UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 22, 2025

CAPSTONE HOLDING CORP.

(Exact name of registrant as specified in its charter)

Delaware		001-33560		86-0585310
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

5141 W. 122nd Street

Alsip, IL 60803

(Address of principal executive offices)

Registrant’s telephone number, including area code: (708) 371-0660

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0005 per share		CAPS		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.01. Completion of Acquisition or Disposition of Assets.

On August 22, 2025, Capstone Holding Corp. (the “Company”) completed its previously announced membership interest purchase agreement (the “Purchase Agreement”) with D22L, Inc., a North Carolina corporation (the “Seller Entity”), David Clary, and Stuart Powell (together with David Clary and the Seller Entity, the “Seller”), to purchase from the Seller Entity all of the issued and outstanding membership interests (the “Holdings Membership Interests”) in Carolina Stone Holdings, LLC, a Delaware limited liability company (“Carolina Stone Holdings”), which owns all of the issued and outstanding membership interests of Carolina Stone Distributors, LLC, a Delaware limited liability company (together with the Carolina Stone Holdings, the “Carolina Stone Companies,” and the transaction, the “Acquisition”). The Acquisition was completed pursuant to the terms and conditions of the Purchase Agreement previously filed in the current report on Form 8-K dated August 18, 2025. The aggregate purchase price of the Holdings Membership Interests is (i) $2,625,000 in cash, subject to adjustment set forth in Section 2.6 of the Purchase Agreement, plus (ii) a seller note in the original principal amount of $1,250,000, plus (iii) the amount payable pursuant to the terms of the earn-out agreement. The Company transferred $2,501,500 in cash to the Seller, representing the aggregate purchase price of $2,625,000 less $123,500 for the preliminary working capital adjustment as set forth in Section 2.6 of the Purchase Agreement. In accordance with Section 2.6, the Company has 120 days from closing to complete the final calculation of the net working capital adjustment, after which any required payment or adjustment will be made pursuant to the terms of the Purchase Agreement.

The Carolina Stone Companies operate showrooms, warehouses and staging yards to sell and distribute stone products and the installation of stonework in residential and commercial properties.

Item 9.01. Financial Statements and Exhibits.

As a result of the Acquisition as described in Item 2.01, the registrant is filing the following financial statements and financial information as exhibits to this Current Report.

(a) Financial Statements of Business Acquired.

The audited financials statements of Carolina Stone Holdings as of and for the year ended December 31, 2024 and unaudited financial statements of Carolina Stone Holdings as of and for the six months ended June 30, 2025, as required by Item 9.01(a) of Form 8-K are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report of Form 8-K and are incorporated by reference herein.

(b) Pro Forma Financial Information.

The unaudited pro forma combined financial statements of the Company as of and for the year ended December 31, 2024 and as of and for the three months ended June 30, 2025, as required by Item 9.01(b) of Form 8-K are attached as Exhibit 99.3 to this Current Report on Form 8-K and are incorporated by reference herein.

(d) Exhibits.

Exhibit Number		Exhibits
23.1		Consent of GBQ Partners LLC
99.1		Audited Financials of Carolina Stone Holdings as of and for the year ended December 31, 2024
99.2		Unaudited Financial Statements of Carolina Stone Holdings as of and for the six months ended June 30, 2025
99.3		Unaudited Pro Forma Combined Financial Statements as of and for the year ended December 31, 2024 and the six months ended June 30, 2025
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 7, 2025	Capstone Holding Corp.

	By:	/s/ Matthew E. Lipman
	Name:	Matthew E. Lipman
	Title:	Chief Executive Officer

Exhibit 99.1

Carolina Stone Holdings, Inc.

Consolidated Financial Statements

As of and for the year ended December 31, 2024

Index to Consolidated Financial Statements

		Page
Independent Auditor’s Report		1
Consolidated Financial Statements:
Balance Sheet		2
Statements of Income and Shareholders’ Equity		3
Statements of Cash Flows		4
Notes to Consolidated Financial Statements		5

To the Shareholders

Carolina Stone Holdings, Inc.

Raleigh, North Carolina

Independent Auditor’s Report

Opinion

We have audited the accompanying consolidated financial statements of Carolina Stone Holdings, Inc. and Subsidiary (the Company), which comprise the consolidated balance sheet as of December 31, 2024, and the related consolidated statement of income and shareholders’ equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued or available to be issued.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

●

Exercise professional judgment and maintain professional skepticism throughout the audit.

●

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

●

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

●

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

●

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ GBQ Partners LLC

Columbus, Ohio

November 7, 2025

CAROLINA STONE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

	December 31, 2024
ASSETS
Current Assets:
Cash	$	311,711
Accounts receivable		584,148
Other Receivables		9,940
Inventory		982,499
Total current assets		1,888,298

Property and equipment, net		467,515
Goodwill		1,854,800
Right of use assets - leases		1,202,238
Security deposits		11,000
Total Assets	$	5,423,851

LIABILITIES & SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	87,009
Accrued payroll		87,704
Notes payable, current		111,320
Lease liabilities, current		393,600
Total current liabilities		679,633

Notes payable		87,936
Lease liabilities		861,769
Total Liabilities		1,629,338

SHAREHOLDERS’ EQUITY:
Common Stock, no par value; 100,000 shares authorized; 1,000 issued and outstanding		—
Retained earnings		3,794,513
Total shareholders’ equity		3,794,513
Total Liabilities and Shareholders’ Equity	$	5,423,851

CAROLINA STONE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME AND SHAREHOLDERS’ EQUITY

	Twelve Months Ended December 31, 2024
Net Revenue	$	11,861,884

Operating Expenses
Cost of materials		4,768,046
Installation labor		3,141,951
Personnel Costs		1,978,168
Rent and lease expense		437,509
Depreciation and amortization		251,284
Fuel and utilities		181,780
Repairs and maintenance		104,968
Insurance		108,665
Professional fees		132,420
Other		256,488
Total operating expenses		11,361,279

Operating Income		500,605

Other Income (Expense)
Interest expense		(41,017	)
Taxes		(24,829	)
Total other (expense) income		(65,846	)
Net Income	$	434,759

Shareholders’ Equity – Beginning of Year	$	3,490,115
Net income		434,759
Shareholders’ distributions		(130,361	)
Shareholders’ Equity – End of Year	$	3,794,513

CAROLINA STONE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOW

	Twelve Months Ended December 31, 2024
Cash Flows from Operating Activities
Net income	$	434,759
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		251,284
Loss on sale of property and equipment		4,007
Change in operating assets and liabilities:
Accounts receivable, net		263,715
Other receivables		(6,940	)
Inventory		(96,617	)
Operating lease assets and liabilities, net		8,901
Accounts payable		(64,704	)
Accrued payroll		11,596
Total adjustments		371,242
Net cash provided by operating activities		806,001
Cash Flows from Investing Activities
Purchase of property and equipment, net		(101,185	)
Proceeds from sale of property and equipment		3,957
Net cash used in investing activities		(97,228	)
Cash Flows from Financing Activities
Proceeds from issuance of notes payable		45,703
Payments on notes payable		(236,233	)
Payments on finance leases		(112,137	)
Distributions to shareholders		(130,361	)
Net cash used in financing activities		(433,028	)
NET INCREASE IN CASH		275,745
CASH – BEGINNING OF YEAR		35,966
CASH – END OF YEAR	$	311,711

Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest	$	41,017

CAROLINA STONE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Nature and Scope of Business

Carolina Stone Holdings, Inc. is a holding company for its wholly owned operating subsidiary, Carolina Stone Distributors, Inc. (dba Carolina Stone Products) and collectively referred to herein as the “Company”. The Company is a stone supplier and installer specializing in both manufactured and natural stone veneer and offering end-to-end services, including material supply, installation, and project management for residential, commercial, and multi-family projects. The Company’s selection of stone products includes brands such as Eldorado, Cultured Stone, Dutch Quality, Pangaea, and Horizon Stone. The Company’s corporate office, showroom and warehouse serving the Raleigh Triangle area is in Morrisville, North Carolina. The Company also has a regional office, showroom and warehouse in Gastonia, North Carolina serving the Charlotte, North Carolina area.

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements are on the accrual basis of accounting. These consolidated financial statements include the results of operations of Carolina Stone Holdings Inc. and its wholly owned subsidiary Carolina Stone Distributors, Inc. Significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates.

Revenue Recognition

The Company recognizes revenue under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606). The Company recognizes revenues when control of the promised materials and services is transferred to the clients, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. The Company’s revenues are recorded net of any sales or other taxes collected from clients.

Revenue from installation projects that include both material and installation services is recognized upon completion of the project. Due to the short-term nature of the Company’s projects, the recognition of revenue upon completion of projects is materially consistent with the transfer of material and services to the customer as the project is executed. Approximately 90% of the Company’s net revenues in 2024 were from installation projects.

The Company also sells materials and stone products to customers without installation services (distribution sales). Distribution sales are recognized at the point in time when material and stone products are transferred to the customer. Approximately 10% of 2024 net revenues were derived from distribution sales.

Note 2 Summary of Significant Accounting Policies (cont.)

The following table provides information about opening and closing totals of contract balances during the presented reporting period:

	2024		2023

Accounts receivable, net	$	584,148	$	847,863

Accounts Receivable

Accounts receivable are unsecured customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date. Accounts receivable are stated at their carrying value, net of a valuation allowance for expected credit losses, as necessary, that reflects management’s best estimate of the amount that will not be collected. Management reviews all accounts receivable balances on a periodic basis that exceed 90 days from the invoice date. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for credit losses is recognized in operating expenses and was approximately $5,000 for 2024. Management determined that the required allowance for credit losses as of December 31, 2024 was de minimis and no allowance has been recorded.

Certain of the Company’s contracts with customers include retainage provisions. Retainage represents amounts withheld from billings by customers until work has been inspected to ensure that obligations have been satisfied under the contract. Company invoices retainage and includes it in contract receivables when obligations have been satisfied and the right to receipt is subject only to the passage of time. As of December 31, 2024, retainage receivables were $150,000 and included in accounts receivable.

Property and Equipment

Property and equipment are carried at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets. The estimated useful lives used for consolidated financial statement purposes are:

Computers & office equipment		3 years
Machinery & equipment		7 years
Vehicles		5 years
Trailers		7 years
Leasehold improvements		5-15 years

Upon retirement or sale, the cost of the asset disposed and its related accumulated depreciation are removed from the accounts. Any resulting gain or loss is credited or charged to operations. Repairs and maintenance are charged to expense as incurred. Depreciation expense was $138,035 for 2024.

Management reviews the carrying value of property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets is based on the estimated future cash flows expected to result from the use of these assets. If the sum of the expected future net cash flows is less than the carrying value, an impairment loss would be recognized. An impairment loss would be measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. The Company’s estimate of future cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors. The actual cash flows realized from these assets may vary significantly from the Company’s estimates due to increased competition, increased costs, and other factors. Assumptions underlying future cash flow estimates are therefore subject to significant risk and uncertainties. During 2024, management determined that no impairment of property and equipment existed.

Note 2 Summary of Significant Accounting Policies (cont.)

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is carried at cost. Goodwill is not amortized, but is subject to annual impairment testing, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. The Company completes its annual performance test as of October 1st.

The Company’s annual goodwill impairment test is performed at the reporting unit level. The Company only has one reporting unit. The Company generally tests goodwill for possible impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If a qualitative assessment is not used, or if the qualitative assessment is not conclusive, a quantitative impairment test is performed. If a quantitative test is performed, the Company determines the fair value of the related reporting unit and compares this value to the recorded net assets of the reporting unit, including goodwill. The fair value of the Company’s reporting unit is determined using a market approach based on quoted prices in active markets. In the event the recorded net assets of the reporting unit exceed the estimated fair value of such assets, an impairment charge is recorded. Based on the Company’s annual impairment assessment, no impairment of goodwill was identified during 2024.

Leases

Pursuant to GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated balance sheet.

Operating and finance leases are included in right-of-use assets – leases and lease liabilities within the Company’s accompanying consolidated balance sheet.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments. Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the implicit rate when it is readily determinable. If the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is defined as the interest the Company would pay to borrow on a collateralized basis, considering factors such as length of lease term. For operating leases, lease expense is recognized on a straight-line basis in operations over the lease term. For finance leases, lease expense is recognized as amortization and interest; amortization on a straight-line basis over the lease term and interest using the effective interest method.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately with amounts allocated to the lease and non-lease components based on stand-alone prices.

Income Taxes

The Company’s stockholders elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. As such, there is no federal and limited state income tax provisions as taxable income or losses are allocated to the shareholders who are responsible for the payment of federal and the majority of state taxes. The Company is responsible for certain local and state income taxes that are immaterial to the consolidated financial statements.

Note 2 Summary of Significant Accounting Policies (cont.)

The Company accounts for uncertainty in income tax positions which initially need to be recognized in the consolidated financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. A recognized tax position is measured at the largest amount of benefit that has a greater than 50% likelihood of being realized upon settlement.

It is the policy of the Company to include in its consolidated statements of income penalties and interest assessed by income taxing authorities. There are no penalties or interest related to income taxes included in the 2024 consolidated statement of income.

Advertising

Advertising costs are expensed as incurred and were not material in 2024.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposit accounts and accounts receivable.

The Company’s cash is deposited in FDIC-insured banks. This limits exposure to concentrations of credit risk in relation to cash; however, from time-to-time deposits may exceed federally insured limits.

The Company grants unsecured credit to its customers. Concentrations of credit risk with respect to trade accounts receivable is mitigated through performance of ongoing credit evaluation of its customers.

As of December 31, 2024, the Company only had one customer with accounts receivable greater than 10% of total accounts receivable with that customer’s balance approximately $61,000.

New Accounting Pronouncements

There were no new accounting pronouncements applicable to the Company in 2024.

Note 3 Property and Equipment

Property and equipment consisted of the following at December 31, 2024:

Computers & office equipment	$	6,322
Machinery & equipment		256,194
Vehicles		478,444
Trailers		64,598
Leasehold Improvements		48,067
		853,625
Accumulated depreciation and amortization		(386,110	)
Property & equipment, net	$	467,515

Note 4 Notes Payable

Notes payable consisted of the following at December 31, 2024:

Three notes outstanding with Ford Credit for the purchase of Ford Ranger trucks between May 2022 and April 2023 with original loan amounts totaling $114,904. The notes accrue interest between 0.00% and 6.99% with equal monthly payments due over terms ranging between 36 and 60 months. The monthly payments totaled $2,948 in 2024. The notes mature between September 2025 and May 2027 and are collateralized by the trucks.	$	46,102
Note payable to Towne Bank for the purchase of equipment totaling $130,335 in August 2022. Monthly payments of principal and interest over 84 months are $1,846 per month. The note accrues interest at 6.93% and the maturity date is August 2029. The note is secured by the equipment and also guaranteed by the shareholders.		91,906
A $200,000 note payable to one of the shareholders issued in May 2018. The stated maturity date is May 2027; however, the Company has made accelerated payments, and the note was paid off in March 2025. The interest rate on the note was 5.00%.		61,248
		199,256
Less: current		(111,320	)
Notes payable, long-term	$	87,936

The future maturities of the notes payable as of December 31, 2024 are as follows:

2025	$	111,320
2026		32,027
2027		20,750
2028		20,883
2029		14,277
Total	$	199,256

Note 5 Line of Credit

The Company has a $1,000,000 line of credit available with no balance outstanding as of December 31, 2024. The line of credit agreement matured in April 2025 and was subsequently extended. The line of credit is collateralized by inventory and equipment and guaranteed by the Company’s shareholders.

Note 6 Leases

The Company leases its office, warehouse and certain equipment under operating or finance leases, which expire at various dates through 2029. Certain leases require the Company to pay its proportionate share of property tax, insurance and other ancillary related costs. The facility operating leases contain rent escalation clauses detailing specific rent increases.

The following are the operating and finance right-of-use assets and lease liability balances included in the accompanying consolidated balance sheet:

	Operating		Finance		Total
Right-of-use assets	$	988,641	$	213,597	$	1,202,238
Lease liabilities		1,024,868		230,501		1,255,369

Note 6 Leases (cont.)

The following summarizes the components of expense recognized in the 2024 statement of income for operating and finance leases subject to Accounting Standards Codification 842 (ASC 842), Leases.

Finance lease expense
Amortization of ROU assets	$	113,249
Interest on lease liabilities		18,507
Operating lease expense		349,321
Total lease expense	$	481,077

The amortization and interest expense for finance leases are included in depreciation and amortization and interest expense, respectively, in the statement of income. Operating lease expense is included in rent and lease expense in the statement of income.

The following is a schedule of future minimum lease payments required under leases as of December 31, 2024:

	Operating			Finance
2025	$	332,221		$	108,351
2026		314,966			100,920
2027		218,997			34,680
2028		157,343			5,300
Thereafter		80,025			—
Total undiscounted Lease Payments		1,103,552			249,251
Less: Present value discount		(78,684	)		(18,750	)
Total Lease Liability	$	1,024,868		$	230,501

The following summarizes additional information related to operating and finance leases accounted for under ASC 842 for the year ended December 31, 2024:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases (interest)	$	18,824
Financing cash flows from finance leases (principal)		111,820
Operating cash flows from operating leases		340,419
Weighted-average remaining lease term in years for finance leases		2.4
Weighted-average remaining lease term in years for operating leases		3.6
Weighted-average discount rate for finance leases		6.45	%
Weighted-average discount rate for operating leases		4.08	%

Note 7 Subsequent Events

Management has evaluated subsequent events through the date of the Independent Auditor’s Report, the date on which the financial statements were available to be issued.

On August 22, 2025, Capstone Holding Corp. completed its membership interest purchase agreement to purchase all of the issued and outstanding membership interests of the Company. The aggregate purchase price was $2,625,000 in cash, subject to adjustment set forth in the purchase agreement, plus a seller note in the original principal amount of $1,250,000 and an amount payable pursuant to the terms of an earn-out agreement.

Exhibit 99.2

Carolina Stone Holdings, Inc.

Consolidated Financial Statements

As of and for the Six Months ended June 30, 2025

Index to Consolidated Financial Statements

	Page
Unaudited Consolidated Financial Statements:
Balance Sheet (Unaudited)	1
Statements of Income and Shareholders’ Equity (Unaudited)	2
Statements of Cash Flows (Unaudited)	3
Notes to Consolidated Financial Statements (Unaudited)	4

CAROLINA STONE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET (Unaudited)

	June 30, 2025
ASSETS
Current Assets:
Cash	$	290,972
Accounts receivable		740,058
Other Receivables		—
Inventory		1,013,064
Total current assets		2,044,094

Property and equipment, net		479,861
Goodwill		1,854,800
Right of use assets - leases		1,000,897
Security deposits		11,000
Total Assets	$	5,390,652

LIABILITIES & SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	384,407
Accrued payroll		32,469
Accrued liabilities		4,206
Notes payable, current		17,777
Lease liabilities, current		386,899
Total current liabilities		825,758

Notes payable		103,990
Lease liabilities		668,090
Total Liabilities		1,597,838

SHAREHOLDERS’ EQUITY:
Common Stock, no par value; 100,000 shares authorized; 1,000 issued and outstanding		—
Retained earnings		3,792,814
Total shareholders’ equity		3,792,814
Total Liabilities and Shareholders’ Equity	$	5,390,652

CAROLINA STONE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME AND SHAREHOLDERS’ EQUITY (Unaudited)

	Six Months Ended June 30, 2025
Net Revenue	$	5,150,153

Operating Expenses
Cost of materials		2,141,225
Installation labor		1,142,021
Personnel Costs		914,535
Rent and lease expense		209,601
Depreciation and amortization		138,479
Fuel and utilities		121,371
Repairs and maintenance		50,115
Insurance		39,355
Professional fees		56,783
Other		140,615
Total operating expenses		4,954,100

Operating Income		196,053

Other Income (Expense)
Interest expense		(10,175	)
Taxes		(19,595	)
Total other (expense) income		(29,770	)
Net Income	$	166,283

Shareholders’ Equity – Beginning of Year	$	3,794,513
Net income		166,283
Shareholders’ distributions		(167,982	)
Shareholders’ Equity – End of Year	$	3,792,814

CAROLINA STONE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

	Six Months Ended June 30, 2025
Cash Flows from Operating Activities
Net income	$	166,283
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		138,479
Loss on sale of property and equipment		16,793
Change in operating assets and liabilities:
Accounts receivable, net		(155,910	)
Other receivables		9,940
Inventory		(30,565	)
Operating lease assets and liabilities, net		2,385
Accounts payable		297,398
Accrued payroll		(55,235	)
Accrued liabilities		4,206
Total adjustments		227,491
Net cash provided by operating activities		393,773
Cash Flows from Investing Activities
Purchase of property and equipment, net		(136,548	)
Proceeds from sale of property and equipment		18,871
Net cash used in investing activities		(117,677	)
Cash Flows from Financing Activities
Proceeds from issuance of notes payable		81,913
Payments on notes payable		(159,402	)
Payments on finance leases		(51,365	)
Distributions to shareholders		(167,982	)
Net cash used in financing activities		(296,836	)
NET INCREASE IN CASH		(20,739	)
CASH – BEGINNING OF YEAR		311,711
CASH – END OF YEAR	$	290,972

Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest	$	10,175

CAROLINA STONE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 Nature and Scope of Business

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Revenue Recognition

The Company recognizes revenue under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606). The Company recognizes revenues when control of the promised materials and services is transferred to the clients, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. The Company's revenues are recorded net of any sales or other taxes collected from clients.

The following table provides information about opening and closing totals of contract balances during the presented reporting period:

	June 30, 2025		December 31, 2024

Accounts receivable, net	$	740,058	$	584,148

Note 2 Summary of Significant Accounting Policies (cont.)

Accounts Receivable

Accounts receivable are unsecured customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date. Accounts receivable are stated at their carrying value, net of a valuation allowance for expected credit losses, as necessary, that reflects management’s best estimate of the amount that will not be collected. Management reviews all accounts receivable balances on a periodic basis that exceed 90 days from the invoice date. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for credit losses is recognized in operating expenses and was approximately $7,000 and $5,000 for June 30, 2025 and December 31, 2024, respectively. Management determined that the required allowance for credit losses as of June 30, 2025 and December 31, 2024 was de minimis and no allowance has been recorded.

Certain of the Company’s contracts with customers include retainage provisions. Retainage represents amounts withheld from billings by customers until work has been inspected to ensure that obligations have been satisfied under the contract. Company invoices retainage and includes it in contract receivables when obligations have been satisfied and the right to receipt is subject only to the passage of time. As of June 30, 2025 and December 31, 2024, retainage receivables were $156,495 and $150,000, respectively, and included in accounts receivable.

Property and Equipment

Computers & office equipment			3 years
Machinery & equipment			7 years
Vehicles			5 years
Trailers			7 years
Leasehold improvements			5-15 years

Management reviews the carrying value of property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets is based on the estimated future cash flows expected to result from the use of these assets. If the sum of the expected future net cash flows is less than the carrying value, an impairment loss would be recognized. An impairment loss would be measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. The Company's estimate of future cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors. The actual cash flows realized from these assets may vary significantly from the Company's estimates due to increased competition, increased costs, and other factors.

Assumptions underlying future cash flow estimates are therefore subject to significant risk and uncertainties. As of June 30, 2025, management determined that no impairment of property and equipment existed.

Note 2 Summary of Significant Accounting Policies (cont.)

Goodwill

Leases

Operating and finance leases are included in right-of-use assets – leases and lease liabilities within the Company’s accompanying consolidated balance sheet.

New Accounting Pronouncements

There were no new accounting pronouncements applicable to the Company in 2025 or 2024.

Note 3 Notes Payable

Notes payable consisted of the following at June 30, 2025:

Note payable to Towne Bank for the purchase of equipment totaling $130,335 in August2022. Monthly payments of principal and interest over 84 months are $1,846 per month. The note accrues interest at 6.93% and the maturity date is August 2029. The note is secured by the equipment and also guaranteed by the shareholders. This note was paid off in July 2025.	$	83,046
Note payable to Towne Bank for the purchase of equipment totaling $81,913 in March 2025. Monthly payments of principal and interest over 60 months are $1,627 per month. The note accrues interest at 6.93% and the maturity date is April 2030; however, the Company has made accelerated payments. The note is secured by the equipment and also guaranteed by the shareholders.		38,721
		121,767
Less: current		(17,777	)
Notes payable, long-term	$	103,990

The future maturities of the notes payable as of June 30, 2025 are as follows:

2025	$	17,777
2026		36,753
2027		31,912
2028		20,842
2029		14,483
Total	$	121,767

Note 4 Line of Credit

The Company has a $1,000,000 line of credit available with no balance outstanding as of June 30, 2025. The line of credit agreement matured in April 2025 and was subsequently extended. The line of credit is collateralized by inventory and equipment and guaranteed by the Company’s shareholders.

Note 5 Leases

The following are the operating and finance right-of-use assets and lease liability balances included in the accompanying consolidated balance sheet:

	Operating		Finance		Total
Right-of-use assets	$	837,240	$	163,657	$	1,000,897
Lease liabilities		875,853		179,136		1,054,989

Note 5 Leases (cont.)

The following summarizes the components of expense recognized in the 2024 statement of income for operating and finance leases subject to Accounting Standards Codification 842 (ASC 842), Leases.

Finance lease expense
Amortization of ROU assets	$	49,940
Interest on lease liabilities		6,526
Operating lease expense		170,646
Total lease expense	$	227,112

The following is a schedule of future minimum lease payments required under leases as of June 30, 2025:

	Operating			Finance
2026	$	323,852		$	100,920
2027		296,753			69,240
2028		154,637			21,200
2029		160,049			—
Thereafter		—			—
Total undiscounted Lease Payments		935,291			191,360
Less: Present value discount		(59,438	)		(12,224	)
Total Lease Liability	$	875,853		$	179,136

The following summarizes additional information related to operating and finance leases accounted for under ASC 842 for the six months ended June 30, 2025:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases (interest)	$	6,647
Financing cash flows from finance leases (principal)		51,244
Operating cash flows from operating leases		168,262
Weighted-average remaining lease term in years for finance leases		2.0
Weighted-average remaining lease term in years for operating leases		3.2
Weighted-average discount rate for finance leases		6.44	%
Weighted-average discount rate for operating leases		4.05	%

Note 6 Subsequent Events

Management has evaluated subsequent events through the date of the Independent Auditor’s Report, the date on which the financial statements were available to be issued.

Exhibit 99.3

CAPSTONE HOLDING CORP.
Unaudited Pro Forma Combined Financial Information

To finance the cash purchase price, on July 29, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Buyer”), pursuant to which the Company authorized the issuance of senior secured convertible notes to the Buyer, in the aggregate original principal amount of up to $10,909,885, which are being issued with a 8.34% original issue discount (each, a “Convertible Note”). The first Convertible Note was issued in the original principal amount of approximately $3,272,966 (the “Note). The Convertible Notes are convertible into shares of common stock, $0.0005 par value per share (the “Common Stock”), in certain circumstances in accordance with the terms of the Convertible Notes at an initial conversion price per share of $1.72 per share. Subsequent to the issuance date, the conversion price of the Note was amended to $1.00 per share. The Company received gross proceeds of $3,000,000 or $2,680,000 of net proceeds after the deduction of transaction related expenses, from the initial closing of the Convertible Note Financing. The pro forma adjustments related to this arrangement are shown in a separate column as “Other Adjustments”.

The following Unaudited Pro Forma Combined Financial Information has been prepared from the respective historical consolidated financial statements of the Company and the Carolina Stone Companies and has been adjusted to illustrate the estimated effects of the Acquisition, shown as “Acquisition Adjustments”.

The Unaudited Pro Forma Combined Financial Information has been prepared in accordance with Article 11 of Regulation S-X as amended. The Unaudited Pro Forma Combined Financial Information is derived from and should be read in conjunction with:

●

the accompanying notes to the Unaudited Pro Forma Combined Financial Information contained herein;

●

the historical audited consolidated financial statements of the Company, as of and for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2025;

●

the historical unaudited consolidated financial statements of the Company, as of and for the six months ended June 30, 2025 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August15, 2025;

●

the audited consolidated financial statements of the Carolina Stone Companies as of and for the year ended December 31, 2024;

●

the unaudited consolidated financial statements of the Carolina Stone Companies as of and for the six months ended June 30, 2025.

The Unaudited Pro Forma Combined Consolidated Balance Sheet gives effect to the Acquisition as if it had been consummated on June 30, 2025 and includes pro forma adjustments based on the preliminary valuation of certain tangible and identifiable intangible assets acquired and liabilities assumed and consideration transferred. The Unaudited Pro Forma Combined Consolidated Balance Sheet combines the Company’s historical Unaudited Consolidated Balance Sheet as of June 30, 2025 with the Carolina Stone Companies’ historical Unaudited Consolidated Balance Sheet as of June 30, 2025.

The Unaudited Pro Forma Combined Consolidated Statement of Operations for the year ended December 31, 2024 gives effect to the Acquisition as if it had been consummated on January 1, 2024, and combines the Company’s historical Audited Consolidated Statement of Operations for the year ended December 31, 2024 with the Carolina Stone Companies’ historical Audited Consolidated Statement of Operations for the year ended December 31, 2024. Similarly, the Unaudited Pro Forma Combined Consolidated Statement of Operations for the six months ended June 30, 2025 gives effect to the Acquisition as if it had been consummated on January 1, 2024 and combines the Company’s historical Unaudited Consolidated Statement of Operations for the six months ended June 30, 2025, with the Carolina Stone Companies’ historical Unaudited Consolidated Statement of Operations for the six months ended June 30, 2025.

The accompany Unaudited Pro Forma Combined Financial Information was derived by making certain Acquisition Adjustments to the historical consolidated financial statements of the Carolina Stone Companies noted above. Such adjustments are based on currently available information and certain estimates and assumptions. Therefore, the actual impact of the Acquisition may differ from the adjustments made to the Unaudited Pro Forma Combined Financial Information. However, management believes that the assumptions provide reasonable basis for presenting the significant effects of the Acquisition as if it had been consummated as of the dates indicated above, and that all adjustments necessary to present fairly the Unaudited Pro Forma Combined Financial Information have been made.

The Unaudited Pro Forma Combined Financial Information is for illustrative purposes only and is subject to a number of uncertainties and assumptions as described in the accompanying notes. The Unaudited Pro Forma Combined Financial Information should not be relied upon as an indication of the financial condition or the operating results that the Company would have achieved had the Acquisition occurred on the dates assumed, nor indicative of the financial condition or operating results of the combined company as of or for any future date or period.

As of the date of this Current Report on Form 8-K, the Company has not finalized its determination of the fair value of consideration transferred, the fair value of assets acquired and liabilities assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform the Carolina Stone Companies’ accounting policies to the Company’s accounting policies. As additional information becomes available and additional analyses are performed, this may cause the final adjustments to be materially different from the Unaudited Pro Forma Combined Financial Information presented below. The final allocation of the total purchase price will be determined after a final determination of the fair value of the Carolina Stone Companies’ tangible and identifiable intangible assets acquired and liabilities assumed based on the assets and liabilities of the Carolina Stone Companies that existed as of the Closing Date.

CAPSTONE HOLDING CORP.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of June 30, 2025

(in thousands, except share and per share data)

(unaudited)

	Capstone Holding Corp. (Historical)			Carolina Stone Holdings (Historical)		Acquisition Adjustments				Other Adjustments			Pro Forma Combined
ASSETS
Current Assets:
Cash	$	773		$	291	$	(2,993	)	(a)	$	2,680	(g)	$	751
Accounts receivable, net		5,487			740		—				—			6,227
Inventories		9,590			1,013		—				—			10,603
Prepaid expenses		439			—		—				—			439
Other current assets		242			—		—				—			242
Total current assets		16,531			2,044		(2,993	)			2,680			18,262
Long-term Assets:
Property and equipment, net		1,466			480		(180	)	(d)		—			1,766
Goodwill		23,286			1,855		1,090		(b)		—			26,231
Other intangible assets		61			—		300		(e)		—			361
Right of use assets		3,185			1,001		—				—			4,186
Deferred tax asset		7,178			—		—				—			7,178
Other long-term assets		178			11		—				—			189
Total long-term assets		35,354			3,347		1,210				—			39,911
Total Assets	$	51,885		$	5,391	$	(1,783	)		$	2,680		$	58,173

LIABILITIES & EQUITY
Current Liabilities:
Accounts payable	$	3,599		$	384	$	310		(f)	$	—		$	4,293
Accrued expenses		923			37		—				—			960
Line of credit		8,713			—		—				—			8,713
Senior convertible note		—			—		—				2,680	(g)		2,680
Current portion of long-term debt		2,910			18		(18	)	(c)		—			2,910
Current portion, lease liability		826			387		—				—			1,213
Total current liabilities		16,971			826		292				2,680			20,769
Long-term liabilities:
Accrued related party management fee		351			—		94		(f)		—			445
Long term debt, net of current portion		5,827			104		1,203		(c)		—			7,134
Lease liability, net of current portion		2,462			668		—				—			3,130
Earn-out payable		—			—		825		(b)		—			825
Total long-term liabilities		8,640			772		2,122				—			11,534
Total Liabilities		25,611			1,598		2,414				2,680			32,303
Equity:
Series B Preferred Stock, no par value; 2,000,000 shares authorized; 985,063 issued as of June 30, 2025.		30			—		—				—			30
Common Stock $0.0005 par value; 50,000; 5,406,305 issued as of June 30, 2025		3			—		—				—			3
Additional paid-in capital		225,476			—		—				—			225,476
Retained Earnings (Accumulated deficit)		(199,235	)		3,793		(4,197	)			—			(199,639	)
Total Equity		26,274			3,793		(4,197	)			—			25,870
Total Liabilities, Preferred Units & Equity	$	51,885		$	5,391	$	(1,783	)		$	2,680		$	58,173

CAPSTONE HOLDING CORP.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2025

(in thousands, except share and per share data)

(unaudited)

	Capstone Holding Corp. (Historical)			Carolina Stone Holdings (Historical)			Acquisition Adjustments		Other Adjustments				Pro Forma Combined
Sales	$	21,358		$	5,150		$	—	$	—			$	26,508
Sales returns and allowances		(607	)		—			—		—				(607	)
Net sales		20,751			5,150			—		—				25,901
Cost of goods sold		16,296			3,283			—		—				19,579
Gross Profit		4,455			1,867			—		—				6,322
Selling, general and administrative expenses		6,143			1,671			—		—				7,814
Income (loss) from operations		(1,688	)		196					—				(1,492	)
Interest expense		(740	)		(10	)		—		(855	)	(c),(g)		(1,605	)
Net income (loss) before taxes		(2,428	)		186					(855	)			(3,097	)
Income tax expense		—			(20	)		—		—				(20	)
Net Income (loss)		(2,428	)		166					(855	)			(3,117	)
Less: Net loss attributable to:
Special preferred units		—			—			—		—				—
Class B units preferred return		(705	)		—			—		—				(705	)
Net loss attributable to Capstone Holding Corp. stockholders	$	(3,133	)	$	166		$		$	(855	)		$	(3,822	)

Earnings (loss) per share:
Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted		(0.58	)											(0.71	)

Weighted average number of common shares outstanding – basic and diluted		5,406,305												5,406,305

CAPSTONE HOLDING CORP.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2024

(in thousands, except share and per share data)

(unaudited)

	Capstone Holding Corp. (Historical)			Carolina Stone Holdings (Historical)			Acquisition Adjustments			Other Adjustments				Pro Forma Combined
Sales	$	45,808		$	11,862		$	—		$	—			$	57,670
Sales returns and allowances		(932	)		—			—			—				(932	)
Net sales		44,876			11,862			—			—				56,738
Cost of goods sold		35,306			7,910			—			—				43,216
Gross Profit		9,570			3,952			—			—				13,522
Selling, general and administrative expenses		10,208			3,451			16	(d),(e)		—				13,675
Transaction Expenses		—			—			404	(f)		—				404
Income (loss) from operations		(638	)		501			(420	)		—				(557	)
Interest expense		(1,483	)		(41	)		—			(888	)	(c),(g)		(2,412	)
Net income (loss) before taxes		(2,121	)		460			(420	)		(888	)			(2,969	)
Income tax expense		(442	)		(25	)		—			—				(467	)
Net Income (loss)		(2,563	)		435			(420	)		(888	)			(3,436	)
Less: Net loss attributable to:
Special preferred units		(328	)		—			—			—				(328	)
Class B units preferred return		(2,604	)		—			—			—				(2,604	)
Net loss attributable to Capstone Holding Corp. stockholders	$	(5,495	)	$	435		$	(420	)	$	(888	)		$	(6,368	)

Earnings (loss) per share:
Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted	$	(34.86	)											$	(40.40	)

Weighted average number of common shares outstanding – basic and diluted		157,610													157,610

CAPSTONE HOLDING CORP.
NOTES TO THE UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

Note 1 Basis of Presentation

The Unaudited Pro Forma Combined Financial Information is prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Article 11 of Regulation S-X.

The historical consolidated financial statements of the Company and Carolina Stone Holding were prepared in accordance with U.S. GAAP and presented in millions. The Unaudited Pro Forma Combined Financial Information has been derived from the historical consolidated financial statements of the Company and Carolina Stone Holdings. Certain Carolina Stone Holdings audited and unaudited historical consolidated balances have been reclassified to conform to the Company’s financial statement presentation. The Unaudited Pro Forma Combined Consolidated Balance Sheet as of June 30, 2025, gives effect to the Acquisition as if it had occurred on June 30, 2025. The Unaudited Pro Forma Combined Consolidated Statements of Operations for the year ended December 31, 2024 and for the six months ended June 30, 2025 give effect to the Acquisition as if it had occurred on January 1, 2024.

The historical consolidated financial statements have been adjusted in the Unaudited Pro Forma Combined Financial Information to give effect to the pro forma events that are factually supportable, directly attributable to the Acquisition, and expected to have a continuing impact on the combined results following the business combination.

The pro forma adjustments represent management’s estimates based on information available as of the date of the filing of the Unaudited Pro Forma Combined Financial Information and do not reflect possible adjustments related to integration activities that have yet to be determined or transaction or other costs following the Acquisition that are not expected to have a continuing impact. No adjustments have been made to the Unaudited Pro Forma Combined Financial Information to reflect potential synergies or cost savings that may result from the business combination.

The Unaudited Pro Forma Combined Financial Information should be read in conjunction with the historical consolidated financial statements, and related notes thereto, of the Company and Carolina Stone Holdings for the periods presented.

Note 2 Preliminary Purchase Price Allocation

The Acquisition is accounted for using the acquisition method of accounting in accordance with the Accounting Standards Codification Topic 805, “Business Combinations” (“Topic 805”), with Capstone as the accounting acquirer. Topic 805 requires, among other things, that the assets acquired, and liabilities assumed be recognized at their acquisition date fair values, with any excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The following table summarizes the preliminary purchase price allocation for the Acquisition as of the August 22, 2025 closing date (in “000’s”):

	Amount
Cash purchase price	$	2,702
Seller note		1,307
Earn-out agreement		825
Aggregate purchase consideration		4,834
Identifiable assets acquired and liabilities assumed:
Cash		—
Accounts receivable, net		949
Inventories		950
Prepaid expenses		8
Property and equipment, net		300
Other intangible assets		300
Right of use assets		1,001
Accounts payable		(409	)
Accrued expenses		(57	)
Current portion of long-term debt		—
Current portion, lease liability		(387	)
Long term debt, net of current portion		—
Lease liability, net of current portion		(668	)
Total identifiable net assets		1,998
Goodwill	$	2,836

The purchase price allocation for the Business Combination is preliminary and subject to revision as additional information about the fair value of the assets to be acquired and liabilities to be assumed becomes available. Management has not completed a full, detailed valuation analysis. Accordingly, the unaudited pro forma condensed combined financial information includes a preliminary allocation of the purchase price based on assumptions and estimates that, while considered reasonable under the circumstances, are subject to changes, which may be material. Management will continue to refine its identification and valuation of assets to be acquired and liabilities to be assumed as further information becomes available.

The final determination of the purchase price allocation will be completed as soon as practicable but not one year beyond the date of the closing date of the Business Combination and will be based on the fair values of the assets acquired and liabilities assumed as of the closing date. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial information.

Note 3 Acquisition Adjustments

(a)

Represents the aggregate cash consideration in connection with the Acquisition in Note 2, Preliminary Purchase Price Allocation, and the cash of the Carolina Stone Companies not acquired in the Acquisition. The cash consideration for the Acquisition includes $2,425.0 thousand paid at closing, $200.0 thousand working capital holdback retained by the Company and payable on December 22, 2025, and $77.0 thousand related to the estimated working capital true-up that was also paid at closing.

(b)

Represents earn-out arrangement issued to D22L, Inc. with a maximum amount of the earn-out payment of $825.0 thousand.

(c)

Represents Seller Note of $1,250.0 thousand issued to D22L, Inc. with a maturity date of February 22, 2028, less debt of the Carolina Stone Companies not assumed in the Acquisition. Interest on the Seller Note accrues at a per annum rate equal to SOFR plus 1.25% (5.25%). The Seller Note principal amount also includes $57.0 thousand for the final working capital true-up subsequent to the closing date that has been added to the Seller Note.

(d)

Represents preliminary purchase accounting adjustment for the estimated fair value of acquired property and equipment.

The following table summarizes the estimated fair values for each asset class and the remaining estimated useful life, where applicable (in “000’s”):

	Fair Value			Remaining Estimated Useful Life (in Years)
Computers & office equipment	$	1		3 years
Machinery and equipment		175		7 years
Vehicles		98		5 years
Leasehold Improvements		26		5 – 15 years
Total fair value	$	300
Less: Carolina Stone Holdings historical “Property and equipment, net”		480
Pro forma adjustment to “Property and equipment, net”	$	(180	)

The pro forma impacts on depreciation expense reflected in selling, general and administrative expenses in the Unaudited Pro Forma Combined Consolidated Statements of Operations are a decrease of $35.0 thousand and $52.0 thousand for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively.

(e)

Represents preliminary purchase accounting adjustment for the estimated fair value of acquired intangible assets

The following table summarizes the estimated fair values for each asset class and the remaining estimated useful life, where applicable (in “000’s):

	Fair Value		Remaining Estimated Useful Life (in Years)
Non-compete (non-solicitation)	$	150	5 years
Business Customer List		150	3.3 to 5.3 years
Total fair value	$	300
Less: Carolina Stone Holdings intangible assets, net of accumulated amortization		—
Pro forma adjustment to Other intangible assets	$	300

The pro forma impacts on amortization expense reflected in selling, general and administrative expenses in the Unaudited Pro Forma Combined Consolidated Statements of Operations are increases of $34.0 thousand and $68.0 thousand for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively.

(f)

The Unaudited Pro Forma Combined Consolidated Statements of Operations for the year ended December 31, 2024, includes $404.0 thousand of non-recurring transaction expenses incurred in the Acquisition. The Unaudited Pro Forma Combined Consolidated Balance Sheet as of June 30, 2025 includes $310.0 thousand of Acquisition expenses payable.

Note 4 Other Adjustments

(g)

The Unaudited Pro Forma Combined Consolidated Balance Sheet as of June 30, 2025 includes acquisition financing related to the Note with an original principal amount of $3,273.0 thousand, an original issue discount of $273.0 thousand and capitalized debt issuance costs of $320.0 thousand. The interest rate applicable to the Note is 7.00%.

The following table summarizes interest expense, original issue discount expense and debt issuance costs applicable to the Senior Convertible Note (in “000’s”):

	Six Months Ended June 30, 2025		Year Ended December 31, 2024
Senior Convertible Note
Interest expense related to senior convertible note	$	—	$	229
Amortization of debt issuance costs		—		320
Amortization of original issue discount		—		273
Pro forma adjustment to “Interest expense”	$	—	$	822