Functional Brands Inc

This management proposal asks shareholders to approve an amendment to the Company’s Certificate of Incorporation granting the Board discretionary authority to implement a reverse stock split at any time within one year following the Special Meeting at a ratio between 1-for-2 and 1-for-250, with the Board to select the exact ratio. Management is pursuing shareholder approval because the Company has received a Nasdaq notice for failure to meet the $1.00 minimum bid price and the Board views a reverse split as a tool to raise the per‑share trading price to regain compliance and avoid possible delisting. The proxy explains Nasdaq’s compliance window and that the Board will not effect the split if market conditions otherwise restore compliance; the Board retains sole discretion both to file the amendment and to decide whether and when to effect the split. The company emphasizes that the split would not change the total authorized shares and would proportionally reduce outstanding shares and outstanding equity awards and warrants, with adjustments to maintain economic value. Management warns of risks: the split may not produce a sustained increase in market price, could reduce liquidity, increase odd‑lot holdings, and could be perceived negatively, potentially reducing market capitalization. The proxy also notes Nasdaq rule changes limiting the use of reverse splits for relisting/compliance if prior splits were effected recently, and explains fractional‑share treatment (round up at the DTC participant level). The Board recommends approval because it believes preserving Nasdaq listing and improving marketability and capital raising flexibility outweigh the risks, and approval is required to give the Board flexibility to act if necessary to address the Nasdaq deficiency.

This management proposal requests shareholder approval of the Functional Brands Inc. 2026 Equity Incentive Plan, which would reserve 4,000,000 shares for issuance under a variety of equity award types including incentive and non‑statutory stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards. The Plan contains an automatic annual increase (an evergreen provision) beginning in fiscal 2027 equal to the least of 500,000 shares, 5% of outstanding common stock as of the prior December 31, or a number determined by the plan administrator, which expands the potential share pool over time. Management argues approval is necessary to enable the Company to recruit, retain and motivate employees, directors and consultants and to align management’s interests with stockholders; without approval the Plan will not be effective. The administrator (initially the compensation committee) will have broad discretion over grant terms, eligible participants, vesting, and adjustments for corporate events; the Plan allows adjustments for equity splits, reverse splits and includes standard change‑in‑control, tax and clawback provisions. The proxy discloses limits on outside director compensation, tax treatment summaries, and that if the Plan is not approved, the Company will not have the intended vehicle for future equity grants which management considers material to performance and retention. The Board unanimously recommends a vote for the Plan, citing its role in supporting performance, recruiting and retention and aligning incentives with stockholder interests; the proposal requires a majority of votes cast for approval and brokers are not expected to be able to vote uninstructed shares on this non‑routine matter.

This procedural management proposal asks shareholders to empower the proxies to adjourn the Special Meeting to one or more later dates if there are insufficient votes at the scheduled meeting to approve the Reverse Stock Split or the 2026 Equity Incentive Plan, enabling the Company to continue soliciting proxies. The Board argues that adjournment authority is in stockholders’ interests because additional solicitation time could yield the affirmative votes necessary to address Nasdaq compliance and implement the incentive plan that management contends is important for operations. The proposal does not change the substance of either substantive proposal but preserves the Board’s option to seek further support if initial voting is inconclusive; it also allows the Company to adjourn without taking a vote on a proposal if proxies indicate a majority against, to continue outreach. Approval requires a majority of shares present and entitled to vote; abstentions and broker non‑votes are not counted as votes cast for this proposal. Management recommends a vote for adjournment to preserve flexibility and avoid losing the opportunity to obtain necessary approvals during the Nasdaq compliance window or for plan implementation.