Functional Brands restructures preferred and adds notes

Functional Brands Inc. entered into an Exchange and Amendment Agreement with several investors to restructure its preferred equity and add new secured debt.

Rhea-AI Filing Summary

Functional Brands Inc. entered into an Exchange and Amendment Agreement with several investors to restructure its preferred equity and add new secured debt. Investors exchanged all Series A and Series B Convertible Preferred Stock for a package valued at an assigned stated value of $8,378,000.

The consideration includes $6,032,160 in stated value of new Series C Convertible Preferred Stock, $900,000 in cash, $837,800 principal amount of senior secured convertible notes and 5,190,171 shares of common stock. Investors agreed to near-term selling limits, including no open-market common stock sales before the next shareholder meeting record date and a 15% of trading volume cap per day afterward.

The Series C Preferred has a $1,000 stated value and is convertible into common stock at three fixed prices: half at $0.30 per share, a quarter at $0.35 and a quarter at $0.41. The new notes bear 12% annual interest, amortize over 17 months starting one year after issuance, are prepayable at par plus interest and are convertible at 120% of the common stock’s closing price on the exchange date. To secure these obligations, the investors received a security interest in substantially all company assets, and the company filed a Certificate of Designation establishing the Series C Preferred.

Insights

Capital structure and credit analyst

Functional Brands swaps legacy preferred for new Series C and adds secured convertible notes, reshaping leverage and equity overhang.

Functional Brands is replacing outstanding Series A and B preferred with a new mix of Series C preferred, cash, secured convertible notes and common shares valued at an assigned stated value of $8,378,000. This consolidates multiple preferred layers into one new class with defined conversion tiers.

The Series C Preferred concentrates conversion into three fixed price levels between $0.30 and $0.41 per share, while the notes accrue 12% interest and mature 17 months after issuance. Both instruments are convertible into common stock, so eventual dilution will depend on future share prices and conversion decisions.

The notes are senior, secured by substantially all company assets, and require amortization in one-sixth monthly installments beginning one year after issuance. Investor sale restrictions on common stock and the company’s ability to repurchase Series C at stated value may influence trading dynamics and future capital management, but actual effects will hinge on subsequent conversions, repayments and operating performance.

8-K Event Classification

4 items: 1.01, 2.03, 5.03, 9.01

4 items

Item 1.01 Entry into a Material Definitive Agreement Business

The company signed a significant contract such as a merger agreement, credit facility, or major partnership.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial

The company incurred a new significant debt or off-balance-sheet obligation.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year Governance

The company amended its charter documents, bylaws, or changed its fiscal year.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, or exhibit attachments filed with this report.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What capital restructuring did Functional Brands Inc. (MEHA) announce in this 8-K?

Functional Brands agreed to exchange all investors’ Series A and B Convertible Preferred Stock for a package valued at an assigned stated value of $8,378,000. The package includes new Series C Preferred shares, cash, senior secured convertible notes and 5,190,171 shares of common stock.

What are the key terms of Functional Brands’ new Series C Convertible Preferred Stock?

The Series C Preferred has a stated value of $1,000 per share and is convertible into common stock at three fixed prices. Half converts at $0.30 per share, one quarter at $0.35 and the remaining quarter at $0.41 per share, with standard anti-dilution provisions.

What are the main features of Functional Brands’ new senior secured convertible notes?

The notes have $837,800 principal, bear 12% annual interest accruing monthly and mature 17 months after issuance. They amortize in one-sixth monthly installments starting one year after issuance, are prepayable at 100% of principal plus accrued interest, and are convertible at 120% of the common stock’s exchange-date closing price.

How much consideration did investors receive in Functional Brands’ preferred stock exchange?

Investors received an aggregate package comprising $6,032,160 in Series C Preferred stated value, $900,000 in cash, $837,800 in senior secured convertible notes and 5,190,171 common shares. This package covers the assigned stated value of the exchanged Series A and Series B Convertible Preferred Stock.

What selling restrictions apply to Functional Brands’ investors after this exchange?

Investors agreed not to sell any common shares in the open market before the record date for the next shareholder meeting. After that record date, their aggregate open-market sales on any trading day cannot exceed 15% of that day’s trading volume in Functional Brands’ common stock.

How are Functional Brands’ obligations under the new notes and agreements secured?

To secure its obligations under the notes, the exchange agreement and related documents, Functional Brands granted the investors a security interest in and lien on substantially all of the company’s assets. This elevates the investors’ claims relative to unsecured creditors if enforcement becomes necessary.

What corporate action did Functional Brands take to establish the Series C Preferred shares?

On March 12, 2026, Functional Brands filed a Certificate of Designation, Preferences and Rights with the Delaware Secretary of State. This filing formally designates and establishes the terms of the Series C Convertible Preferred Shares, including stated value, conversion structure and other rights.

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Accepted by SEC EDGAR 03/13/2026 - 04:38 PM EDT Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): March 9, 2026

Functional Brands Inc.

(Exact name of Registrant as Specified in its Charter)

Delaware		001-42936		85-4094332
(State or other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

6400 SW Rosewood Street

Lake Oswego, Oregon 97035

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code): (800) 245-8282

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.00001 par value share		MEHA		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01. Entry into a Material Definitive Agreement

The descriptions below as they relate to the, Series C Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Shares of the Company (the “CoD”), the Senior Secured Convertible Notes (the “Notes”), the Exchange and Amendment Agreement (the “Exchange Agreement”), and the Pledge and Security Agreement (the “Security Agreement”), do not purport to be complete and are qualified in their entirety by the copies of such documents filed herewith as Exhibits 3.1, 4.1, 10.1 and 10.2, respectively, and are incorporated by reference into this Item 1.01.

Exchange Agreement

Effective as of March 9, 2026, Functional Brands Inc. (the “Company”) entered into the Exchange Agreement with Leonite Fund I, LP, Kips Bay Select LP, FirstFire Global Opportunities Fund, LLC and 3i LP (collectively, the “Investors”) pursuant to which the Investors agreed to exchange all of the Company’s Series A and Series B Convertible Preferred Stock held by such Investors for a combined consideration package consisting of shares of the Company’s new Series C Convertible Preferred Stock (the “Series C Preferred”), cash, Notes and shares of the Company’s common stock , par value $0.00001 per share (the “Common Stock”). The remaining stated values of the Series A Preferred and Series B Preferred were, for purposes of the exchange, valued at 80% and 100% respectively, yielding an aggregate assigned stated value of $8,378,000 to be covered by the consideration package, The aggregate consideration paid for the exchange consists of (i) $6,032,160 in stated value of Series C Preferred, (ii) $900,000 in cash, $450,000 payable immediately and $450,000 to be paid upon the earlier of effectiveness of a registration statement covering Common Stock to be issued in connection with a proposed equity line of credit or 90 days after the date of the Exchange Agreement, (iii) $837,800 in principal amount of Notes and (iv) 5,190,171 shares of Common Stock.

The Investors also agreed not to sell any shares of Common Stock in the open market prior to the record date for the next annual or special meeting of stockholders of the Company and after such record date the aggregate number of shares of Common Stock sold by the Investors in the open market on any trading day may not exceed 15% of the trading volume for such trading day.

Series C Preferred.

The Series C Preferred has a stated value of $1,000 per share. The Series C Preferred is convertible into Common Stock at three fixed conversion price tiers. Fifty percent (50%) of the Series C Preferred stated value is convertible at $0.30 per share, twenty-five percent (25%) of the stated value is convertible at $0.35 per share and the remaining twenty-five percent (25%) of stated value is convertible at $0.41 per share. The Series A Preferred has standard anti-dilution provisions. The Series C Preferred will not bear dividends so long as the Company is not in default on its obligations under the CoD. The Company has the right to repurchase all or a portion of the Series C Preferred at the stated value thereof.

Notes

The principal amount the Notes bear interest at 12% per annum which accrues monthly. The principal of the Notes is payable seventeen (17) months from the date of issuance with the Notes amortizing in one-sixth (1/6) monthly installment amounts payable commencing one year after the date of issuance. The Company may prepay the Notes in whole at any time, upon five (5) days’ prior notice at price of 100% of the outstanding principal amount thereof plus accrued interest.

The Notes are convertible into Common Stock at a rate equivalent to 120% of the closing price of the Common Stock on the date of the exchange. The Notes contain standard default provisions including, but not limited to, failure to pay principal and interest, failure to reserve sufficient shares for conversion, failure to deliver shares upon conversion, breach of covenants or representations and warranties, delisting of the Common Stock, defaults by the Company in other obligations that result in a material adverse effect and bankruptcy events.

Security Agreement

In order to secure its obligations under the Notes, the Exchange Agreement and related documents, the Company has granted the Investors a security interest in and lien on substantially all of the assets of the Company.

Item 2.03. Creation of a Direct Financial Obligation.

The information set forth in Item 1.01 of this Current Report on Form 8-K with respect to the Notes is hereby incorporated by reference into this Item 2.03 in its entirety.

1

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On March 12, 2026, the Company filed the Certificate of Designation, Preferences and Rights for the purpose of designating and establishing the shares of the Series C Preferred, with the Secretary of State of the State of Delaware. A copy of the Certificate of Designation, Preferences and Rights is filed herewith as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.		Description
3.1		Form of Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Shares
4.1		Form of Senior Secured Convertible Promissory Note
10.1		Form of Exchange and Amendment Agreement
10.2		Form of Pledge and Security Agreement
104		Cover Page Interactive Data File (Embedded within the Inline XBRL document)

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 13, 2026	FUNCTIONAL BRANDS INC.
	By:	/s/ Eric Gripentrog
	Name:	Eric Gripentrog
	Title:	Chief Executive Officer

3

Filing Exhibits & Attachments

7 documents

Agreements & Contracts

• EX-10.1 FORM OF EXCHANGE AND AMENDMENT AGREEMENT 117.0 KB
• EX-10.2 FORM OF PLEDGE AND SECURITY AGREEMENT 75.7 KB

Other Documents

• EX-3.1 FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C CONVERTIB 159.1 KB
• EX-4.1 FORM OF SENIOR SECURED CONVERTIBLE PROMISSORY NOTE 136.7 KB
• EX-101 XBRL SCHEMA FILE 3.0 KB
• EX-101 XBRL LABEL FILE 33.4 KB
• EX-101 XBRL PRESENTATION FILE 21.9 KB