diff --git a/README.md b/README.md
index 6880acc2..7a37845e 100644
--- a/README.md
+++ b/README.md
@@ -41,7 +41,7 @@ Version 1.0.7 (in progress in the dev branch)
 * Added World.postUpdate - all sprite position changes, as a result of physics, happen here before the render.
 * Complete overhaul of Physics.Arcade.Body - now significantly more stable and faster too.
 * Updated ArcadePhysics.separateX/Y to use new body system - much better results now.
-* QuadTree bug found in 1.0.5 now fixed. The QuadTree is updated properly now using worldTransform values.
+* QuadTree bug found in 1.0.5 now fixed. The QuadTree is updated properly now using localTransform values.
 * Fixed the Bounce.In and Bounce.InOut tweens (thanks XekeDeath)
 * Renamed Phaser.Text.text to Phaser.Text.content to avoid conflict and overwrite from Pixi local var.
 * Renamed Phaser.Text.style to Phaser.Text.font to avoid conflict and overwrite from Pixi local var.
diff --git a/examples/assets/games/tanks/bullet.png b/examples/assets/games/tanks/bullet.png
new file mode 100644
index 00000000..a8e639a0
Binary files /dev/null and b/examples/assets/games/tanks/bullet.png differ
diff --git a/examples/buttons/rotated buttons.php b/examples/buttons/rotated buttons.php
index b125c634..10ebf1ed 100644
--- a/examples/buttons/rotated buttons.php	
+++ b/examples/buttons/rotated buttons.php	
@@ -5,8 +5,6 @@
 
 <script type="text/javascript">
 
-
-
 	var game = new Phaser.Game(800, 600, Phaser.AUTO, '', { preload: preload, create: create,update : update });
 
 	function preload() {
@@ -14,41 +12,34 @@
 		game.load.spritesheet('button', 'assets/buttons/button_sprite_sheet.png', 193, 71);
 		game.load.image('background','assets/misc/starfield.jpg');
 
-
 	}
-	var button,
-		background;
 
+	var button;
+	var background;
 
 	function create() {
 
 		game.stage.backgroundColor = '#cccccc';
 
-		// the numbers given in parameters are the indexes of the frames, in this order : 
-		// over,out,down
-		button = game.add.button(game.world.centerX, game.world.centerY, 'button', actionOnClick, this, 1, 0, 2);
+		// The numbers given in parameters are the indexes of the frames, in this order: over, out, down
+		button = game.add.button(game.world.centerX, game.world.centerY, 'button', actionOnClick, this, 2, 1, 0);
 
-		//set the anchor of the sprite in the center, otherwise it would rotate around the top-left corner
+		//	Set the anchor of the sprite in the center, otherwise it would rotate around the top-left corner
 		button.anchor.setTo(0.5,0.5);
 
-       
-
 	}
 
 	function actionOnClick () {
 		
 		alert("Though I'm turning around, you can still click on me");
 
-
 	}
 
 	function update () {
 		
-		button.angle+=1;
+		button.angle += 1;
 	}
 
-
-
 </script>
 
 <?php
diff --git a/examples/games/tanks.php b/examples/games/tanks.php
index ebe398fa..18c2572a 100644
--- a/examples/games/tanks.php
+++ b/examples/games/tanks.php
@@ -10,33 +10,30 @@
 	function preload() {
 
 		game.load.atlas('tank', 'assets/games/tanks/tanks.png', 'assets/games/tanks/tanks.json');
-		game.load.image('bullet', 'assets/sprites/enemy-bullet.png');
+		game.load.image('bullet', 'assets/games/tanks/bullet.png');
 		game.load.image('earth', 'assets/games/tanks/scorched_earth.png');
 		
 	}
 
-	var tank;
-	var turret;
-	var shadow;
-
-	var currentSpeed = 0;
-
 	var land;
 
-	var cursors;
-	var bullets;
+	var shadow;
+	var tank;
+	var turret;
 
+	var enemy;
+
+	var currentSpeed = 0;
+	var cursors;
+
+	var bullets;
 	var fireRate = 100;
 	var nextFire = 0;
 
 	function create() {
 
 		//	Resize our game world to be a 2000x2000 square
-		// game.world.setBounds(-1000, -1000, 2000, 2000);
-		game.world.setBounds(0, 0, 1000, 1000);
-
-		console.log(game.world.bounds.right, 'bot', this.game.world.bounds.bottom);
-		console.log(game.camera.bounds.right, 'cbot', this.game.camera.bounds.bottom);
+		game.world.setBounds(-1000, -1000, 2000, 2000);
 
 		//	Our tiled scrolling background
 		land = game.add.tileSprite(0, 0, 800, 600, 'earth');
@@ -46,17 +43,6 @@
 		shadow = game.add.sprite(0, 0, 'tank', 'shadow');
 		shadow.anchor.setTo(0.5, 0.5);
 
-		//	The base of our tank
-		tank = game.add.sprite(0, 0, 'tank', 'tank1');
-		tank.anchor.setTo(0.5, 0.5);
-		tank.animations.add('move', ['tank1', 'tank2', 'tank3', 'tank4', 'tank5', 'tank6'], 20, true);
-      	tank.play('move');
-
-      	//	This will force it to decelerate and limit its speed
-      	tank.body.drag.setTo(200, 200);
-      	tank.body.maxVelocity.setTo(400, 400);
-      	tank.body.collideWorldBounds = true;
-
       	//	Our bullet group
 		bullets = game.add.group();
 		bullets.createMultiple(50, 'bullet');
@@ -64,12 +50,30 @@
 		bullets.setAll('anchor.y', 0.5);
 		bullets.setAll('outOfBoundsKill', true);
 
+		//	The base of our tank
+		tank = game.add.sprite(0, 0, 'tank', 'tank1');
+		tank.anchor.setTo(0.5, 0.5);
+		tank.animations.add('move', ['tank1', 'tank2', 'tank3', 'tank4', 'tank5', 'tank6'], 20, true);
+      	// tank.play('move');
+
+      	//	This will force it to decelerate and limit its speed
+      	tank.body.drag.setTo(200, 200);
+      	tank.body.maxVelocity.setTo(400, 400);
+      	tank.body.collideWorldBounds = true;
+
+
 		//	Finally the turret that we place on-top of the tank body
 		turret = game.add.sprite(0, 0, 'tank', 'turret');
-		turret.anchor.setTo(0.5, 0.5);
+		turret.anchor.setTo(0.3, 0.5);
+
+		enemy = game.add.sprite(900, 400, 'tank', 'tank1');
+		enemy.anchor.setTo(0.5, 0.5);
+      	enemy.body.immovable = true;
+      	enemy.body.collideWorldBounds = true;
 
 		game.camera.follow(tank);
-		// game.camera.deadzone = new Phaser.Rectangle(100, 100, 600, 400);
+		game.camera.deadzone = new Phaser.Rectangle(100, 100, 600, 400);
+		game.camera.focusOnXY(0, 0);
 
 		cursors = game.input.keyboard.createCursorKeys();
 
@@ -77,6 +81,8 @@
 
 	function update() {
 
+		game.physics.collide(tank, enemy);
+
         if (cursors.left.isDown)
         {
         	tank.angle -= 4;
@@ -139,7 +145,7 @@
 
 			bullet.reset(turret.x, turret.y);
 
-			game.physics.moveToPointer(bullet, 1000);
+			bullet.rotation = game.physics.moveToPointer(bullet, 1000);
 		}
 
 	}
@@ -151,15 +157,10 @@
         // game.debug.renderText('sr: ' + tank.body.right, 32, 100);
         // game.debug.renderText('sb: ' + tank.body.bottom, 32, 132);
 
-        game.debug.renderSpriteCorners(tank, true, true);
+        // game.debug.renderSpriteCorners(tank, true, true);
 
         game.debug.renderCameraInfo(game.camera, 500, 32);
-  
-        game.debug.renderLocalTransformInfo(tank, 32, 32);
-        game.debug.renderWorldTransformInfo(tank, 32, 200);
-  
-  
-        // game.debug.renderSpriteInfo(sprite, 32, 450);
+        game.debug.renderSpriteInfo(tank, 32, 450);
 
 	}
 
diff --git a/src/physics/arcade/ArcadePhysics.js b/src/physics/arcade/ArcadePhysics.js
index 7d22b223..e9da6706 100644
--- a/src/physics/arcade/ArcadePhysics.js
+++ b/src/physics/arcade/ArcadePhysics.js
@@ -1286,8 +1286,8 @@ Phaser.Physics.Arcade.prototype = {
 
         pointer = pointer || this.game.input.activePointer;
 
-        this._dx = displayObject.x - pointer.x;
-        this._dy = displayObject.y - pointer.y;
+        this._dx = displayObject.worldX - pointer.x;
+        this._dy = displayObject.worldY - pointer.y;
         
         return Math.sqrt(this._dx * this._dx + this._dy * this._dy);
 
@@ -1340,8 +1340,8 @@ Phaser.Physics.Arcade.prototype = {
 
         pointer = pointer || this.game.input.activePointer;
 
-        this._dx = pointer.x - displayObject.x;
-        this._dy = pointer.y - displayObject.y;
+        this._dx = pointer.worldX - displayObject.x;
+        this._dy = pointer.worldY - displayObject.y;
         
         return Math.atan2(this._dy, this._dx);
 
diff --git a/src/physics/arcade/Body.js b/src/physics/arcade/Body.js
index 1aa95208..9ca2548f 100644
--- a/src/physics/arcade/Body.js
+++ b/src/physics/arcade/Body.js
@@ -105,8 +105,8 @@ Phaser.Physics.Arcade.Body.prototype = {
 
 	    this.embedded = false;
 
-		this.preX = (this.sprite.worldTransform[2] - (this.sprite.anchor.x * this.width)) + this.offset.x;
-		this.preY = (this.sprite.worldTransform[5] - (this.sprite.anchor.y * this.height)) + this.offset.y;
+		this.preX = (this.sprite.localTransform[2] - (this.sprite.anchor.x * this.width)) + this.offset.x;
+		this.preY = (this.sprite.localTransform[5] - (this.sprite.anchor.y * this.height)) + this.offset.y;
 		this.preRotation = this.sprite.angle;
 
 		this.x = this.preX;
@@ -221,12 +221,12 @@ Phaser.Physics.Arcade.Body.prototype = {
 	    this.angularVelocity = 0;
 	    this.angularAcceleration = 0;
 
-		this.preX = (this.sprite.worldTransform[2] - (this.sprite.anchor.x * this.width)) + this.offset.x;
-		this.preY = (this.sprite.worldTransform[5] - (this.sprite.anchor.y * this.height)) + this.offset.y;
+		this.preX = (this.sprite.localTransform[2] - (this.sprite.anchor.x * this.width)) + this.offset.x;
+		this.preY = (this.sprite.localTransform[5] - (this.sprite.anchor.y * this.height)) + this.offset.y;
 		this.preRotation = this.sprite.angle;
 
-		this.x = (this.sprite.worldTransform[2] - (this.sprite.anchor.x * this.width)) + this.offset.x;
-		this.y = (this.sprite.worldTransform[5] - (this.sprite.anchor.y * this.height)) + this.offset.y;
+		this.x = (this.sprite.localTransform[2] - (this.sprite.anchor.x * this.width)) + this.offset.x;
+		this.y = (this.sprite.localTransform[5] - (this.sprite.anchor.y * this.height)) + this.offset.y;
 		this.rotation = this.sprite.angle;
 
 	},
diff --git a/src/utils/Debug.js b/src/utils/Debug.js
index 722d3d0e..9e7a917e 100644
--- a/src/utils/Debug.js
+++ b/src/utils/Debug.js
@@ -539,8 +539,6 @@ Phaser.Utils.Debug.prototype = {
         this.line('scaleY: ' + sprite.localTransform[4]);
         this.line('transX: ' + sprite.localTransform[2]);
         this.line('transY: ' + sprite.localTransform[5]);
-        this.line('sX:     ' + sprite._sx);
-        this.line('sY:     ' + sprite._sy);
 
     },