UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




FORM 10-Q /A
 (Amendment
No. 1)





x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
quarterly period ended June 30, 2009


OR




o
              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:001-34027




Fund.com
Inc.


(Exact
name of Registrant as specified in its charter)




Delaware
                  
                  30-0284778(State
      or Other Jurisdiction of
                    Incorporation
      or Organization)
                  
                  (I.R.S.
      Employer
                    Identification
      Number)




14
      Wall Street, 20th Floor
                      New
      York, NY
                    
                    10005(Address
      of Principal Executive Offices)
                    
                    (ZIP
      Code)




(212)  618-1633


(Registrant’s
telephone number,


including
area code)







Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes 
x      No 
o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  Yes o  
No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one)




Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o    
No x




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: On November
20 , 2009, there were  46,115,905
shares of the issuer's Class A common stock, par value $.001 per share,
outstanding and 6,387,665 shares of the issuer’s Class B common
stock, par value $.001, outstanding.










EXPLANATORY
NOTE
 
 Fund.com
Inc.  (the “Company”) is filing this Amendment No. 1 to its
Quarterly Report on Form 10-Q/A for the three and six months ended June 30,
2009, which was originally filed with the Securities and Exchange Commission
(“SEC”) on August 18, 2009 (the “Original Form 10-Q”), to incorporate the
Company’s revisions and responses to a letter of comment from the staff of the
SEC dated as of November 12, 2009.
 
 This Form
10-Q/A includes new certifications as exhibits 31.1, 31.2, 32.1 and 32.2 by our
principal executive officer and principal financial officer as required by
Rules 12b-15 and 13a-14 promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Except for the amended disclosures set
forth below, the information in this Form 10-Q/A has not been updated to
reflect events that occurred after August 18, 2009, the filing date of our
Original Form 10-Q. Accordingly, this Form 10-Q/A should be read in
conjunction with our filings made with the SEC subsequent to the filing of the
Original Form 10-Q, including any amendments to those filings. The following
sections have been amended, without limitation:
 
 Part I –
Item 1. Financial Statements.
 Part I –
Item 2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
 Part II –
Item 1. Legal Proceedings.
 
 Except as
set forth above, all other information in the Company’s Original Form 10-Q
remains unchanged. The Company has re-filed the entire Form 10-Q in order to
provide more convenient access to the amended information in
context.






















FUND.COM
INC.





INDEX









Page
                              NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
                            
                            Financial
      StatementsConsolidated
      Balance SheetsJune 30, 2009 (unaudited) and December 31, 2008
      (audited)
                            
                            3Consolidated
      Statements of Operations (unaudited)Three and six months
      ended June 30, 2009 and 2008
                            
                            4Consolidated
      Statements of Cash Flows (unaudited)Six  months  ended June 30, 2009 and
      2008
                            
                            5Notes
      to Condensed Consolidated Financial Statements
                            
                            6Item
      2.
                            
                            Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
                            
                            22Item
      3.
                            
                            Quantitative
      and Qualitative Disclosure About Market Risks
                            
                            32Item
      4T
                            
                            Controls
      and Procedures
                            
                            32PART
      II - OTHER INFORMATIONItem
      1.
                            
                            Legal
      Proceedings
                            
                            35Item
      1.A
                            
                            Risk
      Factors
                            
                            35Item
      2.
                            
                            Unregistered
      Sales of Equity Securities and Use of Proceeds
                            
                            35Item
      3.
                            
                            Defaults
      Upon Senior Securities
                            
                            35Item
      4.
                            
                            Submission
      of Matters to a Vote of Security Holders
                            
                            35Item
      5.
                            
                            Other
      Information
                            
                            35Item
      6.
                            
                            Exhibits
                            
                            35







2





FUND.COM INC.(A
      Development Stage Company)CONSOLIDATED
      BALANCE SHEETSFOR
      THE PERIOD ENDING JUNE 30, 2009 AND DECEMBER 31, 2008June
      30, 2009
                                  
                                  
                                  December
      31, 2008(Unaudited)
                                  
                                  
                                  (Audited)ASSETSCURRENT
      ASSETSCash
                                  
                                  $
                                  7,398
                                  
                                  
                                  $
                                  158,083Total
      current assets
                                  
                                  
                                  7,398
                                  
                                  
                                  
                                  158,083Property,
      plant and equipment, net
                                  
                                  
                                  1,788
                                  
                                  
                                  
                                  122Intangible
      Assets, net
                                  
                                  
                                  9,999,500
                                  
                                  
                                  
                                  9,999,500Certificate
      of Deposit
                                  
                                  
                                  21,638,333
                                  
                                  
                                  
                                  21,138,333Minority
      Interest
                                  
                                  
                                  250,892
                                  
                                  
                                  
                                  106,333TOTAL
      ASSETS
                                  
                                  $
                                  31,897,911
                                  
                                  
                                  $
                                  31,402,371LIABILITIES
      AND STOCKHOLDERS' EQUITY:CURRENT
      LIABILITIES:Accounts
      payable
                                  
                                  $
                                  1,630,867
                                  
                                  
                                  $
                                  1,085,210Accrued
      payroll
                                  
                                  
                                  260,738
                                  
                                  
                                  
                                  -Accrued
      interest
                                  
                                  
                                  33,780
                                  
                                  
                                  
                                  -Advances
      from shareholders
                                  
                                  
                                  23,580
                                  
                                  
                                  
                                  23,580Notes
      Payable
                                  
                                  
                                  723,500
                                  
                                  
                                  
                                  443,000Total
      current liabilities
                                  
                                  
                                  2,672,465
                                  
                                  
                                  
                                  1,551,790TOTAL
      LIABILITIES
                                  
                                  
                                  2,672,465
                                  
                                  
                                  
                                  1,551,790STOCKHOLDERS'
      EQUITY:Preferred
      stock, 10,000,000 shares authorized, none issued and
      outstanding
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Class
      A Common stock, $0.001 par value, 100,000,000 sharesauthorized;
      44,087,335 shares issued and outstanding
                                  
                                  
                                  44,087
                                  
                                  
                                  
                                  44,087Class
      B Common stock, $0.001 par value, 10,000,000 sharesauthorized;
      6,387,665 shares issued and outstanding
                                  
                                  
                                  6,388
                                  
                                  
                                  
                                  6,388Additional
      paid-in-capital
                                  
                                  
                                  34,510,875
                                  
                                  
                                  
                                  33,492,056Accumulated
      deficit during the Development Stage
                                  
                                  
                                  (5,335,904
                                  )
                                  
                                  
                                  (3,691,950
                                  )Total
      stockholders' equity
                                  
                                  
                                  29,225,446
                                  
                                  
                                  
                                  29,850,581TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                  
                                  $
                                  31,897,911
                                  
                                  
                                  $
                                  31,402,371






The
accompanying notes are an integral part of these consolidated financial
statements
 3




FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 ANDFOR
      THE PERIOD SEPTEMBER 20, 2007 (INCEPTION) THROUGH JUNE 30,
      2009Three
      Months
                              
                              
                              Three
      Months
                              
                              
                              Six
      Months
                              
                              
                              Six
      Months
                              
                              
                              September
      20, 2007
                                (Inception)Ended
                              
                              
                              Ended
                              
                              
                              Ended
                              
                              
                              Ended
                              
                              
                              throughJune
      30, 2009
                              
                              
                              June
      30, 2008
                              
                              
                              June
      30, 2009
                              
                              
                              June
      30, 2008
                              
                              
                              June
      30, 2009Revenue
                              
                              $
                              10,342
                              
                              
                              $
                              -
                              
                              
                              $
                              20,342
                              
                              
                              $
                              -
                              
                              
                              $
                              20,342Costs
      of revenue
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Gross
      profit
                              
                              
                              10,342
                              
                              
                              
                              -
                              
                              
                              
                              20,342
                              
                              
                              
                              -
                              
                              
                              
                              20,342Operating
      expense
                              
                              
                              1,106,748
                              
                              
                              
                              1,064,296
                              
                              
                              
                              2,309,088
                              
                              
                              
                              1,764,046
                              
                              
                              
                              7,248,414Loss
      from operations before interest income andprovision
      for (benefit from) income tax
                              
                              
                              (1,096,406
                              )
                              
                              
                              (1,064,296
                              )
                              
                              
                              (2,288,746
                              )
                              
                              
                              (1,764,046
                              )
                              
                              
                              (7,228,072
                              )Other
      income
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,754Interest
      income
                              
                              
                              250,003
                              
                              
                              
                              250,288
                              
                              
                              
                              500,233
                              
                              
                              
                              500,288
                              
                              
                              
                              1,639,715Income
      tax expense
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (193
                              )250,003
                              
                              
                              
                              250,288
                              
                              
                              
                              500,233
                              
                              
                              
                              500,288
                              
                              
                              
                              1,641,276Minority
      interest
                              
                              
                              100,714
                              
                              
                              
                              10,213
                              
                              
                              
                              144,559
                              
                              
                              
                              28,550
                              
                              
                              
                              250,892Net
      loss
                              
                              
                              (745,689
                              )
                              
                              
                              (803,795
                              )
                              
                              
                              (1,643,954
                              )
                              
                              
                              (1,235,208
                              )
                              
                              
                              (5,335,904
                              )Net
      loss per common share - basic and diluted (Class A &
B)
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.03
                              )
                              
                              $
                              (0.03
                              )
                              
                              $
                              (0.11
                              )Weighted
      average number of shares outstanding:during
      the period - basic and diluted (Class A)
                              
                              
                              43,829,002
                              
                              
                              
                              34,050,000
                              
                              
                              
                              43,829,002
                              
                              
                              
                              34,050,000
                              
                              
                              
                              43,829,002Weighted
      average number of shares outstanding:during
      the period - basic and diluted (Class B)
                              
                              
                              6,387,665
                              
                              
                              
                              6,387,665
                              
                              
                              
                              6,387,665
                              
                              
                              
                              6,387,665
                              
                              
                              
                              6,387,665






The
accompanying notes are an integral part of these consolidated financial
statements
 4




FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 ANDFOR
      THE PERIOD SEPTEMBER 20, 2007 (INCEPTION) THROUGH JUNE 30,
      2009Six
      Months
                                      
                                      
                                      Six
      Months
                                      
                                      
                                      September
      20, 2007
                                        (Inception)Ended
                                      
                                      
                                      Ended
                                      
                                      
                                      throughJune
      30, 2009
                                      
                                      
                                      June
      30, 2008
                                      
                                      
                                      June
      30, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                      
                                      $
                                      (1,643,954
                                      )
                                      
                                      $
                                      (1,235,208
                                      )
                                      
                                      $
                                      (5,335,904
                                      )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Compensation
      recognized under stock incentive plan
                                      
                                      
                                      1,018,818
                                      
                                      
                                      
                                      561,005
                                      
                                      
                                      
                                      2,899,785Minority
      interest
                                      
                                      
                                      (144,559
                                      )
                                      
                                      
                                      (28,550
                                      )
                                      
                                      
                                      (250,892
                                      )Changes
      in assets and liabilities:Increase
      in accounts payable
                                      
                                      
                                      545,657
                                      
                                      
                                      
                                      488,128
                                      
                                      
                                      
                                      1,630,867Increase
      in accrued payroll
                                      
                                      
                                      260,738
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      260,738Increase
      in accrued interest
                                      
                                      
                                      33,780
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      33,780Accrued
      interest from certificate of deposit
                                      
                                      
                                      (500,000
                                      )
                                      
                                      
                                      (500,000
                                      )
                                      
                                      
                                      (1,638,333
                                      )Net
      cash used in operating activities
                                      
                                      
                                      (429,519
                                      )
                                      
                                      
                                      (714,625
                                      )
                                      
                                      
                                      (2,399,959
                                      )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of Property, Plant and Equipment
                                      
                                      
                                      (1,666
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (1,788
                                      )Certificate
      of deposit
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (20,000,000
                                      )Purchase
      of intangible asset
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (9,999,500
                                      )Net
      cash used in  investing activities
                                      
                                      
                                      (1,666
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (30,001,288
                                      )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the sale of common stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      455,000
                                      
                                      
                                      
                                      31,661,565Proceeds
      from Notes Payable
                                      
                                      
                                      280,500
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      723,500Advances
      from shareholders
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      77,150Repayment
      of shareholders advances
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (42,420
                                      )
                                      
                                      
                                      (53,570
                                      )Net
      cash provided by financing activities
                                      
                                      
                                      280,500
                                      
                                      
                                      
                                      412,581
                                      
                                      
                                      
                                      32,408,645INCREASE
      (DECREASE) IN CASH
                                      
                                      
                                      (150,685
                                      )
                                      
                                      
                                      (302,045
                                      )
                                      
                                      
                                      7,398CASH,
      BEGINNING OF YEAR
                                      
                                      
                                      158,083
                                      
                                      
                                      
                                      605,348
                                      
                                      
                                      
                                      -CASH,
      END OF PERIOD
                                      
                                      $
                                      7,398
                                      
                                      
                                      $
                                      303,303
                                      
                                      
                                      $
                                      7,398Supplemental
      DisclosuresCash
      paid during the year for interest
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Cash
      paid during the year for taxes
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Supplemental
      disclosure of non-cash financing activitiesCompensation
      recognized under stock incentive plan
                                      
                                      $
                                      1,018,818
                                      
                                      
                                      $
                                      561,005
                                      
                                      
                                      $
                                      2,899,785







The
accompanying notes are an integral part of these consolidated financial
statements
 5




FUND.COM INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008




NOTE 1 –
ORGANIZATION





The
consolidated financial statements of Fund.Com Inc. (the “Company”) include the
accounts of its wholly owned subsidiaries, Fund.com Online Technologies Inc.
(“FOT”), Fund.com Managed Products Inc. (“FMP”), Fund.com Capital Inc. (“FC”)
and its majority owned subsidiary, AdvisorShares Investments, LLC
(“AdvisorShares”).  The year end for the Company and its subsidiaries
is December 31.





On
September 20, 2007, the Company was incorporated in the state of
Delaware.  The Company is in its development stage and has not begun
the process of operating this business.  The Company is still in the
process of researching and developing its business and raising
capital.





On
September 27, 2007, FOT was incorporated in the state of Delaware. FOT is a
wholly owned operating subsidiary of the Company and was established to acquire
the domain name “fund.com” and other related intellectual property and assets.
The subsidiary will be responsible for operating the Company’s internet
properties.





On
September 27, 2007, FMP was incorporated in the state of Delaware. FMP is a
wholly owned operating subsidiary of the Company that focuses on asset
management advisory services and related products.





On
September 27, 2007, FC was incorporated in the state of Delaware.  FC
is a wholly owned operating subsidiary of FMP that will serve as an investment
vehicle for the purposes of making active (non-passive) investments in other
financial institutions, fund management companies or, in certain instances,
products offered or managed by either.





On
October 12, 2006, AdvisorShares was incorporated in the state of
Delaware.  AdvisorShares is a developer of proprietary exchange traded
funds, also known as ETFs, with a focus on “actively managed” ETFs.





Change of
name




On
January 8, 2008, the Company and its subsidiaries changed their names to the
following:




To:
              
              From:Meade
      Technology Inc.
              
              Fund.com
      Inc.Meade
      Online Technologies Inc.
              
              Fund.com
      Online Technologies Inc.Meade
      Managed Products Inc.
              
              Fund.com
      Managed Products Inc.Meade
      Capital Inc.
              
              Fund.com
      Capital Inc.







6





FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





These
financial statements and related notes are presented in accordance with
accounting principles generally accepted in the United States of America.
Significant accounting policies are as follows:





Basis of
Presentation





The
Company has not produced any significant revenue from its principal business and
is a development stage company as defined by the Statement of Financial
Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage
Enterprises.”





Principles of
Consolidation





The
consolidated financial statements include the accounts of Fund.com Inc. and its
subsidiaries.  All material intercompany accounts and transactions are
eliminated in consolidation.





Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements.  These estimates and assumptions also affect
the reported amounts of revenues, costs and expenses during the reporting
period.  Management evaluates these estimates and assumptions on a
regular basis.  Actual results could differ from those
estimates.





Revenue
Recognition





The
Company recognizes revenue in accordance with Staff Accounting Bulletin (SAB)
No. 104, “Revenue Recognition in Financial Statements” which established that
revenue can be recognized when persuasive evidence of an arrangement exists, the
product has been shipped, all significant contractual obligations have been
satisfied and collection is reasonably assured.





Cash and Cash
Equivalents





The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.  Cash and cash
equivalents are defined to include cash on hand and cash in the
bank.





Certificate of
Deposit





On
November 9, 2007, the Company deposited $20,000,000 into a fixed Certificate of
Deposit with an interest rate of 5.00% per annum, for a term of three
years.  Accrued interest of $500,000 and $500,000 has been recorded
for the six months ended June 30, 2009 and 2008, respectively.






7






FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Concentration of Credit
Risk





Substantially
all of the Company’s capital, $20 million, has been invested in a three
year non-cancellable certificate of deposit due and payable on November 8, 2010
with Global Bank of Commerce Limited (Global), which is the parent company of
one of our shareholders.  Global is a bank located in Antigua whose
issued financial instruments have not been rated by any security rating
agency such as Standard and Poor’s, Moody’s or Fitch. We have requested and
received audited financial statements for Global Bank of Commerce at December
31, 2008 and the year then ended.  The audit report was issued by PKF
Chartered Accountants,an established global accounting firm.  The financial
statements were presented in accordance with International Financial Reporting
Standards and indicated that the bank has positive equity of approximately
$76,500,000.  Further, the financial statements indicate that our $20
million CD represents approximately 20% of the banks’ total
deposits. This deposit does not have the benefit of any governmental or
third party insurance.





There is
a substantial asset concentration with respect to the Global Bank of Commerce,
as discussed above. However, there is no material valuation or foreign
exchange impairment associated with the deposit. Investors are encouraged
to obtain additional information regarding the financial viability of Global
Bank of Commerce, that such information, permitted by Antiguan banking law, is
available to them.




Advertising
Costs





All
advertising costs are charged to expense as incurred. There was no advertising
expense for the six months ended June 30, 2009 and 2008.





Research and
Development





Costs are
expensed as incurred.  There were no research and development expense
for the six months ended June 30, 2009 and 2008.





Property and
Equipment





Property
and equipment is recorded at cost and depreciated over the estimated useful
lives of the assets using principally the straight-line method. When items are
retired or otherwise disposed of, income is charged or credited for the
difference between net book value and proceeds realized
thereon.  Ordinary maintenance and repairs are charged to expense as
incurred, and replacements and betterments are capitalized.  The range
of estimated useful lives to be used to calculate depreciation for principal
items of property and equipment are as follow:




Asset
      Category
              
              Depreciation/
                Amortization
                PeriodFurniture
      and Fixture
              
              3
      YearsOffice
      equipment
              
              3
      YearsLeasehold
      improvements
              
              5
      Years




Income
Taxes





Deferred
income taxes are recognized based on the provisions of SFAS No. 109, "Accounting
for Income Taxes" ("SFAS 109") for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.






8




FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


.


Earnings Per Share





Basic
earnings per share is computed by dividing net income (loss) available to common
shareholders by the weighted average number of common shares outstanding during
the reporting period. Diluted earnings per share reflects the potential dilution
that could occur if stock options and other commitments to issue common stock
were exercised or equity awards vest resulting in the issuance of common stock
that could share in the earnings of the Company. Common shareholders
include both Class A and Class B as the holders of Class A common stock shall be
entitled to receive, on a pari passu basis with the holders of Class B common
stock, if, as and when declared from time to time by the Board of Directors out
of any assets of the Company legally available therefor, such dividends as may
be declared from time to time by the Board of Directors.





Fair Value of Financial
Instruments





The fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties other than in a
forced sale or liquidation.   The carrying amounts of financial
instruments, including cash, accounts payable and accrued expenses approximate
fair value because of the relatively short maturity of the
instruments.





Accounting for the
Impairment of Long-Lived Assets





The
long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
assets may not be recoverable. It is reasonably possible that these assets could
become impaired as a result of technology or other industry changes.
Determination of recoverability of assets to be held and used is by comparing
the carrying amount of an asset to future net undiscounted cash flows to be
generated by the assets. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of assets exceeds the fair value of the assets. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less costs to
sell.





During
the fourth quarter of 2008, the Company tested the carrying value of its
intangible assets for impairment.  The results of the tests indicated
that the carrying value of the intangible assets was not impaired as of December
31, 2008.  The Company will again test the carrying value for
impairment as of December 31, 2009.





Stock-Based
Compensation





In
October 10, 2006 FASB Staff Position (FSP) issued FSP FAS 123(R)-5 “Amendment of
FASB Staff Position FAS 123(R)-1 - Classification and Measurement of
Freestanding Financial Instruments Originally issued in Exchange of Employee
Services under FASB Statement No. 123(R)”.  The
FSP  provides  that instruments  that
were  originally  issued  as  employee  compensation  and
then  modified, and that modification is made to the terms of the
instrument solely to reflect an
equity  restructuring  that  occurs  when
the  holders  are no longer employees, then no change in the
recognition or the measurement (due to a change
in  classification) of those instruments  will result
if both of the following conditions are met: (a) there is no increase in fair
value of the award (or the ratio of intrinsic  value to the exercise
price of the award is preserved,  that is, the holder is made whole),
or the antidilution provision is not added to the terms of the award
in  contemplation  of an
equity  restructuring; and (b) all holders of the same class of
equity instruments (for example, stock options) are treated in the same
manner.  The provisions in this FSP shall be applied in the first
reporting period beginning January 1, 2007.  The Company does not
expect the adoption of FSP FAS 123(R)-5 to have a material impact on its
consolidated results of operations and financial condition.





Recent Accounting
Pronouncements





Recent
accounting pronouncements that the Company has adopted or that will be required
to adopt in the future are summarized below.





Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting
Principles





In June
2009, the Financial Accounting Standards Board issued Statement “FASB” issued
Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles” (“SFAS No. 168”).  SFAS
No. 168 will become the single source of authoritative nongovernmental U.S.
generally accepted accounting principles









9




FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





(“GAAP”),
superseding existing FASB, American Institute of Certified Public Accountants
(“AICPA”), Emerging Issues Task Force (“EITF”), and related accounting
literature.  SFAS No. 168 reorganizes the thousands of GAAP
pronouncements into roughly 90 accounting topics and displays them using a
consistent structure.  Also included is relevant Securities and
Exchange Commission guidance organized using the same topical structure in
separate sections.  SFAS No. 168 will be effective for financial
statements issued for reporting periods that end after September 15,
2009.  This statement will have an impact on the Company’s financial
statements since all future references to authoritative accounting literature
will be references in accordance with SFAS No. 168.




Subsequent
Events




In May
2009, the FASB issued SFAS No. 165, “Subsequent Events”.(“SFAS No. 165”)
This Statement establishes general standards of accounting for and disclosures
of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued.  It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date and is effective for interim and annual periods
ending after June 15, 2009.  The adoption of SFAS No. 165 is not
expected to have a material impact on the Company’s financial
statements.





Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not
Orderly





In April
2009, the FASB issued FSP FAS No. 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly". This FSP provides additional
guidance for estimating fair value in accordance with FASB Statement No. 157,
Fair Value Measurements, when the volume and level of activity for the asset or
liability have significantly decreased. This FSP also includes guidance on
identifying circumstances that indicate a transaction is not orderly. FSP FAS
No. 157-4 is effective for interim and annual reporting periods ending after
June 15, 2009, and shall be applied prospectively.The
implementation of FSP FAS No. 157-4 did not have a material on the Company’s
financial position and results of operations.





Recognition
and Presentation of Other-Than-Temporary Impairments





In April
2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments ". The objective of an
other-than-temporary impairment analysis under existing U.S. generally accepted
accounting principles (GAAP) is to determine whether the holder of an investment
in a debt or equity security for which changes in fair value are not regularly
recognized in earnings (such as securities classified as held-to-maturity or
available-for-sale) should recognize a loss in earnings when the investment is
impaired. An investment is impaired if the fair value of the investment is less
than its amortized cost basis. FSP FAS No. 115-2 and FAS No. 124-2 is effective
for interim and annual reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. Earlier adoption for
periods ending before March 15, 2009, is not permitted.  The
implementation of FSP FAS No. 115-2 and FAS No. 124-2 did not have a material
impact on the Company’s financial position and results of
operations.




Interim
Disclosures about Fair Value of Financial Instruments




In April
2009, the FASB issued FSP FAS No. 107-1 and APB No. 28-1, “Interim Disclosures
about Fair Value of Financial Instruments". This FSP amends SFAS No. 107, Disclosures about Fair Value of
Financial Instruments,to require disclosures about fair value of
financialinstruments for interim
reporting periods of publicly traded companies as well as in annualfinancial statements.
This FSP also amends APB Opinion No. 28, Interim Financial Reporting,to require those disclosures in summarized financial information at
interim reporting periods. FSP FAS No. 107-1 is effective for interim reporting
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009.  The implementation of FSP FAS No. 107-1
did not have a material impact on the Company’s financial position and results
of operations.





Amendments
to the Impairment Guidance of EITF Issue No. 99-20





In
January 2009, the FASB issued FSP Emerging Issues Task Force ("EITF") Issue No.
99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20". This
FSP amends the impairment guidance in EITF Issue No. 99-20, “Recognition of
Interest Income and Impairment on Purchased Beneficial Interests and Beneficial
Interests That Continue to Be Held by a Transferor in Securitized Financial
Assets,” to achieve more consistent determination of whether an
other-than-temporary impairment has






10






FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





occurred.
The FSP also retains and emphasizes the objective of an other than- temporary
impairment assessment and the related disclosure requirements in FASB Statement
No. 115, Accounting for
Certain Investments in Debt and Equity Securities,and other related
guidance. This Issue is effective for interim and annual reporting periods
ending after December 15, 2008, and shall be applied prospectively.
Retrospective application to a prior interim or annual reporting period is not
permitted. The adoption of FSP EITF 99-20-1 did not have a material effect on
the Company’s consolidated financial statements.




Accounting
for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance
or Other Financing





In June
2009, the FASB issued FSP Emerging Issues Task Force ("EITF") Issue No. 09-1,
“Accounting for Own-Share Lending Arrangements in Contemplation of Convertible
Debt Issuance or Other Financing”. This Issue is effective for fiscal years
beginning on or after December 15, 2009, and interim periods within those fiscal
years for arrangements outstanding as of the beginning of those fiscal years.
Share lending arrangements that have been terminated as a result of counterparty
default prior to the effective date of this Issue but for which the entity has
not reached a final settlement as of the effective date are within the scope of
this Issue. This Issue requires retrospective application for all arrangements
outstanding as of the beginning of fiscal years beginning on or after December
15, 2009. This Issue is effective for arrangements entered into on or after the
beginning of the first reporting period that begins on or after June 15, 2009.
Early adoption is not permitted. The Company is currently assessing the impact
of FSP EITF 09-1 on its financial position and results of
operations.




Determining
the Fair Value of a Financial Asset When the Market for That Asset is not
Active




In
October 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active.”  This
FSP clarifies the application of SFAS No. 157, “Fair Value Measurements,” in a
market that is not active.  The FSP also provides examples for
determining the fair value of a financial asset when the market for that
financial asset is not active.  FSP FAS No. 157-3 was effective upon
issuance, including prior periods for which financial statements have not been
issued.  The impact of adoption was not material to the Company’s
consolidated financial condition or results of operations.




The
Hierarchy of Generally Accepted Accounting Principles





In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles.”  SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements.  SFAS No. 162 is effective 60
days following the SEC's approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity
with Generally Accepted Accounting Principles".  The implementation of
this standard will not have a material impact on the Company's consolidated
financial position and results of operations.





Determination
of the Useful Life of Intangible Assets





In April
2008, the FASB issued FSP FAS No. 142-3, “Determination of the Useful Life of
Intangible Assets”, which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
intangible assets under SFAS No. 142 “Goodwill and Other Intangible
Assets”.  The intent of this FSP is to improve the consistency between the
useful life of a recognized intangible asset under SFAS No. 142 and the period
of the expected cash flows used to measure the fair value of the asset under
SFAS No. 141 (revised 2007) “Business Combinations” and other U.S. generally
accepted accounting principles.    The implementation of FSP FAS
No. 142-3 is not expected to have a material impact on its consolidated
financial statements.





Disclosure
about Derivative Instruments and Hedging Activities





In March
2008, the FASB issued SFAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities, an amendment of SFAS No.
133.” This statement requires that objectives for using derivative instruments
be disclosed in terms of underlying risk and accounting designation. The Company
was required to adopt SFAS No. 161 on January 1, 2009. The adoption of SFAS
No.161 on January 1, 2009 did not have a material effect on the Company’s
consolidated financial statements.







11




FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Fair
Value Option for Financial Assets and Financial Liabilities




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an amendment of SFAS No.
115,” which becomes effective on February 1, 2008, permits companies to choose
to measure many financial instruments and certain other items at fair value and
report unrealized gains and losses in earnings. Such accounting is optional and
is generally to be applied instrument by instrument. The election of this
fair-value option did not have a material effect on its consolidated financial
condition, results of operations, cash flows or disclosures.




Fair
Value Measurements




In
September 2006, the FASB No. 157, “Fair Value Measurements” (“SFAS No. 157”).
SFAS No. 157 defines fair value, establishes a framework for measuring fair
value in accordance with generally accepted accounting principles and expands
disclosures about fair value investments. SFAS No. 157 was effective for
financial assets and liabilities on January 1, 2008. The statement deferred the
implementation of the provisions of SFAS No. 157 relating to certain
non-financial assets and liabilities until January 1, 2009. The adoption of SFAS
No.157 on January 1, 2009 for financial assets and liabilities did not have a
material effect on the Company’s consolidated financial statements.




NOTE 3 –
INTANGIBLE ASSET





Intellectual Property
Asset:





During
2007, the Company acquired 24 domain names including “fund.com” and one
trademark for a total cost of $9,999,950. The Company has determined
that the intangible assets have an indefinite live but are subject to
periodic impairment assessment under SFAS 142.


NOTE 4 –
EQUITY





Initial
Capitalization





During
2007, the issuances of Class A common stock consisted of the
follows:





▪
              18,700,000
      shares common stock to its founders totaling $1,564;▪
              5,000,000
      shares common stock and 2,500,000 shares preferred series A through
      private placement for $2.00 per unit totaling $10,000,000;
    and▪
              10,350,000
      shares common stock through a second private placement for $2.00 per share
      totaling $20,700,000.





Merger





On
January 15, 2008, Fund.com Inc. merged (the “Merger”) with and into Eastern
Services Holdings, Inc. (“Eastern”) pursuant to an Agreement and Plan of Merger,
dated as of January 15, 2008 (the "Agreement"). In connection with the merger
Eastern Services Holdings, Inc. changed its name to Fund.com Inc. (the
"Surviving Corporation").  Pursuant to the Agreement, each share of
common stock, par value $0.00001 per share of Fund (“Fund Common Stock”) was
converted into the right to receive .1278 validly issued, fully paid and
non-assessable shares of Class A Common Stock of the Surviving Corporation;
provided, however, if a holder of Fund Common Stock also held Series A Preferred
Stock, par value $.001 per share, of Fund (“Fund Preferred Stock”) then each
share of Fund Common Stock held by such holder was converted into the right to
receive .1278 validly issued, fully paid and non-assessable shares of Class
B Common Stock (and Fund Preferred Stock held by such holder was
cancelled).  Also pursuant to the Agreement, each share of common
stock, $0.001 par value per share, of Eastern was converted into the right to
receive one validly issued, fully paid and non-assessable share of Class A
Common Stock of the Surviving Corporation. Holders of such shares were
entitled to receive the previously declared 9-for-1 stock dividend payable to
holders of record as of January 15, 2008.





As a
result, at closing (and giving effect to the stock dividend) the Company
issued an aggregate of 37,112,345 shares of our Class A Common Stock and
6,387,665 shares of our Class B Common Stock to former shareholders of Fund.com
Inc., representing 87% of our outstanding Class A Common Stock and 100% of our
Class B Common Stock following the merger. The merger






12




FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 4 –
EQUITY (Continued)





consideration
was determined as a result of arm’s-length negotiations between the
parties.





Each
share of Class A Common stock has one (1) vote per share.  Each share
of Class B Common Stock has ten (10) votes per share.  The holders of
Class B Common Stock have the right to convert each share of Class B Common
Stock into one share of Class A Common Stock (adjusted to reflect subsequent
stock splits, combinations, stock dividends and recapitalizations). Subject
to the prior rights of holders of all classes of stock at the time outstanding
having prior rights as to dividends, the holders of Class A Common Stock shall
be entitled to receive, on a pari passu basis with the holders of Class B Common
Stock, if, as and when declared from time to time by the Board of Directors out
of any assets of the Company legally available therefor, such dividends as may
be declared from time to time by the Board of Directors.





Common Shares
Issued





In
connection with a private placement, the Company issued 475,000 shares of its
Class A common stock at $2.00 per share for total proceeds of $950,000 during
2008.  No shares have been issued for the six months ended June 30,
2009.





Stock Option
Plan





On
December 27, 2007, the Company adopted the Meade Technologies Inc. 2007
Incentive Compensation Plan.  Under this plan, stock options may be
granted to employees, officers, consultants or others who provide services to
the Company. The Plan is administered by the Board.  However, the
Board may delegate any or all administrative functions under the Plan otherwise
exercisable by the Board to one or more Committees.  The aggregate
number of Shares authorized for issuance as Awards under the original Plan shall
not exceed five million fifty-five thousand (5,055,000)
Shares.  However, on April 30, 2009, the Company received majority
shareholder approval to increase the amount of shares able to be granted under
the Plan to ten million (10,000,000) shares.  The number of shares,
exercise price, term and vesting are all determined by the Board at the time of
grant.





On
December 27, 2007, 2,076,111 stock options with a purchase price of $2.30 per
share were granted to officers and employees of the Company.





On March
4, 2008, 2,500,000 stock options with a purchase price of $3.50 were granted to
officers, employees and a director of the Company.





On March
28, 2008, 250,000 stock options with a purchase price of $4.00 were granted to a
director of the Company.





On May
16, 2008, 250,000 stock options with a purchase price of $4.00 were granted to a
director of the Company.





Lastly,
on August 6, 2008, 653,000 stock options with a purchase price of $3.25 were
granted to an officer, employee and director of the Company.





The
Black-Scholes method option pricing model was used to estimate fair value as of
the date of grant using the following assumptions:




Risk-Free
            
            1.66%
      - 4.23%Expected
      volatility
            
            50%-
      83%Forfeiture
      rate
            
            10%Expected
      life
            
            4
      YearsExpected
      dividends
            
            -








13




FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 4 –
EQUITY (Continued)





The
following details stock options for the period ending June 30, 2009 and the year
ending December 31, 2008:





Weighted
                        
                        
                        WeightedAverage
                        
                        
                        AverageWeighted
                        
                        
                        Remaining
                        
                        
                        Grant
      DateAverage
                        
                        
                        Contractual
                        
                        
                        FairShares
                        
                        
                        Exercise
      Price
                        
                        
                        Term
      (Years)
                        
                        
                        ValueBalance,
      December 31, 2007
                        
                        
                        2,076,111
                        
                        
                        $
                        2.30
                        
                        
                        
                        
                        
                        $
                        0.78Granted
                        
                        
                        3,653,000
                        
                        
                        $
                        3.52
                        
                        
                        
                        
                        
                        $
                        2.04Exercised
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        -Canceled
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        -Forfeited
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        -Balance,
      December 31, 2008
                        
                        
                        5,729,111
                        
                        
                        $
                        3.08
                        
                        
                        $
                        3.06
                        
                        
                        $
                        1.58Granted
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        -Exercised
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        -Canceled
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        -Forfeited
                        
                        
                        (1,453,565
                        )
                        
                        $
                        2.30Balance,
      June 30, 2009
                        
                        
                        4,275,546
                        
                        
                        $
                        3.34
                        
                        
                        $
                        2.58
                        
                        
                        $
                        1.86Exercisable,
      June 30, 2009
                        
                        
                        1,547,028
                        
                        
                        $
                        3.09
                        
                        
                        $
                        2.58
                        
                        
                        $
                        1.61





The
following details stock option vested shares for the period ending June 30, 2009
and the years ending December 31, 2008 and 2007:




SharesBalance,
      December 31, 2007
                    
                    
                    -Vested
                    
                    
                    -Balance,
      December 31, 2008
                    
                    
                    -Vested
                    
                    
                    1,547,028Balance,
      June 30, 2009
                    
                    
                    1,547,028




Based on the assumptions noted
above, the fair market value of the options issued was valued at$8,041,681.





For the
six months ended June 30, 2009 and 2008, there was $1,018,819 and $561,005,
respectively, in expense recorded in the Statement of Operations for stock
option grants.  There was no expense recorded for the year ended
December 31, 2007.





NOTE 5 –
RELATED PARTY TRANSACTIONS





On March
4, 2008, Fund.com Inc. (the “Company”) entered into a Consulting Agreement with
Fabric Group, LLC (“Fabric”). Fabric is wholly-owned and managed by the
chairman, director and former Chief Executive Officer of the
Company.  Under the Consulting Agreement, Fabric will receive an
annual base fee of $300,000, in return for strategic consulting services
provided by both the Chairman and the Chief Marketing Officer of the
Company in the areas of business development, product marketing and online
strategy and for performance of other duties as requested from time to time by
the Board.  In addition, pursuant to the Consulting
Agreement, Fabric will receive a one time fee of $55,000 for
services previously rendered to the Company. Included in the operating
expenses for the six months ending June 30, 2009 and 2008 are $150,000 and
$130,000, respectively.  Included in accounts payable as of June 30, 2009
is $405,000 related to this agreement.






14





FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE 5 –
RELATED PARTY TRANSACTIONS (Continued)





On March
4, 2008, the Company entered into a Consulting Agreement with MKL Consulting
Ltd. (“MKL”). MKL is wholly-owned and managed by the executive vice
president and a director of the Company. Under the Consulting Agreement, MKL
will receive an annual base fee of $150,000, in consideration for services
provided to the Company as Executive Vice President and for performance of other
duties as requested from time to time by the Board.  In addition,
pursuant to the Consulting Agreement, MKL will receive a one time fee
of $25,000 for services previously rendered to the Company. This agreement
was not renewed and expired on February 28, 2009 under the terms of the
agreement.  Included in the operating expenses for the six months
ending June 30, 2009 and 2008 are $25,000 and $75,000, respectively. 
Included in accounts payable as of June 30, 2009, is $150,000 related to this
agreement.





NOTE 6 –
LEASES





The
Company presently has no long-term commitments for leases.





NOTE 7 –
INVESTMENT IN SUBSIDIARY





On
October 31, 2008, the Company entered into a Purchase and Contribution
Agreement, dated as of October 31, 2008 (the “Purchase and Contribution
Agreement”), with AdvisorShares Investments, LLC (“AdvisorShares”) and the
Managing Member and principal officer of AdvisorShares.  Pursuant to
the Purchase and Contribution Agreement, the Company purchased 6,000,000 Units
of AdvisorShares, (representing 60% of the outstanding membership interests of
AdvisorShares) for a purchase price of $4,000,000, with an initial contribution
of $275,000 and up to an additional $3,725,000 being contributed to
AdvisorShares upon the achievement of certain milestones relating to
AdvisorShares’ receiving from the Securities and Exchange Commission (the “SEC”) of its notice
(the “SEC Exemptive
Order”) regarding the approval of the application for exemptive relief
and total assets under management.  In connection with our acquisition
of 60% of the equity interests in AdvisorShares, the Company entered into an
Amended and Restated Limited Liability Company Agreement of AdvisorShares, dated
as of October 31, 2008 (the “LLC Agreement”), and was admitted as a member of
AdvisorShares.




NOTE 8 –
RESTATEMENTS
 
 The
Company has restated its financial statements for the period ending December 31,
2008.   The nature of these restatements and presentation as
originally filed and as restated are presented below:
 
 Consolidated Balance Sheets
for the years ended December 31, 2008 and December 31,
2007
 
 The
assets included an item “Minority Interest” which has been revised to “Advances
on behalf of minority shareholder” to more properly reflect the
item.  No changes to financial information were
made.
 
 Consolidated Statement of
Operations for the year ended December 31, 2008 and for the period September 20,
2007 (inception) through December 31, 2007.
 
 The
consolidated statement of operations was revised to in two areas.  The
first was to include a column for September 20, 2007 (inception) through
December 31, 2008 which had been omitted in the original
filing.  Below is the presentation including the additional
column:
 
 15
 
 FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE YEAR ENDED DECEMBER 31, 2008,SEPTEMBER
      20, 2007 (INCEPTION) THROUGH DECEMBER 31, 2007 ANDSEPTEMBER
      20, 2007 (INCEPTION) THROUGH DECEMBER 31, 2008September
      20, 2007
                
                
                September
      20, 2007Year
      Ended
                
                
                (Inception)
      through
                
                
                (Inception)
      throughDecember
      31, 2008
                
                
                December
      31, 2007
                
                
                December
      31, 2008Revenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -Costs
      of revenue
                
                
                -
                
                
                
                -
                
                
                
                -Gross
      profit
                
                
                -
                
                
                
                -
                
                
                
                -Operating
      expense
                
                
                4,551,545
                
                
                
                387,781
                
                
                
                4,939,326Loss
      from operations before interest income andprovision
      for (benefit from) income tax
                
                
                (4,551,545
                )
                
                
                (387,781
                )
                
                
                (4,939,326
                )Other
      income
                
                
                1,754
                
                
                
                -
                
                
                
                1,754Interest
      income
                
                
                1,001,021
                
                
                
                138,461
                
                
                
                1,139,482Income
      tax expense
                
                
                -
                
                
                
                (193
                )
                
                
                (193
                )1,002,775
                
                
                
                138,268
                
                
                
                1,141,043Minority
      interest
                
                
                76,520
                
                
                
                29,813
                
                
                
                106,333Net
      loss
                
                
                (3,472,250
                )
                
                
                (219,700
                )
                
                
                (3,691,950
                )Net
      loss per common share - basic and diluted (Class A &
      B)
                
                $
                (0.07
                )
                
                $
                (0.01
                )
                
                
                (0.07
                )Weighted
      average number of shares outstanding:during
      the year - basic and diluted (Class A)
                
                
                43,829,002
                
                
                
                34,050,000
                
                
                
                43,829,002Weighted
      average number of shares outstanding:during
      the year - basic and diluted (Class B)
                
                
                6,387,665
                
                
                
                -
                
                
                
                6,387,665
 
 
 The
second was to combine both the Class A and B common shares into one category as
the rights of the classes are identical.  Below is presented as
originally filed and the revised information:
 
 
 16
 
 
 As
originally filed:
 
 FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE YEAR ENDED DECEMBER 31, 2008 ANDFOR
      THE PERIOD SEPTEMBER 20, 2007 (INCEPTION) THROUGH DECEMBER 31,
      2007September
      20, 2007Year
      Ended
                
                
                (Inception)
      throughDecember
      31, 2008
                
                
                December
      31, 2007Net
      loss
                
                
                (3,472,250
                )
                
                
                (219,700
                )Net
      loss per share - basic and diluted (Class A)
                
                $
                (0.08
                )
                
                $
                (0.01
                )Net
      loss per share - basic and diluted (Class B)
                
                $
                (0.54
                )
                
                $
                (0.03
                )Weighted
      average number of shares outstanding:during
      the year - basic and diluted (Class A)
                
                
                43,829,002
                
                
                
                34,050,000Weighted
      average number of shares outstanding:during
      the year - basic and diluted (Class B)
                
                
                6,387,665
                
                
                
                6,387,665
 
      17
 
 FUND.COM
INC.
 (A
Development Stage Company)
 Notes to
the Consolidated Financial Statements
 For
period ended June 30, 2009 and for the period September 20, 2007
(inception)
 through
December 31, 2008
 
 As
revised:
 
 FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE YEAR ENDED DECEMBER 31, 2008,SEPTEMBER
      20, 2007 (INCEPTION) THROUGH DECEMBER 31, 2007 ANDSEPTEMBER
      20, 2007 (INCEPTION) THROUGH DECEMBER 31, 2008September
      20, 2007
                
                
                September
      20, 2007Year
      Ended
                
                
                (Inception)
      through
                
                
                (Inception)
      throughDecember
      31, 2008
                
                
                December
      31, 2007
                
                
                December
      31, 2008Net
      loss
                
                
                (3,472,250
                )
                
                
                (219,700
                )
                
                
                (3,691,950
                )Net
      loss per common share - basic and diluted (Class A &
      B)
                
                $
                (0.07
                )
                
                $
                (0.01
                )
                
                
                (0.07
                )Weighted
      average number of shares outstanding:during
      the year - basic and diluted (Class A)
                
                
                43,829,002
                
                
                
                34,050,000
                
                
                
                43,829,002Weighted
      average number of shares outstanding:during
      the year - basic and diluted (Class B)
                
                
                6,387,665
                
                
                
                -
                
                
                
                6,387,665
 
      
 18
 
 FUND.COM
INC.
 (A
Development Stage Company)
 Notes to
the Consolidated Financial Statements
 For
period ended June 30, 2009 and for the period September 20, 2007
(inception)
 through
December 31, 2008
 
 Consolidated Statements of
Cash Flows for the years ended December 31, 2008 and December 31,
2007
 
 The
consolidated statement of cash flows was revised to include a column for
September 20, 2007 (inception) through December 31, 2008 which had been omitted
in the original filing.  Below is the presentation including the
additional column:
 
 FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEAR ENDED DECEMBER 31, 2008,SEPTEMBER
      20, 2007 (INCEPTION) THROUGH DECEMBER 31, 2007 ANDSEPTEMBER
      20, 2007 (INCEPTION) THROUGH DECEMBER 31, 2008September
      20, 2007
                
                
                September
      20, 2007Year
      Ended
                
                
                (Inception)
      through
                
                
                (Inception)
      throughDecember
      31, 2008
                
                
                December
      31, 2007
                
                
                December
      31, 2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                
                $
                (3,472,250
                )
                
                $
                (219,700
                )
                
                $
                (3,691,950
                )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Compensation
      recognized under stock incentive plan
                
                
                1,880,967
                
                
                
                -
                
                
                
                1,880,967Minority
      interest
                
                
                (76,520
                )
                
                
                (29,813
                )
                
                
                (106,333
                )Changes
      in assets and liabilities:Increase
      in accounts payable
                
                
                876,108
                
                
                
                209,102
                
                
                
                1,085,210Accrued
      interest from certificate of deposit
                
                
                (1,000,000
                )
                
                
                (138,333
                )
                
                
                (1,138,333
                )Net
      cash used in operating activities
                
                
                (1,791,695
                )
                
                
                (178,744
                )
                
                
                (1,970,439
                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of Property, Plant and Equipment
                
                
                -
                
                
                
                (122
                )
                
                
                (122
                )Certificate
      of deposit
                
                
                -
                
                
                
                (20,000,000
                )
                
                
                (20,000,000
                )Purchase
      of intangible asset
                
                
                -
                
                
                
                (9,999,500
                )
                
                
                (9,999,500
                )Net
      cash used in  investing activities
                
                
                -
                
                
                
                (29,999,622
                )
                
                
                (29,999,622
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the sale of common stock
                
                
                955,000
                
                
                
                30,706,564
                
                
                
                31,661,564Proceeds
      from Notes Payable
                
                
                443,000
                
                
                
                
                
                
                
                443,000Advances
      from shareholders
                
                
                -
                
                
                
                77,150
                
                
                
                77,150Repayment
      of shareholders advances
                
                
                (53,570
                )
                
                
                -
                
                
                
                (53,570
                )Net
      cash provided by financing activities
                
                
                1,344,430
                
                
                
                30,783,714
                
                
                
                32,128,144INCREASE
      (DECREASE) IN CASH
                
                
                (447,265
                )
                
                
                605,348
                
                
                
                158,083CASH,
      BEGINNING OF YEAR
                
                
                605,348
                
                
                
                -
                
                
                
                -CASH,
      END OF YEAR
                
                $
                158,083
                
                
                $
                605,348
                
                
                $
                158,083Supplemental
      DisclosuresCash
      paid during the year for interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Cash
      paid during the year for taxes
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental
      disclosure of non-cash financing activitiesCompensation
      recognized under stock incentive plan
                
                $
                1,880,967
                
                
                $
                -
                
                
                $
                1,880,967




19


FUND.COM
INC.
 (A
Development Stage Company)
 Notes to
the Consolidated Financial Statements
 For
period ended June 30, 2009 and for the period September 20, 2007
(inception)
 through
December 31, 2008
 
 NOTE 9 –
SUBSEQUENT EVENTS




Purchase and Contribution
Agreement with AdvisorShares – SEC Grant of Exemptive Relief





As
reported in its Form 8-K filed with the SEC on November 6, 2008, on October 31,
2008, the Company entered into a purchase and contribution agreement (the
“Purchase Agreement”), with AdvisorShares Investments, LLC (“AdvisorShares”) and
Noah Hamman, the Managing Member and principal officer of AdvisorShares.
Pursuant to the Purchase and Contribution Agreement, the Company purchased
6,000,000 Units of AdvisorShares, (representing 60% of the outstanding
membership interests of AdvisorShares) for a purchase price of $4,000,000, with
an initial contribution of $275,000 and up to an additional $3,725,000 being
contributed to AdvisorShares upon the achievement of certain milestones relating
to AdvisorShares’ receiving from the Securities and Exchange Commission (the
“SEC”) of its notice (the “SEC Exemptive Order”) regarding the approval of
AdvisorShares’ application for exemptive relief and total assets under
management.  In connection with its acquisition of 60% of the equity
interests in AdvisorShares, the Company entered into an Amended and Restated
Limited Liability Company Agreement of AdvisorShares, dated as of October 31,
2008 (the “LLC
Agreement”), and was admitted as a member of AdvisorShares.





On
January 31, 2008, AdvisorShares and AdvisorShares Trust, a Delaware open-end
investment management company (the “Trust”) that was recently formed by
AdvisorShares for the purpose of publicly offering a series of exchange traded
funds (the “Funds”), filed an application with the SEC under the Investment
Company Act of 1940 (the “Investment Company Act”).  The application
was amended on October 17, 2008.  The application requested an order
from the SEC (the “Exemptive Order”), exempting AdvisorShares and the Trust from
the provisions of the Investment Company Act and permitting AdvisorShares and
the Trust to: (a) issue a series of open-ended management investment companies
to issue shares (“Shares”) redeemable in large aggregations only (“Creation
Units”), (b) engage in secondary market transactions in Shares at
negotiated market prices; and (c) allow
certain affiliated persons of the Funds to deposit securities into, and receive
securities from, the Funds in connection with the purchase and redemption of the
Creation Units.








20











FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For
period ended June 30, 2009 and for the period September 20, 2007
(inception)


through
December 31, 2008





NOTE  9 – SUBSEQUENT EVENTS (Continued)





On
December 23, 2008, the SEC issued a notice advising that it would issue a final
order granting the requested relief unless it orders a hearing on the
application based on requests for a hearing given by third parties by not later
than January 15, 2009.  A third party timely filed a hearing request
involving an intellectual property dispute which AdvisorShares believes is
unrelated to the merits of the application.





On July
20, 2009, the SEC agreed with AdvisorShares’ position and issued the final
Exemptive Order approving the application.  AdvisorShares received a
copy of the final Exemptive Order on July 21, 2009. On July 21, 2009,
AdvisorShares notified the Company that it had received the final Exemptive
Order and therefore had achieved one of the milestones set forth in the Purchase
Agreement.  Such notice also advised the Company that pursuant to
Section 1.2(d) of the Purchase Agreement, within 30 days following the date of
such notice, the Company is obligated to pay AdvisorShares the sum of
$1,000,000.





Line of Credit with IP
Global Investors Ltd.





Effective
May 1, 2009, the Company entered into a $1.343 million line of credit agreement
with IP Global under which the Company is permitted to receive loans of up
to $1,343,000, less $723,000 of prior advances that the Company received from IP
Global through April 30, 2009; provided that such additional advances are for
approved corporate purposes.  In consideration for these advances, the
Company: (i) agreed to pay 9% interest on all advances (including the prior
advances), (ii) granted the lender the right to convert the note into our Class
A Common Stock at $0.60 per share (subject to certain adjustments) and (iii) are
obligated to pay certain fees to the lender.





The
Company and IP Global have negotiated, but have yet to finalize and execute, an
amended and restated revolving line of credit loan agreement with IP Global for
a $2.5 million line of credit under which the Company is permitted to
receive loans of up to $2,500,000, less $1,263,000 of prior advances that the
Company received from IP Global as of the date of filing of this report. Such
prior advances include $100,000 remitted to AdvisorShares on behalf of the
Company as partial satisfaction of the Company’s $1,000,000 contribution to
AdvisorShares for satisfying the first milestone under that certain Purchase and
Contribution Agreement described above.







21






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




FORWARD-LOOKING
INFORMATION





This
report contains forward-looking statements regarding our plans, expectations,
estimates and beliefs. Actual results could differ materially from those
discussed in, or implied by, these forward-looking statements. Forward-looking
statements are identified by words such as “believe,” “anticipate,” “expect,”
“intend,” “plan,” “will,” “may,” and other similar expressions. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. We have based
these forward-looking statements largely on our expectations. Forward-looking
statements are subject to risks and uncertainties, certain of which are beyond
our control. Actual results could differ materially from those anticipated as a
result of the factors described in the “Risk Factors” and detailed in our other
Securities and Exchange Commission filings.





Because of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
report or incorporated by reference might not transpire.  Factors that
cause actual results or conditions to differ from those anticipated by these and
other forward-looking statements include those more fully described in the “Risk
Factors” section in our annual report on Form 10-K/A filed with
the Securities and Exchange Commission on November
30 , 2009. Actual results may differ materially from those contained
in any forward-looking statements.





The following discussion and analysis
of financial condition and results of operations relates to the operations and
financial condition reported in our financial statements for the three and
six months ended June 30, 2009.





The
following discussion should be read in conjunction with our financial statements
and the notes thereto which appear elsewhere in this report.  The
results shown herein are not necessarily indicative of the results to be
expected in any future periods.





Overview





Fund.com
Inc. (the “Company,” “we”, “us” or “our”) is an online content provider and lead
generation platform for the financial services community, including investment
funds and the savings and retirement markets. Our objective is to engage
individual investors and to match their needs with interested fund product
providers. Our www.fund.comwebsite is intended to be approachable by everyday investors and to serve
as an educational and research resource.




In the
quarter ending December 31, 2007, we completed the sale of equity securities
totaling aggregate gross proceeds of $30,700,000. The proceeds were used to
execute the initial phase of our business plan, which included the acquisition
of certain intellectual property consisting primarily of our domain names and
also funding our wholly-owned subsidiary, Fund.com Capital Inc.




We
capitalized Fund.com Capital Inc. with $20,000,000 from proceeds generated from
our equity placements.  On November 9, 2007, Fund.com Capital entered
into a $20,000,000 certificate of deposit with an Antigua bank, the Global
Bank of Commerce, which is an affiliate of one of our stockholders (GBC Wealth
Management Limited).  The deposit is credited with earned interest at
5% per annum for the term of three years and is all due and payable at the end
of the term.   Subject to receipt of any necessary approvals
(including the approval of Global Bank of Commerce, which approval could be
withheld in its sole discretion), we may seek to use all or a portion of this
$20,000,000 to fund one or more control investments.




Fund.com
Capital Inc. (then known as Meade Capital, Inc.) was originally established by
Meade Technologies, Inc., the Company’s predecessor, to invest in financial
entities and structure unregistered financial products and instruments,
including fund management companies, and structured products offered or
managed by such entities. As a result, at the time of the merger with Meade
Technologies in January 2008, the Company believed that the certificate of
deposit investment would provide the Company with a material asset base, would
serve as the basis for unregistered structure products and would provide capital
for one or more potential acquisitions within its then business model as
set forth in its business plan disclosed in a Current Report on Form 8-K filed
with the Commission on January 17, 2008.  However, in view of the
Company’s need for additional working capital, its decision to abandon the
issuance of unregistered structured products in favor of pursuing exclusively
investment products registered under the Securities Act and Global Bank’s right
to exchange and swap the three year certificate of deposit for a long-term
annuity instrument that would not provide the Company with liquidity, our
management determined that it would need to seek additional financing for the
Company in order to support our other strategic initiatives, and could no longer
place undue reliance on the investment in the certificate of
deposit.





Through
our recently acquired 60%-owned subsidiary AdvisorShares Investments, LLC
(“AdvisorShares”), we are seeking to establish a series of proprietary exchange
traded funds (“ETF”) that would be actively managed by select registered
investment advisors (“RIA(s)”). With a view to expanding our platform in the
financial services community, we recently made a strategic investment in
National Holdings Corporation, the public parent corporation of National
Securities Corporation, vFinance Investments Inc.and EquityStation, Inc.,
recognized investment bankers with over 700 FINRA registered
representatives.  On April 29, 2009, our $500,000 NHC limited recourse
note was converted into 666,667 shares of NHC common stock. This relationship
will further position certain ETF solutions introduced through AdvisorShares,
LLC to gain additional Private Client channel exposure.





AdvisorShares
is expected to be a developer of proprietary exchange traded funds, also known
as ETFs, with a focus on “actively managed” ETFs upon the successful achievement
of exemptive relief and effectiveness of the AdvisorShares Trust initial
registration statement. AdvisorShares will seek to partner with SEC registered
Investment Advisers (“SubAdvisor”) to create individual actively managed ETFs
that are customized for specific investments such as bonds, equities, currencies
and commodities, and allow the SubAdvisor to actively manage the portfolio
within each ETF. The AdvisorShares ETFs will
enable its SubAdvisor partners to create individual actively managed ETFs that
are customized for specific investments such as bonds, equities, currencies and
commodities, and allow the SubAdvisor to actively manage the portfolio within
each ETF. The AdvisorShares ETFs will enable its SubAdvisor partners to
customize investments for their clients, may actively rebalance (unlike index
funds) and may be bought and sold as easily as any listed security. According to
Tiburon Strategic Advisors,
there are currently 10,466 RIAs in the United States that manage $37.5 trillion
in professionally managed assets. Many of these RIAs are potential partners for
AdvisorShares.






22





The
AdvisorShares acquisition enhances our strategic goal of connecting individual
investors with appropriate diversified fund products and to also assist asset
fund managers in building client assets under management. We believe that
ETFs are one of the most significant products developed since money market funds
in the 1970’s with ETF asset growth approaching $800 billion. We also
believe that economic conditions for ETFs continue to be highly favorable in the
United States inasmuch as ETFs are the
mutual fund industry's fastest-growing marketplace. According to the National
Stock Exchange, ETF’s attracted nearly $178.4 billion in net inflows in 2008,
and now represent approximately 31% of all trading volume in the United
States equities market.





AdvisorShares
and AdvisorShares Trust, a Delaware open-end investment management company (the
“Trust”) that was recently formed by AdvisorShares for the purpose of
offering a series of exchange traded funds (the “Funds”), filed an application
with the SEC under the Investment Company Act of 1940 (the “Investment Company
Act”) on January 31, 2008, as amended on October 17, 2008. The application
requests an order from the SEC, exempting AdvisorShares and the Trust from the
provisions of the Investment Company Act and permitting (a) the issuance of
series of open-ended management investment companies to issue shares (“Shares”)
redeemable in large aggregations only (“Creation Units”), (b) engaging in
secondary market transactions in Shares at negotiated market prices; and (c)
certain affiliated persons of the series to deposit securities into, and
receive securities from, the series in connection with the purchase and
redemption of the Creation Units (the “Exemption Order”).





On
December 23, 2008, the SEC issued a notice advising that it would issue a final
order granting the requested relief unless it orders a hearing on the
application based on requests for a hearing given by third parties by not later
than January 15, 2009.  A third party timely filed a hearing request
involving an intellectual property dispute which AdvisorShares believes is
unrelated to the merits of the application.  On July 20, 2009, the SEC
agreed with AdvisorShares’ position and issued the final Exemptive Order
approving the application.  AdvisorShares received a copy of the final
Exemptive Order on July 21, 2009.





As a
result of its receipt of the final Exemptive Order, we believe that
AdvisorShares and the Trust may now form Funds to issue exchange traded products
that invest primarily in commodities or currency, but otherwise operate in a
manner similar to exchange traded products registered under the Investment
Company Act. In addition, the Funds may also invest in equity securities or
fixed income securities traded in a U.S. or non-U.S. markets, as well as futures
contracts, options on such futures contracts, swaps, forward contracts or other
derivatives, and shares of money market mutual funds or other investment
companies, all in accordance with their investment objectives. The Funds may
also invest in equity securities or fixed income securities traded in
international markets or in a combination of equity, fixed income and U.S. money
market securities and/or non-U.S. money market securities.




In
addition to our fund product development and publishing business, our plan of
operation is to invest in the further development of our websites. This will
include certain capital expenditures for technology, content and database
management, including certain online advertising systems and affiliate marketing
systems that management believes will assist in executing our customer
acquisition business plan. Our websites are anticipated to evolve over time as
we introduce new content and features and generally seek to improve the customer
experience and to improve the lead generating efficiency of the websites,
consistent with our business plan. In addition to databases created from parties
registering at our websites, we also intend to expand our access to targeted
databases of investors that may be interested in our services or our advertising
clients’ services. This is anticipated to include certain joint ventures
currently in negotiations and certain database acquisitions. Our website was
launched in March 2009 with the full planned feature set accessible at www.fund.com. On
August 20, 2008 we negotiated an advertising arrangement with a third-party
vendor, Investor Channel, which sells our advertising inventory to potential
clients for content and sponsorship deals. We anticipate that it will cost
approximately $200,000 to continue the development and enhancement of www.fund.com with new
quarterly releases. Marketing costs will be approximately $250,000.




Our other
website, www.accreditedinvestor.com
is in the planning phase and it is expected to cost $500,000 in development and
license fees.  No release date has been established.




We have
outsourced our technology to operate our online network and supporting systems
on servers at a secure third-party co-location facility in the Colorado area.
This third-party facility is manned, and our infrastructure and network
connectivity monitored continuously, on a 24 hour a day, 365 day a year basis.
This facility is powered continuously from multiple sources, including
uninterruptible power supplies and emergency power generators. The vast majority
of the information presented on www.fund.com,
including backend databases that serve and store information, will be stored in
and delivered from server farms.







23




Our
operating and capital requirements in connection with operations have been and
will continue to be significant. Based on our current plans, we anticipate that
revenues earned from lead generation will be the primary source of funds for
operating activities. In addition to existing cash and cash equivalents, we may
rely on bank borrowing, if available, or sales of securities to meet the basic
capital and liquidity needs for the next 12 months. Additional capital may be
sought to fund the development of www.fund.com and
marketing efforts, which may also include bank borrowing, or a private placement
of securities. However, other than our agreement with IP Global, Investors LTD.,
discussed below, we have no agreements for funding at this time and there can be
no assurance that funding will be available if we require it.





Critical
Accounting Policies




Our discussion and analysis of results
of operations and financial condition are based upon our consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
consolidated financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.




The Company considered the quality and
variability of information regarding the financial condition and operating
performance that may have changed in the past and future that may have a
material effect and has quantified them where possible. Specifically the Company
considers risk of variability with changes in contract which may affect the
recognition of income and also the possibility of changes in the tax code which
may affect the long term rates of return.





Significant accounting policies are as
follows:





Basis
of Presentation





The Company has not produced any
significant revenue from its principal business and is a development stage
company as defined by the Statement of Financial Accounting Standards (SFAS) No.
7 “Accounting and Reporting by Development Stage Enterprises.”





Principles
of Consolidation





The consolidated financial statements
include the accounts of Fund.com Inc. and its subsidiaries.  All
material intercompany accounts and transactions are eliminated in
consolidation.





Use
of Estimates





The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. These estimates and
assumptions also affect the reported amounts of revenues, costs and expenses
during the reporting period. Management evaluates these estimates and
assumptions on a regular basis. Actual results could differ from those
estimates.





Revenue
Recognition





The Company recognizes revenue in
accordance with Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition in
Financial Statements” which established that revenue can be recognized when
persuasive evidence of an arrangement exists, the product has been shipped, all
significant contractual obligations have been satisfied and collection is
reasonably assured.





Cash
and Cash Equivalents





The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. Cash and cash equivalents are
defined to include cash on hand and cash in the bank.





Certificate
of Deposit





On November 9, 2007, the Company
deposited $20,000,000 into a fixed Certificate of Deposit with an interest rate
of 5.00% per annum, for a term of three years.  Accrued interest of
$500,000 and $500,000 has been recorded for the six months ended June 30, 2009
and 2008, respectively.






24





Concentration
of Credit Risk





Substantially
all of the Company’s capital, $20 million, has been invested in a three
year non-cancellable certificate of deposit due and payable on November 8, 2010
with Global Bank of Commerce Limited (Global), which is the parent company of
one of our shareholders.  Global is a bank located in Antigua whose
issued financial instruments have not been rated by any security rating
agency such as Standard and Poor’s, Moody’s or Fitch. We have requested and
received audited financial statements for Global Bank of Commerce at December
31, 2008 and the year then ended.  The audit report was issued by PKF
Chartered Accountants,an established global accounting firm.  The financial
statements were presented in accordance with International Financial Reporting
Standards and indicated that the bank has positive equity of approximately
$76,500,000.  Further, the financial statements indicate that our $20
million CD represents approximately 20% of the banks’ total
deposits. This deposit does not have the benefit of any governmental or
third party insurance.





There is a substantial asset
concentration with respect to the Global Bank of Commerce, as discussed
above. However, there is no material valuation or foreign exchange
impairment associated with the deposit. Investors are encouraged to obtain
additional information regarding the financial viability of Global Bank of
Commerce, that such information, permitted by Antiguan banking law, is available
to them.




Advertising
Costs





All advertising costs are charged to
expense as incurred. There was no advertising expense for the six months ended
June 30, 2009 and 2008.





Research
and Development





Costs are expensed as
incurred.  There were no research and development expense for the six
months ended June 30, 2009 and 2008.





Property
and Equipment





Property and equipment is recorded at
cost and depreciated over the estimated useful lives of the assets using
principally the straight-line method. When items are retired or otherwise
disposed of, income is charged or credited for the difference between net book
value and proceeds realized thereon.  Ordinary maintenance and repairs
are charged to expense as incurred, and replacements and betterments are
capitalized.  The range of estimated useful lives to be used to
calculate depreciation for principal items of property and equipment are as
follow:




Asset
      Category
              
              Depreciation/
                Amortization
                PeriodFurniture
      and Fixture
              
              3
      YearsOffice
      equipment
              
              3
      YearsLeasehold
      improvements
              
              5
      Years




Income
Taxes





Deferred
income taxes are recognized based on the provisions of SFAS No. 109, "Accounting
for Income Taxes" ("SFAS 109") for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.




Earnings
Per Share





Basic earnings per share is computed by
dividing net income (loss) available to common shareholders by the weighted
average number of common shares outstanding during the reporting period. Diluted
earnings per share reflects the potential dilution that could occur if stock
options and other commitments to issue common stock were exercised or equity
awards vest resulting in the issuance of common stock that could share in the
earnings of the Company. Common shareholders include both Class A and Class
B as the holders of Class A common stock shall be entitled to receive, on a pari
passu basis with the holders of Class B common stock, if, as and when declared
from time to time by the Board of Directors out of any assets of the Company
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.





Fair
Value of Financial Instruments





The fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties other than in a forced sale or
liquidation.   The carrying amounts of financial instruments,
including cash, accounts payable and accrued expenses approximate fair value
because of the relatively short maturity of the instruments.






25







Accounting
for the Impairment of Long-Lived Assets





The long-lived assets held and used by
the Company are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable. It is reasonably possible that these assets could become impaired
as a result of technology or other industry changes. Determination of
recoverability of assets to be held and used is by comparing the carrying amount
of an asset to future net undiscounted cash flows to be generated by the assets.
If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell.





During the fourth quarter of 2008, the
Company tested the carrying value of its intangible assets for
impairment.  The results of the tests indicated that the carrying
value of the intangible assets was not impaired as of December 31,
2008.  The Company will again test the carrying value for impairment
as of December 31, 2009.





Stock-Based
Compensation





In October 10, 2006 FASB Staff Position
(FSP) issued FSP FAS 123(R)-5 “Amendment of FASB Staff Position FAS 123(R)-1 -
Classification and Measurement of Freestanding Financial Instruments Originally
issued in Exchange of Employee Services under FASB Statement No. 123(R)”. The
FSP provides that instruments that were originally issued as employee
compensation and then modified, and that modification is made to the terms of
the instrument solely to reflect an equity restructuring that occurs when the
holders are no longer employees, then no change in the recognition or the
measurement (due to a change in classification) of those instruments will result
if both of the following conditions are met: (a) there is no increase in fair
value of the award (or the ratio of intrinsic value to the exercise price of the
award is preserved, that is, the holder is made whole), or the antidilution
provision is not added to the terms of the award in contemplation of an equity
restructuring; and (b) all holders of the same class of equity instruments (for
example, stock options) are treated in the same manner. The provisions in this
FSP shall be applied in the first reporting period beginning January 1, 2007.
The Company does not expect the adoption of FSP FAS 123(R)-5 to have a material
impact on its consolidated results of operations and financial
condition.




Results
from Operations





The following tables show the results
of operations of our business.




Comparison of the
three months ended June 30, 2009 and 2008




Three
      Months Ended June 31
                    
                    2009
                    
                    
                    2008Sales
                    
                    $
                    10,342
                    
                    
                    $
                    -0-Cost
      of sales
                    
                    $
                    -0-
                    
                    
                    $
                    -0-Total
      expenses
                    
                    $
                    1,106,748
                    
                    
                    $
                    1.064,296Other
      income (expense)
                    
                    $
                    250,003
                    
                    
                    $
                    250,288Income
      taxes
                    
                    $
                    -0-
                    
                    
                    $
                    -0-Net
      income (loss)
                    
                    $
                    (745,689
                    )
                    
                    $
                    (803,795
                    )Foreign
      currency translation adjustment
                    
                    $
                    -0-
                    
                    
                    $
                    -0-Comprehensive
      income (loss)
                    
                    $
                    (745,689
                    )
                    
                    $
                    (803,795
                    )





Results
of Operations for the Three Month Periods ended June 30, 2009 and
2008




We reported a net loss of
$745,689and $803,795
for the three-month
periods endingJune 30, 2009 and 2008,
respectively.  Until we implement our business plan, we will not have
material operating revenues.




For the three-month period
endingJune
30, 2009, we
incurred $1,106,748 inoperating
costs.  This amount includes $490,199related to compensation
expense for stock options, $141,075related to legal and
professional fees, $215,311related to payroll and
benefits for the officers of the Company, and $110,300for consulting
expenses.




For the three-month period
endingJune
30, 2008, we
incurred $1,064,296 inoperating
costs.  This amount includes $345,800related to compensation
expense for stock options, $153,547related to legal and
professional fees, $206,300related to payroll and
benefits for the officers of the Company, $179,000for consulting expenses and
$100,000related to promotional and
public relations expense.




The $20 million
certificate of deposit with the Global Bank of Commerce (an Antiguan bank), held
by our wholly-owed subsidiary Fund.com Capital Inc., earned interest of
$250,000for each three-month period endedJune 30, 2009 and 2008,
respectively.






26





Comparison of the
six months ended June 30, 2009 and 2008




Six
      Months Ended June 31
                    
                    2009
                    
                    
                    2008Sales
                    
                    $
                    20,342
                    
                    
                    $
                    -0-Cost
      of sales
                    
                    $
                    -0-
                    
                    
                    $
                    -0-Total
      expenses
                    
                    $
                    2,309,088
                    
                    
                    $
                    1,764,046Other
      income (expense)
                    
                    $
                    500,233
                    
                    
                    $
                    500,288Income
      taxes
                    
                    $
                    -0-
                    
                    
                    $
                    -0-Net
      income (loss)
                    
                    $
                    (1,643,954
                    )
                    
                    $
                    (1,235,208
                    )Foreign
      currency translation adjustment
                    
                    $
                    -0-
                    
                    
                    $
                    -0-Comprehensive
      income (loss)
                    
                    $
                    (1,643,954
                    )
                    
                    $
                    (1,235,208
                    )





Results
of Operations for the Six Month Periods ended June 30, 2009 and
2008




We reported a net loss of
$1,643,954and $1,235,208
for thesix-month periods endingJune
30, 2009 and
2008, respectively.  Until we implement our business plan, we will not
have material operating revenues.




For thesix-month period endingJune
30, 2009, we
incurred $2,309,088 inoperating
costs.  This amount includes $1,018,819related to compensation
expense for stock options, $235,645related to legal and
professional fees, $615,834related to payroll and
benefits for the officers of the Company, and $229,632for consulting
expenses.




For thesix-month period endingJune
30, 2008, we
incurred $1,764,046 inoperating
costs.  This amount includes $561,005related to compensation
expense for stock options, $325,550related to legal and
professional fees, $331,504related to payroll and
benefits for the officers of the Company, $323,739for consulting expenses and
$128,967related to promotional and
public relations expense.




The $20 million
certificate of deposit with the Global Bank of Commerce (an Antiguan bank), held
by our wholly-owed subsidiary Fund.com Capital Inc., earned interest of
$500,000for eachsix-month period endedJune
30, 2009 and
2008, respectively.





Liquidity
and Capital Resources





On June 30, 2009, the Company had cash
of $7,400 and a working capital deficit of approximately
$2,665,000.  We will require additional funding in order to meet
operating expenses and our development plan.





Upon our
inception we issued an aggregate of 18,700,000 (not giving effect to the 9-for-1
dividend on the Surviving Corporation’s Class A Common Stock and Class B Common
Stock) shares of our common stock, par value $0.0001 per share, to seven
investors, three of whom were co-founders of the Company.  The shares
were valued at $0.0001 per share.  These shares were issued pursuant
to the exemption provided by Section 4(2) of the Securities Act of 1933 for
transactions by an issuer not involving a public offering.  In
November 2007, we issued an aggregate of 10,350,000 (not giving effect to the
9-for-1 dividend on the Surviving Corporation’s Class A Common Stock and Class B
Common Stock) shares of our common stock to eight accredited investors in a
private placement.  The shares were valued at $2.00 per share and
received gross proceeds of $20,700,000.  On November 5, 2007, we sold
5,000,000 (not giving effect to the 9-for-1 dividend on the Surviving
Corporation’s Class A Common Stock and Class B Common Stock) shares of our
common stock and 2,500,000 (not giving effect to the 9-for-1 dividend on the
Surviving Corporation’s Class A Common Stock and Class B Common Stock) shares of
our Series A Preferred Stock to an accredited investor and received gross
proceeds of $10,000,000.  Substantially all of the proceeds of the
Series A Preferred Stock transaction were used to acquire the domain name www.fund.com.





Prior to
the Merger and not giving effect to the 9-for-1 dividend on the Surviving
Corporation’s Class A Common Stock and Class B Common Stock, Fund.com had
authorized a total 110,000,000 shares, of which 105,000,000 were authorized as
common stock and 5,000,000 shares were authorized as Preferred Stock and
2,500,000 shares of the Preferred Stock were designated as Series A Preferred
Stock.  Following the Merger, we had authorized a total of 110,000,000
shares of common stock, par value $0.001 per share, of which 100,000,000 shares
were authorized as Class A Common Stock, 10,000,000 shares were authorized as
Class B Common Stock.  In addition, 10,000,000 shares were authorized
as Preferred Stock.  Following the Merger, 43,612,335 shares of Class
A Common Stock were outstanding, 6,387,665 shares of Class B Common Stock were
outstanding and no shares of Preferred Stock were outstanding.




27






Securities
Purchase Agreement with National Holdings Corporation





On April 8, 2009, the Company entered
into a definitive Securities Purchase Agreement (the “Purchase Agreement”), with
National Holdings Corporation, a Delaware corporation (“NHC”) whereby the
Company has agreed to provide a minimum $5 million financing to NHC (the
“Financing”) after the satisfaction or waiver of a number of closing conditions
set forth in the Purchase Agreement, in exchange for an aggregate of 5,000
shares of NHC to be created Series C Convertible Preferred Stock, par value
$0.01 per share (the “Series C Preferred Stock”) at a purchase price of
$1,000.00 per share, and warrants, exercisable at any time, and entitling the
holder to purchase up to an aggregate of 25,333,333 shares of common stock of
NHC (on an as-exercised basis) with an exercise price of $0.75 per share. Until
such time as the Series C Convertible Preferred Stock is created and authorized,
the Warrants would entitle us to purchase up to an aggregate of 17,500 shares of
Series C Convertible Preferred Stock at an exercise price of $1,000 per share
and 2,000,000 shares of NHC common stock (on an as-exercised basis) with an
exercise price of $0.75 per share. In connection with the Financing, the Company
provided NHC with an initial investment tranche of $500,000, as evidenced by
NHC’s limited recourse promissory note, dated April 8, 2009, which note shall
automatically convert into shares of Series C Preferred Stock upon consummation
of the Financing or, if the Company is unable to close the balance of the
Financing by April 30, 2009, into 666,666 shares of NHC common stock also based
on a $0.75 per common share price. The closing of the Financing is subject to
various and customary closing conditions and was expected to close on or prior
to April 30, 2009. We borrowed the $500,000 initial tranche from Global Asset
Fund Limited, (“GAF”), through a loan, which is secured by a pledge of NHC’s
limited recourse note and all of our rights and interests in the Purchase
Agreement. On May 4, 2009, we entered into an extension agreement with NHC,
pursuant to which the parties agreed to extend the outside date to close the
Financing to May 29, 2009. In consideration for obtaining the extension, we
agreed that if we are unable to obtain the funding to consummate the Financing
by May 29, 2009, we would pay up to $200,000 in professional fees incurred by
NHC in connection with the proposed transaction. We further agreed to place such
amount in escrow by May 11, 2009; failing which NHC could terminate the proposed
transaction at that time. On April 29, 2009, our $500,000 NHC limited recourse
note was converted into 666,667 shares of NHC common stock, which are pledged as
collateral to secure our $500,000 loan from GAF. The $500,000 note to GAF is now
due and payable. However, GAF has not made a demand for payment. If GAF does
demand payment, we expect that they will foreclose on the 666,667 shares of NHC
common stock we received pursuant to the conversion of the Limited Recourse
Note.




The Company was unable to obtain the
requisite funding to make the $5.0 million investment in NHC and consummate the
Financing.  Accordingly, the Purchase Agreement has been terminated.
However, the Company may enter into negotiations with NHC for purposes of
entering into another securities purchase or other agreements to consummate a
financing transaction with NHC.  There can be no assurance that the
Company will enter into another securities purchase or other agreements with NHC
to consummate a financing transaction and if such agreements are entered into,
whether they will be on the terms set forth above or terms acceptable to
us.  In addition, if such agreements are entered into, there is no
assurance prospective investors will provide funding to
consummate a financing transaction with NHC on terms acceptable
to us, if at all.





Working
Capital Loan with IP Global Investors LTD





For the past six months we have relied
on loans and advances from IP Global Investors LTD., a privately owned
intellectual property financing company, to provide us with working capital to
pay our operating expenses.  Through June 30, 2009, we have borrowed
an aggregate of $723,500 from this lending source.  Effective May 1,
2009, the Company entered into a $1.343 million line of credit agreement with IP
Global under which the Company is permitted to receive loans of up to
$1,343,000, less $723,000 of prior advances that the Company received from IP
Global through April 30, 2009; provided that such additional advances are for
approved corporate purposes.  In consideration for these advances, the
Company: (i) agreed to pay 9% interest on all advances (including the prior
advances), (ii) granted the lender the right to convert the note into our Class
A Common Stock at $0.60 per share (subject to certain adjustments) and (iii) are
obligated to pay certain fees to the lender.  Such fees include a
$16,500 per month loan servicing fee which accrues and is payable on the
maturity date of the note, and a CD release fee (to be paid if the lender
arranges for an early payment on our CD with Global Bank of Commerce that
matures November 2010 on terms satisfactory to us), payable in shares of our
class A common stock determined by dividing $1,343,000 by the Conversion Price
then in effect. All of the Company’s subsidiaries guaranteed payment of the note
and the Company issued IP Global a lien on most of our accounts and our
domain name to secure payment of the Note.  Additionally, the Company
agreed to issue IP Global a warrant to purchase that number of shares of our
Class A common stock equal to $1,343,000, divided by an exercise price of $0.60
per shares (subject to certain adjustments, including weighted average
anti-dilution adjustments).





The Company and IP Global have
negotiated, but have yet to finalize and execute, an amended and restated
revolving line of credit loan agreement with IP Global for a $2.5 million line
of credit under which the Company is permitted to receive loans of up
to $2,500,000, less $1,263,000 of prior advances that the Company received from
IP Global as of the date of filing of this report. Such prior advances include
$100,000 remitted to AdvisorShares on behalf of the Company as partial
satisfaction of the Company’s $1,000,000 contribution to AdvisorShares for
satisfying the first milestone under that certain Purchase and Contribution
Agreement described above.





Certificate
of Deposit from Global Bank of Commerce





The structuring and initiation of the
investment in the Certificate of Deposit was an investment strategy was
developed by the private entity (Meade Technologies Inc.) which merged (the
“Merger”) with and into Eastern Services Holdings, Inc. pursuant to an Agreement
and Plan of Merger dated as of January 15, 2008 (the “Merger Agreement”). On
November 9, 2007, Meade Capital, a wholly owned subsidiary of Meade Technologies
Inc. (both privately owned companies), invested in a $20,000,000 three-year
Certificate of Deposit with the Global Bank of Commerce (the “CD”) as part of its
business strategy. This investment was made prior to completing the merger with
Eastern Services Holdings, Inc. which occurred on January 15, 2008 and prior to
current management’s engagement by Meade. As part of the Merger, the Company’s
name was changed to Fund.com Inc, and its subsidiary’s name to Fund.com
Capital.






28





Fund.com
Capital Inc. (then known as Meade Capital, Inc.) was
originally established by Meade Technologies, Inc., the Company’s predecessor,
to invest in financial entities and structure unregistered financial products
and instruments, including fund management companies, and structured products
offered or managed by such entities. As a result, at the time of the merger
with Meade Technologies in January 2008, the Company believed that the
certificate of deposit investment would provide the Company with a material
asset base, would serve as the basis for unregistered structure products and
would provide capital for one or more potential acquisitions within its then
business model as set forth in its business plan disclosed in a Current
Report on Form 8-K filed with the Commission on January 17,
2008.  However, in view of the Company’s need for additional working
capital, its decision to abandon the issuance of unregistered structured
products in favor of pursuing exclusively investment products registered under
the Securities Act and Global Bank’s right to exchange and swap the three year
certificate of deposit for a long-term annuity instrument that would not provide
the Company with liquidity, our management determined that it would need to seek
additional financing for the Company in order to support our other strategic
initiatives, and could no longer place undue reliance on the investment in the
certificate of deposit.
 
  Purchase
and Contribution Agreement with AdvisorShares
 
 There have been discussions with Global
Bank of Commerce in order to attempt to alter the terms and conditions under
which the CD was issued, which if successful, would enhance our
liquidity.  However, there can be no assurance that those negotiations
will be successful or will result in sufficient liquidity to finance the
Company’s plans and similar attempts in the past were
unsuccessful.  Therefore, the Company entered into an agreement to
finance its acquisition of 60% of the equity of AdvisorShares, the Company
issued, and IP Global Investors Ltd. purchased, a promissory note in the
aggregate principal amount of $325,000 (the “IP Global Note”).  The
principal and unpaid interest on the IP Global Note is payable upon demand at
any time following 30 business days notice, and carries a 9% interest
rate.
 
 The funding requirement for the
additional $3,725,000 to AdvisorShares will be made in accordance with the
achievement of specific milestones as defined in the Purchase and Contribution
Agreement (the “Agreement”) dated
October 31, 2008, including (i) $1,000,000 within 30 days of the issuance by the
SEC of its notice regarding approval of the application of AdvisorShares for
exemptive relief under the Investment Company Act of 1940; (ii) $725,000 within
30 days of receipt by the Company from AdvisorShares’ independent auditors
verifying total assets under management equal to $150,000,000;
(iii) $1,000,000 within 30 days of receipt by the Company from
AdvisorShares’ independent auditors verifying total assets under management
equal to $250,000,000; and (iv) $1,000,000 within 30 days of receipt by the
Company from AdvisorShares’ independent auditors verifying total assets under
management equal to $450,000,000.
 
 The Company does not currently have the
capital or resources to make the $1,000,000 payment to AdvisorShares following
AdvisorShares’ receipt of the final Exemptive Order from the SEC, or to make the
additional $2,725,000 in payments to AdvisorShares following AdvisorShares’
achievement of the remaining milestones.  However, the Company is
currently negotiating with IP Global and Equities Media Acquisition Corp. Inc.,
a principal stockholder of the Company, for a line of credit facility that will
provide the Company with additional working capital and the funds necessary to
meet its obligations to AdvisorShares under the Purchase
Agreement.  Although it believes that such credit facility will be
entered into in the near future, there is no assurance that this will be the
case, or that, if obtained, such credit facility will be on terms that are
beneficial to the Company or its shareholders.  In addition, in order
to obtain funds to satisfy the remaining payment obligations to AdvisorShares
(assuming the remaining milestones are achieved), we may utilize any of several
potential options, including cash on hand from operating results, the issuance
of debt or equity securities, or a combination thereof.  No assurance
can be given that we will have available cash on hand from operating results or
be able to obtain additional financing on favorable terms, if at
all.  Moreover, the Company cannot predict with certainty if and when
the remaining milestones for total assets under management will be met by
AdvisorShares.  The $20,000,000 Certificate of Deposit we
purchased from the Global Bank of Commerce will become liquid in November 2010
and if the remaining milestones are achieved at such time, we intend to use such
funds to satisfy any remaining payments owed to AdvisorShares.
 
 We anticipate that our cash
requirements for the next 12 months for expenses related to infrastructure,
business development and accounts payable should be
approximately $ 2,000,000 .  We believe
proceeds from the sale of both equity and debt instruments will be sufficient to
meet presently anticipated working capital and capital expenditure requirements
over the next few months.  However, there can be no assurance that the
sale of equity or notes will take place.  To the extent that we do not
generate sufficient revenues, we will be forced to reduce our expenses and/or
seek additional financing.  As of August 13, 2009 there were no
commitments for long-term capital expenditures.
 Recent Accounting
Pronouncements
  Recent accounting pronouncements that
the Company has adopted or that will be required to adopt in the future are
summarized below.
 
 Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting
Principles
 
 In June
2009, the Financial Accounting Standards Board issued Statement “FASB” issued
Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles” (“SFAS No. 168”).  SFAS
No. 168 will become the single source of authoritative nongovernmental U.S.
generally accepted accounting principles (“GAAP”), superseding existing FASB,
American Institute of Certified Public Accountants (“AICPA”), Emerging Issues
Task Force (“EITF”), and related accounting literature.  SFAS No. 168
reorganizes the thousands of GAAP pronouncements into roughly 90 accounting
topics and displays them using a consistent structure.  Also included
is relevant Securities and Exchange Commission guidance organized using the same
topical structure in separate sections.  SFAS No. 168 will be
effective for financial statements issued for reporting periods that end after
September 15, 2009.  This statement will have an impact on the
Company’s financial statements since all future references to authoritative
accounting literature will be references in accordance with SFAS No.
168.
 
  29
   Subsequent
Events
  In May 2009, the FASB issued SFAS
No. 165, “Subsequent Events”.(“SFAS No. 165”) This Statement establishes
general standards of accounting for and disclosures of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued.  It requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis for that date and
is effective for interim and annual periods ending after June 15,
2009.  The adoption of SFAS No. 165 is not expected to have a material
impact on the Company’s financial statements.
 
 Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not
Orderly
 
 In April 2009, the FASB issued FSP FAS
No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly". This FSP provides additional guidance for estimating fair
value in accordance with FASB Statement No. 157, Fair Value Measurements, when
the volume and level of activity for the asset or liability have significantly
decreased. This FSP also includes guidance on identifying circumstances that
indicate a transaction is not orderly. FSP FAS No. 157-4 is effective for
interim and annual reporting periods ending after June 15, 2009, and shall be
applied prospectively.The
implementation of FSP FAS No. 157-4 did not have a material on the Company’s
financial position and results of operations.
 
 Recognition
and Presentation of Other-Than-Temporary Impairments
 
 In April 2009, the FASB issued FSP FAS
No. 115-2 and FAS No. 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments ". The objective of an other-than-temporary
impairment analysis under existing U.S. generally accepted accounting principles
(GAAP) is to determine whether the holder of an investment in a debt or equity
security for which changes in fair value are not regularly recognized in
earnings (such as securities classified as held-to-maturity or
available-for-sale) should recognize a loss in earnings when the investment is
impaired. An investment is impaired if the fair value of the investment is less
than its amortized cost basis. FSP FAS No. 115-2 and FAS No. 124-2 is effective
for interim and annual reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. Earlier adoption for
periods ending before March 15, 2009, is not permitted.  The
implementation of FSP FAS No. 115-2 and FAS No. 124-2 did not have a material
impact on the Company’s financial position and results of
operations.
  Interim
Disclosures about Fair Value of Financial Instruments
  In April 2009, the FASB issued FSP FAS
No. 107-1 and APB No. 28-1, “Interim Disclosures about Fair Value of Financial
Instruments". This FSP amends SFAS No. 107, Disclosures about Fair Value of
Financial Instruments,to require disclosures about fair value of
financialinstruments for interim
reporting periods of publicly traded companies as well as in annualfinancial statements.
This FSP also amends APB Opinion No. 28, Interim Financial Reporting,to require those disclosures in summarized financial information at
interim reporting periods. FSP FAS No. 107-1 is effective for interim reporting
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009.  The implementation of FSP FAS No. 107-1
did not have a material impact on the Company’s financial position and results
of operations.
 
 Amendments
to the Impairment Guidance of EITF Issue No. 99-20
 
 In January 2009, the FASB issued FSP
Emerging Issues Task Force ("EITF") Issue No. 99-20-1, “Amendments to the
Impairment Guidance of EITF Issue No. 99-20". This FSP amends the impairment
guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment
on Purchased Beneficial Interests and Beneficial Interests That Continue to Be
Held by a Transferor in Securitized Financial Assets,” to achieve more
consistent determination of whether an other-than-temporary impairment has
occurred. The FSP also retains and emphasizes the objective of an other than-
temporary impairment assessment and the related disclosure requirements in FASB
Statement No. 115, Accounting
for Certain Investments in Debt and Equity Securities,and other related
guidance. This Issue is effective for interim and annual reporting periods
ending after December 15, 2008, and shall be applied prospectively.
Retrospective application to a prior interim or annual reporting period is not
permitted. The adoption of FSP EITF 99-20-1 did not have a material effect on
the Company’s consolidated financial statements.
   30
 
 Accounting
for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance
or Other Financing
 
 In June 2009, the FASB issued FSP
Emerging Issues Task Force ("EITF") Issue No. 09-1, “Accounting for Own-Share
Lending Arrangements in Contemplation of Convertible Debt Issuance or Other
Financing”. This Issue is effective for fiscal years beginning on or after
December 15, 2009, and interim periods within those fiscal years for
arrangements outstanding as of the beginning of those fiscal years. Share
lending arrangements that have been terminated as a result of counterparty
default prior to the effective date of this Issue but for which the entity has
not reached a final settlement as of the effective date are within the scope of
this Issue. This Issue requires retrospective application for all arrangements
outstanding as of the beginning of fiscal years beginning on or after December
15, 2009. This Issue is effective for arrangements entered into on or after the
beginning of the first reporting period that begins on or after June 15, 2009.
Early adoption is not permitted. The Company is currently assessing the impact
of FSP EITF 09-1 on its financial position and results of
operations.
 
 Determining
the Fair Value of a Financial Asset When the Market for That Asset is not
Active
 
 In October 2008, the FASB issued FSP
FAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market
for That Asset is Not Active.”  This FSP clarifies the application of
SFAS No. 157, “Fair Value Measurements,” in a market that is not
active.  The FSP also provides examples for determining the fair value
of a financial asset when the market for that financial asset is not
active.  FSP FAS No. 157-3 was effective upon issuance, including
prior periods for which financial statements have not been
issued.  The impact of adoption was not material to the Company’s
consolidated financial condition or results of operations.
 
 The
Hierarchy of Generally Accepted Accounting Principles
 
 In May 2008, the FASB issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting
Principles.”  SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements.  SFAS No. 162 is effective 60
days following the SEC's approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity
with Generally Accepted Accounting Principles".  The implementation of
this standard will not have a material impact on the Company's consolidated
financial position and results of operations.
 
 Determination
of the Useful Life of Intangible Assets
 
 In April 2008, the FASB issued FSP FAS
No. 142-3, “Determination of the Useful Life of Intangible Assets”, which amends
the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of intangible assets under
SFAS No. 142 “Goodwill and Other Intangible Assets”.  The intent of this
FSP is to improve the consistency between the useful life of a recognized
intangible asset under SFAS No. 142 and the period of the expected cash flows
used to measure the fair value of the asset under SFAS No. 141 (revised 2007)
“Business Combinations” and other U.S. generally accepted accounting
principles.    The implementation of FSP FAS No. 142-3 is not
expected to have a material impact on its consolidated financial
statements.
 
 Disclosure
about Derivative Instruments and Hedging Activities
 
 In March 2008, the FASB issued SFAS No.
161, “Disclosure about
Derivative Instruments and Hedging Activities, an amendment of SFAS No.
133.” This statement requires that objectives for using derivative instruments
be disclosed in terms of underlying risk and accounting designation. The Company
was required to adopt SFAS No. 161 on January 1, 2009. The adoption of SFAS
No.161 on January 1, 2009 did not have a material effect on the Company’s
consolidated financial statements.
 
 Fair
Value Option for Financial Assets and Financial Liabilities
 
 In February 2007, the FASB issued SFAS
No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities –
Including an amendment of SFAS No. 115,” which becomes effective on February 1,
2008, permits companies to choose to measure many financial instruments and
certain other items at fair value and report unrealized gains and losses in
earnings. Such accounting is optional and is generally to be applied instrument
by instrument. The election of this fair-value option did not have a material
effect on its consolidated financial condition, results of operations, cash
flows or disclosures.
 
 Fair
Value Measurements
 
 In September 2006, the FASB No. 157,
“Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles and expands disclosures about fair value
investments. SFAS No. 157 was effective for financial assets and liabilities on
January 1, 2008. The statement deferred the implementation of the provisions of
SFAS No. 157 relating to certain non-financial assets and liabilities until
January 1, 2009. The adoption of SFAS No.157 on January 1, 2009 for financial
assets and liabilities did not have a material effect on the Company’s
consolidated financial statements.
   31
 
 Off-Balance
Sheet Arrangements.
  We have no off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial conditions, changes in financial condition, revenue or
expenses, results of operations, liquidity, capital expenditures or capital
resources.
 
 Item
3. Quantitative and Qualitative Disclosure About Market Risk
  Not applicable.
  Item
4T. Controls and Procedures
 
 Evaluation
of Disclosure Controls and Procedures
 
 As of the
end of the period covered by this quarterly report on Form 10-Q, we evaluated
the effectiveness of the design and operation of (i) our disclosure controls and
procedures, and (ii) our internal control over financial reporting. The
evaluators who performed this evaluation were our Chief Executive Officer and
Chief Financial Officer; their conclusions, based on and as of the date of the
evaluation (i) with respect to the effectiveness of our disclosure controls and
(ii) with respect to any change in our internal controls that occurred during
the most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect our internal controls are presented
below.
  CEO
and CFO Certifications
  Attached to this quarterly report, as
Exhibits 31.1 and 31.2, are certain certifications of the CEO and CFO, which are
required in accordance with the Exchange Act and the Commission’s rules
implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications"). This
section of the quarterly report contains the information concerning the
evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This
information should be read in conjunction with the Rule 13a-14(a)/15d-14(a)
Certifications for a more complete understanding of the topic
presented.
 
 Disclosure
Controls and Internal Controls
  Disclosure controls are procedures
designed with the objective of ensuring that information required to be
disclosed in the Company's reports filed with the Securities and Exchange
Commission under the Securities Exchange Act, such as this quarterly report, is
recorded, processed, summarized and reported within the time period specified in
the Commission’s rules and forms. Disclosure controls are also designed with the
objective of ensuring that material information relating to the Company is made
known to the CEO and the CFO by others, particularly during the period in which
the applicable report is being prepared. Internal controls, on the other hand,
are procedures which are designed with the objective of providing reasonable
assurance that (i) the Company's transactions are properly authorized, (ii) the
Company’s assets are safeguarded against unauthorized or improper use, and (iii)
the Company's transactions are properly recorded and reported, all to permit the
preparation of complete and accurate financial statements in conformity with
accounting principles generally accepted in the United States.
 
 Limitations
on the Effectiveness of Controls
  The Company's management does not
expect that their disclosure controls or their internal controls will prevent
all error and all fraud. A control system, no matter how well developed and
operated, can provide only reasonable, but not absolute assurance that the
objectives of the control system are met. Further, the design of the control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control. The design of a system
of controls also is based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in
achieving its stated objectives under all potential future conditions. Over
time, control may become inadequate because of changes in conditions, or because
the degree of compliance with the policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
  Scope
of the Evaluation
  The CEO and CFO’s evaluation of our
disclosure controls included a review of the controls’ (i) objectives, (ii)
design, (iii) implementation, and (iv) the effect of the controls on the
information generated for use in this quarterly report. In the course of the
evaluation, the CEO and CFO sought to identify data errors, control problems and
acts of fraud, and they sought to confirm that appropriate corrective action,
including process improvements, was being undertaken. This type of evaluation is
done on a quarterly basis so that the conclusions concerning the effectiveness
of our controls can be reported in our quarterly reports on Form 10-Q and annual
reports on Form 10-K. The overall goals of these various evaluation activities
are to monitor our disclosure controls and internal controls, and to make
modifications if and as necessary. Our external auditors also review internal
controls in connection with their audit and review activities. Our intent in
this regard is that the disclosure controls and the internal controls will be
maintained as dynamic systems that change (including improvements and
corrections) as conditions warrant.
   32
  Among other matters, the evaluation was
to determine whether there were any significant deficiencies or material
weaknesses in our internal controls, which are reasonably likely to adversely
affect our ability to record, process, summarize and report financial
information, or whether the evaluators identified any acts of fraud, whether or
not material, involving management or other employees who have a significant
role in our internal controls. This information was important for both the
evaluation, generally, and because the Rule 13a-14(a)/15d-14(a) Certifications,
Item 5, require that the CEO and CFO disclose that information to our Board
(audit committee), and our independent auditors, and to report on related
matters in this section of the quarterly report. In the professional auditing
literature, "significant deficiencies" are referred to as "reportable
conditions". These are control issues that could have significant adverse affect
on the ability to record, process, summarize and report financial data in the
financial statements. A "material weakness" is defined in the auditing
literature as a particularly serious reportable condition where the internal
control does not reduce, to a relatively low level, the risk that misstatement
caused by error or fraud may occur in amounts that would be material in relation
to the financial statements and not be detected within a timely period by
employees in the normal course of performing their assigned functions. The
evaluators also sought to deal with other controls matters in the evaluation,
and in each case, if a problem was identified, they considered what revisions,
improvements and/or corrections to make in accordance with our ongoing
procedures.
  Conclusions
  Based upon the evaluation, our CEO and
CFO concluded that our disclosure controls and procedures as of June 30, 2009
were not
effective such that the information required to be disclosed by us in reports
filed under the Exchange Act is (i) recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and (ii)
accumulated and communicated to our management, including our CEO and CFO, as
appropriate to allow timely decisions regarding disclosure. They concluded that
the Company’s disclosure controls were ineffective due to the inability to
timely file the annual report on Form 10-K and the material weaknesses in its
internal controls over financial reportingas described below,
which led us to file our 10-K late.  The actions being taken to
address these ineffective disclosure controls and procedures are set forth
below. Based upon the Evaluation, our CEO and CFO also concluded that our
internal controls are not effective at that assurance level to provide
reasonable assurance that our financial statements are fairly presented in
conformity with accounting principles generally accepted in the United States,
as more fully described below.
  Management determined that, as of June
30, 2009, Fund.Com Inc. did not maintain effective internal control over
financial reporting.  Management identified the following specific
material weaknesses in the Company’s internal controls over its financial
reporting processes (a material weakness is a deficiency, or a combination of
control deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected on a
timely basis):
  •
              Policies
      and Procedures for the Financial Close and Reporting Process — Currently
      there are no written policies or procedures that clearly define the roles
      in the financial close and reporting process.  The various roles
      and responsibilities related to this process should be defined,
      documented, updated and communicated.  Failure to have such
      policies and procedures in place amounts to a material weakness to the
      Company’s internal controls over its financial reporting
      processes.
 
 •
              Inability
      to close our books and generate required disclosure – Due to timing
      constraints related to the finalization of material agreements, we
      recognize a material weakness regarding our inability to simultaneously
      close the books on a timely basis each month and quarter and to generate
      all the necessary disclosure for inclusion in our filings with the
      Securities and Exchange Commission. This material weakness caused us to be
      late in our filing.
 
 •
              Accounting
      and Finance Personnel Weaknesses – Our current accounting staff is
      relatively small and we do not have the required infrastructure of meeting
      the higher demands of being a U.S. public company. Due to the size of our
      accounting staff, we have limitations in the segregation of duties
      throughout the financial reporting processes.  Due to the
      pervasive nature of this issue, the lack of segregation of duties amounts
      to a material weakness to the Company’s internal controls over its
      financial reporting processes.
  In light of the foregoing, once
we have the adequate funds, management plans to develop the following additional
procedures to help address these material weaknesses.  We believe that
these additional steps will further enhance and strengthen the remediation steps
we implemented in fiscal 2008 to address the material weaknesses we discovered
in our 2007 evaluation, which we believed were sufficient to cure such material
weakness.  We recognize now that these must be expanded and developed
to help ensure we achieve and maintain effective controls and
procedures.  The Company will create and refine a structure in which
critical accounting policies and estimates are identified, and together with
other complex areas, are subject to review by other members of management as
well as the Company’s independent accountant.  We also plan to enhance
and test our quarter-end and year-end financial close
process.  Additionally, our board of directors will increase its
review of our disclosure controls and procedures.  We also intend to
develop and implement policies and procedures for the financial close and
reporting process, such as identifying the roles, responsibilities,
methodologies, and review/approval process; we also hope to implement a detailed
financial close plan and enhanced and timelier review of manual journal entries,
account reconciliations, estimates and judgments.
   33
   Finally,
it is our intention to engage professionals on an as needed basis to assist the
Company in the financial reporting process.  We believe these actions
will remediate the material weaknesses by focusing additional attention and
resources in our internal accounting functions.  However, the material
weaknesses will not be considered remediated until the applicable remedial
controls operate for a sufficient period of time and management has concluded,
through testing, that these controls are operating effectively and even then, we
cannot assure you that this will be sufficient. We may be required to expend
additional resources to identify, assess and correct any additional weaknesses
in disclosure or internal control. The Company cannot make assurances that it
will not identify additional material weaknesses in its internal control over
financial reporting in the future.
 
 As of the
date of the of this report, we have taken the following steps to address the
above-referenced material weakness in our internal control over financial
reporting to ensure that all information will be recorded, processed, summarized
and reported accurately:
 
 1.
                On
      August 7, 2009, we filed an amended the 10-K to include the Management’s
      Report on Internal Controls Over Financial Reporting;2.
                We
      will continue to educate our management personnel on compliance with the
      disclosure requirements of the Securities Exchange Act  of 1934
      and Regulation S-K; and
 
 3.
              We
      have increased management oversight of accounting and reporting
      functions.
  The presence of these material
weaknesses does not mean that any misstatement has occurred in our financial
statements, but only that our present controls might not be adequate to detect
or prevent a material misstatement in a timely manner.
  Changes
in Internal Control over Financial Reporting
 
 There have been no changes in our
internal controls over financial reporting that occurred during our fiscal
quarter to which this Quarterly Report on Form 10-Q relates that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.
  
 34
  PART
II - OTHER INFORMATION
   Item
1. Legal Proceedings
 
 As of
June 30, 2009, there were no legal actions pending against us, or any
subsidiary, or of which our property, or the property of any subsidiary, was
subject nor to our knowledge are any such proceedings contemplated.
 
 Our
subsidiary, AdvisorShares Investments, LLC is currently not involved in any
legal proceedings.
 
 Notwithstanding
the foregoing, an arbitration proceeding was commenced on November 7, 2008
against Mr. Noah Hamman, AdvisorShares' CEO and part owner ("Member") of Arrow
Investment Advisors, LLC ("Arrow"), by Arrow.  The arbitration was
commenced pursuant to the provisions of the LLC Operating Agreement of Arrow and
brought under the auspices of the International Institute for Conflict
Prevention and Resolution in New York, as required under the LLC Operating
Agreement. The arbitration involves the other Members of Arrow who have asserted
an ownership claim regarding Mr. Hamman's ownership interest in
AdvisorShares.   Such Members claim that AdvisorShares’ business is
based on the improper usurpation and conversion by Mr. Hamman of Arrow’s
corporate opportunities and assets, including the business of
AdvisorShares.  The arbitration hearing is currently scheduled for December
14, 2009 and a decision is expected approximately 30 days
thereafter.
 
 If the
other Members of Arrow prevail on their claims, this could impact the amount of
ownership Mr. Hamman indirectly holds in AdvisorShares in that Mr. Hamman could
lose his 40% interest in AdvisorShares to Arrow.   In addition, if Arrow
prevails, Arrow could assert other claims including that the Purchase and
Contribution Agreement (to which we are a party) was inappropriately executed
and seek to nullify the obligations associated with that agreement. In such
event, we could lose our investmentin AdvisorShares and
have to undergo the process of seeking another acquisition that could provide us
with the results we hope to receive from acquiring our membership interest in
AdvisorShares. Although we would vigorously defend against any award in the
arbitration that would cause us to lose our investment in AdvisorShares, there
is no assurance that we would be successful in such defense, or if required, in
locating or consummating an appropriate alternative acquisition
transaction.
 Other
than as set forth herein, we are not a party to any material legal proceeding
and to our knowledge no such proceeding is currently contemplated or
pending.
 
 Item
1A. Risk Factors
 
 Not applicable.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 Not applicable.
  Item
3. Defaults Upon Senior Securities
 
 Not applicable.
  Item
4. Submission of Matters to a Vote of Security Holders
 
 No
matters were submitted to our security holders during the period covered by this
Report.  However, on April 30, 2009, a majority of our shareholders
approved, via written consent to increase the number of shares authorized to be
issued under our 2007 Stock Incentive Plan by approximately 5,000,000 shares to
10,000,000 shares.
 
 Item
5. Other Information
 
 None.
 
 Item
6. Exhibits
 
 Exhibit No.
                      
                      Description3.1
                      
                      Amended
      and Restated Certificate of Incorporation of Eastern Services Holdings,
      Inc. (Filed as Exhibit 3.1 to  Form 8-K, filed on January
      17, 2008, incorporated by reference)3.2
                      
                      Bylaws
      of Fund.com. (Filed as Exhibit 3.2 to Form 8-K, filed on January17, 2008,
      incorporated by reference)10.1
                      
                      Amendment
      No. 2 to Securities Purchase Agreement dated as of May 14, 2009. (Filed as Exhibit 10.1
      to Form 10-Q, filed on May 15, 2009, incorporated by
      reference)31.1
                      
                      Certification
      of the Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
                      
                      Certification
      of the Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
                      
                      Certification
      of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
                      
                      Certification
      of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
 
  
 35
 
 
 
  SIGNATURES
   Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
  FUND.COM
      INC.By:
                /s/ Gregory
      WebsterGregory
      Webster
                  Chief
      Executive Officer(Principal
      Executive Officer)By:
                /s/ Michael
      HlavsaMichael
      Hlavsa
                  Chief
      Financial Officer
                  (Principal
      Accounting and Financial Officer)
  Date: 
November 30 , 2009