Functional Brands closes $8 million private placement and completes Nasdaq listing

Functional Brands Inc. (NASDAQ:MEHA) announced the closing of an $8 million private placement and the completion of its direct listing on the Nasdaq Stock Market, according to a statement released in a recent SEC filing.

On Tuesday, the company closed a previously announced private placement with accredited investors, issuing 100,000 shares of Series A Convertible Preferred Stock with a stated value of $10 million and 80,000 shares of Series B Convertible Preferred Stock with a stated value of $8 million. Gross proceeds from the private placement totaled $8 million before placement agent fees and other offering expenses.

The Series A Preferred shares may be converted into common stock 45 days after the direct listing at a price per share determined by the lowest of four specified pricing mechanisms, subject to a floor price of $4.00 per share. Early conversion is possible if the common stock price exceeds $8.00 per share and trading volume surpasses 125,000 shares. The Series B Preferred shares are also convertible into common stock at a price based on the lower of the prior day’s closing price or a set valuation cap.

The Series A Preferred will pay a cash dividend, monthly in arrears, starting at an annual rate of 5% for the first six months and increasing to 10% for months seven through twelve, 15% for months thirteen through eighteen, and an additional 3% per month thereafter. Investors may elect to receive these dividends in common stock at the applicable conversion price.

For as long as Series B Preferred shares are outstanding, holders may require the company to use up to 25% of proceeds from future financings to redeem a portion of any unconverted Series B Preferred shares.

Functional Brands completed the direct listing of its common stock on Nasdaq on Tuesday. The shares underlying the Series A and Series B Preferred were registered under a previously filed registration statement.

On October 9, 2025, the company filed certificates of designation establishing the rights and preferences of the Series A and Series B Preferred Stock.

All information is based on a press release statement filed with the SEC.

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