Capstone Holding: securities offering

Cover page 11 changes

As confidentially submitted to the Securities and Exchange Commission on December 3 , 2024. This draft registration statement has not been publicly filed with the Securities and Exchange Commission and all information herein remains strictly confidential.

REGISTRATION STATEMENT

As filed with the Securities and Exchange Commission on December 31 , 2024.

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DATED: DECEMBER 3 , 2024

DATED: DECEMBER 31 , 2024

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Our Common Stock is currently quoted on the OTCQB Marketplace (the "OTCQB") under the symbol "CAPS." As of [_], December 30, 2024 the last reported sales price for our Common Stock as quoted on the OTCQB was $[_] $2.24 per share.

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We will be considered a "controlled company" following this offering under Nasdaq listing standards. We will be a "controlled company" because we expect that entities jointly controlled by Matthew Lipman, our chief executive officer and a member of our board of directors, and Michael Toporek, the chairman of our board of directors (BPA XIV, LLC and BP Peptides LLC) will have the ability to control all matters requiring shareholder approval because these entities will own over 50% of our common stock, will control over 50% of our voting stock (inclusive of the votes of the over 50% of the Series B Preferred Stock shares outstanding we expect to issue to BPA XIV, LLC prior to the consummation of this offering), and, via the protective provisions of the Series B Preferred Stock, will have to consent before we can conduct major corporate actions. Although we will be considered a "controlled company" following our listing on Nasdaq, we do not intend to rely on the exemptions to corporate governance requirements as a controlled company. BP Peptides, LLC, an entity controlled by Messrs. Lipman and Toporek, currently holds 77.3% of the voting power of the Company.

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(1) See "Underwriting" beginning on page 67 71 of this prospectus for additional information regarding underwriting compensation.

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The underwriters expect to deliver the securities against payment to the investors in this offering on or about [_], 2024. 2025.

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The date of this prospectus is __, 2024 2025

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Through and including __, 2024 2025 (the 25 th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

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Prospectus summary 27 changes

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Deep Team. Capstone is controlled by Brookstone Partners, a private equity group with 25 years of deep expertise in building products investment. Brookstone Partners is controlled by Matthew Lipman, our chief executive officer and a member of our board of directors and Michael Toporek, the chairman of our board. The Capstone leadership team includes seasoned operating executives and building products acquisition and investment professionals. Capstone's leadership team includes Capstone's will include, following the pricing of this offering, its Lead Independent Director, Charles "Chuck" Dana. Mr. Dana spent 19 years at Owens Corning, a leading building materials company. At Owens Corning, Mr. Dana held various positions including Controller, President Global Composites and then Group President Building Materials. In addition, from the Company's acquisition of Instone in April 2020 through December 31, 2023, Instone's revenues have increased from approximately $32.2 million to approximately $48.4 million. In February 2008, a Brookstone Partners affiliate invested $8.8 million in Woodcrafter's Home Products Holdings LLC. Brookstone's team worked with Woodcrafter's management to grow earnings and Brookstone completed the sale of all of its interests in Woodcrafter's for $32 million in December 2013. The ability to identify, acquire and integrate acquisition candidates is a critical skill set to augment the operating expertise that drives organic growth. The current operating company has successfully executed multiple acquisitions and integrations, laying a solid foundation for continued expansion.

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Industry Dynamics. According to the Bain & Company Global M&A Report published in 2024 (the "Bain Report"), this is "just the type of environment that has proved to offer opportunities to companies that are willing to make bold moves." The Bain Report goes on to say, "building products companies that make frequent and material acquisitions substantially outpace inactive companies in total shareholder returns, 9.6% vs 2.7%" and "the most successful companies will pursue scope M&A to build product, geography, and capability adjacencies."

The M&A environment for the building products sector is expected to improve because, according to the Bain Report, "there are ample one -off opportunities to acquire struggling assets", and "financial investors have taken a step back, especially in North America, removing a potentially formidable layer of competition."

The "Annual total shareholder returns for building products companies" chart and quotes from the Bain Report are used with permission from Bain & Company. The Bain Report was not commissioned by the Company. The Company does not currently and has not in the past had a direct or indirect business relationship with Bain & Company. The Bain Report is publicly available via the Insight — Featured Topics portion of Bain & Company's website.

Strategic Positioning. We believe we are strategically well -positioned to take advantage of the current market opportunities because of:

Team strength . The industry experience of the Board and Instone management provides the Company with the expertise to evaluate, acquire, and integrate acquisitions.

Experience integrating acquisitions . Since 2006, the Company has successfully integrated four acquisitions. The team believes the Company has the resources and expertise to continue to integrate acquisitions successfully.

Geographic distribution footprint of Instone . The current service area of the Company, which includes 31 states and 40% of American households, provides a good basis on which to make both "scale" and "scope" acquisitions.

Growth Premium. As Capstone continues to scale, growing its EBITDA, we anticipate benefiting from valuation premiums associated with increased size. This growth, coupled with consistent earnings performance, is expected to drive substantial shareholder value and enhance our market positioning Our current operating company, , TotalStone, LLC (dba Instone), , strives to drive sustainable growth, expand s expands its geographic presence in the building products industry, and deliver superior value to its customers, shareholders, and other stakeholders. We expect to work with Instone to create sustainable value through the following strategic pillars:

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On April 1, 2020, the Company obtained controlling interest in a materials distribution company called TotalStone, LLC ("TotalStone") that distributes masonry stone products for residential and commercial construction in the Midwest and Northeast United States under the trade name Instone, which going forward is the Company's primary business activity. TotalStone, LLC (dba "Instone"), a Delaware limited liability company, was formed on October 4, 2006. TotalStone is consolidated in the Company's financials. TotalStone currently has 5 Managers, who control decision -making and are appointed by Designees designated by Members. Through its membership interests, Capstone currently designates 4 of the 5 Managers (80%) of which 3 are officers or board members of Capstone. It is expected that after this offering, Capstone will control approximately 67% of TotalStone and a current director of TotalStone, Gordon Strout, will control approximately 22% of TotalStone with the remaining 11% controlled by various current and former employees. TotalStone, LLC (dba "Instone"), a Delaware limited liability company, was formed on October 4, 2006.

Contingent on the Company raising at least $3,000,000 in gross proceeds from this Offering (the "Restructuring Condition"), a series of transactions will be consummated on the date of the satisfaction of the Restructuring Condition (the "Restructuring Date") prior to the issuance of Common Stock on the Restructuring Date that will have the effect of the Company owning 100% of the equity interests of TotalStone on the Restructuring Date.

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As of [•], December 30, 2024, there were 157,610 shares of Common Stock outstanding.

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In November 2023 Capstone booked an unsecured promissory note in the amount of $800,000 as part of a transaction through its Capstone Beta, LLC subsidiary to own equity in Diamond Products Holdings, LLC ("DPH") for an $8 million note made to DPH. The guarantee was triggered when DPH returned its equity interest in Diamond Products, LLC (a consumer products company) and cancelled the $8M note from Capstone Beta, LLC. This promissory note including $800,000 principal plus accrued interest of $216,155 (as of August 30, 2024) is made to Brookstone Acquisition Partners XXI, LLC and has been extended for maturity through June 30, 2026.

In November 2023, Capstone and Brookstone Acquisition Partners XXI, LLC ("Brookstone XXI"), a related entity to the Company's majority shareholder, agreed to terms of an unsecured promissory note in the amount of $800,000 as part of a 2021 transaction through its Capstone Beta, LLC ("Beta") subsidiary to own a minority membership interest in Diamond Products Holdings, LLC ("DPH") valued at $8 million for a $8 million secured note payable to Brookstone Acquisition Partners XXI. The agreed to terms of the $800,000 note were formalized in a note agreement executed on March 31, 2024. The sole assets of DPH consisted of a 95% membership interest in Diamond Products LLC ("Diamond"), a consumer products holding company. The majority membership interests in DPH and Diamond were controlled by Brookstone XXI. The $800,000 unsecured promissory note was triggered when the members of Diamond sold their membership interests to a third party as part of a restructuring and recapitalization transaction of the Diamond operating entities. This $800,000 unsecured promissory note was issued on March 31, 2024. The primary consideration received in the transaction was the release of guarantees of the senior debt of Diamond operating entities. No cash proceeds were received in the transaction. Pursuant to the terms of the Beta and Brookstone XXI $8 million secured note, upon sale or disposition of the membership interests in Diamond, Brookstone XXI's remaining payments due under the note are limited to cash proceeds received by DPH from the sale, accrued interest and a limited payment guaranty of $800,000 provided by Capstone. Since no cash proceeds were received upon the sale of the Diamond membership interests, the $8 million note payable to Brookstone XXI was forgiven and replaced by the new $800,000 note issued by Capstone resulting in a net $7.2 million gain on extinguishment of debt which offset the $8 million write -off of the investment in DPH. This promissory note of $800,000 plus accrued interest of $240,555 (as of September 30, 2024) has been amended and extended for maturity through June 30, 2026.

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[_] 157,610 shares of common stock.

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Representative's Warrants Warrant

The registration statement of which this prospectus is a part also registers for sale Warrants (the "Representative's Warrants") Warrant") to purchase [_] shares of our Common Stock to [_] (the "Representative"), as a portion of the underwriting compensation in connection with this offering. The Representative's Warrants Warrant will be exercisable at any time, and from time to time, in whole or in part, during the period commencing [180 days] following the closing date of this offering and expiring five (5) years from the effective date of the offering at an exercise price of $[_] ([_]% (100% of the assumed public offering price per share of Common Stock). Please see "Underwriting — Representative's Warrants" Warrant" on page 68 72 of this prospectus for a description of these Warrants. Underwriter Compensation In connection with this offering, the underwriter will receive an underwriting discount equal to [_] percent ([_]%) of the gross proceeds from the sale of Common Stock in the offering. [We will also reimburse the underwriter for certain out -of-pocket actual expenses related to the offering and the representative of the underwriter shall be entitled to a non -accountable expense allowance equal to one percent ([_]%) of the public offering price. See "Underwriting" starting on page 67 of this prospectus.] Proposed Nasdaq Capital Market Trading Symbol and Listing Our Common Stock is presently quoted on the OTCQB Marketplace under the symbol "CAPS". We intend to apply to list our shares of Common Stock on the Nasdaq Capital Market under the symbol "CAPS" pending the consummation of this offering. No assurance can be given that a trading market will develop for our Common Stock.

Underwriter Compensation

In connection with this offering, the underwriter will receive an underwriting discount equal to [_] percent ([_]%) of the gross proceeds from the sale of Common Stock in the offering. [We will also reimburse the underwriter for certain out -of-pocket actual expenses related to the offering and the representative of the underwriter shall be entitled to a non -accountable expense allowance equal to one percent ([_]%) of the public offering price. See "Underwriting" starting on page 71 of this prospectus.] Proposed Nasdaq Capital Market Trading Symbol and Listing Our Common Stock is presently quoted on the OTCQB Marketplace under the symbol "CAPS". We intend to apply to list our shares of Common Stock on the Nasdaq Capital Market under the symbol "CAPS" pending the consummation of this offering. No assurance can be given that a trading market will develop for our Common Stock.

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• [_] shares of Common Stock issuable upon the exercise of the Underwriters' Over -Allotment Option; Dividends We do not anticipate paying dividends on our and • [_] shares of Common Stock for issuable upon the foreseeable future. exercise of the Representative's Warrant.

We do not anticipate paying dividends on our Common Stock for the foreseeable future.

We and our directors, officers and principal stockholders have agreed with the underwriter not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our Common Stock or securities convertible into Common Stock for a period of [•] days after the date of this prospectus. See "Underwriting" section on page 67. 71.

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Special preferred units

Class B units preferred return

Net loss attributable to Capstone Holding Corp. stockholders (4,360 (4,453 ) Nine Months Ended September 30, 2024 2023 Sales $ 22,734 $ 26,932 Sales returns and allowances (489 ) (142 ) Net sales 22,245 26,790 Cost of goods sold 17,737 20,918 Gross Profit 4,508 5,872 Selling, general and administrative expenses 5,211 6,010 Loss from operations (703 ) (138 ) Interest expense (774 ) (863 ) Other income (expense), net — Loss from operations before taxes (1,477 ) (858 ) Income tax expense Net Loss (1,494 ) (1,191 ) Less: Net loss attributable to:

Net Income (loss) attributable to Capstone Holding Corp. stockholders (5,735 (10 ) Nine Months Ended September 30, 2024 (unaudited) 2023 (unaudited) Sales $ 35,293 $ 39,026 Sales returns and allowances (730 ) (157 ) Net sales 34,563 38,869 Cost of goods sold 27,062 30,484 Gross Profit 7,501 8,385 Selling, general and administrative expenses 7,791 8,672 Loss from operations (290 ) (287 ) Interest expense (1,148 ) (1,288 ) Other income (expense), net — Loss from operations before taxes (1,438 ) (1,432 ) Income tax expense Net Loss (1,460 ) (1,800 ) Less: Net loss attributable to:

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Net loss attributable to Capstone Holding Corp. stockholders (3,362 (2,898 (4,360 (4,453 ) CAPSTONE HOLDING CORP.

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Risk factors 4 changes

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Capstone Holding Corp. is a holding company with no operations of its own, and it depends on its operating subsidiar y subsidiary for cash to fund all of its operations and expenses, including to make future dividend payments, if any.

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Future i ssuance of o ur Common Stock, p referred s tock, o ptions and w arrants c ould d ilute the i nterests of e xisting s tockholders.

Future issuance of our Common Stock, preferred stock, options and warrants could dilute the interests of existing stockholders.

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The public offering price per share of our Common will be substantially higher than the net tangible book value per share of our outstanding Common Stock. As a result, investors in this offering will incur immediate dilution of $[_] $4.59 per share, based on the assumed public offering price of $[_] $4.00 per share. Investors in this offering will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. See "Dilution" for a more complete description of how the value of your investment will be diluted upon the completion of this offering.

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Use of proceeds 2 changes

We estimate that the net proceeds from this offering will be approximately $[_], $3,558,045, or $[_] $4,240,545 if the underwriter exercises their over -allotment option in full, after deducting the underwriting discounts and commissions and estimated offering expenses.

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• Approximately $1,160,000 for the repayment of a term loan issued by Berkshire Bank with interest charged at the one -month Secured Overnight Financing Rate ("SOFR") plus 3.5% (7.86% and 8.96% at September 30, 2024 and December 31, 2023, respectively) and a maturity date of December 1, 2025. The proceeds of the term loan were used for working capital; and • Approximately $ [_] for general corporate purposes to enable us to grow organically by expanding the breadth of our distribution by both geography and new products, either through contractual relationships or owning in -house brands.

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Market for the common stock 1 change

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Our Common Stock is quoted on the OTCQB under the trading symbol "CAPS". We intend to apply to The Nasdaq Capital Market to list our Common Stock under the symbol "CAPS" As of September 25, December 30, 2024, there were approximately 461 holders of record of our Common Stock. The last reported sales price for our Common Stock, as reported on the OTCQB on September 25, December 30, 2024, was $3.40. $2.24 per share.

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Capitalization 5 changes

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• (2) on a pro forma basis, giving effect to: (i) 1,250,000 shares to be issued in connection with this offering at an assumed public offering price of $4.00 per share, after deducting underwriting discounts and commissions and estimated offering expenses of $1,441,995; and (ii) the restructuring transaction consisting of the Class A TS warrants being cancelled, the Class B Preferred Interests being exchanged into 3,782,640 shares of Common Stock that will constitute approximately 96% of the shares of Common Stock outstanding immediately prior to the issuance of 1,250,000 shares to be issued in this Offering, and the Class C Preferred Interests being cancelled.

• (2) on a pro forma basis, giving effect to: (i) [_] shares to be issued in connection with this offering at an assumed public offering price of $[_] per share, after deducting underwriting discounts and commissions and estimated offering expenses; [_] The pro forma information below is illustrative only and our capitalization following the completion of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read this table together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited and unaudited consolidated financial statements and the related notes appearing elsewhere in this prospectus.

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TotalStone, LLC – Class B Preferred Units

TotalStone, LLC – Special Preferred Units

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Common stock: $0.0005 par value; 200,000 50,000,000 shares authorized; 157,610 shares issued and outstanding at [_], September 30, 2024 and [_] 5,190,250 issued and outstanding on a pro forma basis and on a post split basis — Additional paid in capital 193,044 225,179 Accumulated deficit (194,967 ) (194,967 ) Total stockholders' equity (deficit) $ (1,923 ) $ 30,215 A $1.00 increase or decrease in the assumed public offering price per share would increase or decrease our pro forma cash, additional paid -in capital, total stockholders' equity (deficit) and total capitalization by approximately $[_] $1,137,500 assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

Dilution 6 changes

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Net tangible book value (deficit) represents the amount of our total tangible assets reduced by our total liabilities and the TotalStone Preferred Stock. Tangible assets equal our total assets less intangible assets. As of September 30, 2024, our actual net tangible deficit book value (deficit) was $25,255,000 $(35,181,606) and our net tangible book value (deficit) per share was $160.24. $(223.22).

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After giving effect to: the sale of Common Stock that we are (i) 1,250,000 shares to be issued in connection with this offering at the an assumed public offering price of $[_] $4.00 per share, and after deducting the underwriting discount discounts and commission commissions and estimated offering expenses of $1,441,995; and (ii) the restructuring transaction consisting of the Class A TS warrants being cancelled, the Class B Preferred Interests being exchanged into 3,782,640 shares of Common Stock that will constitute approximately 96% of the shares of Common Stock outstanding immediately prior to the issuance of 1,250,000 shares to be issued in this Offering, and the Class C Preferred Interests being cancelled, our pro forma net tangible book value (deficit) as of September 30, 2024 would have been $[_] $(3,044,036) or $[_] $(0.59) per share. This represents an immediate increase in pro forma net tangible book value (deficit) of $[_] $222.63 per share to existing stockholders and immediate dilution of $[_] $(4.59) per share to new investors purchasing Common Stock in the offering.

The following table illustrates this per share dilution: (1):

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Net tangible book deficit value per share as of September 30, 2024 ([_]) Increase in pro forma net tangible book value per share attributable to new investors $ Pro forma net tangible book value per share after giving effect to this offering $ Dilution in net tangible book value per share to new investors (1) Calculated on a pro forma basis, giving effect to the conversion of all our outstanding shares of preferred stock into Common Stock. Does not include:

Net tangible book deficit value per share as of September 30, 2024 (223.22 ) Increase in pro forma net tangible book value per share attributable to new investors $ 222.63 Pro forma net tangible book value per share after giving effect to this offering (0.59 ) Dilution in net tangible book value per share to new investors (4.59 ) If the underwriter's overallotment option is exercised, our adjusted pro forma net tangible book value following the offering will be $[_] $(0.44) per share, and the dilution to new investors in the offering will be $[_] $(4.44) per share.

A $1.00 increase or decrease in the assumed public offering price per share of Common Stock would increase or decrease our pro forma net tangible book value after this offering by approximately $[_] $0.22 and dilution per share to new investors by approximately $[_] $(5.37) for an increase of $1.00, or $[_] $(3.81) for a decrease of $1.00, after deducting the underwriting discount and estimated offering expenses payable by us.

MD&A 35 changes

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A key differentiating factor for our strategy is that we own or control five of the eight the brands we sell. Our products include stone veneer, landscape stone, and modular masonry fireplaces. The brands we distribute which we do not control are Cultured Stone®, Dutch Quality®, and Isokern®. The brands we distribute which we own or control include Aura™, Pangea Stone®, Toro Stone™, Beon Stone®, and Interloc™.

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On November 9, 2023, the Company entered into a transaction that transferred 100% of its ownership in Diamond Products Holdings, LLC., to a third party.

On November 9, 2023, related party entities of the Company's majority shareholder entered into a transaction that resulted in unwinding the Company's 2021 investment in Diamond Products Holdings, LLC ("DPH") valued at $8 million that was obtained in exchange for a $8 million note payable to Brookstone Acquisition Partners XXI, LLC ("Brookstone XXI").

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Our sales primarily consists consist of distributing manufactured and natural stone cladding products, natural stone landscape products, and related goods for residential and commercial construction through a dealer network in 31 states in the Midwestern and Northeastern United States. The Company recognizes revenue when control over the products has been transferred to the customer, and the Company has a present right to payment.

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Other income and expenses consists consist primarily of interest expenses on our line of credit and debt loss on investment, and, the write -off of our related party investment in DPH and related gain on extinguishment of debt from the divestiture of Diamond, Products Holdings, LLC. a note payable to Brookstone XXI.

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For our owned and controlled brands, revenue was down $4.8 million driven by price reductions and offset by a slight increase in volume of approximately six $63.0 thousand or approximately 6,000 square feet. For our other brands we do not control, revenue was down $8.4 million primarily attributed to price reductions and lower volume of six hundred six thousand $5.6 million or 606,000 square feet driven by lower market demand and distribution changes with our largest supplier and price reductions of $2.8 million.

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Selling general and administrative expenses decreased by $1.7 million, or 13%, 13.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease results primarily from a reduction in force of $920.0 thousand, reduced bonuses due to financial performance of $264.0 thousand, lower travel expenses of $144.0 thousand and considerable efforts to reduce overall spending of $243.0 thousand to adjust for lower revenues.

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Other expenses, net, decreased increased by $1.4 million, or 13%, 160%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease increase consists of higher interest expense of $405.0 thousand, largely attributed to our revolving line of credit, lower other income of $229.0 thousand, and a $8 million loss on investment from the divestiture of Diamond Products Holdings, LLC write -off of $8.0 our related party investment in DPH and a related $7.2 million The divestiture of Diamond Products Holding, LLC. was partially offset by the gain on extinguishment (forgiveness) of debt of $7.2 million on our secured promissory note with by Brookstone Acquisition Partners XXI LLC. associated with the DPH investment.

Income tax expense decreased by $549.0 thousand or 70% for the year ended December 31, 2023, compared to the year ended December 31, 2022. The effective tax rate is (7%) in 2023 and 25% in 2022. The negative effective tax rate in 2023 is primarily attributable to state taxes and an increase in the valuation allowance for deferred income tax assets.

The Company has one operating and reportable segment which consists of the operations of TotalStone. The Company also has corporate -level SG&A expenses which are included in Capstone Holding Corp. ("Capstone" or "the Parent") and consist primarily of board fees and, investor relations, filing, legal, insurance, accounting and consulting expenses not identifiable and allocated to TotalStone.

The following table is a summary of TotalStone's operating results through operating income (loss) reconciled to the Company's consolidated totals with the inclusion of Parent and eliminating amounts:

operations before taxes:

Selling, general and administrative

(Loss) income from operations

Other financial information:

Depreciation & amortization included in SG&A expenses

The above discussion of consolidated operating results through operating income (loss) is in substance the operating results of TotalStone for the comparable periods presented. The elimination of selling, general and administrative expenses reflect the elimination of management fees incurred by TotalStone and earned by Parent. The Parent classifies the management fee income earned as a component of net non -operating income (expense) and the corresponding income is also eliminated in the Company's consolidated results.

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For our owned and controlled brands, revenue was down $3.2 million driven by price reductions and a decrease in volume of 217.0 thousand $2.3 million or 217,000 square feet and price reductions of $698.0 thousand. For our other brands we do not control, revenue was down $1.1 million primarily attributed to price reductions and a decrease in volume of 95.0 $771.0 thousand or 95,000 square feet driven by lower market demand and distribution changes with our largest supplier and price reductions of $318.0 thousand.

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Gross profit margin slightly increased from 21.5% 21.6% for the nine months ended September 30, 2023 to 21.7% for the nine months ended September 30, 2024. The slight increase in gross profit margin was primarily due to a decrease in freight expense.

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Selling general and administrative expenses decreased by $881.0 $882.0 thousand, or 10%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease results primarily from a reduction in force of $483.0 thousand, reduced bonuses due to financial performance of $252.0 thousand, and lower travel expenses and considerable efforts to reduce overall spending to adjust for lower revenues. of $93.0 thousand.

Other Income and expense s

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Income tax expense decreased by $346.0 thousand or 94% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The period over period decrease is primarily attributable to higher provisions in 2023 related to state taxes for those states where taxable income was projected in 2023.

The Company has one operating and reportable segment which consists of the operations of TotalStone. The Company also has corporate -level SG&A expenses, which are included in Capstone Holding Corp. ("Capstone" or "the Parent") and consist primarily of board fees and, investor relations, filing, legal, insurance, accounting and consulting expenses not identifiable and allocated to TotalStone.

The following table is a summary of TotalStone's operating results through operating income (loss) reconciled to the Company's consolidated totals with the inclusion of Parent and eliminating amounts:

Nine Months Ended September 30,

operations before taxes:

(Loss) income from operations

Other financial information:

Depreciation & amortization included in SG&A expenses

The above discussion of consolidated operating results through operating income (loss) is in substance the operating results of TotalStone for the comparable periods presented. The $170,000 increase in Parent SG&A expenses in 2024 is primarily attributable to strategic consulting services. The elimination of selling, general and administrative expenses reflects the elimination of management fee expenses incurred by TotalStone and earned by Parent. The Parent classifies the management fee income earned as a component of net non -operating income (expense) and the corresponding income is also eliminated in the Company's consolidated results.

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The Company primarily funds our operations through cash provided from operations of our building products distribution network and available capacity under our ABL Facility ("Revolver"). Our operating cash flows fluctuate based on seasonality with the first half of the year typically resulting in negative operating cash flows from the build in accounts receivable and inventories and the second half of the year generating positive operating cash flows as we bring accounts receivables and inventory levels down from seasonal high periods and pay down our Revolver. The liquidity of the Company is largely dependent on our ability to borrow funds on our Revolver. If the Company fails to fulfill its financial covenant requirements, our ability to continue as a going concern could be at risk. We believe ongoing availability of our Revolver plus cash provided from operations combined with our considerable efforts to reduce overall spending will be sufficient to satisfy our cash requirements for at least one year after the date the consolidated financials are issued. The Company believes we will be able to continue to borrow funds on our Revolver when and as required. Future acquisitions may be financed through other forms of financing that will depend on then -existing conditions.

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Net cash provided by operating activities was $1.4 million for the year ended December 31, 2023, primarily resulting from our net loss of $3.8 million combined with $4.1 million provided in changes in our non -cash working capital, partially offset by non -cash expenses.

Net cash used in operating activities was $2.9 million for the year ended December 31, 2022, primarily resulting from our net income of $2.3 million combined with $6.0 million used in changes in our non -cash working capital.

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Net cash used in financing activities was $1.2 million for the year ended December 31, 2023. The cash outflow was a result of $1.3 million proceeds from bank borrowing under the line of credit, offset primarily by the repayment of debt of $2.1 million. Net cash provided by financing activities was $3.0 million for the year ended December 31, 2022. The cash inflow was a result of $5.7 million in proceeds from bank borrowing under the line of credit and $3.1 million proceeds of the sale -leaseback of our Navarre facility, offset by the repayment of debt of $6.4 million.

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We perform our annual impairment test as of October 1 each year, or in between annual tests whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable, to determine whether an impairment exists. The goodwill impairment test compares a market participant perspective of fair value for a reporting unit with to its carrying amount. As necessary, we recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized would not exceed the total amount of goodwill.

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Business 23 changes

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Capstone Long -Term Growth Strategy. Our long -term growth strategy is built on the foundational strengths of our current operating subsidiary and the strategic opportunities available in the building products distribution and manufacturing industry. We are committed to delivering sustained value to our shareholders through a combination of operational excellence, strategic acquisitions, and an unwavering focus on offering new products in new markets. Our strategy has the following characteristics:

Deep Team. Capstone is controlled by Brookstone Partners, a private equity group with 25 years of deep expertise in building products investment. Brookstone Partners is controlled by Matthew Lipman, our chief executive officer and a member of our board of directors, and Michael Toporek, the chairman of our board. The Capstone leadership team includes seasoned operating executives and building products acquisition and investment professionals. with a proven track record of identifying, acquiring and building successful building products companies. Capstone's leadership team includes Capstone's will include, following the pricing of this offering, its Lead Independent Director, Charles "Chuck" Dana. Mr. Dana spent 19 years at Owens Corning, a leading building materials company. At Owens Corning, Mr. Dana held various positions including Controller, President Global Composites and then Group President Building Materials. In addition, from the Company's acquisition of Instone in April 2020 through December 31, 2023, Instone's revenues have increased from approximately $32.2 million to approximately $48.4 million. In February 2008, a Brookstone Partners affiliate invested $8.8 million in Woodcrafter's Home Products Holdings LLC. Brookstone's team worked with Woodcrafter's management to grow earnings and Brookstone completed the sale of all of its interests in Woodcrafter's for $32 million in December 2013. The ability to identify, acquire and integrate acquisition candidates is a critical skill set to augment the operating expertise that drives organic growth. The current operating company has successfully executed an acquisition multiple acquisitions and integration, integrations, laying a solid foundation for continued expansion.

Strategic Timing. We believe we are strategically positioned to capitalize on market conditions within the building products sector. We believe, as described below, due to our integrated supply chain and the current locations of our distribution network we are well positioned to acquire companies as opportunities arise. Historically, acquiring companies at interest rate peaks has yielded strong returns, and we are poised to leverage these strategic investment opportunities as the market evolves.

Industry Dynamics. According to the Bain & Company Global M&A Report published in 2024 (the "Bain Report"), this is "just the type of environment that has proved to offer opportunities to companies that are willing to make bold moves." The Bain Report goes on to say, "building products companies that make frequent and material acquisitions substantially outpace inactive companies in total shareholder returns, 9.6% vs 2.7%" and "the most successful companies will pursue scope M&A to build product, geography, and capability adjacencies."

The M&A environment for the building products sector is expected to improve because, according to the Bain Report, "there are ample one -off opportunities to acquire struggling assets", and "financial investors have taken a step back, especially in North America, removing a potentially formidable layer of competition."

Scale. For scale M&A, opportunities in core businesses allow for more operational synergies. The Bain Report states that "allowing management to focus on a more related group of products with some level of shared channels, end markets, or manufacturing processes helps focus efforts and tells a clearer equity story."

Scope. Given macroeconomic uncertainty, companies who leverage their parenting advantage, the ability to effectively manage and integrate acquisitions, will be the most successful with regards to scope M&A. The Bain Report states that "the path to leadership generally means overlooking smaller assets in favor of bigger players for a first move in a new space."

The "Annual total shareholder returns for building products companies" chart and quotes from the Bain Report are used with permission from Bain & Company. The Bain Report was not commissioned by the Company. The Company does not currently and has not in the past had a direct or indirect business relationship with Bain & Company. The Bain Report is publicly available via the Insight — Featured Topics portion of Bain & Company's website.

Strategic Positioning. We believe we are strategically well -positioned to take advantage of the current market opportunities because of:

Team strength. The industry experience of the Board and Instone management provides the Company with the expertise to evaluate, acquire, and integrate acquisitions.

Experience integrating acquisitions. Since 2006, the Company has successfully integrated four acquisitions. The team believes the Company has the resources and expertise to continue to integrate acquisitions successfully.

Geographic distribution footprint of Instone. The current service area of the Company, which includes 31 states and 40% of American households, provides a good basis on which to make both "scale" and "scope" acquisitions.

Growth Premium. As Capstone continues to scale, growing its EBITDA, we anticipate benefiting from valuation premiums associated with increased size. This growth, coupled with consistent earnings performance, is expected to drive substantial shareholder value and enhance our market positioning Our current operating company, , Instone, intends to drive sustainable growth, expand s expands its geographic presence in the building products industry, and deliver s delivers superior value to its customers, shareholders, and other stakeholders. We expect to work with Instone to achieve this through the following strategic pillars:

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On April 1, 2020, the Company obtained controlling interest in TotalStone, a company that distributes masonry stone products for residential and commercial construction in the Midwest and Northeast United States under the trade name Instone. TotalStone, LLC (dba "Instone"), a Delaware limited liability company, was formed on October 4, 2006. TotalStone is the Company's primary business activity and it is consolidated in the Company's financial statements. TotalStone currently has 5 Managers, who control decision -making and are appointed by Designees designated by Members. Through its membership interests, Capstone currently designates 4 of the 5 Managers (80%) of which 3 are officers or board members of Capstone. It is expected that after this offering, Capstone will control approximately 67% of TotalStone and a current director of TotalStone, Gordon Strout, will control approximately 22% of TotalStone with the remaining 11% controlled by various current and former employees.

Contingent on the Company raising at least $3,000,000 in gross proceeds from this Offering (the "Restructuring Condition"), a series of transactions will be consummated on the date of the satisfaction of the Restructuring Condition (the "Restructuring Date") prior to the issuance of Common Stock on the Restructuring Date that will have the effect of the Company owning 100% of the equity interests of TotalStone on the Restructuring Date.

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Holders of TotalStone's Class B Preferred Interests (the "Class B Members") have no voting rights and are entitled to designate two TotalStone managers. The TotalStone managers may not take certain actions without the express consent of the Class B Members, who also have preemptive rights such as a right of first refusal over new securities of TotalStone and the right of overallotment. Upon a Redemption Default, Class B Members have the right to sell to the company its interests, and also receive warrants to purchase common stock of Capstone in an aggregate amount equal to 2% of Capstone's outstanding common stock at a an exercise price of $0.01. In the event of a distribution of residual proceeds or operating cash flow, the Class B Members have second priority to the Special Preferred Members and have the right to receive in -kind distributions in the same proportions as cash would be distributed.

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Contingent on the Company raising at least $3,000,000 in gross proceeds from this Offering (the "Restructuring Condition"), a series of transactions will be consummated on the date of the satisfaction of the Restructuring Condition (the "Restructuring Date") prior to the issuance of Common Stock on the Restructuring Date that will have the effect of the Company owning 100% of the equity interests of TotalStone on the Restructuring Date.

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On the Restructuring Date, the Class B Preferred Interests will be exchanged into [*] 3,782,640 shares of Common Stock that will constitute approximately 95% 96% of the shares of Common Stock outstanding on the Restructuring Date immediately prior to the issuance of Common Stock in this Offering. Following the restructuring, BP Peptides, LLC, the current owner of approximately 77.3% of the Company's shares, will own approximately 3% of the Company's shares. Following the restructuring, the largest holder of the Company's shares (approximately 64%) will be BPA XIV, LLC. Both BP Peptides, LLC and BPA XIV, LLC are jointly controlled by Matthew Lipman, our chief executive officer and a member of our board of directors, and Michael Toporek, the chairman of our board of directors.

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The Special Preferred Membership Interests were issued by TotalStone in connection with the restructuring of its mezzanine indebtedness. This indebtedness is documented pursuant to that certain Second Amended and Restated Credit Agreement, dated as of March 8, 2023, with Stream Finance, LLC, as agent, and the lenders from time to time party thereto (as amended, the "Stream Finance Credit Agreement"). The maturity date of the Stream Finance Credit Agreement is September 30, 2026 (the "Stream Finance Maturity Date"). The Special Preferred Membership Interests will be exchanged on the Restructuring Date for loans in an aggregate principal amount of $1,202,753 $1,006,377 plus certain amounts for each day after September 30, 2024 until the Restructuring Date. Other provisions of the Stream Finance Credit Agreement include the following: no financial covenants will be tested until the fiscal quarter ending March 31, 2026 (and will continue to be tested each quarter ending thereafter); an amendment fee of $695,000 shall be payable on the earliest to occur of (i) the date of repayment or prepayment of the entire outstanding principal balance of the loan, (ii) the acceleration of the entire outstanding principal balance of the loan and (iii) the maturity date (such earliest date, the "Deferral Date"); interest accrued during the period commencing on August 1, 2023 through the Restructuring Date will be due and payable on the Deferral Date; the standard interest rate will be an annual rate of 14 percent; the portion of such accrued interest at a rate of 2 percent during each appliable period shall be paid in kind with the balance paid in cash; interest accrued during the period commencing on the Restructuring Date through March 31, 2025 shall be due and payable on July 1, 2025; and interest accrued during the quarter ending June 30, 2025 (and each quarter thereafter) shall be paid on the first day of the immediately following quarter.

Other provisions of the Stream Finance Credit Agreement include that no financial covenants will be tested until the fiscal quarter ending March 31, 2026 (and will continue to be tested each quarter ending thereafter). An amendment fee of $695,000 shall be payable on the earliest to occur of (i) the date of repayment or prepayment of the entire outstanding principal balance of the loan, (ii) the acceleration of the entire outstanding principal balance of the loan and (iii) the Stream Finance Maturity Date. The earliest of the date of repayment, the acceleration date, and the Stream Finance Maturity Date is referred to as the "Deferral Date." In addition, interest accrued during the period commencing on August 1, 2023 through the Restructuring Date will be due and payable on the Deferral Date; the standard interest rate will be an annual rate of 14 percent; the portion of such accrued interest at a rate of 2 percent during each appliable period shall be paid in kind with the balance paid in cash; interest accrued during the period commencing on the Restructuring Date through March 31, 2025 shall be due and payable on July 1, 2025; and interest accrued during the quarter ending June 30, 2025 (and each quarter thereafter) shall be paid on the first day of the immediately following quarter.

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Berkshire Bank Credit Agreement

On December 20, 2017, TotalStone executed a Revolving Credit, Term Loan and Security Agreement with Berkshire Bank (the "Revolving Credit Agreement"). Under the terms of the Eleventh Amendment to the Revolving Credit Agreement, executed on October 18, 2024, TotalStone, LLC's maximum revolving advance amount is $14.0 million for working capital purposes. Advances under the credit agreement are limited to a formula -based amount of up to eighty -five (85%) percent of the face amount of the TotalStone "Eligible Accounts Receivable" plus approximately fifty -five (55%) percent of the face amount of the TotalStone "Finished Goods Inventory" up to a maximum amount of $8.0 million. Interest charged on the unpaid principal amount of the Credit Agreement bears a rate per annum of SOFR plus 2.5%. The balance outstanding on the line of credit was $8.4 million and $8.6 million as of September 30, 2024 and December 31, 2023, respectively, with a maturity date of April 30, 2025.

The Company was formed in 1987 as OrthoLogic Corp. In 2005, the Company filed its amended and restated certificate of incorporation (the "Amended and "Restated Certificate of Incorporation"). In 2010, the Company changed its name to Capstone Therapeutics Corp. On August 22, 2019, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation effecting a 1 for 1,000 reverse stock split of the common stock of the Company, whereby each 1,000 shares of common stock of the Company became 1 share of common stock. In 2021, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation decreasing the total number of shares of common stock authorized to be issued by the Company from 150,000,000 shares to 205,000 shares, consisting of 200,000 shares of common stock, par value $0.0005 per share and 5,000 shares of preferred stock, par value $0.0005 per share. On February 18, 2022, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation, changing the Company's name from Capstone Therapeutics Corp. to Capstone Holding Corp.

Management 18 changes

The names of our executive officers and directors and their age, title, and biography as of [_], December 30, 2024, are set forth below. Messrs. Dana, Strout, Feldman, and Howse have been appointed to serve as members of the Board effective upon the pricing of this offering.

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Chief Executive Officer and Director

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Director Nominee (Lead Independent Director)

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Fredric J. Feldman, Ph.D.

Elwood D. Howse, Jr.

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Matthew E. Lipman, Chief Executive Officer and Director . Mr. Lipman 44, brings over 20 years of experience working with companies to establish growth strategies and execute acquisitions. Mr. Lipman has served as a director since July 14, 2017. Since 2004, Mr. Lipman has served as Managing Director of Brookstone Partners. From July 2001 through June 2004, Mr. Lipman was an analyst in the mergers and acquisitions group at UBS Financial Services Inc. Mr. Lipman has a B.S. in Business Administration from Babson College. The Board believes that Mr. Lipman's proficiency in reading and understanding financial statements, generally accepted accounting principles and internal controls, qualifies him to serve as Chief Executive Officer.

Michael M. Toporek, Chairman. Mr. Toporek 59, has served as a director since July 14, 2017. Since 2003, Mr. Toporek has served as the Managing General Partner of Brookstone Partners, a lower/middle market private equity firm based in New York and an affiliate of BP Peptides, LLC ("Brookstone Partners"). Prior to founding Brookstone Partners in 2003, Mr. Toporek was both an active principal investor and an investment banker. Mr. Toporek began his career in Chemical Bank's Investment Banking Group, later joined Dillon, Read and Co., which became UBS Warburg Securities Ltd. during his tenure, and SG Cowen and Company. Mr. Toporek currently serves on the Board of Trustees of Harlem Academy. Mr. Toporek has a B.A. in Economics and an M.B.A from the University of Chicago. Mr. Toporek brings strategic and financial expertise to the Board as a result of his experience with Brookstone Partners, which the Board believes qualifies him to serve as Chairman.

Edward Schultz, CFO. Mr. Schultz 40, has served as Chief Financial Officer since August 25, 2023. Mr. Schultz also serves as the Vice President of Finance of TotalStone, LLC since June 2021. Prior to his employment with Capstone and TotalStone, Mr. Schultz was employed as Director of Financial Reporting and Technical Accounting for Brookfield Properties Retail from September 2012 through June 2021. He holds a Bachelor of Science in Accountancy from the Governors State University.

Charles "Chuck" Dana, Director Nominee ( Lead Independent Director ) . Mr. Dana, 68, upon his joining the Board, will serve as lead independent director. Mr. Dana has been an investor in Brookstone since 2003, and in 2016 joined the firm as an Operating Partner. His main responsibilities are to assist in the strategy and operations of Brookstone's portfolio companies and to identify and acquire middle market companies. Mr. Dana has over 40 years of financial and general management experience. He started his career at GE and had successively more responsible financial role's culminating as President — GE Locomotives Indonesia. Mr. Dana then joined Owens Corning in 1995. He was the President of the Composites Solutions Business from 2003 to 2010 growing sales from $1.2 billion to $2.4 billion both through organic sales growth but also with via several acquisitions. Mr. Dana then served as the Group President for Building Materials ($4.5 billion sales) from 2010 to 2015, a segment that produced eighteen (18) consecutive quarters of net income growth for the insulation business under his leadership. Mr. Dana retired from Owens Corning and served as EVP at Molded Fiber Glass Companies before joining Brookstone. The Board believes the experience and knowledge of Mr. Dana qualifies him to serve on our Board.

John M. Holliman, III, Director. Mr. Holliman 71, has served as a director of the Company since September 1987 and as former Chairman of the Board of Directors from August 1997 through July 2017. Since February 1993 he has been a general partner of entities which are the general partners of Valley Ventures, LP (formerly known as Arizona Growth Partners, LP), Valley Ventures II, LP, Valley Ventures III, LP, Valley Ventures III Annex, LP, all of which are venture capital funds. He has over thirty -nine years of business experience, including service on the boards of over forty companies, commercial lending experience with major financial institutions, and has been active in venture capital financing for over thirty -five years serving a variety of industries. Mr. Holliman earned a BBA in Finance and a MBA from Southern Methodist University and a Master of International Management from the Thunderbird School of Global Management. During his career Mr. Holliman has gained substantial executive and board level experience in business, finance and operations. The Board believes the experience and knowledge of Mr. Holliman qualifies him to serve on our board and to chair our Audit Committee.

Gordon Strout, Director Nominee

Mr. Strout 62, serves as a director of the Company. Gordon ran a small industrial supply business as well as a heating oil business starting in 1985. After successfully selling off the heating oil business he purchased his father's minority stake in the Industrial supply company in 1989. Instone and Total Lubrication (a Mobil branded lubricants distributor) grew out of the industrial supply business. In 2004 Gordon acquired a majority equity position. Gordon then partnered with Brookstone Partners in 2006 and served as President and CEO through April 2021 at which time he transitioned to Executive Chairman of the Instone board. Mr. Strout holds a bachelor's degree from the University of Miami, Coral Gables Fla. The Board believes the experience and knowledge of Mr. Strout qualifies him to serve on our Board.

Fredric J. Feldman, Ph.D., Director Nominee

Fredric J. Feldman, Ph.D., has been the President of FJF Associates, a consultant to venture capital and emerging companies, since February 1992 and has served as a director of the Company since 1991. From September 1995 to June 1996, he was the Chief Executive Officer of Biex, Inc., a women's healthcare company. He served as Chief Executive Officer of Oncogenetics, Inc., a cancer genetics research company, from 1992 to 1995. Between 1988 and 1992, Dr. Feldman was the President and Chief Executive Officer of Microgenics Corporation, a medical diagnostics company. From 1984 to 1988 Dr. Feldman was Vice President and then President of Instrumentation laboratory a medium sized International Medical Diagnostic Instrumentation Company. Dr. Feldman received his Ph.D. in analytical chemistry from the University of Maryland. He has been a director of a number of public and private companies. The Board believes that Dr. Feldman's over 40 years of operating, scientific and business experience in industry qualifies him for service on our board.

Elwood D. Howse, Jr., Director Nominee

Elwood D. Howse, Jr., previously served as a director of the Company from 1987 to 2023. In 1982, Mr. Howse founded Cable, Howse and Ragen, investment banking and stock brokerage firm, subsequently known as Ragen MacKenzie. In 1977, Mr. Howse co -founded Cable & Howse Ventures, an early -stage venture capital firm focused on technology. In 1976, he served as Vice President, Corporate Finance, for Foster & Marshall, a northwest stock brokerage firm. In 1974 he was the Chief Financial Officer of Seattle Stevedore Company and the Miller Produce Company. Mr. Howse has served as a corporate director and advisor to various public, private and non -profit enterprises. He served on the board of the National Venture Capital Association and is past President of the Stanford Business School Alumni Association. Mr. Howse holds a BS in Engineering from Stanford University and an MBA from Stanford Graduate School of Business. Mr. Howse also served in the US Navy as a nuclear submariner. The Board believes Mr. Howse's education and company operations skills brings important financial and business experience to the board and qualifies him to serve on our board.

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Our Board of Directors has reviewed the composition of our Board of Directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board of Directors has determined that each of Messrs. [_], [_], [_] Charles Dana, Gordon Strout, Fredric J. Feldman, Ph.D., and [_] Elwood D. Howse, Jr. is an "independent director" as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. Our Board of Directors also determined that [_], who will comprise our audit committee following this offering, [_], who will comprise our compensation committee following this offering, and [_] and [_], who will be members of our nominating and corporate governance committee following this offering, satisfy the independence standards for such committees established by the SEC and the NASDAQ Marketplace Rules, as applicable. In making such determinations, our Board of Directors considered the relationships that each such non -employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non -employee director.

Audit Committee. We have established an audit committee consisting of John M. Holliman, III, Matthew E. Lipman, [ ] and [_]. John M. Holliman, III [ ] is chairman of the audit committee and he qualifies as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S -K .

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Executive compensation 3 changes

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The Company intends to grant options to purchase our common stock and awards restricted stock to employees and directors under a to -be-adopted equity incentive plan titled "2024 Stock Plan". The Company expects to reserved reserve shares of common stock for future option exercise representing approximately 10% of authorized shares as of this date under the 2024 Stock Plan. The issuance of grants and future exercise into common shares as well as the grant of restricted stock awards may cause future dilution of ownership to shareholders.

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As of December 31, 2023 and December 31, 2022, there were approximately 976 and 1,753 options exercisable and vested at a weighted average exercise price of $210.00 and $220.00, respectively. The exercisable life for these remaining options has expired and they are effectively cancelled. In addition, the Company issued a warrant to Brookstone Partners IAC to purchase up to 6,322 shares of the Company's Common Stock, which provides for quarterly vesting of shares in amounts approximately equal to the amount of quarterly interest payable that would have been payable under the Agreement, converted into shares at $0.075, all of which has now vested, and can be exercised through October 15, 2028 with an exercise price that was between $10.00 and $30.00 per share, as determined by an independent valuation, through April 1, 2024, and, after since that date, the lesser of (i) $75.00 per warrant share and (ii) the 10 -day average closing price of the Company's common stock.

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On the Restructuring Date, the Class B Preferred Interests will be exchanged into [*] 3,782,640 shares of Common Stock that will constitute approximately 95% 96% of the shares of Common Stock outstanding on the Restructuring Date immediately prior to the issuance of Common Stock in this Offering. Following the restructuring, BP Peptides, LLC, the current owner of approximately 77.4% of the Company's shares, will own approximately 3% of the Company's shares. Following the restructuring, the largest holder of the Company's shares (approximately 64%) will be BPA XIV, LLC. Both BP Peptides, LLC and BPA XIV, LLC are jointly controlled by Matthew Lipman, our chief executive officer and a member of our board of directors, and Michael Toporek, the chairman of our board of directors.

Principal stockholders 5 changes

The following sets forth information as of [_], December 30, 2024 regarding the number of shares of our Common Stock beneficially owned by (i) each person that we know beneficially owns more than 5% of our outstanding Common Stock, (ii) each of our directors and executive officers and (iii) all of our directors and executive officers as a group.

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All Directors and Executive Officers as a Group ( 6 4 persons)

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(2) Based on 157,610 shares of Common Stock outstanding as of [_] and securities convertible into Common Stock. December 30, 2024.

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(7) Includes a warrant to purchase up to 6,322 shares of Common Stock issued to Brookstone Partners IAC, Inc., the investment manager of BP Peptides, LLC which is controlled by Matthew Lipman and Michael Toporek.

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On the Restructuring Date, the Class B Preferred Interests will be exchanged into [*] 3,782,640 shares of Common Stock that will constitute approximately 95% 96% of the shares of Common Stock outstanding on the Restructuring Date immediately prior to the issuance of Common Stock in this Offering. Following the restructuring, BP Peptides, LLC, the current owner of approximately 77.3% of the Company's shares, will own approximately 3% of the Company's shares. Following the restructuring, the largest holder of the Company's shares (approximately 64%) will be BPA XIV, LLC. Both BP Peptides, LLC and BPA XIV, LLC are jointly controlled by Matthew Lipman, our chief executive officer and a member of our board of directors, and Michael Toporek, the chairman of our board of directors.

Related-party transactions 15 changes

Since [_], the beginning of our last fiscal year, other than compensation arrangements, the following is a description of transactions to which we were a participant or will be a participant to, in which:

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Stream Finance, LLC, which serves as a creditor on the Company's TotalStone's mezzanine term loan of $1.3 million, is managed by Brookstone Partners, which has a 77.3% ownership through BP Peptides, LLC, and two board member seats of the Company.

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Beta's obligations under its promissory note are intended to be serviced by distributions from DPH which, in turn, will largely reflect the contractually allowable distributions received by DPH from Diamond. It is anticipated that substantially all of the distributions that DPH receives will be applied in the following manner: 99% of the first $8.4 million to Beta; 90% of the next $4.0 million to Beta; and 20% of all future amounts to Beta. As this transaction involved the Company's majority stockholder, it is related -party in nature. The board appointed a special committee of independent directors to negotiate, perform due diligence and close this investment. The special committee relied on an independent valuation of Diamond as well as outside legal advisors to assist in structuring and maintaining its fiduciary independence for the transaction. An independent director of the Company will serve as manager of Beta.

On March 31, January 15, 2021, the Company Capstone acquired a 20% minority interest in a consumer products company, Diamond Products, LLC ("Diamond"), a sexual wellness holding company. The structure of the transaction was as follows: i) Brookstone Acquisition Partners XXI Corporation ("Brookstone XXI") contributed its approximately 95% equity interest in Diamond, which represents represented approximately 62% equity ownership on a fully -diluted basis, to Diamond Products Holdings, LLC ("DPH"); ii) The Company formed Capstone Beta LLC ("Beta") as a wholly -owned subsidiary, and Beta purchased a portion of Brookstone XXI's interest in DPH; iii) Beta issued a promissory note to Brookstone XXI in the original principal amount of $8.0 million, which bears bearing interest at 1% per annum and has over a 36 month term, and secured its obligations thereunder by pledging Beta's interests in DPH; and iv) As additional credit support, the Company Capstone issued a limited payment guaranty to Brookstone XXI in the amount of 10% of the principal amount of Beta's promissory note. The terms of the promissory note issued by Beta to Brookstone XXI include provisions whereby in the event that the membership interests in Diamond are sold or otherwise disposed of, any proceeds received by Beta are to be utilized to prepay the promissory note to Brookstone XXI and Brookstone XXI's remaining recourse for the remaining note balance, if any, is limited to the pledged collateral (Beta's membership interest in DPH) and the $800,000 limited payment guarantee provide by Capstone. DPH was structured to hold one asset, the membership interest in Diamond, and accordingly upon the sale or other disposition of the membership interests in Diamond, the sole recourse of payment by Brookstone XXI is the $800,000 limited payment guarantee. In summary, the intent of Brookstone XXI and the special committee of Capstone's independent directors entering into this arrangement was to limit Capstone's downside risk to $800,000.

The 20% minority investment in DPH represents represented an effective 19% equity interest in Diamond and approximately 12% on a fully -diluted basis. The Company does not have the ability to exercise significant influence over operating and financial policies of Diamond and DPH. Investments in non -marketable securities without readily determinable fair values by entities that do not exercise significant influence over The investee are recorded at cost, less impairment, plus or minus observable price changes. The December 31, 2022 consolidated balance sheet includes the Company's $8.0 million investment in long -term assets and the corresponding $8.0 million note payable plus accrued interest.

On November 9, 2023 in connection with a restructuring and recapitalization transaction of Diamond's operating entities, Diamond and other related party entities affiliated with Brookstone XXI entered into a transaction that sold 100% of the membership interest in Diamond inclusive of Beta's minority interest in Diamond via its membership interest in DPH to a third party. No cash consideration was received in this transaction. Rather, the primary consideration received by the selling parties was the release of guarantees of senior debt of Diamond operating entities. The third party assumed none of the $8.0 million debt liability and no other consideration was transferred. As a result, the Company's wrote -off its equity investment in DPH from $8.0 million to zero, and recognized a $7.2 million gain on debt extinguishment from Brookstone XXI's debt forgiveness which was consistent with the terms of the note agreement that limited Captone's risk upon sale or disposition of Diamond's membership interests to the $800,000 limited guaranty provided by Capstone which is the net amount of the loss recognized in the 2023 statement of operations from this transaction. An $800,000 unsecured promissory note was issued on March 31, 2024. The remaining unsecured debt liability $800,000 plus accrued interest will remain on the Company's balance sheet with a maturity date of June 30, 2026.

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On November 9, 2023, the Company entered into a transaction that transferred 100% of its ownership in Diamond Products Holdings, LLC., to a third party. The third party assumed none of the $8.0 million debt liability and no other consideration was transferred. As a result, the Company's wrote -off its equity investment in DPH from $8.0 million to zero and wrote -down its debt liability to $800,000 plus interest. The remaining unsecured debt liability will remain on the Company's balance sheet with a maturity date of June 30, 2026, as amended.

As of [_], the Company owed the following amounts to [_]:

As of September 30, 2024, the Company owed the following notes payable and accrued interest to related parties:

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Balance – January 1, 2022

Conversion of principal and accrued interest to

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Principal and interest payments

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1 Activity is with [_]

2 Activity is with [_]

(1) In connection with the unwinding of the Diamond transaction in November 2023, the March 31, 2021 secured note accruing interest at 1% was replaced by a new secured note for $800,000 plus existing accrued interest with interest accruing from November 2023 to maturity at 6% per annum.

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Description of the securities 16 changes

As of [_], we were authorized to issue 200,000 shares of Common Stock, $0.0005 par value and 5,000 shares of Series A preferred stock, $0.0005 par value.

As of December 30, 2024, we were authorized to issue 200,000 shares of Common Stock, $0.0005 par value and 5,000 shares of Series A preferred stock, $0.0005 par value. The Company expects that, prior to the consummation of this offering, the Company's controlling shareholder will authorize the Company to file an amendment to its Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the authorized shares of Common Stock to 50,000,000 shares and increase the authorized shares of preferred stock to 25,000,000 shares.

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As of [•], December 30, 2024, there were 157,610 shares of Common Stock issued and outstanding.

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The following is a summary of the Company's warrant activity:

Outstanding – January 31, 2022

Exercisable – December 31, 2022

Outstanding – December 31, 2022

Outstanding – December 31, 2023

Exercisable – December 31, 2023

Warrants Outstanding

Warrants Exercisable

At December 31, 2023, the total intrinsic value of warrants outstanding and exercisable was $[_].

The Company did not issue any warrants as compensation for services during the year ended December 31, 2023.

As of September 30, 2024, and December 31, 2023, there were [_] and [_] warrants outstanding, respectively.

As of September 30, 2024, 6,322 warrants were outstanding. All of these warrants were issued to Brookstone Partners IAC in March 2020. The warrants are exercisable through October 15, 2028 with an exercise price that was between $10.00 and $30.00 per share, as determined by an independent valuation, through April 1, 2024, and, since that date, the exercise price is the lesser of (i) $75.00 per warrant share and (ii) the 10 -day average closing price of the Company's common stock at time of exercise.

At December 31, 2023, the total intrinsic value of warrants outstanding and exercisable is not determinable given the variable nature of the exercise price. The Company did not issue any warrants as compensation for services during the years ended December 31, 2023 and 2022 and the nine months ended September 30, 2024. As of September 30, 2024, and December 31, 2023, there were 6,322 warrants outstanding and exercisable.

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Shares Eligible for Future Sale 1 change

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Based on the number of shares of Common Stock outstanding as of [_], December 30, 2024, after giving pro forma effect to the closing of this offering we will have 5,190,250 shares of Common Stock outstanding, assuming (1) no exercise of the underwriter's option to purchase additional shares of Common Stock and (2) no exercise of outstanding options or warrants. Of those shares, all the shares sold in this offering will be freely tradable.

Plan of distribution 1 change

Joseph Gunnar & Co., LLC is acting as underwriter of this offering. We have entered into an underwriting agreement with Joseph Gunnar & Co., LLC, dated [•], 2024, 2025, with respect to the shares of our Common Stock subject to this offering. Subject to the terms and conditions in the underwriting agreement, we have agreed to sell to the underwriter, and the underwriter has agreed to purchase from us on a firm commitment basis, the number of shares of our Common Stock set forth opposite its name in the table below:

42 unchanged paragraphs

Legal Matters 1 change

Certain legal matters with respect to the securities offered hereby will be passed upon by Lucosky Brookman LLP, Woodbridge, New Jersey. Certain other legal matters will be passed upon for the underwriter by Ellenof Ellenoff Grossman & Schole LLP, New York, New York, in connection with this offering.

Notes to the financial statements 2 changes

31 unchanged paragraphs

Total S tone, TotalStone, LLC – Class B Preferred Units

1 unchanged paragraph

Common Stock $0.0005 par value; 200,000 shares authorized; 157,610 issued as of December 31, 2023 and December 31, 2022 — — Additional paid-in capital 193,044 193,044 Accumulated deficit (190,607 ) (184,872 ) Total Equity 2,437 8,172 Total Liabilities, Total S tone, TotalStone, LLC. Preferred Units & Equity $ 52,701 $ 65,212 See notes to consolidated financial statements CAPSTONE HOLDING CORP.

60 unchanged paragraphs

Note 3: Related Party Transactions 6 changes

1 unchanged paragraph

Stream Finance, LLC, which serves as a creditor on the Company's TotalStone's mezzanine term loan of $1.3 million as of December 31, 2023, is managed by Brookstone, which has a 77.3% ownership through BP Peptides, LLC, and two board member seats of the Company.

2 unchanged paragraphs

On June 15, 2022, Brookstone, exercised its right to convert $1.9 million of accrued interest and debt from its senior secured note into 78,333 shares of the Capstone's Common Stock exercised at $24.75 per share. With this transaction, Brookstone now owns 121,774 shares of Capstone's Common Stock or 77.3% of the 157,610 outstanding shares of common stock.

CAPSTONE HOLDING CORP.

As further disclosed in Note 6, on March 31, 2021 a subsidiary of the Company acquired a minority interest in Diamond Products, LLC ("Diamond") from an entity affiliated with Brookstone in exchange for a note payable issued to that entity Brookstone by a Company subsidiary.

The 20% minority investment in DPH represented an effective 19% equity interest in Diamond and approximately 12% on a fully -diluted basis. The Company does not have the ability to exercise significant influence over operating and financial policies of Diamond and DPH. The December 31, 2022 consolidated balance sheet includes the Company's $8.0 million investment in long -term assets and the corresponding $8.0 million note payable plus accrued interest.

On November 9, 2023 in connection with a restructuring and recapitalization transaction of Diamond's operating entities, Diamond and other related party entities affiliated with Brookstone XXI entered into a transaction that sold 100% of the membership interest in Diamond inclusive of Beta's minority interest in Diamond via its membership interest in DPH to a third party. No cash consideration was received in this transaction. Rather, the primary consideration received by the selling parties was the release of guarantees of senior debt of Diamond operating entities. The third CAPSTONE HOLDING CORP.

Note 5: Goodwill and Other Intangible Assets (cont.) 5 changes

As of December 31, 2023

Non-compete agreements

Total definite-lived intangible assets

Indefinite-lived intangible assets

Total intangible assets

1 unchanged paragraph

Note 6: Investment in Non-Marketable Securities 2 changes

On January 15, 2021, the Capstone acquired a minority interest in a consumer products company, Diamond Products, LLC ("Diamond"), a sexual wellness holding company. The structure of the transaction was as follows: i) Brookstone Acquisition Partners XXI Corporation ("Brookstone XXI") contributed its approximately 95% equity interest in Diamond, which represented approximately 62% equity ownership on a fully -diluted basis, to Diamond Products Holdings, LLC ("DPH"); ii) The Company formed Capstone Beta LLC ("Beta") as a wholly -owned subsidiary, and Beta purchased a portion of Brookstone XXI's interest in DPH; iii) Beta issued a promissory note to Brookstone XXI in the original principal amount of $8.0 million, bearing interest at 1% per annum over a 36 month term, and secured its obligations thereunder by pledging Beta's interests in DPH; and iv) As additional credit support, Capstone issued a limited payment guaranty to Brookstone XXI in the amount of 10% of the principal amount of Beta's promissory note. The terms of the promissory note issued by Beta to Brookstone XXI include provisions whereby i) in the event that the membership interests in Diamond are sold or otherwise disposed of, any proceeds received by Beta are to be utilized to prepay the promissory note to Brookstone XXI and Brookstone XXI's remaining recourse for the remaining note balance, if any, is limited to the pledged collateral (Beta's membership interest in DPH) and the $800.0 thousand limited payment guarantee provide by Capstone. DPH was structured to hold one asset, the membership interest in Diamond, and accordingly upon the sale or other disposition of the membership interests in Diamond, the sole recourse of payment by Brookstone XXI is the $800.0 thousand limited payment guarantee. In summary, the intent of Brookstone XXI and the special committee of Capstone's independent directors entering into this arrangement was to limit Capstone's downside risk to $800.0 thousand.

1 unchanged paragraph

On November 9, 2023, the Company entered into a transaction that transferred 100% of its ownership in Diamond Products Holdings, LLC., to a third party. The third party assumed none of the $8.0 million debt liability and no other consideration was transferred. As a result, the Company's wrote -off its equity investment in DPH from $8.0 million to zero and wrote -down its debt liability to $800,000 plus interest. The remaining unsecured debt liability will remain on the Company's balance sheet with a maturity date of June 30, 2026, as agreed upon by the noteholder.

1 unchanged paragraph

Note 8: Debt (cont.) 9 changes

Term note agreement with Berkshire Bank, due in 48 consecutive monthly payments of $83.0 thousand. The loan matures on December 1, 2025 and is secured by all assets of TotalStone. Interest is charged at the one-month SOFR plus 3.5% (8.96% and 7.89% at December 31, 2023 and 2022, respectively).

In December 2022, TotalStone sold its facility in Navarre, Ohio to a nonaffiliated third party for a purchase price of $3.2 million and concurrently entered into a leaseback transaction. The transaction is treated as a failed sale in accordance with U.S. GAAP. The Company therefore recorded a financing liability related to the sale-leaseback in the amount of the sale price. The obligation matures in January 2048 and requires monthly payments of principal and interest. With the sale leaseback, TotalStone signed a lease agreement with a 25-year lease term. The initial annual lease payment of $259.0 thousand increases 2% per annum. The imputed interest rate is 8.10%.

Auto loan from VW Credit, Inc. with an interest rate of 3.99% per annum over 48 months commencing January 1, 2020. The loan was paid in full on December 26, 2023.

Secured promissory note with Brookstone plus accrued interest to acquire a minority interest in DPH. Interest accrues at 1% per annum, with a maturity date of June 30, 2026.

Less: current portion

Less unamortized loan origination fees

Total Long-term debt

6 unchanged paragraphs

Less than or equal to $2,500,000, but greater than or equal to $2,000,000 10% Less than or equal to $4,000,000, but greater than or equal to $3,500,000 10% Less than $2,000,000 8% Less than $3,500,000 8% Scheduled maturities of long -term as of September 30, 2024, December 31, 2023, are as follows:

CAPSTONE HOLDING CORP.

Note 9: Leases 7 changes

As of September 30, 2024, December 31, 2023, the balance of our right -of -use ("ROU") assets was $2.3 $2.9 million, net and lease liabilities of $2.4 $3.0 million, are included in current portion, lease liability and lease liability, net of current portion. The maturity of our lease liabilities as of September 30, 2024 December 31, 2023 is as follows in ("000's"):

4 unchanged paragraphs

Amortization expense

1 unchanged paragraph

CAPSTONE HOLDING CORP.

The following summarizes additional information related to our leases for 2023 and 2022 in ("000's"):

Weighted-average remaining lease terms (years)

Weighted-average discount rate

ROU assets obtained in exchange for new lease liabilities

Note 10: TotalStone Preferred Units 2 changes

2 unchanged paragraphs

On March 8, 2023, the Company entered into the Ninth Amendment to the Revolving Credit, term Loan and Security Agreement (the "Ninth Amendment"). The Ninth Amendment permitted permited a payment of $389.0 thousand to the Special Preferred Unit holders.

CAPSTONE HOLDING CORP.

Note 12: Stockholders' Equity 5 changes

3 unchanged paragraphs

As of December 31, 2023 and December 31, 2022, there were approximately 976 and 1,753 options exercisable and vested at a weighted average exercise price of $210.00 and $220.00, respectively. The exercisable life for these remaining options has expired and they are effectively cancelled. In addition, the Company issued a warrant to Brookstone to purchase up to 6,322 shares of the Company's Common Stock, which provides for quarterly vesting of shares in amounts approximately CAPSTONE HOLDING CORP. equal to the amount of quarterly interest payable that would have been payable under the Agreement, converted into shares at $0.075, all of which has now vested, and can be exercised through October 15, 2028 with an exercise price between $10.00 and $30.00 per share, as determined by an independent valuation, through April 1, 2024, and after that date, the lesser of (i) $75.00 per warrant share and (ii) the 10 -day average closing price of the Company's common stock.

We have 5,000 shares of authorized preferred stock, the terms of which may be fixed by our Board of Directors. We presently have no outstanding shares of preferred stock. Our Board of Directors has the authority, without stockholder approval, to create and issue one or more series of such preferred stock and to determine the voting, dividend and other rights of holders of such preferred stock. If we raise additional funds to continue operations, we may issue preferred stock. The issuance of any of such series of preferred stock may have an adverse effect on the holders of common stock.

The Board of Directors of the Company approved a Tax Benefit Preservation Plan ("Benefit Plan") dated April 18, 2017, between the Company and Computershare. The Benefit Plan and the exercise of rights to purchase Series A Preferred Stock, pursuant to the terms thereof, may delay, defer or prevent a change in control without the approval of the Board. In addition to the anti -takeover effects of the rights granted under the Benefit Plan, the issuance of preferred stock, generally, could have a dilutive effect on our stockholders.

Under the Benefit Plan, each outstanding share of our common stock has attached one preferred stock purchase right, Each share of our common stock subsequently issued prior to the expiration of the Benefit Plan will likewise have attached one right. Under specified circumstances involving an "ownership change," as defined in Section 382 of the Internal Revenue Code ("the Code"), the right under the Benefit Plan that attaches to each share of our common stock will entitle the holder thereof to purchase 1/100 of a share of our Series A Preferred Stock for a purchase price of $5.00 (subject to adjustment), and to receive, upon exercise, shares of our common stock having a value equal to two times the exercise price of the right. In May of 2024, The Company and Computershare extended the Benefit Plan through December 31, 2027.

CAPSTONE HOLDING CORP.

Note 14: Income Taxes (cont.) 3 changes

ASC 740 requires that a valuation allowance be established when it is more -likely - than-not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period -to -period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, the Company takes into account all evidence with regard to the utilization of a deferred tax asset including past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. Management has evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets and has established a valuation allowance of $27.4 million and $26.7 million at December 31, 2023 and 2022, respectively. The valuation allowance reduces deferred tax assets to an amount that management believes will more likely than not be realized.

The components of the income tax provision (benefit) are as follows in ("000's):

Income tax provision

5 unchanged paragraphs

Note 7: Line of Credit 2 changes

CAPSTONE HOLDING CORP.

On June 29, 2015, TotalStone established a Revolving Credit Note which has been amended since. Under the terms of the Tenth Eleventh Amendment to the Revolving Credit, Term Loan and Security Agreement with Berkshire Bank, executed on December 20, 2023, October 16, 2024, TotalStone, LLC LLC's maximum revolving advance amount is $14.0 million for working capital purposes. Advances under the credit agreement are limited to a formula -based amount of up to eighty -five (85%) percent of the face amount of the TotalStone "Eligible Accounts Receivable" plus about approximately fifty -five (55%) percent of the face amount of the TotalStone, "Finished Goods Inventory" up to a maximum amount of $8.0 million. Interest charged on the unpaid principal amount of the Credit Agreements bear Agreement bears a rate per annum of LIBOR SOFR plus 2.5% (6.86% and 7.96% at September 30, 2024 and December 31, 2023, respectively). The balance outstanding on the line of credit was $8.5 $8.4 million and $7.2 $8.6 million as of September 30, 2024 and December 31, 2023, and 2022, respectively, with a maturity date of January 31, April 30, 2025.

Note 8: Debt 6 changes

4 unchanged paragraphs

In December 2022, TotalStone sold its facility in Navarre, Ohio to a nonaffiliated third party for a purchase price of $3.2 million and concurrently entered into a leaseback transaction. The transaction is treated as a failed sale in accordance with U.S. GAAP. The Company therefore recorded a financing liability related to the sale-leaseback in the amount of the sale price. The obligation matures in January 2048 and requires monthly payments of principal and interest. With the sale leaseback, TotalStone signed a lease agreement with a 25-year lease term. The initial annual lease payment of $259.0 thousand increases 2% per annum. The inputed interest rate is 8.10%.

Secured promissory note with Brookstone plus accrued interest to acquire a minority interest in DPH. Interest accrues at 1% per annum, as amended maturity date of June 30, 2026.

Less: current portion

Less unamortized loan origination fees

Total Long-term debt

Term note agreement with Berkshire Bank, due in 48 consecutive monthly payments of $83.0 thousand. The loan matures on December 1, 2025 and is secured by all assets of TotalStone. Interest is charged at the one- month LIBOR SOFR plus 3.5% (7.86% and 8.96% at September 30, 2024 and December 31, 2023, respectively).

1 unchanged paragraph

Note 9: Leases (cont.) 4 changes

Lease expense recognized on our leases is as follows in ("000's"):

Amortization expense

Straight-line rent expense

The following summarizes additional information related to our leases for 2023 2024 and 2022 2023 in ("000's"):

3 unchanged paragraphs

Note 11: TotalStone Warrants 2 changes

1 unchanged paragraph

Vested warrants may be exercised through March 31, 2030 subject to continuing employment. The fair value of the warrants granted was not significant and accordingly no equity -based compensation has been recognized in the statements statement of operations. income.

CAPSTONE HOLDING CORP.

Other Expenses of Issuance and Distribution 2 changes

2 unchanged paragraphs

Printing and Engraving Expenses

2 unchanged paragraphs

* To be provided by amendment.

Indemnification of Directors and Officers 3 changes

The amended and restated certificate of incorporation, as amended, and the bylaws of the Company provide that the Company shall indemnify its officers, directors and certain others to the fullest extent permitted by the Delaware General Corporation Law ("DGCL"). Section 145 of the DGCL, provides in pertinent part as follows:

10 unchanged paragraphs

As permitted by Section 102(b)(7) of the DGCL, the Company's amended and restated certificate of incorporation eliminates the personal liability of each of the Company's directors to the Company and its stockholders for monetary damages for breaches of his or her fiduciary duties as a director except that the fourth amended and restated certificate of incorporation does not eliminate or limit the liability of a director to the extent that such elimination or limitation of liability is expressly prohibited by the DGCL as in effect at the time of the alleged breach of duty by such director.

As permitted by Section 102(b)(7) of the DGCL, the Company's restated certificate of incorporation, as amended, eliminates the personal liability of each of the Company's directors to the Company and its stockholders for monetary damages for breaches of his or her fiduciary duties as a director except that a director shall be liable to the extent provided by applicable law (i) for breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit.

Exhibits 6 changes

3 unchanged paragraphs

List of Subsidiaries

Consent of GBQ Partners LLC

Consent of Lucosky Brookman LLP (included in Exhibit 5.1)

Power of Attorney (included on signature page)

+ Indicates management contract or compensatory plan

Amended and Restated Certificate of Designation of Series A Preferred Stock, executed Incorporation, dated April 22, 2005, as amended on May 21, 2010, June 24, 2014 22, 2015, August 22, 2019, February 10, 2021, and February 18, 2022 3.2 P Bylaws of the Company 4.2 06/23/2015 3.3 Restated Certificate of Incorporation, as Amended through June 24, 2014 3.4 Second Amended and Restated Certificate of Incorporation as amended through Designation of Series A Preferred Stock, dated June 22, 2015 including the Amended and Restated 3.4 Certificate of Designation of Series A B Convertible Preferred Stock, 3.5 LipimetiX Development, Inc., Certificate dated July 9, 1998 4.1* Form of Incorporation Representative's Warrant 4.2 Amended and By Laws 3.6 Certificate of Amendment to the Restated Certificate of Incorporation 3.7 Certificate of Amendment Warrant to the Restated Certificate of Incorporation Purchase Common Stock, dated March 20, 2020, issued to BP Peptides, LLC 4.3 Warrant to Purchase Common Stock, dated January 30, 2018, issued to BP Peptides, LLC 8-K 10.2 02/01/2018 5.1* Opinion of Lucosky Brookman LLP 10.1* Form of Indemnification Agreement (+) 10.2 Series B Preferred Stock and Warrant Purchase Agreement, – Exhibit B – Form of Warrants dated August 25, 2016, by and between LipimetiX Development, Inc. and Capstone Therapeutics Corp. 8-K 10.1 08/26/2016 10.3 Securities Purchase, Loan and Security Agreement dated July 14, 2017, by and between Capstone Therapeutics Corp. and BP Peptides, LLC 8-K 10.1 07/17/2017 10.4 Promissory Note dated July 14, 2017, payable First Amendment to Securities Purchase Loan and Security Agreement dated January 30, 2018, by and between Capstone Therapeutics, Corp. and BP Peptide, Peptides, LLC 8-K 10.1 02/01/2018 II-3 Exhibit Number Exhibit Description Incorporated by Reference Filed or Furnished Herewith Form Exhibit Filing Date 10.5 Registration Rights Second Amendment to Securities Purchase Loan and Security Agreement dated July 14, 2017, March 15, 2019, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 8-K 10.1 03/19/2019 10.6 First Third Amendment to Securities Purchase Loan and Security Agreement dated January 30, 2018, March 27, 2020, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 10.7 Warrant to Purchase Common Stock dated January 30, 2018 10.8 Second Fourth Amendment to Securities Purchase Loan and Security Agreement dated March 15, 2019, 2021, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 10.9 Third Amendment to 10.8 Termination of Securities Purchase, Loan and Security Agreement, dated March 27, 2020, November 13, 2024, by and between Capstone Therapeutics, Holding Corp. and BP Peptides, LLC 10.10 Amended and Restated Warrant to Purchase Common Stock 10.9 Promissory Note dated March 27, 2020 10.11 Totalstone, July 14, 2017, payable to BP Peptide, LLC 8-K 10.2 07/17/2017 10.10 Fourth Amended and Restated Limited Liability Company Operating Agreement Executed as of TotalStone, LLC, dated March 27, 2020 and Effective as of April 1, 2020 10.12 Totalstone, LLC, Warrants No. 1 -5 November 26, 2021 10.11 Consent and First Amendment to purchase Class A Common Stock. Executed as the Fourth Amended and Restated Operating Agreement of TotalStone, LLC, dated March 27, 2020 and Effective as of April 1, 2020 10.13 November 26, 2021 10.12 Second Amended and Restated Credit Agreement, dated November 14, 2019 March 8, 2023, by and between TotalStone, LLC, Northeast Masonry Distributors, LLC, TotalStone Properties, LLC, and Stream Finance, LLC (a related party) 10.14 10.13 Consent, Waiver and Amendment to Second Amended and Restated Credit Agreement, dated November 14, 2019 October 18, 2024, by and between TotalStone, LLC, Northeast Masonry Distributors, LLC, TotalStone Properties, LLC, and Stream Finance, LLC (a related party), effective March 27, 2020 10.15 Non -negotiable 10.14 Non-negotiable Secured Subordinated Promissory Note by and between TotalStone, LLC and Northeast Masonry Distributors, LLC 10.16 Non -negotiable 10.15 Non-negotiable Secured Subordinated Contingent Value Promissory Note by and between NEM Purchaser, LLC and Northeast Masonry Distributors, LLC 10.17 10.16 Brookstone Partners IAC, Inc. Amended and Restated Management Fee Agreement Dated March 1, 2020 by and between TotalStone, LLC and Brookstone Partners IAC, Inc. 10.17 Management Fee Agreement, dated March 27, 2020, by and between TotalStone, LLC and Capstone Holding Corp. 10.18 Third Amendment to Revolving Credit, Term Loan of Amended and Security Restated Management Fee and Transaction Fee Agreement, dated November 14, 2019 15, 2024, by and among between Capstone Holding Corp., TotalStone, LLC, Northeast Masonry Distributors, LLC, and Berkshire Bank Brookstone Partners IAC, Inc. II-4 Exhibit Number Exhibit Description Incorporated by Reference Filed or Furnished Herewith Form Exhibit Filing Date 10.19 First Amended & Restated Operating Agreement of Stream Finance, LLC Dated November 5, 2019 by and among Stream Finance, LLC, the Managing Member, and each of the Members executing this Agreement 10.20 Fourth Amendment to Securities Purchase Loan and Security Agreement dated March 15, 2021, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 10.21 Limited Liability Agreement dated January 1, 2021, of Capstone Beta, LLC 10.22 Secured Promissory Note dated March 31, 2021, between Capstone Beta, LLC and Brookstone Acquisition Partners XXI Corporation 10.23 Limited Payment Guarantee dated March 31, 2021, between Capstone Therapeutics Corp. and Brookstone Acquisition Partners XXI Corporation 10.24 Diamond Products Holdings Amended and Restated Limited Liability Company 10.20 Series B-2 Preferred Stock Purchase Agreement, dated January 15, 2021 10.25 August 11, 2017, by and between Capstone Therapeutics Corp. and LipimetiX Development, Inc. 10-Q 10.1 08/14/2017 10.21 First Amendment to the Second Amended and Restated Limited Liability Company Stockholders Agreement of Diamond Products, LLC LipimetiX Development, Inc., dated January 15, 2021 10.26 License Transfer and Royalty August 11, 2017 10-Q 10.2 08/14/2017 10.22 Joinder of August 25, 2016 Registration Rights Agreement by and between Anji Pharmaceutical of LipimetiX Development, Inc., and dated August 11, 2017 10-Q 10.3 08/14/2017 10.23 LipimetiX Development, Inc. Contingent Value Rights Agreement, dated December 31, 2020 10.27 Consent August 23, 2019, by and First Amendment to among Capstone Therapeutics Corp., the Fourth Shareholder Representative and Computershare Inc., and Computershare Trust Company, N.A., as Rights Agent 10.24 Second Amended and Restated Operating Promissory Note, dated November 11, 2024, issued by Capstone Holding Corp. to BP Peptides, LLC 10.25 Revolving Credit, Term Loan and Security Agreement by and among TotalStone, LLC, Northeast Masonry Distributors, LLC, TotalStone Properties, LLC, and Berkshire Bank, dated March 27, 2020 December 20, 2017 10.26 Amendments to Revolving Credit, Term Loan and Effective Security Agreement Still in Effect As of December 30, 2024 10.27 Second Amended and Restated Revolving Credit Note Issued by TotalStone, LLC and Northeast Masonry Distributors, LLC to Berkshire Bank, dated November 26, 2021 14, 2019 10.28 Exercise of secured debt Term Note Issued by TotalStone, LLC, Northeast Masonry Distributors, LLC, and interest conversion option TotalStone Properties, LLC to Berkshire Bank, dated November 22, 2021 10.29 Second Amended and Restated Promissory Note Issued by majority shareholder, BP Peptides, Capstone Holding Corp. to Brookstone Partners Acquisition XXI Corporation, dated November 11, 2024 21.1 List of Subsidiaries 23.1 Consent of GBQ Partners LLC 23.2* Consent of Lucosky Brookman LLP (included in Exhibit 5.1) 99.1 Consent of Charles Dana to be named as a director nominee 99.2 Consent of Gordon Strout to be named as a director nominee 99.3 Consent of Fredric J. Feldman to be named as a director nominee II-5 Exhibit Number Exhibit Description Incorporated by Reference Filed or Furnished Herewith Form Exhibit Filing Date 99.4 Consent of Elwood D. Howse to be named as a director nominee Filing Fee Table ____________ * To be filed by amendment.

2 unchanged paragraphs

Undertakings 7 changes

18 unchanged paragraphs

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Alsip, Illinois, on [_]. December 31, 2024.

1 unchanged paragraph

/ s / Matthew E. Lipman

2 unchanged paragraphs

/ s / Matthew E. Lipman

Chief Executive Officer and Director

1 unchanged paragraph

/ s / Edward C. Schultz

2 unchanged paragraphs

/ s / Michael M. Toporek

1 unchanged paragraph

/ s / John M. Holliman

1 unchanged paragraph