SecProbe.io

CORRESP
1
filename1.htm

    August
    12, 2025

Securities
and Exchange Commission

Division
of Corporation Finance

Office of
Life Sciences

100 F Street,
NE

Washington,
DC 20549

    Re:
    Functional Brands Inc.

    Amendment No. 8 to Registration Statement on Form S-1
 Filed July
    15, 2025

    File No. 333-284180

Dear
Mr. Daniel Crawford, Ms. Laura Crotty, Mr. Gary Newberry and Ms. Vanessa Robertson:

 Set
                                            forth below, on behalf of our client Functional Brands Inc. (the “Company”),
                                            we are submitting the Company’s responses to comments received from the staff of the
                                            Division of Corporation Finance (the “Staff”) of the Securities and Exchange
                                            Commission (the “Commission”) by letter dated July 31, 2025 (the “Comment
                                            Letter”), with respect to the Company’s Amendment No. 8 to Registration Statement
                                            on Form S-1 filed with the Commission on July 15, 2025 (the “Registration Statement”).
                                            Concurrently with this letter the Company is filing Amendment No. 9 to the Registration Statement
                                            (“Amendment No. 9”) to respond to the comments contained in the Comment Letter
                                            and to make certain other changes.

To
facilitate the Staff’s review, we have included in this letter the captions and numbered comments from the Comment Letter in bold
text and have provided the Company’s responses immediately following the numbered comments in plain text.

Amendment
No. 8 to Registration Statement on Form S-1

General

 1. Please
                                            tell us whether all of the shares of common stock registered for resale in this registration
                                            statement were issued and outstanding prior to May 30, 2025, the date you filed the amended
                                            registration statement disclosing your intention to register the resale of common stock underlying
                                            preferred stock issued in a private placement contemporaneously with a direct listing. If
                                            any of the shares to be registered for resale were not outstanding at that time, please remove
                                            them from the registration statement or tell us why you believe it is appropriate to include
                                            them at this time. Refer to Securities Act Sections Compliance & Disclosure Interpretations
                                            134.01, 139.27 and 139.11.

 In
                                            response to the Staff’s comment, we note that the Company publicly filed for registration
                                            of shares of its common stock for resale in connection with its proposed direct listing on
                                            May 30, 2025. All such shares were issued and outstanding as of such date, excluding the
                                            shares (the “Private Placement Shares”) to be issued upon the exercise of the
                                            Company’s Series A and Series B Convertible Preferred Stock (the “Preferred Stock”)
                                            the sale of the Preferred Stock is referred to herein as the “Private Placement”).

1185
AVENUE OF THE AMERICAS | 31ST FLOOR | NEW YORK, NY | 10036

T
(212) 930-9700 | F (212) 930-9725 | WWW.SRFC.LAW

We
note that, as described in the Registration Statement, 3,816,698 shares of Company common stock previously  held by its former controlling
shareholder, Hemptown Organics Corp. (“HOC”), were distributed by HOC to its debenture holders in exchange for HOC debentures
and to HOC stockholders, both in connection with the wind up and dissolution of HOC. Such shares are being registered for resale pursuant
to the Registration Statement.

The
Company is registering the Private Placement Shares for resale pursuant to the Registration Statement.

With
respect to the registration for resale of the Private Placement Shares, we reference CD&Is 134.01,139.11 and 139.27.

CD&I
134.01 provides that a “resale registration statement may be filed if securities are privately placed, with the closing of the
private placement contingent on filing or effectiveness of a resale registration statement. At the time of filing the registration statement,
the purchasers in the private placement must be irrevocably bound to purchase the securities subject only to the filing or effectiveness
of the registration statement or other conditions outside their control, and the purchase price must be established at the time of the
private placement. The purchase price cannot be contingent on the market price at the time of effectiveness of the registration statement.”

In
addition, Securities Act Release No. 8828 as referenced in CD&I 139.27 states “[o]ur view is that, while there are many situations
in which the filing of a registration statement could serve as a general solicitation or general advertising for a concurrent private
offering, the filing of a registration statement does not, per se, eliminate a company’s ability to conduct a concurrent private
offering, whether it is commenced before or after the filing of the registration statement. Further, it is our view that the determination
as to whether the filing of the registration statement should be considered to be a general solicitation or general advertising that
would affect the availability of the Section 4(2) exemption for such a concurrent unregistered offering should be based on a consideration
of whether the investors in the private placement were solicited by the registration statement or through some other means that would
otherwise not foreclose the availability of the Section 4(2) exemption. This analysis should not focus exclusively on the nature
of the investors, such as whether they are ‘qualified institutional buyers’ as defined in Securities Act Rule 144A or
institutional accredited investors, or the number of such investors participating in the offering; instead, companies and their counsel
should analyze whether the offering is exempt under Section 4(2) on its own, including whether securities were offered and sold
to the private placement investors through the means of a general solicitation in the form of the registration statement.”

 First,,
                                            all purchase agreements obligating the purchasers to purchase the Preferred Stock were executed
                                            as of July 22, 2025. As noted above, CD&I 134.01 allows for registration of shares to
                                            be issued to purchasers in a private placement if the purchasers are irrevocably bound to
                                            purchase the securities subject only to the filing or effectiveness of the registration statement
                                            or other conditions outside their control, and the purchase price must be established at
                                            the time of the private placement. All the purchase agreements for the Preferred Stock and
                                            Private Placement Shares are identical (save for the name of investor and amount of subscription)
                                            and provide that the funding of the private placement will occur upon the completion of the
                                            closing conditions set forth in the purchase agreements. The purchase agreements include
                                            standard conditions such as (1) the accuracy of the representations and warranties of the
                                            Company and the investors, (2) the performance of the obligations, covenants and agreements
                                            of the Company and investors, the primary obligations being the filing and effectiveness
                                            of the Registration Statement and confirmation by Nasdaq of the acceptance of the direct
                                            listing, and (3) the delivery by the Company and investors of the closing deliverables, including
                                            opinions of Company counsel and Company certificates. All closing conditions are outside
                                            of the investors’ control and the investors cannot voluntarily terminate the purchase
                                            agreement. The primary closing condition is the filing and effectiveness of the Registration
                                            Statement, and the Company is responsible for ensuring this closing condition is met. Further,
                                            as disclosed in the Registration Statement, the Company will only request effectiveness of
                                            the Registration Statement upon receipt from Nasdaq of acceptance of the direct listing.
                                            Therefore, the investors are irrevocably bound to purchase the securities subject to the
                                            filing and effectiveness of the Registration Statement. Moreover, prior to the closing, but
                                            upon receipt of listing confirmation from Nasdaq, the investors must deliver, via wire transfer,
                                            immediately available funds equal to the investors’ aggregate subscription amounts
                                            to Odessey Trust, escrow agent for the Private Placement. The funds held in the escrow account
                                            will be immediately released to the Company at closing without any further action by the
                                            investors. Since the investors are irrevocably bound to purchase the Preferred Stock, subject
                                            only to the effectiveness of the Registration Statement and other factors outside of their
                                            control, the registration of the Private Placement Shares complies with the exception provided
                                            in CD&I 134.01. We further note that the purchase price of the Preferred Stock was established
                                            at the time the purchase agreements were executed, and such purchase price was not contingent
                                            on the market price of the Company’s common stock at the time of effectiveness of the
                                            Registration Statement.

1185
Avenue of the Americas | 37th Floor | New York, NY | 10036

T
(212) 930 9700 | F (212) 930 9725 | WWW.SRF.LAW

    2

In
addition, Section 4(a)(2) of the Securities Act exempts from registration offers and sales by an issuer that do not involve a public
offering or distribution. When determining whether an offering is exempt from registration pursuant to Section 4(a)(2), several
factors are analyzed. Such factors include (1) the suitability of the investors, (2) the restrictions on transfer of the securities,
and (3) the prohibition on general solicitation and general advertising. The suitability of the investors relates to an investors’
level of sophistication, knowledge and experience of financial and business matters to evaluate the risks and merits of the proposed
offering. Additionally, the securities offered by the issuer must be restricted securities. Lastly, in order for an offering to qualify
for the Section 4(a)(2) exemption, neither the issuer, nor anyone acting on the issuer’s behalf can generally solicit or advertise
the offering.

 The
                                            Company is relying on the Section 4(a)(2) exemption for issuance of the Preferred Stock.
                                            As represented by the investors in the purchase agreements, the investors are sophisticated
                                            investors who are able to evaluate the risks and merits of their investment in the Private
                                            Placement and are able to bear the investment’s economic risk. the Preferred Stock
                                            will be issued to the investors at the closing of the Private Placement as restricted stock
                                            with appropriate restrictive legends. Lastly, neither the Company, nor anyone acting on the
                                            Company’s behalf, generally advertised the Private Placement or generally solicited
                                            investments. None of the six investors had substantive, pre-existing relationships with the
                                            Company prior to investing in the Private Placement. All of the investors had a substantive,
                                            pre-existing relationship with the Company’s placement agent, Joseph Gunnar & Co.,
                                            LLC (“Gunnar”). Moreover, the solicitation of interest in the Preferred Stock
                                            and Private Placement Shares was conducted consistent with the interpretive guidance of Securities
                                            Act Release No. 8828 as referenced in CD&I 139.27. The availability of the Section 4(a)(2)
                                            exemption for a concurrent unregistered offering depends on whether the investors in the
                                            private placement were solicited by the registration statement. , The investors were not
                                            solicited by the Registration Statement relating to the registered resale offering (“Resale
                                            Offering”) to participate in the Private Placement, nor were any of such persons provided
                                            copies or access to any of the confidential submissions prior to the public filing of the
                                            Registration Statement.

As
described above, the Private Placement complies with the guidance provided in CD&I 134.01 and CD&I 139.27. Therefore, the Private
Placement Shares should be permitted to be registered for resale on the Registration Statement.

 2. To
                                            the extent you continue to include the common stock underlying the private placement preferred
                                            stock in this registration statement, please tell us what exemption from registration you
                                            are relying on with respect to that issuance and provide your analysis as to why that private
                                            placement should not be integrated with the registered resale offering. Refer to Securities
                                            Act Rule 152.

In
response to the Staff’s comment, as described in the Company’s response to the Staff’s comment 1 above, we note that
the Company is relying on the Section 4(a)(2) exemption for issuance of the Preferred Stock..

With
respect to the Staff’s comment on integration, the integration doctrine provides an analytical framework for determining whether
multiple securities transactions should be considered part of the same offering. “If the safe harbors in Rule 152(b) do not
apply, in determining whether