FONU2 Inc. (OTCPK:FONU) announced that it has entered into a material definitive agreement for the private placement of a 5% secured promissory note with SBI Investments LLC, a fund managed by new accredited investor Sea Otter Global Ventures for gross proceeds of $250,000 on May 29, 2015. The note has a principal amount of $275,000. The company also issued warrants for 500,000 shares of common stock exercisable at $0.015 per share for a three year period.

The note bears fixed interest at 5% per annum, and is paid over four quarters beginning August 29, 2015, with a final payment of all remaining principal, accrued interest and any fees then due on May 29, 2016. Any overdue principal bears interest at 22% per annum. The note is not convertible.

Upon the occurrence of certain events of default in the note, including but not limited to the failure to make a principal or interest payment; the company's breach of any material covenant, representation or warranty with respect to the note or other agreement with the investor; the appointment of a receiver or trustee for the company, or the commencement of a bankruptcy, liquidation or insolvency proceeding; the default by the company under other debt instruments; or the change of control of the company, the note becomes immediately due and payable and the company shall pay to the investor 125% of the sum of the then outstanding principal on the note, together with default interest. The payment of the note is secured by the pledge by Joel Jake Shapiro, Chairman of the Company, of 1,875 shares of the company's series B convertible preferred stock owned by Joel Jake Shapiro.