UNITED STATES



SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 10-K /Amendment No. 2



[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended September 30, 2014



Or



[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _____________



Commission file number: 000-49652

FONU2 INC.

(Exact name of registrant as specified in its charter)



|                                                             |  |                                   
|------------------------------------------------------------ |  | ----------------------------------
|                                                             |  |                                   
|                                                             |  |                                   
|Nevada                                                       |  | 65-0773383                        
|State or other jurisdiction of incorporation or organization |  | I.R.S. Employer Identification No.



135 Goshen Road Ext Suite 205, Rincon, GA 31326

(Address of principal executive offices) (Zip Code)



Registrant's telephone number, including area code:

(954) 938 4133



Securities registered pursuant to Section 12(b) of the Act:



|                               |                                          
|------------------------------ | -----------------------------------------
|                               |                                          
|                               |                                          
|Title of each class registered | Name of each exchange on which registered
|Not Applicable                 | Not Applicable                           



Securities registered pursuant to Section 12(g) of the Act:

Common Stock

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes |_| No |X|



Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. |_|



1











Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes |X_| No ||



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

Yes |X_| No |_



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|



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



|                                |                                          
|------------------------------- | -----------------------------------------
|                                |                                          
|Large accelerated filer    [  ] | Accelerated filer                    [  ]
|Non-accelerated filer      [  ] | 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 |_| No |X|



State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed fiscal year. The market value of the Registrants voting $.001 par value common stock held by non-affiliates of the Registrant was approximately $2,248,993 (shares outstanding as of September 30, 2014 was 124,913,633).



Indicate the number of shares outstanding of each of the Registrants classes of common stock, as of the latest practicable date.   The number of shares outstanding of the Registrants only class of common stock, as of May 13 , 2015 was 233,724 ,615 shares of its $0.001 par value common stock.  This is equivalent to 93,489,846,000 pre-split shares (on February 8, 2014, the Company completed a 400:1 reverse stock split).





2









EXPLANATORY NOTE





This amendment to the Form 10-K as originally filed
January 13, 2015, is being filed to correct Item 10, Involvement in Certain Legal Proceedings.



No other changes or corrections were made.



3









TABLE OF CONTENTS

PART I

|                                  |   
|--------------------------------- | --
|                                  |   
|ITEM 1 Business                   | 6 
|ITEM 1A Risk Factors              | 14
|ITEM 1B Unresolved Staff Comments | 14
|ITEM 2 Properties                 | 14
|ITEM 3 Legal Proceedings          | 15
|ITEM 4 Mine Safety Disclosure     | 15



PART II



|                                                                                                                    |    
|------------------------------------------------------------------------------------------------------------------- | ---
|                                                                                                                    |    
|ITEM 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 16 
|ITEM 6 Selected Financial Data                                                                                      | 17 
|ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations                        | 18 
|ITEM 7A Quantitative and Qualitative Disclosures about Market Risk                                                  | 20 
|ITEM 8 Financial Statements and Supplementary Data                                                                  | 21 
|ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 4 8
|ITEM 9A Controls and Procedures                                                                                     | 4 8
|ITEM 9B Other Information                                                                                           | 4 9



PART III

|                                                                                                        |   
|------------------------------------------------------------------------------------------------------- | --
|                                                                                                        |   
|ITEM 10 Directors, Executive Officers, and Corporate Governance                                         | 50
|ITEM 11 Executive Compensation                                                                          | 56
|ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters | 60
|ITEM 13 Certain Relationships and Related Transactions, and Director Independence                       | 61
|ITEM 14 Principal Accounting Fees and Services                                                          | 62



PART IV

|                                                |   
|----------------------------------------------- | --
|                                                |   
|ITEM 15 Exhibits, Financial Statement Schedules | 63
|SIGNATURES                                      | 65















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FORWARD LOOKING STATEMENTS



This document includes forward-looking statements, including, without limitation, statements relating to FONU2, Inc. ("FONU2") plans, strategies, objectives, expectations, intentions and adequacy of resources.







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PART I



ITEM 1. BUSINESS



The following is a summary of some of the information contained in this document. Unless the context requires otherwise, references in this document to the Registrant "We," Us," Our FONU2 or the "Company" are to FONU2, Inc.



About FONU2, Inc.



During this reporting period, FONU2 was developing a social commerce web-site and mobile applications bringing sellers and buyers of services and products together in real time. The Company is focused on completing the development of Our mobile service to establish Our platform as the go to destination for sellers and buyers to list and search for services/products, schedule appointments, and make payments, all in a real time mobile environment.  Management believes that FONU2 will also be the only prepaid card to fully integrate Facebook relationships into the transaction experience. In the future, we may also acquire other companies, and similar products and services to those We currently offer, or will offer in the future.



The Company continued to operate its legacy business of selling comic books, toys and collectible items at its retail location at 331 East Commercial Blvd., Ft. Lauderdale, Florida, and on eBay.



Subsequently, on December 7,2014 the Company entered into an agreement to acquire StudioPlex City, LLC and on February 10, 2015 the Company purchased the land lease asset of Moon River Studios, Inc.  The acquisition of these assets has had a major impact on the Companys strategy and future plans.  On March 1, 2015 the Company sold its legacy comic books and collectibles business to focus on the film and social commerce business.



FONU2 was incorporated on October 25, 2011 in the state of Nevada. The Company operates on a September 30 fiscal year-end.



Events For the Year Ended September 30, 2014



On October 14, 2013 the Company converted the $188,300 note payable due to its former CEO, along with accrued interest of $7,419 and accrued wages payable totaling $86,000, into 2,400,000 shares of the Companys common stock.  Pursuant to this transaction, the Company recognized a $5,719 gain on settlement of debts.  As of December 31, 2013, all payables to the former CEO had been satisfied in full.





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On November 6, 2013, the Company agreed to sell, an 8% convertible note in the aggregate principal amount of $128,500 to Asher.



On November 13, 2013, the Company executed a $300,000 Promissory Note in favor of JMJ Financial (JMJ).  Under the terms of the Note, JMJ will pay $85,000 to the Company at closing and JMJ will have the right to pay additional consideration, up to and additional $185,000, to the Company in JMJs sole discretion.  The Note includes a $30,000 original issue discount



On December 16, 2013 , the Company authorized the issue of 4,000,000 shares to raise $160,000 through a private placement memorandum



On January 30, 2014, the Company entered into an agreement with Maximum Performance Advisors, Inc. (MPAI). MPAI will provide client public relations, communications, advisory and consulting services to the Company for a period of six months.  500,000 unregistered and restricted shares were issued as payment for these services.



On January 24, 2014, the Company agreed to sell, an 8% convertible note in the aggregate principal amount of $78,500 to Asher.



On March 7, 2014 the Company issued 84,580 shares of free trading shares to an investor who had made an investment on May 7, 2012 but as a result of a company oversight had not been issued shares.



On April 4, 2014 the Company issued a stock bonus to eight key contributors after completing and launching a beta version of its social commerce website.  The stock bonus consisted of 6,600,000 unregistered and restricted shares issued immediately as well as 385,000 to be paid quarterly thereafter.



On April 11, 2014 the Company agreed to sell, an 8% convertible note in the aggregate principal amount of $103,000 to Magna.



On April 15, 2014 the Company entered an engagement letter with Wellington Shields & Co (WS) in respect of a proposed public offering of $30 Million consisting of the Companys common shares intended to be listed on the MKT or NASDAQ exchange, including an intention by WS to underwrite the offering.

Fees payable to WS include:



7% of the amount received from the public offering



Non  refundable $50,000 of restricted common stock (823,723 unregistered and restricted shares were issued)



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Warrants in favor of WS and/or its designees to purchase an aggregate of common shares amounting to 4% of the total shares sold pursuant to the public offering. Said warrants shall be exercisable at a price of 120% of the public offering price.



A non  accountable expense allowance of 2% of the gross proceeds of the public offering.



The engagement expires three (3) months after SEC provides a Notice of Effectiveness on the S-1 registration form.



On April 15, 2014 the Company entered an engagement letter with Wellington Shields & Co (WS) as exclusive financial advisor to the Company as it relates to a proposed raise of acquisition financing of up to $20Million.



Fees payable to WS include:



A placement fee of 8% of the gross proceeds of the placement



A success fee of 3% of the fully diluted shares outstanding post merger



The term of the engagement is 12 months expiring on April 15, 2015.



On April 22, 2014 the Company issued 226,152 S-8 registered shares in exchange for $14,338 in certain non-capital raising legal services.



On April 22, 2014 the company issued 732,314 S-8 registered shares in exchange for $51,262 of outstanding invoices for website development services.



On April 28, 2014 the company issued 75,643 S-8 registered shares in exchange for $5,000 of outstanding invoices for certain non-capital raising accounting services.



On May 2, 2014, the Company issued 700,000 shares of unregistered and restricted common shares to Maximum Performance Advisors, Inc., to provide certain public relations and communications services to the company.  On August 25, 2014 an additional 4,000,000 shares were issued as the service was extended for an additional 6 months.



On July 7,2014 the company entered into a Security Purchase Agreement in the amount of $73,500



On July 17, 2014 the Company issued 89,273 S-8 registered shares in exchange for $5,659 in certain non-capital raising legal services.





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On August 19, 2014 the company authorized the issuance of a $1,500,000 in Convertible Debenture at 12% simple annual interest with a minimum investment of $25,000.  This offering expired August 31, 2014.  On September 1, 2014 this offering was extended until November 30, 2014.



On August 21, 2014 the company issued a $25,000 convertible debenture to Ira Williams, a long time Company investor



On October 1, 2014 Robert Lees resigned as President and CEO and Roger Miguel who had served as Chief Operating Officer was appointed President and CEO.  Robert Lees remained in the company and on the Board of Directors.



On October 3, 2014 Robert Lees resigned as CFO and as Director.  Roger Miguel assumed the role of Interim CFO.  The Board of Director position was left vacant.



On December 3, 2014 the Company issued an aggregate of 770,000 shares of common stock to various individuals as compensation for services rendered. This payment was for the first two quarters.  Subsequently this program was terminated.



On December 8, 2014, the Company entered into a purchase agreement with Studioplex City, LLC, (SC) a Georgia based limited liability company and Jake Shapiro (Shapiro), the owner of all membership interests of SC. Pursuant to this agreement, the Company paid Shapiro $2.5 Million in the form of 2,500,000 Series B convertible preferred shares.



On December 8, 2014 the Company elected Shapiro as a director and Chairman of the Board of Directors of the Company.



On February 8, 2014, the Company completed a 400:1 reverse stock split.



On February 8, 2014 the Board authorized the Company to issue 300,000 shares to Roger Miguel per his employment agreement and 73,500 shares to Jeffrey Olweean per his consultancy agreement.



On February 10, 2015, the Company acquired the lease of a 1,560 acre property located in Effingham County, Georgia from Moon River Studios, Inc. The purchase price was $10,000,000 and 10,000,000 post-split shares (4,000,000,000 pre-split shares) of FONU2 common stock.



On February 12, 2015, the Company acquired the worldwide distribution rights for the movie Yellow.



On February 15, 2015, the Company issued 4,300,000 post-split (1,720,000,000 pre-split) common shares to Dr. Yusuf Hameed upon his conversion  of his three outstanding convertible notes.



9







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On February 18, 2015, the Company issued 7,083,333 post-split (2,833,333,200 pre-split) common shares to Penny Marshall in payment of the equity portion of her directors fee re the movie Effa.



On February 18, 2015, the Company issued 1,250,000 post-split (500,000,000 pre-split) common shares to Michael Mann in payment  of the equity portion of his management fee re the movie Effa .



On February 27, 2015, the Company issued 166,666,667 post-split (66,666,666,800 pre-split) common shares at $0.06 per common share to Eagle Productions to acquire the worldwide distribution rights for the film Effa .



On March 1, 2015, the Company sold ownership of Zaldiva Comics and Collectibles.



On March 1, 2015, Nicole Leigh resigned as a director.



On March 1, 2015, the Company elected Joseph Giamichael as a director.  Mr. Giamichael will be the chairman of the audit committee.



On March 1, 2015, the Company appointed Graham Bradstreet as Chief Financial Officer.



On March 1, 2015, the Company approved the change of its offices to 135 Goshen Rd. Ext., Suite 205, Rincon, GA 31326.



On March 9, 2015 the Company engaged EquityGroups to conduct an investor campaign to increase the Companys public awareness. The Company has agreed to pay $2,500 per month for the first three months increasing to $3,500 per month thereafter. The consultant may also earn up to 1M of common shares.  From time to time, the Company intends to hire a variety of companies to increase public awareness.



On March 10, 2015 the Company announced that Ms. Alice P. Neuhauser has been appointed as Chief Operating Officer of the Company.



On March 26, 2015 the Board resolved that the Company issue 1,250,000 shares of unregistered and restricted common shares to Alex Warner in exchange for $50,000 to be used for entertainment purposes.



On March 31, 2015 the Company announced that it had signed definitive agreements to acquire the assets of Applebox Productions, Inc.



In the period to April 29, 2015 the Company issued a Long Term Note in the amount of $78,000. The Note matures 36 months after issue.





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In the period to March 31, 2015 the Company issued $1,154,879 of Convertible Notes. The Convertible Notes have interest rates of between 8% and 12% and mature one year from the date of issue. The Convertible Notes have holdbacks are convertible of between no days and 180 days. The discount on conversion ranges from 45% to 50% based on various share prices averaged over a number of days prior to the date of conversion or the date of notice of conversion.



Basis of Presentation



The Company prepares its financial statements on the accrual basis of accounting.  All intercompany balances and transactions are eliminated.   Management believes that all adjustments necessary for a fair presentation of the results of the twelve (12) months ended September 30, 2014 and 2013 respectively have been made. The Company does not have any subsidiaries.



Employees



As of September 30, 2014, FONU2 had five full-time employees. They are not part of any union, and we believe that our relationships with them are good.



STRATEGY



Strategy



The Companys management team has identified the following strategies to drive the growth and potential success of the Company. Subject to financing, due diligence, and approval by the Board of Directors, the Company plans to continue regular operations of its Comic Book and Collectibles business.  The retail operation continues to operate at close to the break-even point. The Company plans to focus more efforts into expanding its market by selling increased amounts of inventory through eBay.



The Company still believes that its Social Commerce website offers tremendous potential for future income.  However, the Company requires approximately $50,000 per month to sustain this operation.   The Company needs to raise approximately $600,000, or acquire a company with sufficient cash flow to provide this funding.  The Company is currently looking at several acquisition and strategic partnership opportunities that would fulfill this objective





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Traditional Marketing.



FONU2s comics and collectibles business continues to combine the traditional brick and mortar retail sales at our current location with marketing on the internet through published discounts, etc. The Company is a Silver level power seller on eBay with a 99.7% positive feedback level. Monthly specials on our website feature items regularly created to increase return traffic. Local advertisements are used for selling our estate purchases, which are becoming a larger part of our revenue stream.



Internet and Social Media Marketing.



FONU2s web-site and mobile application will be utilizing proven viral search engine techniques coupled with social media management to bring in new clients to its social commerce platform. FONU2s primary marketing focus will be in the following areas: Press releases and launch announcement, informational video clips, affiliate marketing, click-thru advertising, member referral programs, and strategic partnership.



Principal Products or Services and Their Markets



Our website and future mobile app will offer a social commerce marketing platform where people can promote themselves locally and through their social networks and make extra money.  Services will include post and list services, buy and sell listings, jobs classified, lost and found as well as social networking and games.  Our target market is the local internet advertising business by consumers who are focused on social media networking and smartphone technology.



Over the past year we have made the following improvements to our planned product offering:



|                                                             
|-------------------------------------------------------------
|●     Developed core functionality on our web-site including:




|                                                                                
|--------------------------------------------------------------------------------
|●     Enhanced account profile functionality with customizable privacy settings,




|                                                                                                   
|---------------------------------------------------------------------------------------------------
|●     Amazon Wallet integration to allow secure transactions utilizing a familiar, trusted provider




|                                          
|------------------------------------------
|●     Enhanced Post and List functionality




|                                                                    
|--------------------------------------------------------------------
|●     Added a dynamic ticket functionality with Messaging technology

12     Table of Contents


|                                                                                                         
|---------------------------------------------------------------------------------------------------------
|●     Introduced Lost and Found functionality, where members can offer rewards for lost valuables or pets




|                                                                               
|-------------------------------------------------------------------------------
|●     Implemented a multi-layer security environment to protect customers data




|                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------
|●     Contracted with Amazon Web Services (AWS) in order to deliver cloud performance solutions and data protection services to its customer base.




|                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|●     Over the next six months, FONU2 plans to finish developing core functionality of its web site and mobile app.   The Company plans to launch beta versions early in the new year and is planning a full launch by the end of the first quarter of 2015.

In our legacy retail business, our principal products are the comic books, toys, collectibles and estate sale items that we sell from our store in the Ft. Lauderdale, Florida area, on eBay. Experience and a very low overhead are FONU2's principal advantages in this area.  Distribution Methods of the Products or Services  Upon release, our social commerce web-site and mobile application will be available and accessible through the internet and will be available through mobile app channels for iPhone and Android App distribution,  Sales Summary  The Company continues to operate its legacy business of selling comic books, toys and collectible items at its retail location at 331 East Commercial Blvd., Ft. Lauderdale, Florida, and through its web site Zaldiva.com and on eBay. COMPETITION, MARKETS AND REGULATION



Competition



The comic book and collectible retailing industry is no more or less competitive than any other mainstream retail business.  Our competitors include other brick-and-mortar and online retailers of comics, toys and collectibles.





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In terms of FONU2s social media platform ad applications, if and when launched, will have significant competition.  Due to the nature of the internet, and e-commerce, we will be competing against companies ranging from start ups to well financed multi national conglomerates.  The e-commerce and social media industries are extremely competitive, with no assurances for success.



Markets



The Companys target market is domestic users of e-commerce and social media.



Current Operational Status



The Company has made substantial progress over the last year in completing the social media e-commerce platform.  The Companys comic business, Zaldiva Comics & Collectables, remains operational through its retail location.



The Company is actively engaged in the identification and acquisition of additional products, services, and/or companies. Investment Company Act 1940



Although the Company will be subject to regulation under the Securities Act of 1933, as amended, and the 1934 Act, it believes that it will not be subject to regulation under the Investment Company Act of 1940 (the "1940 Act") insofar as it will not be engaged in the business of investing or trading in securities. The Company has obtained no formal determination from the SEC as to its status under the 1940 Act and, consequently, any violation of the 1940 Act would subject it to material adverse consequences. The Company believes that, currently, it is exempt under Regulation 3a-2 of the 1940 Act. ITEM 1A. RISK FACTORS



Not applicable for smaller reporting companies.        ITEM 1B. UNRESOLVED STAFF COMMENTS



Not applicable. ITEM 2. PROPERTIES Effective as of March 1, 2013, the Company executed a lease on our retail location at 331 E. Commercial Blvd. in Ft. Lauderdale, Florida.  The lease is on a month-to-month basis, with monthly rent in the amount of $1,000.



On March 1, 2015, the Company approved the change of its offices to 135 Goshen Rd. Ext., Suite 205, Rincon, GA 31326.





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ITEM 3. LEGAL PROCEEDINGS



FONU2 anticipates that it (including any future subsidiaries) will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and FONU2 cannot assure that their ultimate disposition will not have a materially adverse effect on FONU2's business, financial condition, cash flows or results of operations. As of the filing of this document, except as indicated below, we are not a party to any pending legal proceedings, nor are we aware of any civil proceeding or government authority contemplating any legal proceeding.



On October 18, 2013, Summit Trading, a Bahamian company (Summit) filed a Demand for Arbitration with the American Arbitration Association (the Demand) in the State of Florida.  The Demand relates to a Consulting Agreement entered into by Summit and Cygnus Internet, Inc. (Cygnus) effective as of February 1, 2011, prior to the date of the Agreement and Plan of Reorganization by which the Company acquired the material assets of Cygnus.  In the Demand, Summit demanded the value of 10 percent of the issued and outstanding shares of FONU2, as well as punitive damages, interest and any other appropriate relief.  On September 26, 2014, all claims by Summit were denied under binding arbitration in favor of the Company. ITEM 4. MINING SAFETY DISCLOSURE



Not applicable.  15









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PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



Market Information



There is a limited public trading market for the common stock. Our common stock is quoted on the OTC Bulletin Board under the symbol "FONU", with quotations that commenced in April 2003; however, the market for shares of our common stock is extremely limited.  No assurance can be given that the present limited market for our common stock will continue or will be maintained.



For any market that is maintained for our common stock, the resale of restricted securities pursuant to Rule 144 of the Commission by members of management or other persons may have a substantial adverse impact on any such public market. Present members of management have already satisfied the six month holding period of Rule 144 for public sales of a large portion of their holdings in our Company thereunder.



A minimum holding period of six months is required for resales under Rule 144. In addition, affiliates of the Company must comply with certain other requirements, including publicly available information concerning the Company; limitations on the volume of restricted securities which can be sold in any 90-day period; the requirement of unsolicited brokers transactions; and the filing of a Notice of Sale on Form 144.



The following table sets forth the range of high and low sales prices for the Company's common stock for each of the fiscal quarters for the past year as reported on the OTC Markets' OTCQB and the OTC Bulletin Board. These prices represent inter-dealer prices without adjustments for mark-up, markdown, or commission and do not necessarily reflect actual transactions High
    
    LowYear Ended September 30, 2014First quarter
    $    .0547
    
    $    .0031Second quarter
    .0364
    
    .0059Third quarter
    .0150
    .0041Fourth quarter
    .0112
    
    .0030  Holders  As of May 13, 2015, we have approximately 916 shareholders of record of our common stock.   16    Table of Contents Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us . Under Rule 144(k), a person who has not been one of our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months, is entitled to sell shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144.  Dividend Policy



As of the filing of this Annual Report, we have not paid any dividends to shareholders. There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend; we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution



Recent Sales of Unregistered Securities



An aggregate of 16,977,930,591 pre-split shares (42,444,826 post-split shares) were issued upon conversion of Notes in the aggregate amount of $ 822,099 at an average conversion price of $0. 00005 per pre-split share ($0.0194 post-split shares).  The convertible debt was purchased by non-affiliated third parties who effected the foregoing conversions.



These shares were issued pursuant to the exemption from registration provided by Section 4(a)(1) of the Securities Act of 1933, as amended, and Rule 144 of the Securities and Exchange Commission.  Pursuant to certain covenants contained in their convertible notes, exclusive of Magna Equities II, LLC (Magna) at no time did the investors own more than 4.99% of the Companys issued and outstanding common stock following any of the above-referenced conversions by such entities.  On October 21, 2014, Magna filed with the Securities and Exchange Commission a Schedule 13G disclosing its ownership of approximately 9.99% of the Companys issued and outstanding common stock resulting from the above-referenced conversions by Magna. Issuer Purchases of Equity Securities



FONU2 did not repurchase any shares of its common stock during the years ended September 30, 2014 or 2013. ITEM 6. SELECTED FINANCIAL DATA



Not applicable. 17





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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein and Forward Looking Statements above. PLAN OF OPERATIONS



Plan of Operations



The Company plans to continue regular operations of its Comic Book and Collectibles business.  The retail operation continues to operate at close to the break-even point. The Company plans to focus more efforts into expanding its market buy selling increased amounts of inventory through eBay.



The Company still believes that its Social Commerce website offers tremendous potential for future income.  However, the Company requires approximately $50,000 per month to sustain this operation.   The Company needs to raise approximately $600,000 or acquire a company with sufficient cash flow to provide this funding.  RESULTS OF OPERATIONS For the year ended September 30, 2014, we earned revenues of $343,453. We spent $158,370 on cost of sales, earning a gross margin of $185,083. We had depreciation expense of $4,476, general and product development expenses of $431,993. We incurred $141,170 in compensation and $982,594 on professional fees, investment banking fees and the other professional services. We incurred general and administrative expenses of $113,614. We incurred an interest expense of $462,959, a gain on settlement of debt of $12,602 and a gain on derivative liability of $583,615. As a result, we had a net loss of $1,355,506 for the year ended September 30, 2014.



Comparatively, for the year ended September 30, 2013, we earned revenues of $282,009.  We spent $117,283 on cost of sales, earning a gross margin of $164,726. We recorded depreciation expense of $2,141 and product development expenses of $278,050. We incurred $551,648 on compensation and $494,318 on professional fees. We incurred general and administrative expenses of $164,234. We incurred interest expense of $191,853, a gain on settlement of debt of $118,551 and a loss on derivative liability of $303,973. As a result, we had a net loss of $1,702,940 for the year ended September 30, 2013.  The decrease in net loss between the year ended September 30, 2014 and 2013 is primarily due to reduced compensation and the gain on derivative liability.





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LIQUIDITY



The Company currently finances its operations through investment capital from a number of accredited investors.  The primary use of the funds is funding the Companys operations. Over the next twelve months, the Companys cash requirement for operations is expected to be approximately $750,000. This requirement is expected to be funded by investor capital.  There can be no assurance that we will be able to raise capital, if at all, upon terms acceptable to the Company. The Company currently has no agreements, arrangements or understandings with respect to obtaining the necessary capital and there can be no assurance that the Company will be able to raise the required funds .

.

The Companys current and future sources of capital are from investors. If the Company was unsuccessful at raising additional capital this could lead to the Companys termination of operations.



For the year ended September 30, 2014, we used cash in operations of $ 660,135 , consisting primarily of our net loss partially offset by a gain on derivative liability.  A further $4,919 was spent on fixed assets resulting in our net cash used in investing activities of $4,919.



We received $ 416,500 on convertible notes, $25,000 on notes payable, $18,000 from related party and $ 130 ,000 from common and preferred stock issued for cash .  , and $90,000 from Warrants that were exercised. We repaid $53,000 of convertible notes.  As a result we had cash provided by financing activities of $ 626,500 .



For the year ended September 30, 2013, we had cash used in operations of $489,141 and cash used in investing activities from the purchase of fixed assets of $3,000.



We received $105,000 from notes payable, $201,300 from related party, and $250,000 from common and preferred stock issued for cash. We repaid $13,000 to related party. As a result we had cash provided from financing activities of $543,300.



Off - Balance Sheet Arrangements

The Company had no material off-balance sheet arrangements as of September 30, 2014.



Capital Resources



The Company has common stock and preferred stock as our capital resources.





19





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In 2014 the Company had no material commitments for capital expenditures within the next year, however, the Company intended to incur significant expenses and capital expenditures as part of our business plan , which includes developing the social commerce application and ongoing maintenance. The Company is also considering several strategic acquisitions to facilitate the launching and marketing of the application .



Need for Additional Financing



The social commerce business currently has an incomplete web-site that requires between $400,000 to $1,000,000 in financing to complete the application and re-launch services. This requirement is expected to be funded by institutional investor capital.  The Company has had a number of high level discussions for these financing needs, however, there can be no assurance that we will be able to raise capital, if at all, upon terms acceptable to the Company.  The Company currently has no written agreements, arrangements or understandings with respect to obtaining the necessary capital and there can be no assurance that the Company will be able to raise the required funds. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



FONU2's operations do not employ financial instruments or derivatives that are market sensitive. Short-term funds are held in non-interest bearing accounts and funds held for longer periods are placed in interest bearing accounts. Large amounts of funds, if available, will be distributed among multiple financial institutions to reduce risk of loss. Our cash holdings do not generate any significant interest income.  20







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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



FONU2, Inc.

Index to

Financial Statements


|                                                                                                                |  |     
|--------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                |  |     
|                                                                                                                |  |     
|                                                                                                                |  | Page
|Report of Independent Registered Public Accounting Firm                                                         |  | 2 2 
|                                                                                                                |  |     
|Balance Sheets as September 30, 2014 and 2013                                                                   |  | 2 3 
|                                                                                                                |  |     
|Statements of Operations for the Years Ended September 30, 2014 and 2013                                        |  | 2 4 
|                                                                                                                |  |     
|Statement of Changes in Stockholders' Deficit for the Period from September 30, 2012 through September 30, 2014 |  | 2 5 
|                                                                                                                |  |     
|Statements of Cash Flows for the Years Ended September 30, 2014 and 2013                                        |  | 2 6 
|                                                                                                                |  |     
|Notes to Financial Statements                                                                                   |  | 2 8 

21    Table of Contents REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM  To the Board of Directors and Stockholders  FonU2, Inc. Rincon, Georgia  We have audited the accompanying balance sheets of FonU2 , Inc. (the Company) as of September 30, 2014 and September 30, 2013 and the related statements of operations, stockholders deficit , and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits .  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FonU2 , Inc. as of September 30, 2014 and September 30, 2013 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.  The accompanying financial statements for September 30, 2014 have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has negative operating cash flow and has a working capital deficit. These conditions raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  /s/ MaloneBailey, LLP www.malonebailey.com Houston , Texas May 11 , 2015 22









Table of Contents

FONU2, INC.

Balance Sheets


|                                      |                                                         |                                     |               |           |        |              |            
|------------------------------------- | ------------------------------------------------------- | ----------------------------------- | ------------- | --------- | ------ | ------------ | -----------
|ASSETS                               
|                                      |                                                         |                                     | September 30,
|                                      |                                                         |                                     | 2014          |           | 2013  
|CURRENT ASSETS                        |                                                         |                                     |               |           |       
|                                      |                                                         |                                     |               |           |        |              |            
|                                      | Cash                                                    | $                                   | 15,643        |           | $      | 54,197      
|                                      | Inventory                                               |                                     | 9,007         |           |        | 7,520       
|                                      | Prepaid expenses                                        |                                     | 31,516        |           |        | 218,384     
|                                      |                                                         | Total Current Assets                |               | 56,166    |        |              | 280,101    
|                                      |                                                         |                                     |               |           |        |              |            
|PROPERTY AND EQUIPMENT, net           |                                                         | 14,157                              |               |           | 13,714
|                                      |                                                         |                                     |               |           |        |              |            
|OTHER ASSETS                          |                                                         |                                     |               |           |       
|                                      | Security deposits                                       |                                     | 2,285         |           |        | 2,285       
|                                      |                                                         | TOTAL ASSETS                        | $             | 72,608    |        | $            | 296,100    
|                                      |                                                         |                                     |               |           |        |              |            
|LIABILITIES AND STOCKHOLDERS' DEFICIT
|                                      |                                                         |                                     |               |           |        |              |            
|CURRENT LIABILITIES                   |                                                         |                                     |               |           |       
|                                      |                                                         |                                     |               |           |        |              |            
|                                      | Accounts payable and accrued expenses                   | $                                   | 7,866         |           | $      | 29,685      
|                                      | Accrued interest payable                                |                                     | 32,208        |           |        | 26,683      
|                                      | Payroll and payroll tax liabilities                     |                                     | 10,002        |           |        | 86,000      
|                                      | Derivative liability                                    |                                     | 247,880       |           |        | 969,675     
|                                      | Notes payable                                           |                                     | 19,000        |           |        | 72,000      
|                                      | Convertible notes payable, net                          |                                     | 195,320       |           |        | 61,439      
|                                      | Related party payable                                   |                                     | 18,000        |           |        | 188,300     
|                                      |                                                         | Total Current Liabilities           |               | 530,276   |        |              | 1,433,782  
|                                      |                                                         |                                     |               |           |        |              |            
|NON-CURRENT LIABILITIES               |                                                         |                                     |               |           |       
|                                      |                                                         |                                     |               |           |        |              |            
|                                      | Notes payable                                           |                                     | 25,000        |           |        | -           
|                                      |                                                         | Total Non-Current Liabilities       |               | 25,000    |        |              | -          
|                                      |                                                         | TOTAL LIABILITIES                   |               | 555,276   |        |              | 1,433,782  
|                                      |                                                         |                                     |               |           |        |              |            
|STOCKHOLDERS' DEFICIT                 |                                                         |                                     |               |           |       
|                                      |                                                         |                                     |               |           |        |              |            
|                                      | Preferred stock series A; 20,000,000 shares authorized, |                                     |               |           |        |             
|                                      | at $0.01 par value, -0- and  -0-                        |                                     |               |           |        |             
|                                      | shares issued and outstanding, respectively             |                                     | -             |           |        | -           
|                                      | Preferred stock series B; 20,000,000 shares authorized, |                                     |               |           |        |             
|                                      | at $0.01 par value, -0- and -0-                         |                                     | -             |           |        | -           
|                                      | shares issued and outstanding, respectively             |                                     |               |           |        |             
|                                      | Common stock; 2,000,000,000 shares authorized,          |                                     |               |           |        |             
|                                      | at $0.001 par value, 124,913,633 and 67,052,502         |                                     |               |           |        |             
|                                      | shares issued and outstanding, respectively             |                                     | 124,913       |           |        | 67,052      
|                                      | Additional paid-in capital                              |                                     | 39,793,452    |           |        | 37,840,793  
|                                      | Accumulated Deficit                                     |                                     | (40,401,033)  |           |        | (39,045,527)
|                                      |                                                         |                                     |               |           |        |              |            
|                                      |                                                         | Total Stockholders' Deficit         |               | (482,668) |        |              | (1,137,682)
|                                      |                                                         | TOTAL LIABILITIES AND STOCKHOLDERS' |               |           |        |              |            
|                                      |                                                         | DEFICIT                             | $             | 72,608    |        | $            | 296,100    

The accompanying notes are an integral part of these financial statements.  23     Table of Contents FONU2, INC. Statements of Operations


|                                  |                                     |                          |                     |           |             |           |          
|--------------------------------- | ----------------------------------- | ------------------------ | ------------------- | --------- | ----------- | --------- | ---------
|                                  |                                     |                          | For the Years Ended
|                                  |                                     |                          | September 30,      
|                                  |                                     |                          | 2014                |           | 2013       
|                                  |                                     |                          |                     |           |             |           |          
|REVENUES                          | $                                   | 343,453                  |                     | $         | 282,009    
|COST OF SALES                     |                                     | 158,370                  |                     |           | 117,283    
|                                  |                                     |                          |                     |           |             |           |          
|GROSS PROFIT                      |                                     | 185,083                  |                     |           | 164,726    
|                                  |                                     |                          |                     |           |             |           |          
|OPERATING EXPENSES                |                                     |                          |                     |           |            
|                                  |                                     |                          |                     |           |             |           |          
|                                  | Depreciation                        |                          | 4,476               |           |             | 2,141    
|                                  | Product development                 |                          | 431,993             |           |             | 278,050  
|                                  | Compensation                        |                          | 141,170             |           |             | 551,648  
|                                  | Professional fees                   |                          | 982,594             |           |             | 494,318  
|                                  | General and administrative          |                          | 113,614             |           |             | 164,234  
|                                  |                                     |                          |                     |           |             |           |          
|                                  |                                     | Total Operating Expenses |                     | 1,673,847 |             |           | 1,490,391
|                                  |                                     |                          |                     |           |             |           |          
|LOSS FROM OPERATIONS              |                                     | (1,488,764)              |                     |           | (1,325,665)
|                                  |                                     |                          |                     |           |             |           |          
|OTHER EXPENSES                    |                                     |                          |                     |           |            
|                                  |                                     |                          |                     |           |             |           |          
|                                  | Interest expense                    |                          | (462,959)           |           |             | (191,853)
|                                  | Gain on settlement of debt          |                          | 12,602              |           |             | 118,551  
|                                  | Gain (loss) on derivative liability |                          | 583,615             |           |             | (303,973)
|                                  |                                     |                          |                     |           |             |           |          
|                                  |                                     | Total Other Expenses     |                     | 133,258   |             |           | (377,275)
|                                  |                                     |                          |                     |           |             |           |          
|INCOME (LOSS) BEFORE INCOME TAXES |                                     | (1,355,506)              |                     |           | (1,702,940)
|PROVISION FOR INCOME TAXES        |                                     | -                        |                     |           | -          
|                                  |                                     |                          |                     |           |             |           |          
|NET INCOME (LOSS)                 | $                                   | (1,355,506)              |                     | $         | (1,702,940)
|                                  |                                     |                          |                     |           |             |           |          
|BASIC AND DILUTED INCOME (LOSS)   |                                     |                          |                     |           |            
|PER SHARE                         | $                                   | (0.02)                   |                     | $         | (0.03)     
|                                  |                                     |                          |                     |           |             |           |          
|WEIGHTED AVERAGE NUMBER OF        |                                     |                          |                     |           |            
|COMMON SHARES OUTSTANDING         |                                     | 87,551,511               |                     |           | 58,648,828 

The accompanying notes are an integral part of these financial statements.  24     Table of Contents FONU2, INC. Statements of Stockholders Deficit


|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|---------------------------------------------------------- | ------------------ | ------------------ | ------------ | ------- | ----------- | ------------- | ------------ | ------- | --------- | ---------- | ---------- | - | ------------ | - | -----------
|                                                           |                    |                    |              |         |             |               |              |         |           | Additional |            |   | Total       
|                                                           | Preferred Series A | Preferred Series B | Common Stock | Paid-In | Accumulated | Stockholders'
|                                                           | Shares             | Amount             | Shares       | Amount  | Shares *    | Amount        | Capital      | Deficit | (Deficit)
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Balance, September 30, 2012                                | -                  | $                  | -            | -       | $           | -             | 66,676,182   | $       | 66,676    | $          | 37,144,409 | $ | (37,342,587) | $ | (131,502)  
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Cancellation of common stock                               | -                  |                    | -            | -       |             | -             | (27,958,306) |         | (27,959)  |            | 27,959     |   | -            |   | -          
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for services rendered                  | -                  |                    | -            | -       |             | -             | 10,581,515   |         | 10,582    |            | 463,719    |   | -            |   | 474,301    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for prepaid services                   | -                  |                    | -            | -       |             | -             | 1,500,000    |         | 1,500     |            | 253,500    |   | -            |   | 255,000    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for conversion of notes                |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|payable and other debts                                    | -                  |                    | -            | -       |             | -             | 10,003,111   |         | 10,003    |            | 204,256    |   | -            |   | 214,259    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Reclassification of derivative liabilities on              |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|conversions of debt                                        | -                  |                    | -            | -       |             | -             | -            |         | -         |            | 221,200    |   | -            |   | 221,200    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for cash                               | -                  |                    | -            | -       |             | -             | 6,250,000    |         | 6,250     |            | 243,750    |   | -            |   | 250,000    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Derivative recognized on warrants granted                  | -                  |                    | -            | -       |             | -             | -            |         | -         |            | (718,000)  |   | -            |   | (718,000)  
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Net loss for the year ended                                |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|September 30, 2013                                         | -                  |                    | -            | -       |             | -             | -            |         | -         |            | -          |   | (1,702,940)  |   | (1,702,940)
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Balance, September 30, 2013                                | -                  |                    | -            | -       |             | -             | 67,052,502   |         | 67,052    |            | 37,840,793 |   | (39,045,527) |   | (1,137,682)
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for cash                               | -                  |                    | -            | -       |             | -             | 3,250,000    |         | 3,250     |            | 126,750    |   | -            |   | 130,000    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for conversion                         |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|of notes payable and other debts                           | -                  |                    | -            | -       |             | -             | 38,293,299   |         | 38,293    |            | 463,672    |   | -            |   | 501,965    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued in exercise of                         |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|stock options                                              | -                  |                    | -            | -       |             | -             | 2,250,000    |         | 2,250     |            | 87,750     |   | -            |   | 90,000     
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for services                           | -                  |                    | -            | -       |             | -             | 13,841,680   |         | 13,842    |            | 636,400    |   | -            |   | 650,242    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Common stock issued for the settlement of accounts payable | -                  |                    | -            | -       |             | -             | 226,152      |         | 226       |            | 14,112     |   | -            |   | 14,338     
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Reclassification of derivative liabilities on              |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|conversions of debt                                        | -                  |                    | -            | -       |             | -             | -            |         | -         |            | 623,975    |   | -            |   | 623,975    
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Net loss for the year ended                                |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|September 30, 2014                                         | -                  |                    | -            | -       |             | -             | -            |         | -         |            | -          |   | (1,355,506)  |   | (1,355,506)
|                                                           |                    |                    |              |         |             |               |              |         |           |            |            |   |              |   |            
|Balance, September 30, 2014                                | -                  | $                  | -            | -       | $           | -             | 124,913,633  | $       | 124,913   | $          | 39,793,452 | $ | (40,401,033) | $ | (482,668)  

The accompanying notes are an integral part of these financial statements. Note: Subsequent to this report, on February 8th, the Company did a 400:1 reverse stock split. All figures in the above table represent the share value at the time of the report.   25     Table of Contents FONU2, INC. Statements of Cash Flows


|                                 |                                                  |                                               |                     |             |        |             |          
|-------------------------------- | ------------------------------------------------ | --------------------------------------------- | ------------------- | ----------- | ------ | ----------- | ---------
|                                 |                                                  |                                               | For the Years Ended
|                                 |                                                  |                                               | September 30,      
|                                 |                                                  |                                               | 2014                |             | 2013  
|OPERATING ACTIVITIES             |                                                  |                                               |                     |             |       
|                                 | Net loss                                         | $                                             | (1,355,506)         |             | $      | (1,702,940)
|                                 | Adjustments to reconcile loss                    |                                               |                     |             |        |            
|                                 | to cash flows from operating activities:         |                                               |                     |             |        |            
|                                 |                                                  | Depreciation                                  |                     | 4,476       |        |             | 2,141    
|                                 |                                                  | Amortization of debt discount                 |                     | 416, 126    |        |             | 136,841  
|                                 |                                                  | Gain (Loss) on derivative liability           |                     | (583,615)   |        |             | 303,973  
|                                 |                                                  | Stock-based compensation                      |                     | 650,242     |        |             | 474,301  
|                                 |                                                  | Gain on settlement of debt                    |                     | ( 5,719 )   |        |             | (130,704)
|                                 |                                                  | Default provision on convertible note payable |                     | -           |        |             | 29,000   
|                                 | Changes in operating assets and liabilities      |                                               |                     |             |        |            
|                                 |                                                  | Inventory                                     |                     | (1,487)     |        |             | (244)    
|                                 |                                                  | Prepaid expenses                              |                     | 186,868     |        |             | 257,164  
|                                 |                                                  | Accounts payable & accrued liabilities        |                     | 28,480      |        |             | 141,327  
|                                 |                                                  |                                               |                     |             |        |             |          
|                                 |                                                  | Net Cash Used                                 |                     |             |        |             |          
|                                 |                                                  | in Operating Activities                       |                     | ( 660,135 ) |        |             | (489,141)
|                                 |                                                  |                                               |                     |             |        |             |          
|INVESTING ACTIVITIES             |                                                  |                                               |                     |             |       
|                                 | Purchase of fixed assets                         |                                               | (4,919)             |             |        | (3,000)    
|                                 |                                                  |                                               |                     |             |        |             |          
|                                 |                                                  | Net Cash Used                                 |                     |             |        |             |          
|                                 |                                                  | in Investing Activities                       |                     | (4,919)     |        |             | (3,000)  
|                                 |                                                  |                                               |                     |             |        |             |          
|FINANCING ACTIVITIES             |                                                  |                                               |                     |             |       
|                                 | Cash received on convertible notes payable       |                                               | 416,500             |             |        | -          
|                                 | Repayments on convertible notes payable          |                                               | (53,000)            |             |        | -          
|                                 | Cash received on notes payable                   |                                               | 25,000              |             |        | 105,000    
|                                 | Repayment of notes payable                       |                                               | -                   |             |        | -          
|                                 | Proceeds from related party payables             |                                               | 18,000              |             |        | 201,300    
|                                 | Repayments of related party payables             |                                               | -                   |             |        | (13,000)   
|                                 | Common stock issued for the exercise of warrants |                                               | 90,000              |             |        |            
|                                 | Common stock issued for cash                     |                                               | 130 ,000            |             |        | 250,000    
|                                 |                                                  | Net Cash Provided                             |                     |             |        |             |          
|                                 |                                                  | by Financing Activities                       |                     | 626,500     |        |             | 543,300  
|                                 |                                                  |                                               |                     |             |        |             |          
|NET INCREASE (DECREASE)  IN CASH |                                                  | (38,554)                                      |                     |             | 51,159
|                                 |                                                  |                                               |                     |             |        |             |          
|CASH AT BEGINNING OF YEAR        |                                                  | 54,197                                        |                     |             | 3,038 
|                                 |                                                  |                                               |                     |             |        |             |          
|CASH AT END OF YEAR              | $                                                | 15,643                                        |                     | $           | 54,197

26     Table of Contents FONU2, INC. Statements of Cash Flows


|                                    |                                                                   |              |                     |   |      |         |  
|----------------------------------- | ----------------------------------------------------------------- | ------------ | ------------------- | - | ---- | ------- | -
|                                    |                                                                   |              | For the Years Ended
|                                    |                                                                   |              | September 30,      
|                                    |                                                                   |              | 2014                |   | 2013
|                                    |                                                                   |              |                     |   |      |         |  
|SUPPLEMENTAL CASH FLOW INFORMATION: |                                                                   |              |                     |   |     
|                                    | CASH PAID FOR:                                                    |              |                     |   |      |        
|                                    |                                                                   |              |                     |   |      |         |  
|                                    |                                                                   | Interest     | $                   | - |      | $       | -
|                                    |                                                                   | Income taxes | $                   | - |      | $       | -
|                                    |                                                                   |              |                     |   |      |         |  
|NON-CASH INVESTING ACTIVITIES:      |                                                                   |              |                     |   |     
|                                    | Common stock for related party payables                           | $            | 195,719             |   | $    | -      
|                                    | Common stock issued for settlement of accounts payable            | $            | 14,338              |   | $    | -      
|                                    | Conversion of accounts payable to notes payable                   | $            | 12,500              |   | $    | 23,500 
|                                    | Common stock issued for settlement of payroll liability           | $            | 86,000              |   | $    | -      
|                                    | Common stock issued for convertible notes payable and other debts | $            | 225,965             |   | $    | 214,259
|                                    | Cancellation of common stock                                      | $            | -                   |   | $    | 27,959 
|                                    | Debt discount from derivative liability                           | $            | 485,795             |   | $    | 189,500
|                                    | Write off of derivative liability into additional paid in capital | $            | 623,975             |   | $    | 221,200
|                                    | Common stock issued for prepaid expenses                          | $            | -                   |   | $    | 255,000
|                                    | Derivative liability on warrants granted                          | $            | -                   |   | $    | 718,000

The accompanying notes are an integral part of these financial statements.   27    Table of Contents FONU2, INC. Notes to the Financial Statements For the Years Ended September 30, 2014 and 2013  1. BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES  Nature of Business FONU2, Inc. (the Company) was organized on August 26, 2009, under the laws of the State of Florida, as Cygnus Internet, Inc. The Company operates two business units; a comic book and collectibles retail business and a social commerce business currently under development.  Basis of Presentation The Company prepares its financial statements on the accrual basis of accounting. Management believes that all adjustments necessary for a fair presentation of the results of the years ended September 30, 2014 and 2013 have been made. The Company currently does not have any subsidiaries.  Significant Accounting Policies The Companys management selects accounting principles generally accepted in the United States of America and adopts methods for their application.  The application of accounting principles requires the estimating, matching and timing of revenue and expense.  It is also necessary for management to determine, measure and allocate resources and obligations within the financial process according to those principles.  The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.  The financial statements and notes are representations of the Companys management that is responsible for their integrity and objectivity.  Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded  transactions are valid;  2) valid  transactions  are recorded;  and  3) transactions  are recorded in the proper  period in a timely  manner to produce financial  statements which present fairly the financial  condition,  results of operations  and cash  flows of the  Company for the  respective  periods  being presented.  Reverse-Merger Transaction On December 2, 2011, the stockholders of Zaldiva, Inc., a Florida corporation (Zaldiva) approved Zaldivas change of domicile from the state of Florida to the state of Nevada.  The change of domicile was effectuated by merging Zaldiva into its newly-  28   Table of Contents  formed wholly-owned subsidiary, FONU2 Inc., a Nevada corporation formerly known as Zaldiva, Inc. (FONU2), with every share of Zaldivas common and preferred stock automatically being converted into one-half of one corresponding share of FONU2, and with all fractional shares that would otherwise result from such conversion being rounded up to the nearest whole share.  Zaldiva and FONU2 filed Articles of Merger in the States of Florida and Nevada on December 2, 2011.  The change of domicile and de facto reverse-split were effectuated on January 9, 2012.  On March 6, 2012, the Company executed an Agreement and Plan of Reorganization (the Agreement) with FONU2, and Jeffrey M. Pollitt, who is the Companys Chief Executive Officer and the holder of approximately 37% of the Companys outstanding shares of common stock.  Under the Agreement, FONU2 acquired all of the material assets of the Company in exchange for 53,411,262 unregistered and restricted shares of FONU2s common stock, which represented approximately 85% of FONU2s issued and outstanding common stock upon issuance, with such shares to be issued pro rata to the Companys common stockholders.  The Agreement was accounted for as a reverse-merger recapitalization transaction, with FONU2 as the accounting acquirer, and Zaldiva as the legal acquirer.  The historical financial statements presented herein for the period prior to the merger date are those of FONU2.  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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.  Earnings (Loss) per Share The Company computes net income (loss) per share in accordance with ASC 260 which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.  There are no such common stock equivalents outstanding as of September 30, 2014 and 2013.  Reclassification Certain account totals and other figures from prior periods have been reclassified to conform to current period presentation.  29   Table of Contents  Comprehensive Income ASC 220 establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements.  For the years ended September 30, 2014 and 2013, the Company had no items of other comprehensive income.  Therefore, the net loss equals the comprehensive loss for the years then ended.  Emerging Growth Company Critical Accounting Policy Disclosure The Company qualifies as an emerging growth company under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.   As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.     The Company may elect to take advantage of the benefits of this extended transition period in the future.  Cash and Cash Equivalents For purposes of the Statement of Cash Flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.  Property and Equipment Property and equipment is recorded at cost.  Major additions and improvements are capitalized and depreciated over their estimated useful lives.  Depreciation of property and equipment is determined using the straight-line method over their useful lives, which ranges from three to five years.  Gains or losses on the sale or disposal of property and equipment are included in the statements of operations. Maintenance and repairs that do not extend the useful life of the assets are expensed as incurred.  Inventory The Companys inventory consists of various comic books, toys, and other collectible items.  These items are purchased from external suppliers.  The inventory items are recorded and valued at cost. Management performs periodic reviews of its slow-moving inventory for possible impairment.  When slow-moving inventory is identified, its cost is also adjusted so as to represent the lower of cost or market at all times.  Revenue Recognition The Company's revenues are generated from the sales of various comic books, toys, and other collectible items.  Sales are transacted primarily through the Companys website, via credit card order; or through eBay, via Paypal or e-check transaction.The Company follows guidance found in ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements.   30   Table of Contents  ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to merchandise sales when the following conditions are met:  a) Persuasive evidence of an arrangement exists, b) Delivery has occurred or services have been rendered, c) The fee is fixed or determinable, d) Collectability is reasonably assured.  Cost of Sales When an inventory item is sold, the Company recognizes cost of sales expense for the value of the inventory item sold.  This value includes the purchase price of the inventory item, plus any expenditure on improvements to the inventory items.  Shipping costs are not included in cost of sales calculations.  Accounting Basis The basis is accounting principles generally accepted in the United States of America.  The Company has adopted a September 30 fiscal year end.  Stock-Based Compensation. The Company accounts for share-based compensation in accordance with Accounting Standards Codification subtopic 718-10, Stock Compensation (ASC 718-10). This requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.  Research and Development. Research and development cost are charged to operations as incurred.  Recent Accounting Pronouncements The Company has evaluated recent accounting pronouncements and their adoption has not had nor is not expected to have a material impact on the Companys financial position or statements.  2. GOING CONCERN  The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern.  However, the Company has accumulated deficit of $40,401,033 as of September 30, 2014, and negative working capital of $474,110.  During the year ended September 30, 2014 the Company realized negative cash flows from operations totaling $660,135.  The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time.These items raise substantial doubt about its ability to continue as a going concern.   31  Table of ContentsManagement anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of managements efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.  3. CONVERTIBLE NOTES PAYABLE  As of September 30, 2014 and September 30, 2013, the Company had net totals of $195,320 and $61,439 in outstanding convertible notes payable, respectively.


|                 |            |               |  |                    |         |  |                    |  |          |     |  |   |            |  |  |          |        |  |     |         |         |   |        |        |        | 
|---------------- | ---------- | ------------- |  | ------------------ | ------- |  | ------------------ |  | -------- | --- |  | - | ---------- |  |  | -------- | ------ |  | --- | ------- | ------- | - | ------ | ------ | ------ | 
|                 |            |               |  | September 30, 2014 |         |  | September 30, 2013 | 
|Convertible Debt | Note Date  | Maturity Date |  | Face value         |         |  | Discount           |  |          | Net |  |   | Face value |  |  | Discount |        |  | Net |        
|                 |            |               |  |                    |         |  |                    |  |          |     |  |   |            |  |  |          |        |  |     |        
|Loan #1          | 9/30/2011  | Demand        |  |                    | -       |  |                    |  |          |     |  | - |            |  |  | 50,000   |        |  |     |         |         |   | 50,000 |       
|Loan #2          | 3/11/2013  | 12/16/2013    |  |                    |         |  |                    |  |          |     |  | - |            |  |  | 43,500   |        |  |     | (32,061 | )       |   |        | 11,439 |       
|Loan #4          | 11/6/2013  | 8/8/2014      |  |                    | 51,560  |  |                    |  | -        |     |  |   | 51,560     |  |  |          |        |  |     |         |         |   |        |        |        | 
|Loan #5          | 1/24/2014  | 10/28/2014    |  |                    | 78,500  |  |                    |  | (23,290  | )   |  |   | 55,210     |  |  |          |        |  |     |         |         |   |        |        |        | 
|Loan #6          | 4/11/2014  | 4/11/2015     |  |                    | 103,000 |  |                    |  | (54,463  | )   |  |   | 48,537     |  |  |          |        |  |     |         |         |   |        |        |        | 
|Loan # 7         | 11/13/2013 | 11/13/2015    |  |                    | 94,990  |  |                    |  | (54,977  | )   |  |   | 40,013     |  |  |          |        |  |     |         |         |   |        |        |        | 
|                 |            |               |  |                    |         |  |                    |  |          |     |  |   |            |  |  |          |        |  |     |         |         |   |        |        |        | 
|                 |            |               |  |                    | 328,050 |  |                    |  | (132,730 | )   |  |   | 195,320    |  |  |          | 93,500 |  |     |         | (32,061 | ) |        |        | 61,439 | 

During 2011, the Company entered into two debt agreements for a total of $75,000.  The notes carry interest at 10% and are convertible into shares of the Company common stock at a discount of 30% to the market price of the Companys common stock, however the conversion price can be no lower than $0.10 or higher than $0.50.  During the year ended September 30, 2013 the Company converted $25,000 of this debt into 243,055 shares of the Companys common stock.  During the year ended September 30, 2014, the remaining principal of $50,000 and accrued interest of $12,500 was assigned to a new holder.  During 2013, $58,000 of notes payable that were previously not convertible became convertible.  The embedded conversion options in these notes are required to be classified as liabilities.  See Note 7. The note payable was due on February 2, 2013, and the Company incurred an additional $29,000 owed as part of the principal of the note due to being in default. During the year ended September 30, 2013, the lender converted $87,000 of the note payable. As of September 30, 2014 and September 30, 2013, the note had an outstanding principal of zero.   32    Table of Contents On March 11, 2013 the Company entered into a convertible promissory note with an unrelated third party, wherein the Company borrowed $78,500.  A total of $23,500 of the proceeds was paid directly to the Companys vendors by the lender. The principal accrues interest at a rate of eight percent per annum and is due in full on December 16, 2013.  The note is convertible at the option of the holder at any point at least 180 days from the note date at a 42 percent discount to the average of the three lowest closing prices during the ten day period prior to conversion.  The note will accrue interest at a rate of 22 percent per annum should the Company default. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.  During the year ended September 30, 2013 the lender converted $35,000 of the note principal into 417,224 shares of the Companys common stock.  During the nine months ended June 30, 2014 the lender converted the remaining $43,500 note principal into 1,102,411 shares of the Companys common stock.  As of September 30, 2014 and September 30, 2013 the note had an outstanding principal balance of $-0- and $43,500, respectively.  As of September 30, 2014 accrued interest on this note totaled $3,422.  On November 6, 2013 the Company entered into a convertible promissory note with an unrelated third party whereby the Company borrowed $128,500, with initial debt discount of $18,500.  The principal accrues interest at a rate of eight percent per annum and is due in full on August 8, 2014.  The note became convertible on May 5, 2014 at a 42 percent discount to the average of the three lowest closing prices during the ten day period prior to conversion.  The note will accrue interest at a rate of 22 percent per annum should the Company default. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the derivative instrument should be classified as a liability once the conversion option becomes effective due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.  During the year ended September 30, 2014 the lender converted $76,940 of the note principal into 15,415,891 shares of the Companys common stock.  As of September 30, 2014 the remaining principal balance on this note was $51,560.  On November 13, 2013 the Company entered into a promissory note with an unrelated third party whereby the Company agreed to borrow a maximum of $300,000.  Each borrowing under the terms of the note, along with specific accrued interest is due two years from the date the specific funds are received by the Company. All borrowings under the terms of this note are subject to a 10% original issue discount such that the consideration due back to the lender is equal to cash proceeds actually received plus ten percent of the amount borrowed. Through June 30, 2014, the Company had borrowed $137,500, with initial debt discount of $12,500 pursuant to this promissory note. The note is exempt from interest for the 90 days after the note date; after 90 days the unpaid principal balance shall accrue interest at a rate of 12 percent per annum.  The note  33    Table of Contents became convertible into shares of the Companys common stock on May 12, 2014 at 60 percent of the lowest trade price in the 25 trading days previous to the conversion. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the derivative instrument should be classified as a liability once the conversion option becomes effective due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.  During the year ended September 30, 2014 the lender converted $42,510 of the note principal into 9,700,000 shares of the Companys common stock.  As of September 30, 2014 the remaining principal balance on this note was $94,990.  On April 11, 2014 the Company entered into a convertible promissory note with an unrelated third party, wherein the Company borrowed $103,000. The principal accrues interest at a rate of eight percent per annum and is due in full on April 11, 2015.  The note is convertible at the option of the holder at any point after the note date at a 40 percent discount to the average of the three lowest closing prices during the ten day period prior to conversion.  The note will accrue interest at a rate of 22 percent per annum should the Company default. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the derivative instrument should be classified as a liability when the conversion option became effective after the note date due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.  As of September 30, 2014 the principal balance on this note remained at $103,000.  On April 11, 2014 theCompany assigned $50,000 of principal and $12,500 of interest to a new holder who issued a replacement note.  The principal accrues interest at a rate of eight percent per annum and is due in full on April 11, 2015.  The note is convertible at the option of the holder at any point after the note date at a 40 percent discount to the lowest closing price during the five day period prior to conversion. The Company analyzed the modification of the term under ASC 470-60 Trouble Debt Restructurings and ASC 470-50 Extinguishment of Debt. The Company determined the modification is substantial and the transaction should be accounted for as an extinguishment with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company analyzed the conversion option of the new debt for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the derivative instrument should be classified as a liability when the conversion option became effective after the note date due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.  During the year ended September 30, 2014 the lender converted all $62,500 of the note principal, along with $515in accrued interest, into 9,674,997 shares of the Companys common stock.  As of September 30, 2014 the remaining principal balance on this note was $-0-   34   Table of Contents  On January 24, 2014 the Company entered into a Securities Purchase Agreement with an unrelated third-party entity in connection with a convertible note whereby the Company borrowed $78,500.  The note principal bears interest at a rate of eight percent per annum and will accrue interest at a rate of 22 percent per annum should the Company default.  The note principal and any unpaid accrued interest is due in full on or before October 28, 2014.  The note is convertible at the option of the holder at any point at least 180 days from the note date at a 42 percent discount to the average of the three lowest closing prices during the ten day period prior to conversion.  As of September 30, 2014 accrued interest on this note totaled $4,284.  During the year ended September 30, 2013 the Company recorded a debt discount totaling $168,902 relating to the derivative features and original issue discounts of the convertible debts. Of this amount, $136,841 was amortized to interest expense during the year ended September 30, 2013, leaving total unamortized debt discounts of $32,061 as of September 30, 2013.  During the year ended September 30, 2014, the Company recorded additional debt discounts totaling $485,795, and amortized a total $416,126to interest expense, leaving total unamortized debt discounts of $132,730 as of September 30, 2014.  4. NOTES PAYABLE  As of September 30, 2014 and September 30, 2013, the Company had total of $44,000 and $19,000 in outstanding notes payable respectively.


|              |           |               |  |                    |          |                    |  |            |          |        
|------------- | --------- | ------------- |  | ------------------ | -------- | ------------------ |  | ---------- | -------- | -------
|              |           |               |  | September 30, 2014 |          | September 30, 2013
|Notes Payable | Note Date | Maturity Date |  | Face value         | Discount | Net                |  | Face value | Discount | Net    
|Current       |           |               |  |                    |          |                    |  |            |          |        
|Loan #1       | 5/1/2012  | Demand        |  | 19,000             | -        | 19,000             |  | 19,000     | -        | 19,000 
|Loan #2       | 6/12/2013 | 3/14/14       |  | -                  | -        | -                  |  | 53,000     | -        | 53,000 
|              |           |               |  | 19,000             | -        | 19,000             |  | 72 ,000    | -        | 72 ,000
|Non-Current   |           |               |  |                    |          |                    |  |            |          |        
|Loan # 3      | 8/26/2014 | 8/25/2017     |  | 25,000             | -        | 25,000             |  | -          | -        | -      
|              |           |               |  | 25,000             | -        | 25,000             |  | -          | -        | -      

On May 1, 2012 the Company entered into a loan agreement with an unrelated third party. The note principal bears interest at a rate of 10 percent per annum and due on demand. AtSeptember30, 2014and 2013,the entire $19,000 principal balance remained outstanding, along with $3,800 in accrued interest.  On June 12, 2013 the Company entered into a convertible promissory note with an unrelated third party, wherein the Company borrowed $53,000.  $3,000 of the proceeds was paid directly to the Companys vendors by the lender.  The principal accrues interest at a rate of eight percent per annum and is due in full on March 14, 2014.  The note is convertible at the option of the holder at any point at least 180 days from the note date at  35    Table of Contents a 42 percent discount to the average of the three lowest closing prices during the ten day period prior to conversion.  The note will accrue interest at a rate of 22 percent per annum should the Company default. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the derivative instrument should be classified as a liability when the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.  As of September 30, 2013 the principal balance on this note remained at $53,000.  The note became convertible on December 19, 2013.  The Company recognized an initial derivative liability in the amount of $30,769 pursuant to the debt discount on the note.  On December 20, 2013 the Company paid the note principal, along with all accrued interest, down to zero.  In satisfying the note, the Company recognized a loss on derivative liability in the amount of $9,088 and amortized $7,125 of the debt discount to interest expense.  The remaining $23,644 debt discount was closed to interest and the $39,857 derivative liability was closed to additional paid-in capital.  On August 26, 2014 the Company entered into a $25,000 convertible debenture note agreement with an unrelated third party.  The note accrues interest at a rate of 12 percent per annum and is due on August 25, 2017.  Pursuant to the terms of the note, the principal can be converted into shares of the Companys common stock, at the option of the lender, at any time after six months and up to one year from the note date at a 20 percent discount to the market price of the shares.  The discount will be 25 percent if converted between one and two years, and will be 30 percent if converted after two years.  The maximum conversion price will be $0.50 per share.  As of September 30, 2014, accrued interest on the note totaled $288.  5. RELATED PARTY NOTES PAYABLE   During the period ended September 30, 2013 the Company borrowed an aggregate amount of $13,000 from its CMO, Niccole Leigh. The Company repaid this amount in full during the period.  During the period ended September 30, 2013 the Company borrowed an aggregate amount of $188,300 from its former CEO, Jeff Pollitt. The note is unsecured, bears no interest and is due on demand.  On October 14, 2013 the Company converted the $188,300 note payable due to its former CEO, along with accrued interest of $7,419 and accrued wages payable totaling $86,000, into 2,400,000 shares of the Companys common stock.  Pursuant to this transaction, the liabilities were considered fully satisfied, and the Company recognized a $5,719 gain on settlement of debts.   36   Table of Contents  On August 5, 2014 the Company borrowed $18,000 from a related party(former CEO Robert Lees)in the form of a note payable.  The note accrues interest at a rate of 12 percent per annum, is unsecured, and is due on demand.  As of September 30, 2014 and 2013, the Company had $18,000 and $188,300, respectively, in outstanding related party payables.  6. FAIR VALUE MEASUREMENTS  As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).  The three levels of the fair value hierarchy are as follows:  Level 1    
    Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.  Level 2     -
    Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.   37     Table of Contents Level 3     
    Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in managements best estimate of fair value.  The following table sets forth by level within the fair value hierarchy the Companys financial assets and liabilities that were accounted for at fair value as September 30, 2014 and 2013  September 30, 2014


|                              |         |         |         |       |  |    |  |         |  |         |  |  |  | 
|----------------------------- | ------- | ------- | ------- | ----- |  | -- |  | ------- |  | ------- |  |  |  | 
|Recurring Fair Value Measures | Level 1 | Level 2 | Level 3 | Total
|LIABILITIES:                  |         |         |         |      
|Derivative liability          |         |         | -       |       |  | -- |  | 247,880 |  | 247,880

September 30, 2013


|                              |         |         |         |       |  |    |  |         |  |         |  |  |  | 
|----------------------------- | ------- | ------- | ------- | ----- |  | -- |  | ------- |  | ------- |  |  |  | 
|Recurring Fair Value Measures | Level 1 | Level 2 | Level 3 | Total
|LIABILITIES:                  |         |         |         |      
|Derivative liability          |         |         | -       |       |  | -- |  | 969,675 |  | 969,675

7. DERIVATIVE INSTRUMENTS  During 2013, the Company issued debt instruments that were convertible into common stock at a 42 percent discount to the average of the three lowest closing prices during the ten day period prior to conversion. During the year ended September 30, 2014 the Company issued additional debt instruments under the same terms, as well as additional debt instruments convertible into common stock at a 40% discount to the lowest trading price in the 25 trading days previous to conversion, 60% discount to the average of the three lowest closing prices during the ten day period prior to conversion.  The conversion options embedded in these instruments contain no explicit limit to the number of shares to be issued upon settlement and as a result are classified as liabilities under ASC 815. Additionally, because the number of shares to be issued upon settlement is indeterminate, all other share settle-able instruments must also be classified as liabilities. A debt discount of $168,902 was recorded as a result of these derivative liabilities, $136,841 of which was amortized into interest expense for the year ended September 30, 2013.  During the period ended September 30, 2014, debt discount of $485,795was recorded as a result of new derivative liabilities, $416,126of which was amortized into interest expense for the period ending September 30, 2014.  During 2013, certain notes payable were converted resulting in settlement of the related derivative liabilities.  The Company re-measured the embedded conversion options at fair value on the date of settlement and recorded these amounts to additional paid-in capital.   38   Table of Contents  The following table summarizes the changes in the derivative liabilities during the period ended September 30, 2014:  Balance as of September 30, 2012
    
    $
    -Additions due to new convertible debt and warrants issued
    
    
    900,933Reclassification of derivative liabilities to additional paid-in capital due to conversion of debt
    
    
    (221,200)Change in fair value
    
    
    289,942Balance as of September 30, 2013
    
    $
    969,675Additions due to new convertible debt and warrants issued
    
    
    485,795Reclassification of derivative liabilities to additional paid-in capital due to conversion of debt
    
    
    ( 623,975 )Change in fair value
    
    
    ( 583,615 )Balance as of September 30, 2014
    
    $
    247,880   During the period ended September 30, 2013, the loss on derivative of $303,973 in the statement of operations consisted of a loss on the change in fair value of $289,942 noted above and a loss of $14,031, which was the amount by which the derivative liabilities exceeded the principal of the related party payable on the date the notes were issued.  The Company uses the Black Scholes Option Pricing Model to value its derivatives based upon the following assumptions:2014: dividend yield of -0-%, volatility of 174-449%, risk free rate of 0.11-0.18% and an expected term of 0.25 to one year; 2013:dividend yield of -0-%, volatility of 86-693%, risk free rate of 0.12-0.18% and an expected term of 0.25 to one year.  8. COMMON STOCK  During the year ended September 30, 2013 the Company issued 10,581,515 shares of common stock for services valued at $474,301.  On February 27, 2013, Jeff Pollitt, the Companys CEO, resigned his position with the Company.  Pursuant to this resignation, Mr. Pollitt returned 15,000,000 of his 22,796,962 shares of the Companys common back to the Company.  The 15,000,000 shares were cancelled by the Company immediately upon receipt.  During the year ended September 30, 2013 the Company issued 10,003,111 for the conversion of notes payable and other debts in the amount of $214,259.  During the year ended September 30, 2013 the Company issued 6,250,000 shares of common stock for cash proceeds of $250,000. 6,250,000 warrants were issued with the common shares, which can be exercised at a price of $0.04 per share. These warrants qualify for derivative accounting, see note 7.  39    Table of Contents  During the year ended September 30, 2013 the Company issued 1,500,000 shares of common stock for prepaid services valued at fair market value of $255,000. The consulting services will be provided for one year commencing 8/1/2013.  During the year ended September 30, 2014 the Company issued 3,250,000 shares of common stock for cash proceeds of $130,000.  The Company issued an additional 2,250,000 shares of common stock upon the exercise of warrants at $0.04 per share, resulting in cash proceeds in the amount of $90,000.  During the year ended September 30, 2014 the Company issued an aggregate of35,893,299 shares of common stock for the conversion of$225,965notes payable and2,400,000 shares of common stock for the conversion ofother debts totaling $276,000. The conversion rates ranged from $0.0013 to $0.0677. The Company recorded a gain on the conversion of other debts of $5,719.  On January 30, 2014 the Company entered into an agreement with an unrelated public relations firm.  Pursuant to the agreement, the firm will provide public relations services for the Company for a term of six months.  As payment for these services, the Company issued 500,000 shares of common stock valued at fair market value of $24,600 on the agreement date, and issued an additional 700,000 shares on May 2, 2014 at fair market value of $41,930 at the beginning of month four of the agreement term.  On April 4, 2014 the Company issued 6,625,000 shares of common stock to various individuals as consideration for services rendered.These shares had a fair market value of $463,750.In addition, the Company agreed to issue an aggregate of 385,000 shares of common stock per quarter to various individuals as compensation for services to be rendered.  On April 15, 2014 the Company executed an engagement letter with a non-related third party entity to provide certain services in relation to a public offering of the Companys common stock.  Pursuant to the agreement, the firm will provide services for the Company for a term of one year.  As payment for these services, the Company issued 823,723 shares of common stock valued at fair market value of $50,000 on the agreement date.  On April 22, 2014 the Company issued 226,152 shares of common stockto settle accounts payable fromlegal and professional services rendered.  The fair value of the shares issued is $14,338, no gain or loss was recorded on the settlement of accounts payable.  On April 22, 2014 the Company issued 732,314 shares of common stockwith a fair value of $51,262for consulting services rendered.   40   Table of Contents  On April 25, 2014 the Company issued 75,643 shares of common stockwith a fair value of  $5,000for professional feesrendered.  On August 25, 2014 the Company issued 4,000,000 shares of common stock to a third party consulting entity as payment for a one-year consulting services contract.  The shares were valued at $0.0033 per share, being the market value of the shares on the date of issuancewhich is $13,200.  On September 30, 2014 the Company issued an aggregate of 385,000 shares of common stockwith a fair market value of $501,to various third parties as payment for consulting and administrative services rendered.  9. WARRANTS  A summary of the status of the Companys options and warrants as of September 30, 2014 and 2013 and changes during the periods ended September 30, 2014 and 2013 is presented below:  Description
    
    Warrant Shares
    
    
    Exercise Price
    
    
    Value if ExercisedOutstanding at 9/30/12
    
    
    -
    
    
    
    -
    
    
    
    -Granted
    
    
    6,250,000
    
    
    $
    0.04
    
    
    $
    1,062,500Exercised
    
    
    -
    
    
    
    -
    
    
    
    -Cancelled
    
    
    -
    
    
    
    -
    
    
    
    -Expired
    
    
    -
    
    
    
    -
    
    
    
    -Outstanding at 9/30/13
    
    
    6,250,000
    
    
    
    0.04
    
    
    
    1,062,500Granted
    
    
    -
    
    
    
    -
    
    
    
    -Exercised
    
    
    2,250,000
    
    
    
    0.04
    
    
    
    90,000Cancelled
    
    
    -
    
    
    
    -
    
    
    
    -Expired
    
    
    4,000,000
    
    
    
    0.04
    
    
    
    160,000Outstanding at 9/30/14
    
    
    -
    
    
    $
    -
    
    
    $
    -  The warrants granted during the year ended September 30, 2013 were granted in connection with the a private placement offering whereby the Company is authorized to issue up to 6,500,000 units, with each unit consisting of one share of the Companys common stock and one warrant to purchase one share of the Companys common stock at an exercise price of $0.04 per share.  The units were sold for $0.04 per unit, resulting in total cash proceeds of $250,000.  The warrants were valued using the Black-Scholes Options Pricing Model using the following assumptions: dividend yield of -0-%, volatility of 86-693%, risk free rate of 0.12-0.18% and an expected term of 0.25 to one year.  During the year ended September 30, 2014 2,250,000 warrants were exercised at $0.04 per share, resulting in cash proceeds in the amount of $90,000. Additionally during the year ended September 30, 2014 4,000,000 warrants expired.  41    Table of Contents  10. INCOME TAXES  The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Companys predecessor operated as entity exempt from Federal and State income taxes.  ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.  The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to net the loss before provision for income taxes for the following reasons:  September 30,
    
    September 30,2014
    
    2013Income tax expense at statutory rate
    
    $
    (460,534)
    
    $
    (579,000)Common stock issued for services
    
    
    246,533
    
    
    161,262Amortization
    
    
    141,483
    
    
    46,526Impairment expense
    
    
    2,557
    
    
    -Change in valuation allowance
    
    
    69,962
    
    
    371,211Income tax expense per books
    
    $
    -
    
    $
    -  Net deferred tax assets consist of the following components as of:  September 30,
    
    September 302014
    
    2013NOL carryover
    $
    (876,534)
    
    $
    $ (416,000)Valuation allowance
    
    876,534
    
    
    416,000Net deferred tax asset
    $
    -
    
    $
    -    Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards ofapproximately$2,500,000for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.   42  Table of Contents   11. SUBSEQUENT EVENTS  On October 1, 2014 Robert Lees resigned as President and CEO and Roger Miguel who had served as Chief Operating Officer was appointed President and CEO.  Robert Lees remained in the company and on the Board of Directors.  On October 3, 2014 Robert Lees resigned as CFO and as Director.  Roger Miguel assumed the role of Interim CFO.  The Board of Director position was left vacant.  On November 10, 2014 the Company entered into an Independent Contractor Agreement with a third party, pursuant to which the Company issued 17,500,000 shares of common stock as an initial payment.  Subsequent to September 30, 2014 the Company issued an aggregate of 16,977,930,591 pre-split shares (42,444,826 post-split) shares of common stock upon conversion of debts in the amount of $ 822,099 .  The following resolution was duly adopted by the Board of Directors of the Company effective as of December 5, 2014: pursuant to authority conferred upon the Board of Directors by the Articles of Incorporation, as amended, of the Company, which authorizes the issuance of up to twenty million (20,000,000) shares of preferred stock, par value $0.001 per share, and by the bylaws of the Company.  It was resolved that pursuant to authority expressly granted to and vested in the Board of Directors of the Company by the Company's Articles of Incorporation, the Board of Directors hereby creates a series of preferred stock, herein designated and authorized as the Series B Convertible Preferred Stock, par value $0.01 per share, which shall consist of Two Million Five Hundred Thousand (2,500,000) of the twenty million (20,000,000) shares of preferred stock which the Company now has authority to issue, and the Board of Directors hereby fixes the powers, designations and preferences and the relative, participating, optional and other special rights of the shares of each such class and series, and the qualifications, limitations and restrictions thereof .  . The Series B Convertible Preferred Stock shall be entitled to vote on all matters submitted to for a vote to holder of Common stock as if they held five hundred shares of Common stock for each share of Series B Preferred stock. The conversion price of the Series B Convertible Preferred Stock is $0.10 per share.  On December 3, 2014 the Company issued an aggregate of 770,000 shares of common stock to various individuals as compensation for services rendered. This payment was for the first two quarters.  Subsequently this program was terminated.   43  Table of Contents   On December 8, 2014, the Company entered into a purchase agreement with Studioplex City, LLC, (SC) a Georgia based limited liability company and Jake Shapiro (Shapiro), the owner of all membership interests of SC. Pursuant to this agreement, the Company paid  Shapiro $2.5 Million in the form of 2,500,000 Series B convertible preferred shares, which were issued to him on December 12, 2014. In return, the Company received 100% of the membership interests of SC.  As part of the purchase agreement The Company has formed Studioplex City Acquisition Corp., as a wholly owned subsidiary of the Company. The closing shall take place through this subsidiary.  As a result of this transaction Shapiro directly owns 67% of the voting securities of the Company, causing a change of control of the Registrant.  On December 8, 2014 the Company elected Shapiro as a director and Chairman of the Board of Directors of the Company.  Mr. Shapiro was formerly a director of Medient Studios, Inc. (now Moon River Studios, Inc.)  On February 8, 2014, the Company completed a 400:1 reverse stock split.  On February 10, 2015, the Company acquired the lease of a 1,560 acre property located in Effingham County, Georgia from Moon River. The purchase price was $10,000,000 and 10,000,000 post-split shares (4,000,000,000 pre-split shares) of FONU2 common stock.  Terms of the purchase agreement require that the FONU2 shares be registered and distributed to all Moon River shareholders as of record date February 10, 2015.  In addition to the lease, the Company has acquired certain intellectual property and trademarks associated with the project. The property has an independently appraised value in excess of $22,000,000.  Included under terms of the original lease, Memorandum of Understanding and supplemental agreement (i) the Company is responsible for an agreed amount of job creation and capital investment in the property, (ii) All property taxes for the property have been waived for the term of the lease, (iii) the property may be purchased at any time with no prepayment penalties,  (iv) at the end of the lease, the property may be purchased for $100. FONU2 has assumed the $10,000,000 note secured by the property. The note has an interest rate of zero percent with a 20 year term.  On February 12, 2014 300,000 post-split (120,000,000 pre-split) shares were issued to Roger Miguel and 73,500 post-split (24,900,000 pre-split) shares were issued to an unrelated third party as a performance bonus.  On February 12, 2015, the Company acquired the worldwide distribution rights for the movie Yellow. Under terms of the agreement, FONU2 will receive, in addition to a profit share, a 10% (ten percent) distribution fee, and a 20% (twenty percent) return on all funds expended associated with the acquisition of the rights, print and advertising, marketing, and other expenses associated with the release of the movie. As consideration, FONU2 has committed to provide these costs and fees, along with the assumption of $540,000 of costs associated with the movie.  44  Table of Contents   On February 15, 2015, the Company issued 4,300,000 post split (1,720,000,000 pre-split) common shares to Dr. Yusuf Hameed upon his conversion  of his three outstanding convertible notes.  These notes consist of an $90,000 convertible note with an 8% per annum interest dated 9/5/2014, a $50,000 convertible note with an 8% per annum interest rate dated 12/22/2014, and a $20,000 convertible note with an 8% per annum interest rate dated 12/31/2014.  These notes were settled at a conversion price of $0.04 per share, resulting  in the issuance of 4,000,000 post-split (1,600,000,000) common shares.  An additional 300,000 post-split (120,000,000 pre-split) shares were issued as a negotiated settlement for the interest due on the notes. Dr. Hameed has agreed a 12 month voluntary lockup provision on these shares.  On February 18, 2015, the Company issued 7,083,333 post-split (2,833,333,200 pre-split) common shares to Penny Marshall in payment of the equity portion of her directors fee re the movie Effa , which totaled $425,000.  The shares were issued at a price of $0.06 per share.  On February 18, 2015, the Company issued 1,250,000 post-split (500,000,000 pre-split) common shares to Michael Mann in payment  of the equity portion of his management fee re the movie Effa , which totaled $75,000.  The shares were issued at a price of $0.06 per share.  On February 27, 2015, the Company entered into a Rights Acquisition and Investment Agreement with Eagle Productions, LLC with a view toward the Company investing in, co-producing and exploiting the motion picture currently titled Effa to be produced by Eagle Productions.  Under this agreement, the Company will acquire the worldwide distribution rights and will invest in the movie.  The Company will be the sole and exclusive beneficiary of the worldwide exploitation rights of the picture for all purposes, in perpetuity.  The Company will advance a portion of the budget of the picture, consisting of $10,000,000 in restricted common shares at a value of $0.06 per share. The Company agrees to file a Registration statement for these shares.  Once the Company has recouped its advance in full, the Company and Eagle Productions will share in the net profits of the film, with the Company to receive 99% and Eagle Productions to receive 1%.  All fees and costs of the Company are to be included in and payable from the budget of the picture.  The Company is not liable for any loss should the transaction not proceed for any reason.  However, the Company will bear the loss (if any) arising from the initial payment of $75,000 in regards to the director services of Penny Marshall, the issuance of stock (7,083,333 post-split shares) in the value of $425,000 for the services of the director, the initial payment  of $75,000 to Wendi Laski under the terms of her producing agreement, and the initial payment of $8,000 made to the writers of the screenplay.   45  Table of Contents   On February 27, 2015, the Company issued 166,666,667 post-split (66,666,666,800 pre-split) common shares at $0.06 per common share to Eagle Productions (which was originally formed by Jake Shapiro) to acquire the worldwide distribution rights for the film Effa , as described above.   Film Producer Wendi Laski has been appointed the managing director of Eagle Productions LLC.  On March 1, 2015, the Company sold ownership of Zaldiva Comics and Collectibles to Ms. Nicole Leigh, a former director of the Company, for $100 and the settlement of a $10,000 debt.  The assets sold consist of Zaldiva.com, Zaldiva.com Comics & Collectibles, Zaldiva Comics & Collectibles, and all of Zaldivas inventory and intellectual property.  The company was not profitable and was deemed by Management to no longer be a strategic fit for the Company.  On March 1, 2015, Nicole Leigh resigned as a director.  On March 1, 2015, the Company elected Joseph Giamichael as a director.  Mr. Giamichael will be the chairman of the audit committee.  Mr. Giamichael was formerly a director of Medient Studios, Inc. (now Moon River Studios, Inc.). Other than his experience in serving as a director of Medient, there have been no transactions between Mr. Giamichael and any related party, nor any material plans, contracts, or arrangements to which Mr. Giamichael is a party.  On March 1, 2015, the Company appointed Graham Bradstreet, as Chief Financial Officer.  His position will last for one year, and is renewable at the yearly shareholder meeting.  On March 1, 2015, the Company approved the change of its offices to 135 Goshen Rd. Ext., Suite 205, Rincon, GA 31326, with a monthly rent of $2,730.  On March 9, 2015 the Company engaged EquityGroups to conduct an investor campaign to increase the Companys public awareness. The Company has agreed to pay $2,500 per month for the first three months increasing to $3,500 per month thereafter. The consultant may also earn up to 1M of common shares. From time to time, the Company intends to hire a variety of companies to increase public awareness.  On March 10, 2015 the Company announced that Ms. Alice P. Neuhauser has been appointed as Chief Operating Officer of the Company.  On March 26, 2015 the Board resolved that the Company issue 1,250,000 shares of unregistered and restricted common shares to Alex Warner in exchange for $50,000 of services.   46  Table of Contents   On March 31, 2015 the Company announced that it had signed definitive agreements to acquire the assets of Applebox Productions. The acquisition is structured as an asset purchase consisting of lights, cameras, grip equipment, electrics, production vehicles, etc. The purchase price of One Million Dollars ($1,000,000) is being financed by a combination of traditional equipment loans and seller financing. The seller-financing note is both corporately guaranteed and personally guaranteed by Mr. Jake Shapiro, Chairman of the Board of the Company. Closing is expected to take place by mid May, 2015  In the period to March 31, 2015 the Company issued a Long Term Note in the amount of $78,000. The Note matures 36 months after issue.  Subsequent to September 30, 2014, the Company issued $1,154,879 of Convertible Notes. The Convertible Notes have interest rates of between 8% and 12% and mature one year from the date of issue. The Convertible Notes are convertible between no days and 180 days. The discount on conversion ranges from 45% to 50% based on various share prices averaged over a number of days prior to the date of conversion or the date of notice of conversion.  12 . EMPLOYEE BENEFIT PLANS  During the years ended September 30, 2014 and 2013, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans authorized for any class of employees.   47   Table of Contents   ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  On December 12, 2014 the Company discontinued audit services with Malone Bailey, LLP, (MB) its independent registered public accounting firm, and appointed The Hall Group CPAs as its independent registered public accounting firm.  During the term of engagement of MB there were no disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedure which, if not resolved to the satisfaction of MB, would have caused MB to make reference to the subject matter of the disagreement(s) in connection with any report.  On March 6, 2015, the registrant dismissed The Hall Group, CPAs as their registered independent public accountant.  On March 6, 2015, the registrant engaged MaloneBailey, LLP as its new registered independent public accountant.  MaloneBailey has previously served as the Companys independent public accountants.  ITEM 9A. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures:



Based on our evaluation as of the end of the period covered by this Annual Report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this Annual Report were not effective such that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding disclosure. This material deficiency is due to a lack of adequate internal controls and the lack of an audit committee.



Managements Annual Report on Internal Control over Financial Reporting:



The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).  The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.





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Table of Contents



The Companys management, with the participation of the principal executive officer and the principal financial officer, evaluated the effectiveness of the Companys internal control over financial reporting as of September 30, 2014.  In making this assessment, the Companys management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control  Integrated Framework.  Based on this evaluation,ourmanagement, with the participation of the principal executive officer and principal financial officer, concluded that, as of September 30, 2014, ourinternal control over financial reporting was not effective, due primarily to lack of adequate internal controls and the lack of an audit committee.  The most significant material weaknesses that led management to this conclusion are the lack of segregation of duties, and failure in the operation of controls over stock based compensation and derivative liabilities.



This Annual Report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting.  Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to rules of the Commission that permit the Company to provide only managements report in this Annual Report. Evaluation of Changes in Internal Control over Financial Reporting:



There have been no changes in internal control over financial reporting during the fourth quarter of the fiscal year covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting. ITEM 9B. OTHER INFORMATION



The Company is delinquent in meeting its payroll tax obligations and is working to correct this as soon as possible.



49







Table of Contents

PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE



Identification of Directors and Executive Officers



The following table sets forth the names of all current directors and executive officers of the Company. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.


|                                                   |                                                                  |                                                                 |                                     
|-------------------------------------------------- | ---------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------------------
|Name                                               | Positions Held                                                   | Date of Election or Designation                                 | Date of Termination or Resignation  
|Robert B. Lees                                     | President                                                        | 2/27/2013                                                       | 10/1/2014                           
|                                                   | CEO                                                              | 2/27/2013                                                       | 10/1/2014                           
|                                                   | Chairman                                                         | 12/24/97                                                        | 10/1/2014*                          
|                                                   | CFO                                                              | 7/10/08                                                         | 10/3/2014                           
|                                                   | Director                                                         | 12/24/97                                                        | 10/1/2014                           
|                                                   | Secretary                                                        | 3/29/12                                                         | 2/27/2013                           
|                                                   |                                                                  |                                                                 |                                     
|Nicole Leigh                                       | Secretary                                                        | 2/27/2013                                                       | *  3/1/2015                         
|                                                   | Director                                                         | 6/4/07                                                          | *  3/1/2015                         
|                                                   |                                                                  |                                                                 |                                     
|Roger Miguel                                       | Director
        President
        CEO
        CFO               | 9/11/2013
        10/1/2014
        10/1/2014
        10/3/2014 | *
        
        
        3/1/2015
|                                                   |                                                                  |                                                                 |                                     
|Jake Shapiro                                       | Chairman                                                         | 12/08/2014                                                      |                                     
|                                                   |                                                                  |                                                                 |                                     
|Joseph Giamichael                                  | Chairman of Audit Committee                                      | 3/1/2015                                                        |                                     
|                                                   |                                                                  |                                                                 |                                     
|Alice Neuhauser
        
        Graham Bradstreet | Chief Operating Officer
        
        Chief Financial Officer | 3/6/2015
        
        3/1/2015                              |                                     

* These persons presently serve in the capacities indicated.   50    Table of Contents Business Experience  Robert B. Lees.  Mr. Lees, age 66, is a graduate of the U.S. Naval Academy. He served as an Officer in the Marine Corps, both overseas and domestically.  After transferring to the active Reserves, he joined the DuPont Company, where he managed the Southeastern Region.  He took the region from last to first in the acrylic sheet division for sales and service.  He then became part owner and general manager of a wood laminating operation in Orlando, Florida.  Upon the sale of the business, he joined Merrill Lynch in the Private Client Group and became an assistant Vice President.  He has since consulted to a Florida-based investor relations firm, and served as President and Chief Operating Officer of two start-up companies, as well as his current position.  Ms. Leigh is 42 years of age.  She is a 1989 graduate of Washington High School in Phoenix, Arizona.  For the past six years, she has been significantly involved in the Companys operations, including web site design and maintenance, inventory and shipping, online sales fulfillment and general operations.  On October 1, 2014, Robert B. Lees, Nicole Leigh and Roger Miguel, acting as the sole directors of FONU2 resolved to accept the resignation of Mr. Lees as the Companys President and Chief Executive Officer and to appoint Mr. Miguel to serve in such capacities.  Mr. Lees will continue to serve as the Chief Financial Officer and as a director of the Company.  On October 3, 2014, Robert B. Lees resigned as a director and as the Chief Financial Officer of FONU2 for personal reasons.  On the same date, the Companys Board of Directors unanimously resolved to appoint Roger Miguel, the Companys Chief Executive Officer and one of its two remaining directors, to serve as interim Chief Financial Officer.  Mr. Miguel is 59 years old.  Mr. Miguel graduated from The University of Toronto in 1979 with an Honors BA in Commerce and Economics and has over 30 years experience in the Information Technology Industry.  He currently is serving as Chief Operating Officer at the Companys wholly-owned subsidiary, FONU2 CCN, Inc. which includes responsibility for all corporate and administrative functions, sales, marketing, contract negotiations and strategic partnerships.  Previously Roger held Senior Management Positions with some of the worlds largest Computer Services Outsourcing Companies (EDS/HP, Computer Sciences Corp, Xerox Business Services).  He managed application services outsourcing across wide variety of industries and provided large account management with major clients such as General Motors, Sears and the Government of Ontario, Canada. Served as Regional Applications Services Manager for CSC in the U.S. Midwest region, Application Service Center Director (900 FTEs) for South East US, and Services Director of Global Process Management for the Americas and the Zurich  51   Table of Contents  Financial Services global account.  Successfully managed all aspects of the business including participating in several successful CMMI Level 3, ISO 9K, ISO 20K certifications, large program and product management, business process re-engineering, and business process outsourcing.  There are no family relationships between Mr. Miguel and any other director, executive officer or person nominated or chosen by the Company to become a director or executive officer.  Mr. Jake Shapiro is 43 years old.  Mr. Shapiro has served as a founder or co-founder of several technology and commercial product companies and has helped structure and/or finance companies in Asia, South America, Australia, Western Europe, Eastern Europe, and North America. Shapiro is also a former Principal and Vice President from M.H. Meyerson & Company, where he served as a Senior Equities Trader, servicing clients such as Goldman Sachs, Lehman Brothers, and Deutsche Bank. Mr. Shapiro currently serves as the Companys Chairman of the Board. There are no family relationships between Mr. Shapiro and any other director, executive officer or person nominated or chosen by the Company to become a director or executive officer.  Mr. Shapiro was formerly an officer of Medient Studios, Inc. (now Moon River Studios, Inc.)  Mr. Joseph Giamichael is 43 years old.  Mr. Giamichael is the founder and Chief Executive Officer of Umbrella Research and Advisory, an emerging growth research and advisory financial services boutique. He has extensive capital markets experience, including over a decade as a publishing analyst and several years as a trader with an emphasis on special situations, as well as having served as an advisor to a middle markets-oriented private equity firm. Mr. Giamichael earned his Bachelor of Science degree from Skidmore College and was previously employed by Global Hunter Securities LLC, Rodman and Renshaw LLC, CJS Securities LLC, and Knight Capital Group.  Mr. Giamichael currently serves as the Companys Chairman of the Audit Committee. There are no family relationships between Mr. Giamichael and any other director, executive officer or person nominated or chosen by the Company to become a director or executive officer.  Mr. Giamichael was formerly an officer of Medient Studios, Inc. (now Moon River Studios, Inc.)  Alice Neuhauser, age 53, has been a manager of New Beginning Enterprises, LLC from 1999 through today.  She has been the responsible officer for the Kushner-Locke Company and has been the manager of its successor entity, Kushner Locke, LLC, from 2002 through today.  She worked in SVP film operations with Relativity Media from 2006 through 2014.  In addition, she has provided consulting work for Zen Media and Lloyd Ivan Miller Productions.



Ms. Neuhauser received an MBA from the Anderson School at UCLA in 1994.  She received her BA at Harvard College in 1984. On March 1, 2015, the Company appointed Graham Bradstreet, age 62, as Chief Financial Officer.  His position will last for one year, and is renewable at the yearly shareholder meeting.  There is no family relationship between Mr. Bradstreet and any other member of the Company, nor any material plans, contracts, or arrangements to which Mr. Bradstreet is a party. From 2000 through today, Mr. Bradstreet has worked as a consultant to various entities and was the executive producer for the movies Carmen and 360 .  From August 2012 through February 27, 2015, he worked as a financial consultant for Medient.  From 1997 through 2001, he was the founder and director of ICE Media, which managed insurance-backed film financing. Mr. Bradstreet qualified as a chartered accountant in New Zealand in 1974. Mr. Bradstreet was formerly an officer of Medient Studios, Inc. (now Moon River Studios, Inc.)   52    Table of Contents Significant Employees  Other than Jeffrey Pollitt, who is responsible for the development of our prepaid card service program, FONU2 has no significant employees who are not executive officers.  Jeffrey Pollitt is no longer with the Company, he apparently resigned without notice in July 2014 and the Company has been unable to contact him since.  Family Relationships  None; not applicable.  Directorships  None of the Companys directors holds a directorship in any other company with a class of securities registered pursuant to Section12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.  Involvement in Certain Legal Proceedings  During the past ten years, no director, promoter or control person:  · has filed a petition under federal
bankruptcy laws or any state insolvency laws, nor had a receiver, fiscal agent or similar officer appointed by a court for
the business or property of such person, or any partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of which he was an executive officer at or within two
years before the time of such filing exclusive of Mr. Shapiro who served as an officer for 360 Global Wine Company, which declared voluntary bankruptcy
on March 7, 2007;  · was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);  · was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting the following activities:  - Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;  53     Table of Contents - Engaging in any type of business practice; or  - Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;  - was the subject of any order, judgment or decree, not subsequently reverse, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in the preceding bullet point, or to be associated with persons engaged in any such activity;  - was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated;  - was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;  - was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:  - any Federal or State securities or commodities law or regulation; or  - any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or  - any law or regulation prohibiting mail or wire fraud in connection with any business activity; or  - was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, or any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.   54   Table of Contents  Promoters and control person.  Not applicable.  Section 16(a) Beneficial Ownership Reporting Compliance  Based solely on a review of Forms 3, 4 and 5, and amendment thereto, filed during the most recently completed fiscal year, and since then, the Company has determined that the following persons failed to file the following Section 16(a) forms on a timely basis:  Jeffrey M. Pollitt, Form 4 re disposition of 15,000,000 shares of common stock on February 27, 2013.  Robert B. Lees, Form 5 re various transactions during the 2013 fiscal year.  Nicole Leigh, Form 5 re various transactions during the 2013 fiscal year.  J & S Funding Group, LLC, Form 3 re acquisition of a number of shares of common stock triggering the Form 3 filing requirement on November 19, 2013.  Jeffrey M. Pollitt, Form 4 re various transactions beginning on July 3, 2013.  J & S Funding Group re various transactions during the 2014 fiscal year.  Code of Ethics  The Company adopted a Code of Ethics that was filed as Exhibit 14 to our Annual Report on Form 10-KSB-A1 for the year ended September 30, 2012.  The Company undertakes to provide to any person, without charge, upon request, a copy of such Code of Ethics.  Requests may be made by contacting the Company at 954-938-4133.  Corporate Governance  Nominating Committee  During the annual period ended September 30, 2014, there were no changes in the procedures by which security holders may recommend nominees to FONU2s Board of Directors, and FONU2 does not presently have a Nominating Committee for members of its Board of Directors.  Nominations are considered by the entire Board.  Committees of the Board of Directors



FONU2 is managed under the direction of its Board of Directors.





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Compensation Committee



The members of the Board of Directors serve as its compensation committee, with the serving Chairman as Chairman of the committee. Audit Committee



The members of the Board of Directors serve as its audit committee, with Mr. Miguel serving as its chairman.



Previous "Blank Check" or "Shell" Company Involvement



Management of FONU2 has not been involved in prior private "blank-check" or "shell" companies.



Annual Meeting



The annual meeting of FONU2 stockholders is expected to be held at a future date as soon as practicable. This will be an annual meeting of stockholders for the election of directors. The annual meeting will be held at FONU2s principal office or at such other place as permitted by the laws of the State of Nevada and on such date as may be fixed from time to time by resolution of FONU2s Board of Directors. ITEM 11. EXECUTIVE COMPENSATION



The following table sets forth the compensation paid to officers and Board of Directors members during the fiscal years ended September 30, 2014 and 2013. The table sets forth this information for salary, bonus, and certain other compensation to the Board of Directors members and named executive officers for the past three fiscal years and includes all Board of Directors members and officers as of September 30, 2014.  56





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SUMMARY COMPENSATION TABLE


|                                                            |                                         |                                |                               |                                      |                                       |                                                                |                                                                             |                                                        |                               |  |  |  |  |  |  |  | 
|----------------------------------------------------------- | --------------------------------------- | ------------------------------ | ----------------------------- | ------------------------------------ | ------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------- |  |  |  |  |  |  |  | 
|                                                            |                                         |                                |                               |                                      |                                       |                                                                |                                                                             |                                                        |                              
|Name and Principal Position
        (a)                     | Year
        (b)                        | Salary
        ($)
        (c) | Bonus
        ($)
        (d) | Stock Awards
        ($)
        (e) | Option Awards
        ($)
        (f) | Non-Equity Incentive Plan Compensation
        ($)
        (g) | Nonqualified
        Deferred Compensation Earnings
        ($)
        (h) | All Other
        Compensation
        ($)
        (i) | Total
        ($)
        (j)
|                                                            | 9/30/14                                 |                                |                               | 2,000,000                            |                                       |                                                                |                                                                             | 11,000                                                 |                              
|Robert B. Lees
        President,
        CEO and CFO       | 9/30/13
        9/30/12
        9/30/11 |                                | (1)
        36,400
        0  | 0
        0
        0                | (1)
        75,000
        0          | 0
        0
        0                                          | 0
        0
        0                                                       | 8,000
        0
        0                              | (1)
        111,400
        0
|                                                            | 9/30/14                                 |                                |                               | 750,000                              |                                       |                                                                |                                                                             | $46,100                                                |                              
|Nicole Leigh,
        Secretary and Chief Marketing Officer | 9/30/13
        9/30/12
        9/30/11 |                                | (1)
        36,400
        0  | 0
        0
        0                | (1)
        75,000
        0          | 0
        0
        0                                          | 0
        0
        0                                                       | 0
        0
        0                                  | (1)
        111,400
        0
|                                                            |                                         |                                |                               |                                      |                                       |                                                                |                                                                             |                                                        |                              
|Roger Miguel
        COO                                    | 9/30/14                                 |                                |                               | 2,000,000                            |                                       |                                                                |                                                                             | 17,000                                                 |                              

(1) Under the terms of their Executive Employment Agreements, our President/Chief Executive Officer and Chief Financial Officer, Robert B. Lees, and our Secretary and Chief Marketing Officer, Nicole Leigh, each was entitled to receive a salary of $36,400 per year and 12,500 unregistered and restricted shares of common stock per month. Due to unavailability of funds, the Company was unable to pay any cash compensation to Mr. Lees or Ms. Leigh during our 2013 fiscal year.  On July 3, 2013, the Board of Directors resolved to compensate Mr. Lees and Ms. Leigh in the amount of 2,000,000 unregistered and restricted shares each for services rendered, valued at $0.013 per share.  The parties agreed to terminate both of the Executive Employment Agreements on August 27, 2013, and in consideration of the issuance of 500,000 unregistered and restricted shares each, Mr. Lees and Ms. Leigh released all claims against the Company for accrued but unpaid compensation under their respective Executive Employment Agreements.  The Company paid both Messrs. Lees and Miguel cash compensation of $4,000 per month in the months of August, September and November, 2013. Except for such compensation and as indicated above, no cash compensation, deferred compensation, pension benefits or long-term incentive plan awards were issued or granted to FONU2's management during the fiscal years indicated above.  Further, no member of management has been granted any option or stock appreciation rights except as indicated above; accordingly, no tables relating to such items have been included within this Item. 57





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OPTION/SAR GRANTS IN THE LAST FISCAL YEAR



FONU2 does not have a stock option plan as of the date of this filing. There was no grant of stock options to the Chief Executive Officer and other named executive officers during the fiscal years ended September 31, 2014 and 2013.



Employment Contracts and Termination of Employment and Change-in-Control arrangements.



There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company, with respect to any of Our directors or executive officers which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with Us, any change in control of Us, or a change in the person's responsibilities following such a change in control.



Compensation Committee Interlocks and Insider Participation



The FONU2 Board of Directors in its entirety acts as the compensation committee for FONU2, with the serving Chairman as Chairman of the committee.



Stock Option Plan



None; not applicable.



Compensation of Directors



None; not applicable.  Limitation on Liability and Indemnification



FONU2 is a Nevada corporation. The Nevada Revised Statutes (NRS) provides that the Articles of Incorporation of a Nevada corporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except that any such provision may not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) acts specified in Section 78 (concerning unlawful distributions), or (iv) any transaction from which a director directly or indirectly derived an improper personal benefit. FONU2s Articles of Incorporation contain a provision eliminating the personal liability of directors to FONU2 or FONU2 shareholders for monetary damages to the fullest extent provided by the NRS.





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The NRS provides that a Nevada corporation must indemnify a person who was wholly successful, on the merits or otherwise, in defense of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal (a "Proceeding"), in which he or she was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the Proceeding, unless such indemnity is limited by the corporation's articles of incorporation. FONU2s Articles of Incorporation do not contain any such limitation.



The NRS provides that a Nevada corporation may indemnify a person made a party to a Proceeding because the person is or was a director against any obligation incurred with respect to a Proceeding to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred in the Proceeding if the person conducted himself or herself in good faith and the person reasonably believed, in the case of conduct in an official capacity with the corporation, that the person's conduct was in the corporation's best interests and, in all other cases, his or her conduct was at least not opposed to the corporation's best interests and, with respect to any criminal proceedings, the person had no reasonable cause to believe that his or her conduct was unlawful. The Company's Articles of Incorporation and bylaws allow for such indemnification. A corporation may not indemnify a director in connection with any Proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or, in connection with any other Proceeding charging that the director derived an improper personal benefit, whether or not involving actions in an official capacity, in which Proceeding the director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted in connection with a Proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with such Proceeding. The NRS, unless otherwise provided in the articles of incorporation, a Nevada corporation may indemnify an officer, employee, fiduciary, or agent of the corporation to the same extent as a director and may indemnify such a person who is not a director to a greater extent, if not inconsistent with public policy and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract. FONUs Articles of Incorporation provide for indemnification of directors, officers, employees, fiduciaries and agents of FONU2 to the full extent permitted by Nevada law.



FONU2s Articles of Incorporation also provide that FONU2 may purchase and maintain insurance on behalf of any person who is or was a director or officer of FONU2 or who is or was serving at the request of FONU2 as a director, officer or agent of another enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not FONU2 would have the power to indemnify him or her against such liability.





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EQUITY COMPENSATION PLAN INFORMATION



The Company has not established an equity compensation plan or Incentive Stock Option Plan. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



The following table sets forth, as of September 30, 2014, the number and percentage of Our outstanding shares of common stock owned by (i) each person known to Us to beneficially own more than 5% of its outstanding common stock, (ii) each director, (iii) each named executive officer and significant employee, and (iv) all officers and directors as a group. Name and Address of Stockholder
    Common Stock
    PercentageJ & S Funding Group LLC
        330 NW 67 th St. #104
        Boca Raton, FL 33487
    1,750,000
    1.4%  Security Ownership of Management  The following table sets forth the share holdings of the Companys directors and executive officers as of the date of this Report:  Name and Address of Stockholder
    Common Stock
    PercentageNicole Leigh
        331 East Commercial Boulevard
        Ft. Lauderdale, FL  33334
    4,050,714(1)
    3.2%Robert B. Lees
        331 East Commercial Boulevard
        Ft. Lauderdale, FL  33334
    7,910,000 (2)
    6.3%Roger Miguel
        331 East Commercial Boulevard
        Ft. Lauderdale, FL  33334
    4,760,062
    3.8%  (1)  This figure includes 250,000 shares of common stock that may be issued upon exercise of options having an exercise price of $0.50, and which may currently be deemed to be out-of-the-money.  (2)  This figure includes 50,000 shares of common stock that may be issued upon exercise of options having an exercise price of $0.50, and which may currently be deemed to be out-of-the-money.  Changes in Control  Other than as noted in Note 11 above, there are no present arrangements or pledges of our securities which may result in a change in control of FONU2.   60   Table of Contents   Securities Authorized for Issuance under Equity Compensation Plans


|                                                           |                                                                                             |                                                                             |                                                                                                                                          
|---------------------------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------
|                                                           |                                                                                             |                                                                             |                                                                                                                                          
|                                                           |                                                                                             |                                                                             |                                                                                                                                          
|Plan Category                                              | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)
|                                                           | (a)                                                                                         | (b)                                                                         | (c)                                                                                                                                      
|Equity compensation plans approved by security holders     | -0-                                                                                         | -0-                                                                         | -0-                                                                                                                                      
|Equity compensation plans not approved by security holders | 905,000                                                                                     | $0.50                                                                       | 95,000                                                                                                                                   
|Total                                                      | 905,000                                                                                     | $0.50                                                                       | 95,000                                                                                                                                   

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Transactions with Related Persons



Except as indicated below, there were no material transactions, or series of similar transactions, during the Companys last two fiscal years, or any currently proposed transactions, or series of similar transactions, to which the Company or any of Our subsidiaries was or is to be a party, in which the amount involved exceeded the lesser of $120,000 or one percent of the average of the Company's total assets at year-end for such fiscal years and in which any director, executive officer or any security holder who is known to Us to own of record or beneficially more than five percent of any class of Our common stock, or any member of the immediate family of any of the foregoing persons, had an interest.  On November 11, 2011, the Company loaned $7,000 to Mr. Lees.  Mr. Lees repaid the $7,000 principal amount on the loan on December 20, 2011, together with $70 in interest.



Promoters and Certain Control Persons



Except as indicated under the heading Transactions with Related Persons above, there have been no transactions since the beginning of Our last fiscal year, or any currently proposed transaction in which the Company was or is to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of Our total assets at year end for the last three completed fiscal years.



Parents of the Smaller Reporting Company



FONU2 has no parents.





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Director Independence



The Company does not have any independent directors serving on its board of directors.  ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES



The following is a summary of the fees billed to the Company by its principal accountants during the fiscal years ended September 30, 2014, and 2013:  Fee category
    
    2014
    
    
    2013Audit fees  -  Malone Bailey
    
    $
    24,035
    
    
    $
    19,695- The Hall Group
    
    
    15,000Audit-related fees
    
    $
    0
    
    
    $
    0Tax fees
    
    $
    0
    
    
    $
    0All other fees
    
    $
    0
    
    
    $
    0Total fees
    
    $
    39,035
    
    
    $
    19,695  Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of the Companys annual financial statements and review of the financial statements included in the Companys Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.  Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the Companys financial statements and are not reported under Audit fees.  Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.  All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under Audit fees, Audit-related fees, and Tax fees above.  Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors  The Company has not established an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, the Company does not require approval in advance of the performance of professional services to be provided to the Company by its principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.   62   Table of Contents  PART IV ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES



(a)(1)  List of Financial statements included in Part II hereof



Balance Sheets as of September 30, 2014 and 2013

Statements of Operations for the Years Ended September 30, 2014 and 2013

Statements of Stockholders' Deficit for the Period from September 30, 2012 through September 30, 2014

Statements of Cash Flows for the years ended September 30, 2014 and 2013

Notes to the Financial Statements



(a)(2) List of Financial Statement schedules included in Part IV hereof:  None.

(a)(3) Exhibits



The following exhibits are included herewith:  Exhibit No.
    Description31
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002101.INS*
    XBRL Instance Document101.SCH*
    XBRL Taxonomy Extension Schema Document101.CAL*
    XBRL Taxonomy Extension Calculation Linkbase Document101.DEF*
    XBRL Taxonomy Extension Definition Linkbase Document101.LAB*
    XBRL Taxonomy Extension Label Linkbase Document101.PRE*
    XBRL Taxonomy Extension Presentation Linkbase Document  *XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.  Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.   63









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|      |                                                  |                |                   
|----- | ------------------------------------------------ | -------------- | ------------------
|NO.   | DESCRIPTION                                      | FILED WITH     | DATE FILED        
|3.1   | Articles of Incorporation                        | Form 10 SB 12G | February 28, 2002 
|3.2   | Certificate of Amendment                         | Form 10 SB 12G | February 28, 2002 
|3.3   | Certificate of Amendment                         | Form 8-K       | September 17, 2004
|3.4   | Certificate of Amendment                         | Form 8-K       | August 24, 2010   
|3.5   | Certificate of Amendment                         | Form 8-K       | April 12, 2012    
|3.6   | Bylaws                                           | Form 10 SB 12G | February 28, 2002 
|10.1  | Warrant Amendment Agreement                      | Form 8-K       | October 2, 2009   
|10.2  | Investment Banking and Advisory Agreement        | Form 8-K       | November 20, 2009 
|10.3  | Placement Agreement                              | Form 8-K       | November 20, 2009 
|10.4  | Securities Purchase Agreement                    | Form 8-K       | May 10, 2010      
|10.5  | Convertible Promissory Note with Asher           | Form 8-K       | May 10, 2010      
|10.6  | Amendment to Asher Convertible Promissory Note   | Form 8-K       | September 14, 2010
|10.7  | Agreement and Plan of Reorganization             | Form 8-K       | March 6, 2012     
|10.8  | Jeffrey Pollitt Executive Employment Agreement   | Form 8-K       | March 29, 2012    
|10.9  | Robert Lees Executive Employment Agreement       | Form 8-K       | March 29, 2012    
|10.10 | Nicole Leigh Executive Employment Agreement      | Form 8-K       | March 29, 2012    
|10.11 | Mark Simpson Executive Employment Agreement      | Form 8-K       | March 29, 2012    
|10.12 | William Lavenia Independent Contractor Agreement | Form 8-K       | March 29, 2012    
|10.13 | Jeff Olweean Independent Contractor Agreement    | Form 8-K       | March 29, 2012    
|10.14 | Redemption Agreement with HMBL Trust             | Form 8-K       | October 24, 2012  
|10.15 | Securities Purchase Agreement with Asher         | Form 8-K       | March 19, 2013    
|10.16 | Convertible Promissory Note with Asher           | Form 8-K       | March 19, 2013    
|10.17 | Securities Purchase Agreement with Asher         | Form 8-K       | July 1, 2013      
|10.18 | Convertible Promissory Note with Asher           | Form 8-K       | July 1, 2013      
|10.19 | Consulting Agreement with EquityGroups, LLC      | Form 8-K       | August 13, 2013   
|10.20 | Securities Purchase Agreement with Asher         | Form 8-K       | November 19, 2013 
|10.21 | Convertible Promissory Note with Asher           | Form 8-K       | November 19, 2013 
|10.22 | Securities Purchase Agreement with Asher         | Form 8-K       | January 31, 2014  
|10.23 | Convertible Promissory Note with Asher           | Form 8-K       | January 31, 2014  
|10.24 | Agreement with Maximum Performance Advisors      | Form 8-K       | February 3, 2014  
|10.25 | Asset Purchase Agreement                         | Form 8-K       | December 12, 2014 

64    Table of Contents SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) 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.  /s/ Roger Miguel September 10, 2015 Roger Miguel Chief Executive Officer   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.  /s/ Roger Miguel September 10, 2015 Roger Miguel Chief Executive Officer Director  /s/ Graham Bradstreet September 10, 2015 Graham Bradstreet Chief Financial Officer  /s/ Alice Neuhauser September 10, 2015 Alice Neuhauser Chief Operating Officer  /s/ Joseph Giamichael September 10, 2015 Joseph Giamichael Chairman of Audit Committee Director  /s/ Jake Shapiro September 10, 2015 Jake Shapiro Chairman of the Board   65