Capstone Holding: securities offering (amended)

Cover page 9 changes

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As filed with the Securities and Exchange Commission on December 31 January 24 , 2024. 2025 .

Registration No. 333- 284105

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DATED: DECEMBER 31 , 2024

DATED: JANUARY 24 , 202 5

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This is a firm commitment underwritten public offering of [_] 1,250,000 shares of common stock at an offering price of $4.00 per share (the "Common Stock") of Capstone Holding Corp., a Delaware corporation (the "Company," "we," "us," "our").

Our Common Stock is currently quoted on the OTCQB Marketplace (the "OTCQB") under the symbol "CAPS." As of December 30, 2024 January 23, 2025 the last reported sales price for our Common Stock as quoted on the OTCQB was $2.24 $2.75 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 individually or 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 (Brookstone Partners Acquisition XIV, LLC ("BPA XIV, LLC"), and BP Peptides LLC, and Nectarine Management 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, Nectarine Management 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 71 73 of this prospectus for additional information regarding underwriting compensation.

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We have granted a [_] 45 -day option to the underwriters, exercisable one or more times in whole or in part, to purchase up to an additional [_] 187,500 shares of Common Stock at the public offering price per share of Common Stock less the underwriting discounts payable by us, in any combination solely to cover over -allotments , if any (the " Underwriters' Over -Allotment Option ").

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Prospectus summary 20 changes

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Contingent on the Company raising at least $3,000,000 in gross proceeds from this Offering with the pricing of this Offering on or prior to February 13, 2025 (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. Please see the description of the restructuring transactions to take place on the Restructuring Date under " Business — TotalStone, LLC — Future TotalStone Equity Interests Transactions " on page 51 of this prospectus.

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As of December 30, 2024, January 23, 2025, there were 157,610 shares of Common Stock outstanding.

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TotalStone, LLC (T/A ( dba "Instone"), a Delaware limited liability company, was formed on October 4, 2006. The Company is engaged in the distribution of pre -cast specialty items and thin stone products and related accessories. All of its operations are performed in Illinois, Ohio and New Jersey. Its administrative functions are performed in Massachusetts and Illinois, with its corporate headquarters located in New Jersey. Instone services the Northeast and Midwest regions, which comprise 31 states.

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In March 2021 the Company and Brookstone amended the Brookstone Agreement to extend the Secured Debt's maturity to April 1, 2024 (subsequently extended to December 31, 2024) with continued interest deferral on the loan. The Company has provided an option, for a period ending December 31, 2024, to convert all or part of the aggregate outstanding principal amount of the Loan, together with all accrued and unpaid interest thereon, into shares of the Company's common stock at a conversion price determined by an independent valuation and for exercise of the Warrants at a conversion price determined by an independent valuation.

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On September 1, 2024, BP Peptides, LLC (a Brookstone entity) and the Company agreed to the terms of a Sixth Amendment to the Senior Secured Note including a maturity extension through June 30, 2026.

On November 11, 2024, BP Peptides, LLC (a Brookstone entity) and the Company agreed to the terms of the Second Amended and Restated Note, with a principal amount of $700,617.52 and an accrued interest of $101.810.28, at an initial interest rate of 6.0% per annum, to extend the maturity date through June 30, 2026.

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An aggregate of 1,250,000 shares of our common stock at an assumed public offering price of $ . $4.00.

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[_] shares of Common Stock (or [_] shares if the underwriter exercises its option to purchase additional shares of Common Stock in full) which includes: (i) [_] shares to be issued in connection with this offering;

5,190,251 shares of Common Stock (or 5,377,751 shares if the underwriter exercises its option to purchase additional shares of Common Stock in full) which includes (in addition to 1,250,000 shares of our common stock to be offered in this offering) 3,782,641 shares to be issued pursuant to the restructuring transactions to take place on the Restructuring Date. Please see the description of the restructuring transactions to take place on the Restructuring Date under " Business — TotalStone, LLC — Future TotalStone Equity Interests Transactions " on page 51 of this prospectus.

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We have granted the underwriter a 45 -day ] option to purchase up to [_] 187,500 additional shares of Common Stock at the public offering price per share of Common Stock less the underwriting discounts payable by us, in any combination solely to cover over -allotments , if any. Use of proceeds We intend to use the net proceeds of approximately $[_] from this offering for the following purposes: approximately $1,160,000 for the repayment of a term loan issued by Berkshire Bank with a maturity date of December 1, 2025, and approximately $[ ] for general corporate purposes. We currently have [no] agreements or commitments for any acquisitions and no guarantee can be made that we will make such acquisitions in the future. See "Use of Proceeds" section on page 28.

We intend to use the net proceeds of approximately $3,558,045, or $4,240,545 if the underwriter exercises their over -allotment option in full, from this offering for the following purposes: approximately $826,667 for the repayment of a term loan issued by Berkshire Bank with a maturity date of December 1, 2025, and approximately $2,731,378, or $3,413,878 if the underwriter exercises their over -allotment option in full, for general corporate purposes. We currently have no agreements or commitments for any acquisitions and no guarantee can be made that we will make such acquisitions in the future. See "Use of Proceeds" section on page 29.

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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.

The registration statement of which this prospectus is a part also registers for sale warrants (the "Representative's Warrant") to purchase [_] up to 62,500 shares of our Common Stock to [_] Joseph Gunnar (the "Representative"), as a portion of the underwriting compensation in connection with this offering. The Representative's Warrant will be exercisable at any time, and from time to time, in whole or in part, during the period commencing [180 days] six (6) months following the closing date of effectiveness of the registration statement of which this offering prospectus forms a part and expiring five (5) one and one -half (1.5) years from the effective date of the offering at an exercise price of $[_] $4.00 (100% of the assumed public offering price per share of Common Stock). Please see "Underwriting — Representative's Warrant" on page 72 74 of this prospectus for a description of these Warrants.

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• [_] 187,000 shares of Common Stock issuable upon the exercise of the Underwriters' Over -Allotment Option; and • [_] 62,500 shares of Common Stock issuable upon the exercise of the Representative's Warrant.

Underwriter Compensation

In connection with this offering, the underwriter will receive an underwriting discount equal to eight percent (8.0%) 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 (1.0%) of the public offering price. See "Underwriting" starting on page 73 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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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 six (6) months after the closing date of this prospectus. Offering. See "Underwriting" section on page 71. 73.

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Risk factors 13 changes

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• we expect, if we raise at least $[_] $5,000,000 in gross proceeds in this offering, that the net proceeds, along with our current cash position, will be able to fund our operating expenses and capital expenditure for at least the next two years. Thereafter, unless we achieve profitability, we anticipate that we will need to raise additional capital to fund our operations and to otherwise implement our overall business strategy. We currently do not have any contracts or commitments for additional financing. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. Any additional equity financing may involve substantial dilution to then existing shareholders.

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Affiliates of Brookstone (BPA XIV, LLC , Nectarine Management LLC and BP Peptides LLC) currently have and will, following this offering continue to have significant control over shareholder matters and the minority shareholders will have little or no control over our affairs.

Currently, BP Peptides LLC, an entity jointly controlled by Messrs. Lipman and Toporek, owns 77.3% of the Company's shares. Following the offering, we expect that BP Peptides LLC, and another an entity jointly controlled by Messrs. Lipman and Toporek, BPA XIV, LLC, an entity controlled by Mr. Lipman (but not Mr. Toporek), and an entity, Nectarine Management LLC, whose voting of our securities held by such entity is solely controlled by Mr. Toporek, 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, Nectarine Management 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. BP Peptides, LLC, and BPA XIV, LLC, and Nectarine Management LLC may have interests that are different from yours. For example, these entities may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of our Company or otherwise discourage a potential acquirer from attempting to obtain control of our Company, which in turn could reduce the price of our stock. In addition, these entities could use their voting influence to maintain our existing management and directors in office (including Messrs. Lipman and Toporek), delay or prevent changes in control of our Company, or support or reject other management and board proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions.

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We have material weaknesses in our internal control over financing reporting. If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time -consuming effort that needs to be re -evaluated frequently. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Prior to this offering, due to accounting resource constraints, we have had limited review controls. These constraints have resulted in (1) a lack of segregation of duties, since we have a limited administrative staff, and (2) lack of internal controls structure review. As a result of these constraints, we have a material weakness in our internal control over financing reporting.

Our management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. All responsibility for accounting entries and the creation of financial statements is held by a single person, though the Company engages multiple accounting consultants for accounting, tax and audit support. To remedy this situation, we would need to hire additional staff or financial consultant support. Currently, we are unable to hire additional staff to facilitate greater segregation of duties but will reassess our capabilities after completion of the offering.

In connection with this offering, we intend to begin the process of documenting, reviewing and improving our internal controls and procedures for compliance with Section 404 of the Sarbanes -Oxley Act, which will require annual management assessment of the effectiveness of our internal control over financial reporting. To comply with the requirements of being a public company, the Company has undertaken various actions, and will take additional actions, such as remediating the material weaknesses described above, implementing additional internal controls and procedures and hiring internal audit staff or financial consultants. Testing and maintaining internal controls can divert our management's attention from other matters that are important to the operation of our business. Additionally, when evaluating internal controls over financial reporting, the Company may identify additional material weaknesses that it may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of the Sarbanes -Oxley Act. If the Company identifies any additional material weaknesses in its internal control over financial reporting or is unable to remediate the material weakness described above or comply with the requirements of Section 404 of the Sarbanes -Oxley Act in a timely manner or if the Company's independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting once it is no longer an emerging growth company, or if the Company is unable to conclude in our quarterly and annual reports that our disclosure controls and procedures are effective, investors may lose confidence in the accuracy and completeness of the Company's financial reports and the market price of our common stock could be negatively affected, and the Company could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

In addition, if the Company fails to remediate any material weakness, including the material weaknesses described above, our financial statements could be inaccurate and the Company could face restricted access to capital markets. Our small size and internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. Moreover, our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed.

The liquidity of the Company is largely dependent on our ability to borrow funds on our ABL Facility.

We fund our operations primarily 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, it could lose access to funding under the Revolver, which would significantly impact our liquidity and put our ability to continue as a going concern at risk.

The proceeds from this offering are expected to improve our liquidity position and reduce our reliance on the Revolver, enhancing our ability to meet financial covenant requirements and fund our operations. However, while we believe we will be able to continue to borrow funds on our Revolver when and as required, there can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. If additional financing is not available when required or is not available on acceptable terms, we may be unable to operate our business as planned or at all, fund our expansion, successfully promote our business, develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.

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Our operations are conducted entirely through our operating subsidiary, and our ability to generate cash to fund operations and expenses, to pay dividends or to meet debt service obligations is highly dependent on the earnings and the receipt of funds from our subsidiaries through dividends or intercompany loans. Deterioration in the financial condition, earnings or cash flow of Capstone Holding Corp. LLC ("Holdings") and its subsidiaries for any reason could limit or impair their ability to pay such distributions.

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In addition, prior to the consummation of this offering we expect to create a class of Series B Preferred Stock with such preferred stock's certificate of designation containing protective provisions requiring holders of 50% of the stock to consent before we can conduct major corporate actions. We expect to issue to BPA XIV, Nectarine Management LLC (an entity jointly whose voting of our securities held by such entity is solely controlled by Messrs. Lipman and Mr. Toporek, prior to the consummation of this offering, more than 50% of the shares of Series B Preferred Stock outstanding.

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Use of proceeds 1 change

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• Approximately $1,160,000 $826,667 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 $ [_] 2,731,378, or $3,413,878 if the underwriter exercises their over -allotment option in full, 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 December 30, 2024, January 23, 2025, 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 December 30, 2024, January 23, 2025, was $2.24 $2.75 per share.

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Capitalization 8 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 as adjusted 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; (ii) 3,782,641 shares of Common Stock to be issued pursuant to the restructuring transactions to take place on the Restructuring Date, including (a) the cancellation of TotalStone's Class A TS Warrants to purchase 1,125 TotalStone's Class A Common Interests, (b) the exchange of all of TotalStone's Class B Preferred Interests for 3,782,641 shares of Common Stock, and (c) the cancellation of TotalStone's 75 Class C Preferred Interests with an outstanding balance of approximately $42,000, which is included in TotalStone's Class B Preferred Interests on the Company's consolidated balance sheet (please see the description of the restructuring transactions to take place on the Restructuring Date under " Busines s — Tota lStone, LLC — Future TotalStone Equity Interests Transactions " on page 51 of this prospectus); and (iii) the Special Preferred Membership Interests being exchanged on the Restructuring Date for loans in an aggregate principal amount of $1,006,377 plus certain amounts for each day after September 30, 2024 until the Restructuring Date.

The pro forma as adjusted 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 and Class C Preferred Units Interests

TotalStone, LLC – Special Preferred Units Membership Interests

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Common stock: $0.0005 par value; 50,000,000 shares authorized; 157,610 shares issued and outstanding at September 30, 2024 and 5,190,250 5,190,251 issued and outstanding on a pro forma 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.

The table above excludes the following shares:

• 187,000 shares of Common Stock issuable upon the exercise of the Underwriters' Over -Allotment Option; and • 62,500 shares of Common Stock issuable upon the exercise of the Representative's Warrant

Dilution 6 changes

If you invest in our securities, your investment will be diluted immediately to the extent of the difference between the public offering price per share of Common Stock, and the pro forma as adjusted net tangible book value per share of Common Stock immediately after this offering.

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

Pro forma as adjusted net tangible book value per share represents our pro forma as adjusted net tangible book value divided by the number of shares of Common Stock outstanding after this offering.

After 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) 3,782,641 shares of Common Stock to be issued pursuant to the restructuring transaction consisting of transactions to take place on the Restructuring Date, including (a) the cancellation of TotalStone's Class A TS Warrants being cancelled, to purchase 1,125 TotalStone's Class A Common Interests, (b) the exchange of all of TotalStone's Class B Preferred Interests being exchanged into 3,782,640 for 3,782,641 shares of Common Stock, that will constitute approximately 96% of and (c) the shares cancellation of Common Stock TotalStone's 75 Class C Preferred Interests with an outstanding immediately prior to balance of approximately $42,000, which is included in TotalStone's Class B Preferred Interests on the issuance Company's consolidated balance sheet (please see the description of 1,250,000 shares the restructuring transactions to be issued in take place on the Restructuring Date under " Business — TotalStone, LLC — Future TotalStone Equity Interests Transactions " on page 51 of this Offering, prospectus), and (iii) the Class C Special Preferred Membership Interests of TotalStone being cancelled, converted into loans in like aggregate principal amount of $1,006,377 plus certain amounts for each day after September 30, 2024 until the Restructuring Date, our pro forma as adjusted 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.

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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 as adjusted 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.

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The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual public offering price of our Common Stock and other terms of this offering determined at pricing.

MD&A 3 changes

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The following discussion and analysis should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2023, and the related notes thereto, which have been prepared in accordance with U.S. GAAP, included in the registration statement of which this prospectus forms a part. Throughout this discussion, unless the context specifies or implies otherwise the terms the "Company", "we", "us" and "our" refer to the business and operations of Capstone Holding Corp and its operating subsidiary, TotalStone , LLC t/a (db a Instone ) .

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Capstone Holding Corp. formerly known as Capstone Therapeutics Corp. and OrthoLogic Corp., incorporated in Delaware in 1987 as a domestic corporation, is the parent entity of TotalStone, LLC t/a ( dba Instone). Instone has a building products distribution network that services 31 US states in a trade area that geographically represents about 40% of American households. Our over 400 active customers are primarily masonry, building materials and landscape dealers.

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Other Income and expense s expenses

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Business 13 changes

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As of the date of this filing, Capstone employs approximately 38 people full -time employees and 2 independent contractors across our distribution centers and corporate offices. Our employees are the backbone of our company, and we are committed to fostering a positive and productive work environment that encourages growth, collaboration, and innovation. We believe that our team's expertise, dedication, and passion are key drivers of our success, and we continuously invest in their development through training and professional growth opportunities.

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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 3 of the 5 Managers (80%) of which (60%). 3 of the 5 Managers are officers or board members of Capstone.

Contingent on the Company raising at least $3,000,000 in gross proceeds from this Offering with the pricing of this Offering on or prior to February 13, 2025 (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 January 23, 2025, there are currently 3,782,641 TotalStone's Class B Preferred Interests outstanding. 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 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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Holders of TotalStone's Class C Preferred Interests (the "Class C Members") are treated as profit interests and have no voting rights in TotalStone and receive no tax distributions. In the event of a distribution of residual proceeds, Class C Members receive Class C Incentive Distributions concurrently with distributions made to Class B Members. Pursuant to the Company's allocation and distribution agreement, after the Special Preferred Members and Class B Members have received full payment in accordance with the charter, Class C Members shall have [_] priority with respect to residual proceeds, and [_] priority with respect to distributions on operating cash flow.

As of January 23, 2025, there are currently 75 TotalStone's Class C Preferred Interests outstanding. TotalStone's Class C Preferred Interests are treated as profit interests and the one holder of TotalStone's Class C Preferred Interests (the "Class C Member") has no voting rights in TotalStone and receives no tax distributions. In the event of a distribution of proceeds, the Class C Member receives Class C Incentive Distributions concurrently with distributions made to Class B Members, but only after $500,000 in distributions have been made to the Special Preferred Members and the Class B Members since the date of grant of such Class C Preferred Interests. The outstanding balance of the Class C Preferred Interests as of September 30, 2024, is approximately $42,000 and included in TotalStone's Class B Preferred Interests on the Company's consolidated balance sheet.

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Holders of TotalStone's Special Preferred Membership Interests (the "Special Preferred Membership Interest", Interests", and the holder thereof, the "Special Preferred Members") have no voting rights. The Company may not amend its charter in a way that adversely affects the Special Preferred Members without a written consent of a majority of the Special Preferred Members. In the event of a distribution on residual proceeds or operating cash flow, the Special Preferred Members shall receive first priority and have a right to receive distributions on income tax equal to such Member's tax distribution. The Special Preferred Members have a right to receive in -kind distributions in the same proportions as cash would be distributed.

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On the Restructuring Date, the Class A TS Warrants will be cancelled. The holders of the Class A TS Warrants will receive grants pursuant to a stock plan the Company plans to have in place prior to the Restructuring Date (the "2024 Stock Plan") or, if not eligible to receive such a grant, a nominal cash payment.

On the Restructuring Date, the Class C Preferred Interests will be cancelled. The Class C Members will receive grants pursuant to the 2024 Stock Plan or, if not eligible to receive such a grant, a nominal cash payment.

Class A TS Warrants to purchase 50 TotalStone's Class A Common Interests have been cancelled and the remaining Class A TS Warrants to purchase 1,125 TotalStone's Class A Common Interests will be cancelled with such holders on or prior to the Restructuring Date.

On the Restructuring Date, pursuant to a master exchange agreement (the "Master Exchange Agreement") to be entered into by the Company, TotalStone and TotalStone's Class B Members, all of TotalStone's Class B Preferred Interests will be exchanged into 3,782,640 for 3,782,641 shares of Common Stock that will constitute approximately 96% of the shares of Common Stock outstanding on the Restructuring Date immediately prior to the issuance of Common Stock in this Offering, to be allocated to the Class B Members as set forth in the Master Exchange Agreement. As consideration for the issuance of 3,782,641 shares of Common Stock, the Class B Members will surrender their existing TotalStone's membership interests and withdraw from the membership of TotalStone. 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 is 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, and BPA XIV, LLC is controlled by Mr. Lipman.

On the Restructuring Date, the Class C Preferred Interests will be cancelled in connection with the exchange of Class B Preferred Interests into 3,782,641 shares of Common Stock. The Class C Member has agreed to cancel his Class C Preferred Interests, the Class A TS Warrants, and his right to receive incentive compensation from TotalStone, in consideration of receiving a total of 28,368 shares of Common Stock on the Restructuring Date, which are included in the 3,782,641 shares of Common Stock to be issued upon the exchange of the Class B Preferred Interests.

In total, on the Restructuring Date, in exchange for the 3,782,641 shares of Common Stock will be issued pursuant to the restructuring transactions.

6 unchanged paragraphs

Management 4 changes

29 unchanged paragraphs

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 [_], John M. Holliman, Elwood D. Howse Jr. and Fredric J. Feldman Ph.D., who will comprise our audit committee following this offering, [_], Fredric J. Feldman Ph.D., Charles Dana and John M. Holliman, who will comprise our compensation committee following this offering, and [_] Charles Dana, Elwood D. Howse Jr. and [_], Fredric J. Feldman Ph.D., 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, Elwood D. Howse, Jr., and [_]. [ ] Fredric J. Feldman, Ph.D. 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 .

The audit committee's duties are to [recommend to our board of directors the engagement of independent auditors to audit our financial statements and to review its accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of our board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.] Compensation Committee. We have established a compensation committee consisting of [_], [_], Fredric J. Feldman, Ph.D., Charles Dana, and [_]. [_] John M. Holliman, III. Fredric J. Feldman is chairman of the compensation committee.

[In considering and determining executive and director compensation, the compensation committee reviews compensation that is paid by other similar public companies to its officers and takes that into consideration in determining the compensation to be paid to our officers. The compensation committee also determines and approves any non -cash compensation paid to any employee. We do not engage any compensation consultants to assist in determining or recommending the compensation to our officers or employees.] Nominating and Corporate Governance Committee. We have established a nominating and corporate governance committee consisting of [_], [_], Charles Dana, Elwood D. Howse, Jr., and [_]. [_] Fredric J. Feldman, Ph.D. Charles Dana is chairman of the nominating and corporate governance committee.

2 unchanged paragraphs

Executive compensation 9 changes

1 unchanged paragraph

The following table shows the compensation for our Chief Executive Officer and all other of our executive officers and any of our employees whose cash compensation exceeded $100,000 for the years ended December 31, 2023 2024 and 2022. 2023.

8 unchanged paragraphs

Stock -based compensation expense reflects the fair value of stock -based awards measured at the grant date and recognized over the relevant vesting period. The Company generally estimates the fair value of each stock -based award on the measurement date using the Black -Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk -free interest rate and dividend yield. No options were granted in 2023 2024 or 2022. 2023.

3 unchanged paragraphs

As of December 31, 2023 2024 and December 31, 2022, 2023, there were approximately 976 500 and 1,753 976 options exercisable and vested at a weighted average exercise price of $210.00 $163.00 and $220.00, $210.00, 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, 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.

3 unchanged paragraphs

Our Company's executive compensation plan is based on [_]

On January 2, 2025, we entered into an executive employment agreement with Matthew Lipman, our Chief Executive Officer, which will become effective upon the consummation of a public offering of Common Stock for an aggregate gross proceeds of at least $3 million. Under this agreement, Mr. Lipman will serve as the Company's Chief Executive Officer with a base salary of $250,000 per annum and an annual performance bonus ranging from 50% to 100% of the base salary. The agreement will commence on its effective date and terminate on January 31, 2028, with automatic one -year extensions unless either party provides 120 days' written notice to opt -out . The agreement includes a noncompetition clause effective for 18 months following the termination of Mr. Lipman's employment with the Company. In the event of termination due to death, disability, for cause by the Company, resignation by Mr. Lipman without good reason, or non -extension of the agreement, Mr. Lipman will be entitled to any previously earned but unpaid base salary through the termination date, any earned but unpaid annual performance bonus, and other accrued benefits. If the agreement is terminated by the Company without cause or by Mr. Lipman for good reason, Mr. Lipman will receive a lump sum payment equal to three years' base salary and the target performance bonus, as well as continued copayment by the Company of coverage premiums for 12 months following the termination date, at the same level and cost as if he were an active employee.

Effective August 25, 2023, we began to compensate Mr. Edward Schultz, our Chief Financial Officer, an annual salary of $200,000 paid in accordance with our standard employee payroll practices. Mr. Schultz receives his compensation through the Company's subsidiary TotalStone, LLC where he also serves as the Vice President of Finance.

1 unchanged paragraph

John M. Holliman, III. and Michael M. Toporek, III. have received director compensation of $48,000 annually for 2024 and 2023 for service on the Company's board prior to this offering.

In connection with the completion of this offering, the Company will adopt a director compensation plan. This director compensation plan will consist of an annual cash retainer of $20,000 paid quarterly in arrears.

On the Restructuring Date, the Class B Preferred Interests will be exchanged into 3,782,640 for 3,782,641 shares of Common Stock that will constitute approximately 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 is 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, and BPA XIV, LLC is controlled by Mr. Lipman.

Principal stockholders 7 changes

The following sets forth information as of December 30, 2024 January 23, 2025 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.

6 unchanged paragraphs

All Directors and Executive Officers as a Group ( 4 5 persons)

3 unchanged paragraphs

(3) Based on: (i) [_] shares to be issued in connection with this offering; (ii) [_] (4) Includes [_].

(2) Based on 157,610 shares of Common Stock outstanding as of December 30, 2024. January 22 , 2025 .

(3) Based on 5,190,251 shares of Common Stock to be outstanding after this offering (assuming no exercise of the underwriter's option to purchase additional shares of Common Stock) which includes, in addition to 1,250,000 shares of our common stock to be offered in this offering, 3,782,641 shares to be issued pursuant to the restructuring transactions to take place on the Restructuring Date.

(4) Includes 985,630 votes pursuant to the Series B Preferred Stock to be created and issued to Nectarine Management LLC (an entity whose voting of our securities held by such entity is solely controlled by Mr. Toporek) prior to the consummation of this offering .

4 unchanged paragraphs

On the Restructuring Date, the Class B Preferred Interests will be exchanged into 3,782,640 for 3,782,641 shares of Common Stock that will constitute approximately 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 is 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, and BPA XIV, LLC is controlled by Mr. Lipman.

Related-party transactions 2 changes

18 unchanged paragraphs

(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 unsecured note for $800,000 plus existing accrued interest with interest accruing from November 2023 to maturity at 6% per annum.

BPA XIV, LLC, an entity controlled by Matthew Lipman, our Chief Executive Officer, and Gordon Rocks, Inc., an entity controlled by Gordon Strout, our director nominee, will be parties to the Master Exchange Agreement to be entered into by the Company, TotalStone and TotalStone's Class B Members. Pursuant to the Master Exchange Agreement, BPA XIV, LLC and Gordon Rocks, Inc. will surrender their existing TotalStone's membership interests and withdraw from the membership of TotalStone in exchange for 2,528,662 and 822,128 shares of Common Stock, respectively, on the Restructuring Date immediately prior to the issuance of Common Stock in this Offering.

4 unchanged paragraphs

Description of the securities 9 changes

As of December 30, 2024, January 23, 2025, 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.

4 unchanged paragraphs

As of December 30, 2024, January 23, 2025, there were 157,610 shares of Common Stock issued and outstanding.

13 unchanged paragraphs

Limitations on Liability and Indemnification of Officers and Directors Delaware General Corporation Law limits or eliminates the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties as directors, except for liability:

• for any transaction from which the director derives an improper personal benefit;

• for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

• for any unlawful payment of dividends or redemption of shares; or

• for any breach of a director's duty of loyalty to the corporation or its stockholders.

Our bylaws include provisions that require us to indemnify our directors or officers against monetary damages for actions taken as a director or officer of our company. We are also expressly authorized to carry directors' and officers' insurance to protect our directors, officers, employees and agents for certain liabilities.

Limitations on Liability and Indemnification of Officers and Directors Delaware General Corporation Law limits or eliminates the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties as directors. [Our bylaws include provisions that require us to indemnify our directors or officers against monetary damages for actions taken as a director or officer of our company. We are also expressly authorized to carry directors' and officers' insurance to protect our directors, officers, employees and agents for certain liabilities. Our articles of incorporation do not contain any limiting language regarding director immunity from liability.] The limitation of liability and indemnification provisions under the Delaware General Corporation Law and in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non -monetary relief such as injunction or rescission in the event of a breach of a director's fiduciary duties. Moreover, the provisions do not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

2 unchanged paragraphs

Shares Eligible for Future Sale 1 change

1 unchanged paragraph

Based on the number of shares of Common Stock outstanding as of December 30, 2024, January 23, 2025, after giving pro forma effect to the closing of this offering we will have 5,190,250 5,190,251 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 16 changes

Joseph Gunnar & Co., LLC ("Joseph Gunnar" or the "Representative") is acting as underwriter of this offering. We have entered into an underwriting agreement with Joseph Gunnar & Co., LLC, dated [•], 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:

2 unchanged paragraphs

The Common Stock sold in this offering are expected to be ready for delivery on or about [•], 2024, 2025, against payment in immediately available funds. The underwriter may reject all or part of any order.

1 unchanged paragraph

We have granted to the underwriters an option to purchase up to an additional [•] 187,500 shares of Common Stock from us at the same price to the public, and with the same underwriting discount, as set forth in the table below. The underwriters may exercise this option any time during the 45 -day period after the date of closing of this offering, but only to cover over -allotments , if any. To the extent the underwriters exercise the option, the underwriters will become obligated, subject to certain conditions, to purchase the shares of Common Stock for which they exercise the option.

6 unchanged paragraphs

We have agreed to pay the underwriter's out -of -pocket accountable expenses, including its legal fees, up to a maximum amount of $[•] $125,000 if this offering is completed as well as a non -accountable expense allowance equal to one percent (1.0%) of the public offering price. The fees and expenses of the underwriters that we have agreed to reimburse are not included in the underwriting discounts set forth in the table above. The underwriting discount and reimbursable expenses the underwriters will receive were determined through arms' length negotiations between us and the underwriters.

We estimate that the total expenses of the offering payable by us, not including the underwriting discount, will be approximately $[•], which includes up to $125,000 that we have agreed to reimburse the underwriter for the fees and expenses incurred by it and its legal counsel in connection with this offering and a non -accountable expense allowance equal to one percent (1.0%) of the public offering price. These expenses are payable by us.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

1 unchanged paragraph

We have agreed to issue to Joseph Gunnar (or its permitted assignees) a warrant to purchase a number of common shares that is equal to 5% 5.0% of the aggregate number of common shares sold in this offering (up to [•] 62,500 common shares, or up to [•] 71,875 common shares if the underwriter exercises the over -allotment option in full). The Representative's Warrant will be non -exercisable for six (6) months from the date of effectiveness of the registration statement of which this prospectus forms a part and will expire one and one half (1.5) years after such date. The warrant is exercisable at a per share price equal to 100% of the offering price, subject to certain anti -dilution adjustments. Such warrant will be subject to FINRA Rule 5110(e)(1) in that, except as otherwise permitted by FINRA rules, for a period of 180 days from the commencement of sales of this offering, the warrant shall not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person except as permitted by FINRA Rule 5110(e)(2). The Representative's Warrant and the shares of common stock underlying the Representative's Warrant are being registered on the registration statement of which this prospectus is a part.

Joseph Gunnar The Representative's Warrants will have provide for registration rights including unlimited piggyback rights and a one -time demand registration rights for a period of one and one half (1.5) years from the effective date of this registration statement, as permitted under FINRA Rule 5110(g). The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger or consolidation consistent with FINRA Rule 5110.

We, each of our officers, directors and executive and 5% or greater shareholders officers have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for our common stock for a period of six (6) months after this offering is completed without the prior written consent of the underwriter. Representative.

The underwriter Representative may in its sole discretion and at any time without notice release some or all of the shares subject to lock -up agreements prior to the expiration of the lock -up period.

1 unchanged paragraph

Upon the closing of this offering, for a period of eighteen (18) months from the final closing date of this offering, we will grant Joseph Gunnar the right of first refusal to act as sole managing underwriter and sole book runner, sole placement agent, or sole sales agent, for any and all future public or private equity or equity -linked offerings, for which we retain the service of an underwriter, agent, advisor, finder or other person or entity in connection with such offering during such eighteen (18) month period. The Company shall not offer to retain any entity or person in connection with any such offering on terms more favorable than terms on which it offers to retain Joseph Gunnar.

In the event that any investor whom the underwriter Representative had contacted or introduced to us during the term of its engagement provides any capital to us, in a public or private offering or other financing or capital -raising transaction of any kind, within the twelve (12) months following the earlier later of (a) the closing of this offering and (b) the expiration or termination of the engagement of the underwriter, subject to certain conditions and exceptions, we will pay the underwriter Representative the cash and warrant compensation provided above, calculated in the same manner. If the Company terminates such engagement of the Representative for cause, in compliance with FINRA Rule 5110(g)(5)(B), then no tail fee will be owed to the Representative.

5 unchanged paragraphs

Our Common Stock is currently quoted on the OTCQB under the symbol "CAPS." We have applied to have our Common shares Stock approved for listing on the Nasdaq Capital Market under the symbol "CAPS". Completion of this offering is contingent on the approval of our listing application for trading on the Nasdaq Capital Market.

Determination of Offering Price

Prior to this offering, there has been no public market for our common shares. The initial public offering price will be determined by negotiations between us and the representative of the underwriters. In determining the initial public offering price, we and the representative of the underwriters expect to consider a number of factors including:

6 unchanged paragraphs

Neither we nor the underwriters can assure investors that an active trading market will develop for our Common shares, Stock, or that the shares will trade in the public market at or above the initial public offering price.

7 unchanged paragraphs

Note 8: Debt (cont.) 1 change

3 unchanged paragraphs

Secured Unsecured promissory note with Brookstone plus accrued interest to acquire a minority interest in DPH. Interest accrues at 1% 6% per annum, with a maturity date of June 30, 2026.

11 unchanged paragraphs

Note 16: Segment Information (cont .) 73 changes

13 unchanged paragraphs

Note 1 7 Subsequent Events

Subsequent to December 31, 2023, the Company was not in compliance with the financial covenant requirements under the Revolving Credit, Term Loan and Security Agreement with Berkshire Bank (the "Credit Agreement"). In October 2024, terms of the Credit Agreement were agreed to that modified the financial covenant requirements to align with the Company's current forecast. Further, the amended terms provided a waiver for the Company's compliance of the financial covenants not met through September 30, 2024. The Company was in compliance through December 30, 2024, the date of the independent accountant's report.

CAPSTONE HOLDING CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

Accounts receivable, net

Other current assets

Total current assets

Property and equipment, net

Other intangible assets

Other long-term assets

Total long-term assets

LIABILITIES & EQUITY

Current Liabilities:

Current portion of long-term debt

Current portion, lease liability

Total current liabilities

Long-term liabilities:

Accrued related party management fee

Long term debt, net of current portion

Lease liability, net of current portion

Total long-term liabilities

TotalStone, LLC – Class B Preferred Units

TotalStone, LLC – Special Preferred Units

Common Stock $0.0005 par value; 200,000 shares authorized; 157,610 issued as of September 30, 2024 and December 31, 2023 — — Additional paid-in capital 193,044 193,044 Accumulated deficit (194,967 ) (190,607 ) Total Equity (1,923 ) 2,437 Total Liabilities, TotalStone, LLC. Preferred Units & Equity $ 51,534 $ 52,701 See notes to consolidated financial statements CAPSTONE HOLDING CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

Sales returns and allowances

Selling, general and administrative expenses

Loss from operations

Other income (expense), net

Loss from operations before taxes

Less: Net loss attributable to:

Special preferred units

Class B units preferred return

Net loss attributable to Capstone Holding Corp. stockholders (4,360 (4,453 ) See notes to consolidated financial statements CAPSTONE HOLDING CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES

Depreciation and amortization

Accounts receivable and other assets

Accounts payable and other accrued liabilities

Cash flows used in operating activities

INVESTING ACTIVITIES

Purchase of property and equipment, net

Cash flows used in investing activities

FINANCING ACTIVITIES

Proceeds from debt issuance

Borrowings under line of credit, net

Cash payment to special preferred equity members

Cash flows provided by (used in) financing activities

NET CHANGE IN CASH & CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS AT END OF PERIOD

SUPPLEIMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Operating cash flows from finance leases (interest)

Financing cash flows from finance leases (principal portion)

Operating cash flows from operating leases

See notes to consolidated financial statements

CAPSTONE HOLDING CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands, except Common Stock Shares)

Balance at December 31, 2023

Accrued Class B Distributions

Accrued Special Preferred Distributions

Special Preferred Distribution

Balance at September 30, 2024

Balance at December 31, 2022

Accrued Class B Distributions

Accrued Special Preferred Distributions

Special Preferred Distribution

Balance at September 30, 2023

See notes to consolidated financial statements

CAPSTONE HOLDING CORP.

Note 8: Debt 1 change

1 unchanged paragraph

Note payable to BP Peptides, LLC "Brookstone". secured by an interest in The Company's assets. The secured unsecured loan bears interest at 6% per annum, with interest payable quarterly and the as amended maturity date is June 30, 2026.

4 unchanged paragraphs

Exhibits 2 changes

3 unchanged paragraphs

Restated Certificate of Incorporation, dated April 22, 2005, as amended on May 21, 2010, June 22, 2015, August 22, 2019, February 10, 2021, and February 18, 2022 3.2 Bylaws of the Company 4.2 06/23/2015 3.3** Amended and Restated Certificate of Designation of Series A Preferred Stock, dated June 22, 2015 3.4** Certificate of Designation of Series B Convertible Preferred Stock, dated July 9, 1998 4.1* Form of Representative's Warrant 4.2** Amended and Restated Warrant to 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, 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 First Amendment to Securities Purchase Loan and Security Agreement dated January 30, 2018, by and between Capstone Therapeutics, Corp. and BP 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 Second Amendment to Securities Purchase Loan and Security Agreement dated March 15, 2019, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 8-K 10.1 03/19/2019 10.6** Third Amendment to Securities Purchase Loan and Security Agreement dated March 27, 2020, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 10.7** Fourth Amendment to Securities Purchase Loan and Security Agreement dated March 15, 2021, by and between Capstone Therapeutics, Corp. and BP Peptides, LLC 10.8** Termination of Securities Purchase, Loan and Security Agreement, dated November 13, 2024, by and between Capstone Holding Corp. and BP Peptides, LLC 10.9 Promissory Note dated July 14, 2017, payable to BP Peptide, LLC 8-K 10.2 07/17/2017 10.10** Fourth Amended and Restated Operating Agreement of TotalStone, LLC, dated March 27, 2020 and Effective as of November 26, 2021 10.11** Consent and First Amendment to the Fourth Amended and Restated Operating Agreement of TotalStone, LLC, dated March 27, 2020 and Effective as of November 26, 2021 10.12** Second Amended and Restated Credit Agreement, dated March 8, 2023, by and between TotalStone, LLC, Northeast Masonry Distributors, LLC, TotalStone Properties, LLC, and Stream Finance, LLC 10.13** Consent, Waiver and Amendment to Second Amended and Restated Credit Agreement, dated October 18, 2024, by and between TotalStone, LLC, Northeast Masonry Distributors, LLC, TotalStone Properties, LLC, and Stream Finance, LLC 10.14** Non-negotiable Secured Subordinated Promissory Note by and between TotalStone, LLC and Northeast Masonry Distributors, LLC 10.15** Non-negotiable Secured Subordinated Contingent Value Promissory Note by and between NEM Purchaser, LLC and Northeast Masonry Distributors, LLC 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** Amendment of Amended and Restated Management Fee and Transaction Fee Agreement, dated November 15, 2024, by and between Capstone Holding Corp., TotalStone, LLC, and Brookstone Partners IAC, Inc. II-4 Exhibit Number Exhibit Description Incorporated by Reference Filed or Furnished Herewith Form Exhibit Filing Date 10.19** Limited Payment Guarantee dated March 31, 2021, between Capstone Therapeutics Corp. and Brookstone Acquisition Partners XXI Corporation 10.20 Series B-2 Preferred Stock Purchase Agreement, dated 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 Amended and Restated Stockholders Agreement of LipimetiX Development, Inc., dated August 11, 2017 10-Q 10.2 08/14/2017 10.22 Joinder of August 25, 2016 Registration Rights Agreement of LipimetiX Development, Inc., dated August 11, 2017 10-Q 10.3 08/14/2017 10.23** LipimetiX Development, Inc. Contingent Value Rights Agreement, dated August 23, 2019, by and among Capstone Therapeutics Corp., the Shareholder Representative and Computershare Inc., and Computershare Trust Company, N.A., as Rights Agent 10.24** Second Amended and Restated 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 December 20, 2017 10.26** Amendments to Revolving Credit, Term Loan and 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 14, 2019 10.28** Term Note Issued by TotalStone, LLC, Northeast Masonry Distributors, LLC, and TotalStone Properties, LLC to Berkshire Bank, dated November 22, 2021 10.29** Second Amended and Restated Promissory Note Issued by Capstone Holding Corp. to Brookstone Partners Acquisition XXI Corporation, dated November 11, 2024 10.30 Form of Master Exchange Agreement by and among Capstone Holding Corp., TotalStone, LLC, and TotalStone's Class B Member 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 99.3** Consent of Fredric J. Feldman to be named as a director nominee 99.4** Consent of Elwood D. Howse to be named as a director nominee 107** Filing Fee Table ____________ * To be filed by amendment.

** Filed previously.

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Undertakings 1 change

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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. January 24, 2025.

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