UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM 10-Q





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


For the
quarterly period ended March 31, 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:333-128415




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)


________________________________________________________


Former
name, former address and former fiscal year, if changed since last
report)






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 is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one)




Large
      Accelerated Filer
                
                o
                Accelerated
      Filer
                oNon-accelerated
      filer
                (do
      not check if a smaller reporting company)
                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 
x   No 
o




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




On May
14, 2009 there were 44,087,335 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.

























FUND.COM
INC.





INDEX





Page
                              NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
                            
                            Financial
      StatementsConsolidated
      Balance SheetsMarch
      31, 2009 (unaudited)
                            
                            3Consolidated
      Statements of Operations (unaudited)Three
      months ended March 31, 2009 and 2008
                            
                            4Consolidated
      Statements of Cash Flows (unaudited)Three
      months ended March 31, 2009 and 2008
                            
                            5Notes
      to Condensed Consolidated Financial Statements
                            
                            6Item
      2.
                            
                            Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
                            
                            20Item
      3.
                            
                            Quantitative
      and Qualitative Disclosure About Market Risks
                            
                            23Item
      4T
                            
                            Controls
      and Procedures
                            
                            24PART
      II - OTHER INFORMATIONItem
      1.
                            
                            Legal
      Proceedings
                            
                            25Item
      1.A
                            
                            Risk
      Factors
                            
                            25Item
      2.
                            
                            Unregistered
      Sales of Equity Securities and Use of Proceeds
                            
                            25Item
      3.
                            
                            Defaults
      Upon Senior Securities
                            
                            25Item
      4.
                            
                            Submission
      of Matters to a Vote of Security Holders
                            
                            25Item
      5.
                            
                            Other
      Information
                            
                            25Item
      6.
                            
                            Exhibits
                            
                            26







-2-




FUND.COM
      INC.(A
      Development Stage Company)CONSOLIDATED
      BALANCE SHEETSMarch
      31, 2009
                        
                        
                        December
      31, 2008(Unaudited)
                        
                        
                        (Audited)ASSETSCURRENT
      ASSETSCash
                        
                        $
                        25,768
                        
                        
                        $
                        158,083Total
      current assets
                        
                        
                        25,768
                        
                        
                        
                        158,083Property,
      plant and equipment, net
                        
                        
                        1,364
                        
                        
                        
                        122Intangible
      Assets, net
                        
                        
                        9,999,500
                        
                        
                        
                        9,999,500Certificate
      of Deposit
                        
                        
                        21,388,333
                        
                        
                        
                        21,138,333Minority
      Interest
                        
                        
                        150,178
                        
                        
                        
                        106,333TOTAL
      ASSETS
                        
                        $
                        31,565,143
                        
                        
                        $
                        31,402,371LIABILITIES
      AND STOCKHOLDERS' EQUITY:CURRENT
      LIABILITIES:Accounts
      payable
                        
                        $
                        1,264,024
                        
                        
                        $
                        1,085,210Accrued
      payroll
                        
                        
                        104,896
                        
                        
                        
                        -Accrued
      interest
                        
                        
                        18,207
                        
                        
                        
                        -Advances
      from shareholders
                        
                        
                        23,580
                        
                        
                        
                        23,580Notes
      Payable
                        
                        
                        673,500
                        
                        
                        
                        443,000Total
      current liabilities
                        
                        
                        2,084,207
                        
                        
                        
                        1,551,790TOTAL
      LIABILITIES
                        
                        
                        2,084,207
                        
                        
                        
                        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
                        
                        
                        34,020,676
                        
                        
                        
                        33,492,056Accumulated
      deficit during the Development Stage
                        
                        
                        (4,590,215
                        )
                        
                        
                        (3,691,950
                        )Total
      stockholders' equity
                        
                        
                        29,480,936
                        
                        
                        
                        29,850,581TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                        
                        $
                        31,565,143
                        
                        
                        $
                        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 MONTHS ENDED MARCH 31, 2009 AND 2008 ANDFOR
      THE PERIOD SEPTEMBER 20, 2007 (INCEPTION) THROUGH MARCH 31,
      2008Three
      Months
                          
                          
                          Three
      Months
                          
                          
                          September
      20, 2007
                            (Inception)Ended
                          
                          
                          Ended
                          
                          
                          throughMarch
      31, 2009
                          
                          
                          March
      31, 2008
                          
                          
                          March
      31, 2009Revenue
                          
                          $
                          10,000
                          
                          
                          $
                          -
                          
                          
                          $
                          10,000Costs
      of revenue
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Gross
      profit
                          
                          
                          10,000
                          
                          
                          
                          -
                          
                          
                          
                          10,000Operating
      expense
                          
                          
                          1,202,340
                          
                          
                          
                          731,779
                          
                          
                          
                          6,141,666Loss
      from operations before interest income andprovision
      for (benefit from) income tax
                          
                          
                          (1,192,340
                          )
                          
                          
                          (731,779
                          )
                          
                          
                          (6,131,666
                          )Other
      income
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,754Interest
      income
                          
                          
                          250,230
                          
                          
                          
                          250,000
                          
                          
                          
                          1,389,712Income
      tax expense
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (193
                          )250,230
                          
                          
                          
                          250,000
                          
                          
                          
                          1,391,273Minority
      interest
                          
                          
                          43,845
                          
                          
                          
                          18,337
                          
                          
                          
                          150,178Net
      loss
                          
                          
                          (898,265
                          )
                          
                          
                          (463,442
                          )
                          
                          
                          (4,590,215
                          )Net
      loss per share - basic and diluted (Class A)
                          
                          $
                          (0.08
                          )
                          
                          $
                          (0.01
                          )
                          
                          $
                          (0.10
                          )Net
      loss per share - basic and diluted (Class B)
                          
                          $
                          (0.54
                          )
                          
                          $
                          (0.03
                          )
                          
                          $
                          (0.72
                          )Weighted
      average number of shares outstanding:during
      the period - basic and diluted (Class A)
                          
                          
                          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





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 THREE MONTHS ENDED MARCH 31, 2009 AND MARCH 2008 ANDFOR
      THE PERIOD SEPTEMBER 20, 2007 (INCEPTION) THROUGH MARCH 31,
      2009Three
      Months
                          
                          
                          Three
      Months
                          
                          
                          September
      20, 2007
                            (Inception)Ended
                          
                          
                          Ended
                          
                          
                          throughMarch
      31, 2009
                          
                          
                          March
      31, 2008
                          
                          
                          March
      31, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                          
                          $
                          (898,265
                          )
                          
                          $
                          (463,442
                          )
                          
                          $
                          (4,590,215
                          )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Compensation
      recognized under stock incentive plan
                          
                          
                          528,620
                          
                          
                          
                          215,199
                          
                          
                          
                          2,409,581Changes
      in assets and liabilities:Increase
      in accounts payable
                          
                          
                          178,814
                          
                          
                          
                          310,891
                          
                          
                          
                          1,264,024Increase
      in accrued payroll
                          
                          
                          104,896
                          
                          
                          
                          -
                          
                          
                          
                          104,896Increase
      in accrued interest
                          
                          
                          18,207
                          
                          
                          
                          -
                          
                          
                          
                          18,207Net
      cash used in operating activities
                          
                          
                          (67,728
                          )
                          
                          
                          62,648
                          
                          
                          
                          (793,507
                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of Property, Plant and Equipment
                          
                          
                          (1,242
                          )
                          
                          
                          (122
                          )
                          
                          
                          (1,364
                          )Minority
      interest
                          
                          
                          (43,845
                          )
                          
                          
                          (18,337
                          )
                          
                          
                          (150,178
                          )Certificate
      of deposit
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (20,000,000
                          )Accrued
      interest from certificate of deposit
                          
                          
                          (250,000
                          )
                          
                          
                          (250,000
                          )
                          
                          
                          (1,388,333
                          )Purchase
      of intangible asset
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (9,999,500
                          )Net
      cash used in  investing activities
                          
                          
                          (295,087
                          )
                          
                          
                          (268,459
                          )
                          
                          
                          (31,539,375
                          )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the sale of common stock
                          
                          
                          -
                          
                          
                          
                          5,000
                          
                          
                          
                          31,661,570Proceeds
      from Notes Payable
                          
                          
                          230,500
                          
                          
                          
                          -
                          
                          
                          
                          673,500Advances
      from shareholders
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          77,150Repayment
      of shareholders advances
                          
                          
                          -
                          
                          
                          
                          (13,420
                          )
                          
                          
                          (53,570
                          )Net
      cash provided by financing activities
                          
                          
                          230,500
                          
                          
                          
                          (8,420
                          )
                          
                          
                          32,358,650INCREASE
      (DECREASE) IN CASH
                          
                          
                          (132,315
                          )
                          
                          
                          (214,231
                          )
                          
                          
                          25,768CASH,
      BEGINNING OF YEAR
                          
                          
                          158,083
                          
                          
                          
                          605,348
                          
                          
                          
                          -CASH,
      END OF PERIOD
                          
                          $
                          25,768
                          
                          
                          $
                          391,117
                          
                          
                          $
                          25,768Supplemental
      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
                          
                          $
                          528,620
                          
                          
                          $
                          215,199
                          
                          
                          $
                          2,409,581






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 three
months ending March 31, 2009 and 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 fund.com’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
              
              FromMeade
      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.





Interim Review
Reporting





The
accompanying interim unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 8 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 2009 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2009. For further information, refer to the financial
statements and footnotes thereto included in the Company’s Form 10-K annual
report.








-6-







FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 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 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





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 $250,000 and $250,000 has been recorded as of March 31, 2009 and
2008, respectively.











-7-









FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements




For three
months ending March 31, 2009 and 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 an unrated bank located in
Antigua. Accordingly, there is a substantial credit risk and exposure arising
from this holding and concentration of assets in one institution. The financial
condition of the Company is largely dependent on Global performing its
obligations under the CD.  The Company believes that the $20.0 million
deposit represents a significant portion of Global’s total deposits and net
worth.  This deposit does not have the benefit of any governmental or
third party insurance




Advertising
Costs





All
advertising costs are charged to expense as incurred. There was no advertising
expense for the periods ended March 31, 2009 and 2008.





Research and
Development





Costs are
expensed as incurred.  There were no research and development expense
for the periods ended March 31, 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








-8-







FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008






NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





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.





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.





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,








-9-








FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008





NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





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





Employers’
Disclosures about Postretirement Benefit Plan Assets





In
December 2008, the Financial Accounting Standards Board (“FASB”) issued FASB
Staff Position on Financial Accounting Standard (“FSP FAS”) No. 132(R)-1,
“Employers’ Disclosures about Postretirement Benefit Plan
Assets.”  This FSP amends FASB Statement No. 132(R) (“SFAS No.
132(R)”), “Employers’ Disclosures about Pensions and Other Postretirement
Benefits,” to provide guidance on an employer’s disclosures about plan assets of
a defined benefit pension or other postretirement plan.





FSP FAS
No. 132(R)-1 also includes a technical amendment to SFAS No. 132(R) that
requires a nonpublic entity to disclose net periodic benefit cost for each
annual period for which a statement of income is presented.  The
required disclosures about plan assets are effective for fiscal years ending
after December 15, 2009.  The technical amendment was effective upon
issuance of FSP FAS No. 132(R)-1. The Company currently has no such plans and
does anticipate that its adoption of SFAS No 132(R) will have an impact on its
consolidated financial position and results of operations.





Effective
Date of FASB Interpretation No. 48 for Certain Nonpublic
Enterprises





In
December 2008, the FASB issued FSP FIN No. 48-3, “Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises.”  FSP FIN No.
48-3 defers the effective date of FIN No. 48, “Accounting for Uncertainty in
Income Taxes,” for certain nonpublic enterprises as defined in SFAS No. 109,
“Accounting for Income Taxes.”  However, nonpublic consolidated
entities of public enterprises that apply U.S. generally accepted accounting
principles (GAAP) are not eligible for the deferral.FSP FIN No. 48-3 was
effective upon issuance.  The impact of adoption was not material to
the Company’s consolidated financial condition or results of
operations.





Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities





In
December 2008, the FASB issued FSP FAS No. 140-4 and FIN No. 46(R) -8,
“Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest













-10-





FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008




NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Entities.”
This FSP amends SFAS No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,” to require public entities
to provide additional disclosures about transfers of financials assets. FSP FAS
No. 140-4 also amends FIN No. 46(R)-8, “Consolidation of Variable Interest
Entities,” to require public enterprises, including sponsors that have a
variable interest entity, to provide additional disclosures about their
involvement with a variable interest entity. FSP FAS No. 140-4 also requires
certain additional disclosures, in regards to variable interest entities, to
provide greater transparency to financial statement users. FSP FAS No. 140-4 is
effective for the first reporting period (interim or annual) ending after
December 15, 2008, with early application encouraged. The Company is currently
assessing the impact of FSP FAS No. 140-4 on its consolidated financial position
and results of operations.





Accounting
for an Instrument (or an Embedded Feature) with a Settlement Amount That is
Based on the Stock of an Entity’s Consolidated Subsidiary





In
November 2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) Issue No.
08-8, “Accounting for an Instrument (or an Embedded Feature) with a Settlement
Amount That is Based on the Stock of an Entity’s Consolidated Subsidiary.” EITF
No. 08-8 clarifies whether a financial instrument for which the payoff to the
counterparty is based, in whole or in part, on the stock of an entity’s
consolidated subsidiary is indexed to the reporting entity’s own stock. EITF No.
08-8 also clarifies whether or not stock should be precluded from qualifying for
the scope exception of SFAS No. 133, “Accounting for Derivative Instruments and
Hedging Activities,” or from being within the scope of EITF No. 00-19,
“Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock.” EITF No. 08-8 is effective for fiscal years
beginning on or after December 15, 2008, and interim periods within those fiscal
years. The Company is currently assessing the impact of EITF No. 08-8 on its
consolidated financial position and results of operations.





Accounting
for Defensive Intangible Assets





In
November 2008, the FASB issued EITF Issue No. 08-7, “Accounting for Defensive
Intangible Assets.”  EITF No. 08-7 clarifies how to account for
defensive intangible assets subsequent to initial measurement.  EITF
No. 08-7 applies to all defensive intangible assets except for intangible assets
that are used in research and development activities.  EITF No. 08-7
is effective for intangible assets acquired on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  The Company is currently assessing the impact of EITF No. 08-7
on its consolidated financial position and results of operations.





Equity
Method Investment Accounting Considerations





In
November 2008, the FASB issued EITF Issue No. 08-6 (“EITF No. 08-6”), “Equity
Method Investment Accounting Considerations.”  EITF No. 08-6 clarifies
accounting for certain transactions and impairment considerations involving the
equity method.  Transactions and impairment dealt with are initial
measurement, decrease in investment value, and change in level







-11-





FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008




NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




of
ownership or degree of influence.  EITF No. 08-6 is effective on a
prospective basis for fiscal years beginning on or after December 15,
2008.  The Company is currently assessing the impact of EITF No. 08-6
on its consolidated 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.





Issuer’s
Accounting for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement





In
September 2008, the FASB issued EITF Issue No. 08-5 (“EITF No. 08-5”), “Issuer’s
Accounting for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement.”  This FSP determines an issuer’s unit of accounting for
a liability issued with an inseparable third-party credit enhancement when it is
measured or disclosed at fair value on a recurring basis.  FSP EITF
No. 08-5 is effective on a prospective basis in the first reporting period
beginning on or after December 15, 2008.  The Company is currently
assessing the impact of FSP EITF No. 08-5 on its consolidated financial position
and results of operations.





Disclosures
about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement
No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date
of FASB Statement No. 161





In
September 2008, the FASB issued FSP FAS No. 133-1, “Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and
FASB Interpretation No. 45; and Clarification of the Effective Date of FASB
Statement No. 161.” This FSP amends FASB Statement No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” to require disclosures by
sellers of credit derivatives, including credit derivatives embedded in a hybrid
instrument. The FSP also amends FASB Interpretation No. 45, “Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others,” to require and additional disclosure
about the current status of the payment/performance risk of a guarantee.
Finally, this FSP clarifies the Board’s intent about the effective date of FASB
Statement No. 161, “Disclosures about Derivative Instruments and Hedging
Activities.” FSP FAS No. 133-1 is effective for fiscal years ending after
November 15, 2008. The Company is currently assessing the impact of FSP FAS No.
133-1 on its consolidated financial position and results of
operations.







-12-









FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008








NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities





In
June 2008, the FASB issued EITF Issue No. 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.” EITF No. 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting
and, therefore, need to be included in the earnings allocation in computing
earnings per share under the two-class method. The EITF 03-6-1 affects entities
that accrue dividends on share-based payment awards during the awards’ service
period when the dividends do not need to be returned if the employees forfeit
the award. EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008. The Company is currently assessing the impact of EITF
03-6-1 on its consolidated financial position and results of
operations.





Determining
Whether an Instrument (or an Embedded Feature) Is Indexed to an entity's Own
Stock





In June
2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own Stock.”  EITF
07-5 provides that an entity should use a two step approach to evaluate whether
an equity-linked financial instrument (or embedded feature) is indexed to its
own stock, including evaluating the instrument's contingent exercise and
settlement provisions.  It also clarifies on the impact of foreign
currency denominated strike prices and market-based employee stock option
valuation instruments on the evaluation.  EITF 07-5 is effective for
fiscal years beginning after December 15, 2008.  The Company currently
does not have such instruments and does not anticipate that its adoption of EITF
07-5 will have an impact on its consolidated financial position and results of
operations.




Accounting
for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement
No. 60





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60”.  This statement requires that an insurance enterprise recognize a
claim liability prior to an event of default (insured event) when there is
evidence that credit deterioration has occurred in an insured financial
obligation.  SFAS No. 163 also clarifies how SFAS No. 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities to
increase comparability in financial reporting of financial guarantee insurance
contracts by insurance enterprises.  SFAS No. 163 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and all interim periods within those fiscal years, except for some disclosures
about the insurance enterprise’s risk-management activities of the insurance
enterprise are effective for the first period (including interim periods)
beginning after issuance of SFAS No. 163.  Except for those
disclosures, earlier application is not permitted.






-13-







FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008








NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)





In
May 2008, the FASB issued FSP Accounting Principles Board (“APB”) Opinion
No. 14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement).” The FSP
clarifies the accounting for convertible debt instruments that may be settled in
cash (including partial cash settlement) upon
conversion.  The




FSP
requires issuers to account separately for the liability and equity components
of certain convertible debt instruments in a manner that reflects the issuer's
nonconvertible debt (unsecured debt) borrowing rate when interest cost is
recognized.  The FSP requires bifurcation of a component of the debt,
classification of that component in equity and the accretion of the resulting
discount on the debt to be recognized as part of interest expense in our
consolidated statement of operations.  The FSP requires retrospective
application to the terms of instruments as they existed for all periods
presented.  The FSP is effective for fiscal years beginning after
December 15, 2008 and early adoption is not permitted.  The Company is
currently evaluating the potential impact of FSP APB 14-1 upon its consolidated
financial statements.




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 Company has
adopted SFAS 162.




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 Company is currently evaluating the potential impact
of FSP FAS No. 142-3 on its consolidated financial statements.






-14-












FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008








NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





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
is required to adopt SFAS No. 161 on January 1, 2009. The Company currently has
not such instruments and does not anticipate that its adoption of SFAS 161 will
have an impact on its consolidated financial statements.




Delay
in Effective Date




In
February 2008, the FASB issued FSP FAS No. 157-2, “Effective Date of FASB
Statement No. 157”. This FSP delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. The impact of adoption was not material to the
Company’s consolidated financial condition or results of
operations.




Business
Combinations




In
December 2007, the FASB issued SFAS No. 141(R) “Business
Combinations.”  This Statement replaces the original SFAS No.
141.  This Statement retains the fundamental requirements in SFAS
No. 141 that the acquisition method of accounting (which SFAS No. 141
called the purchase
method) be used for all business combinations and for an acquirer to be
identified for each business combination. The objective of SFAS No. 141(R) is to
improve the relevance, and comparability of the information that a reporting
entity provides in its financial reports about a business combination and its
effects. To accomplish that, SFAS No. 141(R) establishes principles and
requirements for how the acquirer:




a.        .Recognizes
and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the
acquiree




b.        Recognizes
and measures the goodwill acquired in the business combination or a gain from a
bargain purchase.




c.        Determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business
combination.




This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied before
that date. The Company is unable at this time to determine the effect that
its adoption of SFAS No. 141(R) will have on its consolidated results of
operations and financial condition.




Noncontrolling
Interests in Consolidated Financial Statements—an amendment of ARB No.
51




In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51.”  This
Statement amends the original Accounting Review Board (ARB) No.
51








-15-







FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008








NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




“Consolidated
Financial Statements” to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement is effective for fiscal
years and interim periods within those fiscal years, beginning on or after
December 15, 2008 and may not be applied before that date.  The
Company is unable at this time to determine the effect that its adoption of SFAS
No. 160 will have on its consolidated results of operations and financial
condition.




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 for the Company 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 issued SFAS No. 157, "Fair Value
Measurements.”  SFAS No. 157 provides guidance for using fair value to
measure assets and liabilities.  SFAS No. 157 addresses the requests
from investors for expanded disclosure about the extent to which companies’
measure assets and liabilities at fair value, the information used to measure
fair value and the effect of fair value measurements on earnings. SFAS No. 157
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value, and does not expand the use of fair value in any new
circumstances. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and was adopted by the Company in
the first quarter of fiscal year 2008. There was no material impact on the
Company’s consolidated results of operations and financial condition due to the
adoption of SFAS No. 157.




Accounting
Changes and Error Corrections




In May
2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections,”
which replaces APB Opinion No. 20, "Accounting Changes," and SFAS No. 3,
"Reporting Accounting Changes in Interim Financial Statements - An Amendment of
APB Opinion No. 28”. SFAS No. 154 provides guidance on the accounting for and
reporting of accounting changes and error corrections, and it establishes
retrospective application, or the latest practicable date, as the required
method for reporting a change in accounting principle and the reporting of a
correction of an error. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005.
SFAS 154 was adopted at the Company’s




NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




inception
and did not have a material impact on its consolidated results of operations and
financial condition.




NOTE 3 –
INTANGIBLE ASSET





Intellectual Property
Asset:





During
2007, the Company acquired the domain name “fund.com” and other intangible
assets related to intellectual property and trademarks for a total cost of
$9,999,950.





-16-










FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008




NOTE 4 –
EQUITY




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).





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 were issued in the three month period ending March
31, 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.





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.





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.





Lastly,
on February 17, 2008, an officer of the company resigned. As a result 1,453,565
stock options with a purchase price of $2.30 per share were
forfeited.





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%-
      89%Forfeiture
      rate
            
            10%Expected
      life
            
            4
      YearsExpected
      dividends
            
            -




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







-17-










FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008











NOTE 4 –
EQUITY (Continued)





Compensation
expense in relation to options totaled $528,620 and $215,199 during the three
months ended March 31, 2009 and 2008, respectively.





NOTE 5 –
SUBSEQUENT EVENTS





Proposed Investment in
National Holdings Corporation





On April
8, 2009, we 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 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, we 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 we are 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 amendment to the Purchase
Agreement, pursuant to which the parties agreed to extend the outside date to
close the Financing to May 29, 2009 and we agreed that if we were 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.
However, on May 14, 2009, we entered into another amendment to the Purchase
Agreement, pursuant to which: (i) the outside closing date was moved to May 22,
2009 and (ii) our obligation to place $200,000 in escrow and to pay such amount
for NHC’s related professional fees was eliminated. Pursuant to this last
amendment, if the Financing does not occur by May 22, 2009, the Purchase
Agreement shall automatically terminate and neither party shall have any further
liability to the other. 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, with the extension of the Financing, GAF has not made
a demand for payment. If GAF does demand payment prior to the new closing date,
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.




If we
complete the $5.0 million Financing, until the earlier to occur of a “Triggering
Event” (as defined) or December 31, 2009, the Series C Preferred Stock entitles
the Company to vote with the common stock of NHC on all matters on which NHC
common stockholders may vote, and to cast that number of votes equal to 100% of
the number of shares NHC capital stock entitled to vote at such meeting, plus
one vote.  A “Triggering Event” is defined as our exercise of such
number of the warrants that will result in the purchase of not less than
13,333,333 shares of NHC common stock and payment by us to NHC of a minimum of
$10.0 million.  We may exercise our warrants at any time to cause a
“Triggering Event” to occur.  However, except in connection with a
strategic acquisition that we approve, without the approval of the NHC board of
directors, we may not exercise the warrants or otherwise purchase capital stock
of NHC that would result in our owning more than 50% of the then outstanding NHC
common stock.





Upon
completion of the $5.0 million Financing, we are entitled to initially designate
two representatives on the NHC board of directors, and if we cause a Triggering
Event to occur on or before December 31, 2009, we may designate up to 50% of the
total number of directors of NHC.   Our intention is, through the
exercise of our warrants, to provide NHC with the financing necessary to enable
it to make one or more strategic acquisitions in the investment banking and
financial management and services businesses.  In such connection, we
have a certain preferential rights to provide such
financing.  However, subject to our obtaining the necessary funding,
it is our intention to exercise our warrants in an amount sufficient to cause a
Triggering Event to occur by not later than December 31, 2009.






-18-





FUND.COM
INC.


(A
Development Stage Company)


Notes to
the Consolidated Financial Statements


For three
months ending March 31, 2009 and 2008








NOTE
5 – SUBSEQUENT EVENTS (continued)





If we
complete the $5.0 million Financing, our agreements with NHC contain certain
covenants and agreements whereby our consent (or that of our designees on the
NHC board of directors) is required for certain major actions by NHC and its
subsidiaries.  In addition, our Chief Executive Officer, Gregory
Webster would become President and CEO of the National Asset Management
subsidiary of NHC, and we would participate on the merger and acquisition
committee of NHC.





We are
currently in negotiations with a third party investor to provide us with the
funding to make the $5.0 million investment in NHC and consummate the
Financing.  However, there can be no assurance that the prospective
investor will provide such funding or that the Financing will be consummated on
terms acceptable to us, if at all.  The closing of the Financing is
subject to various and customary closing conditions and was expected to close on
or about April 30, 2009; however, the parties agreed to extend the closing date
to May 22, 2009 and therefore, the Financing has not yet closed.





Working Capital Loan 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.  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.)





On May 1,
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, thereby allowing a total of
10,055,000 shares to be issued under the Plan.  At the date of this
Report, 4,275,546 shares have issued pursuant to the Plan, leaving 5,724,454
available for issuance.








-19-







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




The
following discussion and analysis of our financial condition and result of
operations contains forward-looking statements and involves numerous risks and
uncertainties, including, but not limited to, those described in the "Risk
Factors" section of the other reports we file with the Securities and Exchange
Commission. Actual results may differ materially from those contained in any
forward-looking statements.





The
following discussion and analysis of our financial condition and result of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q.




Overview





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.




We
believe that a structured product that is benchmarked to an index published by
EQUITIES Magazine, would provide important statistical and investment data. We
believe that this data could be useful in further developing our business plan
This track record may assist Fund.com Capital Inc. in the future should Fund.com
Capital Inc. seek to develop a registered investment product available for sale
to third parties. No decision has been taken to develop such a product or to
register same with the Securities and Exchange Commission.




Our plan
of operations may also consist of licensing our content to third parties. This
content may include proprietary indexes as well as service marks and trademarks.
Third party product providers, like banks and asset management companies,
license a range of indexes, such as the Russell 2000 from the Frank Russell
Companies or the S&P 500 from Standard and Poors/McGraw Hill. We may have
similar business arrangements to license indexes in return for the payment of
licensing fees.




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, that 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.






-20-





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.





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, we
have no agreements for funding at this time and there can be no assurance that
funding will be available if we require it.




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.




We
anticipate that our cash requirements for the next 12 months for expenses
related to infrastructure and business development should be approximately
$1,000,000. 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, their 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 May 5, 2009 there were no
commitments for long-term capital expenditures.






-21-




Recent
Debt Financing





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 April 30,
2009, we have borrowed an aggregate of $723,000 from this lending
source.  Effective May 1, 2009, we entered into a one year $1.343
million line of credit agreement with IP Global under which we are permitted to
receive loans of up to $1,343,000, less the $723,000 of prior advances, through
April 30, 2009; provided, that such additional advances are for approved
corporate purposes.  In consideration for these advances, we have
agreed to pay 9% interest on all approved advances (including the prior loans),
granted the lender the right to convert our note into shares of our Class A
Common Stock at a conversion price equal to $0.60 per share (subject to certain
adjustments, including weighted average anti-dilution adjustments) and are
obligated to pay certain fees to the lender in certain
circumstances.  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.





In
addition to the note and fees, under the terms of our loan agreement, we agreed
to issue to the lender 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).





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.




Description
of Property.





Our
corporate headquarters are located at 14 Wall Street, 20th floor, New York, NY,
10005.




Critical
Accounting Policies




Please
refer to “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” in our Annual Report on Form 10-K for the year ending
December 31, 2008, which we filed with the Securities and Exchange Commission on
May 7, 2009, for disclosures regarding our critical accounting policies and
estimates.  The interim financial statements follow the same
accounting policies and methods of computations as those for the year ended
December 31, 2008.







-22-





Results
of Operations




The
following table shows the results of operations of our business.




Comparison of the
three months ended March
31, 2009 and 2008




Three
      Months Ended March 31
                        
                        2009
                        
                        
                        2008Sales
                        
                        $
                        10,000
                        
                        
                        $
                        -0-Cost
      of sales
                        
                        $
                        -0-
                        
                        
                        $
                        -0-Total
      expenses
                        
                        $
                        1,202,340
                        
                        
                        $
                        731,779Other
      income (expense)
                        
                        $
                        250,230
                        
                        
                        $
                        250,000Income
      taxes
                        
                        $
                        -0-
                        
                        
                        $
                        -0-Net
      income (loss)
                        
                        $
                        (898,265
                        )
                        
                        $
                        (463,442
                        )Foreign
      currency translation adjustment
                        
                        $
                        -0-
                        
                        
                        $
                        -0-Comprehensive
      income (loss)
                        
                        $
                        (898,265
                        )
                        
                        $
                        (463,442
                        )





Results
of Operations for the Three Month Periods ended March 31, 2009 and
2008




We reported a net loss of
$898,265and $463,442
for the three-month
periods ending March 31, 2009 and 2008, respectively.  Until we
implement our business plan, we will not have material operating
revenues.




For the three-month period
ending March 31, 2009, we incurred $1,202,340 inoperating
costs.  This amount includes $528,620 related to compensation expense
for stock options, $93,143 related to legal and professional fees, $331,219
related to payroll and benefits for the officers of the Company, and
$104,087 for consulting expenses.




For the three-month period
ending March 31, 2008, we incurred $731,779 inoperating
costs.  This amount includes $215,199 related to compensation expense
for stock options, $171,916 related to legal and professional fees, $119,396
related to payroll and benefits for the officers of the Company, $109,602 for
consulting expenses and $57,495 related 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 ended March 31, 2009 and 2008,
respectively.




Item
3. Quantitative and Qualitative Disclosure About Market Risk




Not
applicable.








-23-






Item
4T. Controls and Procedures





I. Disclosure
Controls and Procedures.





As of the
end of the period covered by this report, our management conducted an
evaluation, under the supervision and with the participation of our chief
executive officer and chief financial officer of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934). Based on this evaluation, the
officers concluded that our disclosure controls and procedures are effective in
ensuring that information required to be disclosed by our company in reports
that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
Commission rules and forms.




II.  Changes
in Internal Control over Financial Reporting





There
have been no changes in our internal controls over financial reporting that
occurred during our last 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.









-24-








PART
II - OTHER INFORMATION






Item
1. Legal Proceedings





Our
subsidiary, AdvisorShares Investments, LLC is not currently involved in any
legal proceedings.  However, AdvisorShares' CEO, who is separately a part
owner of Arrow Investment Advisors, LLC. is currently a party to arbitration
with other members of Arrow who have asserted an ownership claim regarding the
CEO's ownership interest in AdvisorShares.  If the other members prevail on
their claims, this could impact the amount of ownership AdvisorShares’ CEO
indirectly holds in AdvisorShares.  In addition, if Arrow prevails, Arrow
could assert claims that the Purchase and Contribution Agreement, pursuant to
which we purchased our 60% interest in AdvisorShares, was inappropriately
executed and seek to nullify the obligations associated with that
agreement.





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 May 1, 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.





Item
5. Other Information





On April
14, 2009, we filed a Current Report on Form 8-K to disclose our entry into a
Securities Purchase Agreement with National Holdings, Corporation and disclosed
that the closing of such transaction was to take place on April 29, 2009. 
In our Annual Report on Form 10-K for the year ending December 31, 2008, we
disclosed that on May 4, 2009, we entered into an amendment to the Purchase
Agreement, pursuant to which the closing date was extended until May 29,
2009 and pursuant to which we agreed that if we were unable to obtain the
funding to consummate the related 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.  However, on May 14, 2009, we entered into a second amendment to
the Purchase Agreement, pursuant to which: (i) the outside closing date was
moved to May 22, 2009 and (ii) our obligation to place $200,000 in escrow and to
pay such amount for NHC's related professional fees was eliminated. 
Pursuant to this last amendment, if the transaction does not occur by May
22, 2009, the Purchase Agreement shall automatically terminate and neither party
shall have any further liability to the other.





-25-







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,
      2009.31.1
                
                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.










-26-













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&
      DirectorBy:
              /s/ 
      Michael HlavsaMichael
      Hlavsa
                Chief
      Financial Officer & Chief Accounting Officer




Date: 
May 15, 2009








-27-