to Francis Foong, the
Company's CFO for services rendered to the Company valued at
$5,000.

COMPENSATION OF DIRECTORS

The Company reimburses each Director for reasonable expenses (such as
travel and out-of-pocket expenses) in attending meetings of the Board of
Directors. Directors are not separately compensated for their services as
Directors.

EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

There are no employment agreements with the Company's key employees at
this time.

Limitation of Liability of Directors
------------------------------------

The laws of the State of Nevada and the Company's By-laws provide for
indemnification of the Company's directors for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of the Company, and
with respect to any criminal action or proceeding, actions that the indemnitee
had no reasonable cause to believe were unlawful.

The Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

General

As at December 31, 2004, 27,200,000 shares of our common stock were outstanding.
The following table set forth information as of that date regarding the
beneficial ownership of our stocks by:

o Each of our directors
o Each of our named executive officers
o All of our directors and executive officers as a group; and
o Each person known by us to beneficially own 5% or more of the
outstanding shares of our common stock as of the date of the
table.

Name and Address Amount and Nature Percent of
Of Beneficial Owner of Beneficial Ownership of Class of
of Common Stock Common Stock

Colin St.Gerard Binny 150,000 20.9%
87 CASHEW ROAD #02-02 (Direct)
CASHEW HEIGHTS 5,527,972 (2)
SINGAPORE 679658 (Indirect)

Francis Keong Kwong Foong 100,000 0.4%
8 DOVER RISE #12-09
HERITAGE VIEW
SINGAPORE 138678

M2B Media Pte Ltd 5,527,972 (2) 20.3%
112 MIDDLE ROAD (Direct)
#08-01 MIDLAND HOUSE
SINGAPORE 188970

Asian Technology Resouces
Sdn Bhd 2,303,322 8.5%
63000 CYBERJAYA SELANGOR
DARUL EHSAN MALAYSIA

Asian Venture Group
Pte Ltd 2,347,902 8.6%
80 ROBINSON ROAD #17-02
SINGAPORE 068898

Capital Hills Assets
Limited 1,560,315 5.7%
OFFSHORE INCORPORATIONS
LIMITED P.O.BOX 957
OFFSHORE INCORPORATIONS CT.
TORTOLA, BRIT VIRGIN IS

Ho Pong Chong 1,560,315 5.7%
BLOCK 46 LENGKOK BAHRU
#11-263 SINGAPORE 150046

Lily Lee 1,486,014 5.5%
30 DOVER RISE#01-11
SINGAPORE 138687

Annie Lin 1,375,000 5.1%
36 HARTLEY GROVE
SINGAPORE 457897

Michael John Shone 1,691,352 6.2%
5CD GOODWOOD HILL
SINGAPORE 258904
All Directors and Officers
As A Group (2 persons) 5,777,972 21.2%

(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed below, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to
options or warrants currently exercisable, or exercisable within 60
days, are deemed outstanding for purposes of computing the percentage
of the person holding such options or warrants, but are not deemed
outstanding for purposes of computing the percentage of any other
person

(2) Based on a total of 5,527,927 shares of common stock of Amaru, Inc held
by Mr. Binny and his wife, Chew Bee Lian, indirectly as 100%
shareholders of M2B Media Pte Ltd.

Item 12. CERTAIN RELATIONSHIP AND RELATED TRANSCATIONS

For the year ended December 31, 2004, M2B World sold $2,700,000 of advertising
services to a related party, FSBM M2B Sdn Bhd.

For the year ended December 31, 2004, M2B World acquired content license rights
of $2,966,350 from the same related party.

The related party is FSBM M2B Sdn Bhd which is registered in Malaysia. FSBM M2B
was a joint venture between M2B World and FSBM Holdings Berhad (formerly known
as Fujitsu System Business Malaysia Berhad). FSBM M2B serves as a production
base for M2B World, having digital post-production suites for content
production. M2B World owned a 9.76% equity stake in FSBM.

On December 29, 2004, the Company sold its entire 9.76% equity stake in FSBM M2B
Sdn Bhd to a third party for $600,000 at a gain of $597,292.

Item 13. EXHIBITS

(a) Exhibits

Exhibit Number Description
-------------- -----------

2.1 Agreement and Plan of Reorganization with M2B World Pte
Ltd.**

3.1 Articles of Incorporation*

3.2 Amendment to the Articles of Incorporation***

3.3 Bylaws*

4.1 Form of Subscription Agreement executed by investors in the
Private Placement*

14.1 Code of Ethics of the Company

14.2 Code of Ethics of Senior Officers of the Company

21 Company's Subsidiaries

31.1 Certification of Chief Executive Officer and Chief Executive
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

31.2 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

32.1 Certification of Chief Executive Officer and Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

32.2 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

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

* Previously filed with the Securities and exchange Commission on Form 10-SB.
**Previously filed with the Securities and Exchange Commission on Form 8-K.
**Previously filed with the Securities and Exchange Commission on Schedule 14C.

ITEM 14. PRINCIPAL FEES AND SERVICES.

The following table presents fees for professional audit services rendered by P
G Wee & Patners for the year ended December 31, 2003 and Mendoza Berger Company,
LLP for the year ended December 31, 2004.

2004 2003
--------- ---------
Audit Fees: (1) $109,130 1,174
Tax Fees: (2) 5,000 998

--------- ---------
Total $114,130 $ 2,172
========= =========

(1) Audit Fees: Fees for professional services performed by P G Wee for the
audit of the company's annual financial statements for the year ended December
31, 2003. In the year 2003, the company was not publicly listed in the US. In
the year 2004, fees were for professional services performed by Mendoza Berger
Company, LLP for the audit of the annual financial statements and review of
financial statements included in our 10-QSB filings, and services that are
normally provided in connection with statutory and regulatory filings.

(2) Tax Fees: Fees for professional services performed by P G Wee with respect
to tax compliance for year ended December 31, 2003. In the year 2003, the
company was not publicly listed in the US. In the year 2004, fees were for
professional services performed by Mendoza Berger Company, LLP relating to tax
compliance, preparation and filing of returns for the company.

SIGNATURES
----------

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Amaru, Inc.

By: /s/ Colin Binny
----------------------------------------------
Colin Binny, Chairman, President and Secretary

Date: 4/12/05

Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

/s/ Colin Binny Chairman, President, Secretary and Director Date: 4/12/05
------------------------ (principal executive officer)
Colin Binny

/s/ Francis Foong Chief Financial Officer Date: 4/12/05
------------------------
Francis Foong