Functional Brands Inc. 8-K

What Happened
On May 22, 2026, Functional Brands Inc. announced it signed an Asset Purchase Agreement to acquire certain assets and IP of BullionFX (including the Alchemy gold-backed blockchain product). The purchase consideration is 100,000 newly created Series D Convertible Preferred shares with an expected value of $142.9 million. The Series D is structured to convert into common stock (the Conversion Shares) and is expected to represent roughly 98.28% of outstanding common stock upon conversion (subject to adjustment). The Company expects the transaction to close in Q2 or Q3 2026, subject to customary closing conditions and a number of specific requirements to be met after signing.

Key Details

• Consideration: 100,000 shares of Series D Preferred (expected value $142,900,000).
• Conversion/Ownership: Series D is expected to convert into ~98.28% of common stock upon approval; shareholder approval of the conversion and any increase in authorized common shares will be sought after Closing in a proxy.
• Closing conditions include: due diligence, valuation report, D&O tail insurance, settlement of outstanding litigation, agreement with holders of Series C preferred and convertible notes about buyouts/cancellations, consulting agreements with certain BullionFX individuals, and arranging a broker‑dealer to conduct an equity financing of at least $10 million.
• Rights/Protections: Series D will have no dividends or redemptions, limited voting before stockholder approval (but certain protective rights and the ability to appoint one director while outstanding), and a liquidation preference equal to the greater of 2x stated value (expected $142.9M) or the value of shares issuable on conversion.
• Fees/Breaks: Company to reimburse certain Seller transaction expenses up to $100,000 initially and another $50,000 after Equity Financing; a $100,000 break‑fee applies if Seller terminates for certain breaches (may increase to $2,000,000 under specified circumstances).
• Securities treatment: The Series D and the Conversion Shares are intended to be sold in a private transaction exempt from registration (Section 4(a)(2) / Rule 506 Reg D). A press release was furnished as Exhibit 99.1.

Why It Matters
This is a transformative transaction in structure and potential ownership impact: the Series D consideration could convert into a controlling stake (~98.28% on current terms), which would substantially change equity ownership and board composition (seller has director appointment rights). However, conversion requires stockholder approval and Nasdaq rules review; the deal also includes many closing conditions (financing, litigation settlements, valuation, D&O tail, etc.), so completion is not guaranteed. Investors should note the sizable liquidation preference and the private, exempt nature of the share issuance when assessing dilution, governance changes, and downside protections tied to this transaction.