~ ASHER ~

[lmcat]

FONU2 Inc.

On April 30, 2012, the Company issued an 8% secured convertible note (the “April 2012 Note”) in the amount of $58,000 to Asher Enterprises, Inc. (“Asher”). The principal and accrued interest is payable on February 2, 2013, or such earlier date as defined in the agreement. The note is convertible by Asher at any time after 180 days from the issue date.
The note is convertible into shares of the Company’s common stock at a price of 58% of the average of the three lowest trading prices of the Company’s common stock during the ten trading day period ending on the latest complete trading day prior to the conversion date. Asher is not entitled to convert any portion of the April 2012 Note to the extent that the shares to be issued in connection therewith would cause Asher’s beneficial ownership of the Company’s common stock to exceed 4.99% of the outstanding shares of the Company’s common stock.
Because of the operation of the floating conversion price and the limitation on the ability of Asher to convert as described above, the Company is unable to determine at any time the number of shares into which Asher could convert the April 2012 Note.