Capstone Holding Corp 10-Q/A for FY2025 Q3
Capstone Holding Corp. (CAPS)
About this 10-Q/A
Capstone Holding Corp filed this 10-Q/A on August 12, 2026, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $13.65M
- up 10.8% from $12.32M a year earlier
- Net loss
- $2.01M
- compared with net income of $34K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(
(Mark One)
For the quarterly period ended
or
For the transition period from ________________ to ________________
Commission file number
Capstone Holding Corp.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of | (I. R. S. Employer |
| | | |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| | Smaller reporting company |
| 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 to Section 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes
The number of shares of the registrant’s common stock outstanding as of August 10, 2026 was
EXPLANATORY NOTE
Capstone Holding Corp. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to amend the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, originally filed with the Securities and Exchange Commission (the “SEC”) on November 18, 2025 (the “Original Report”).
This Amendment restates the weighted average number of common shares outstanding and the related basic and diluted net loss per share in the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025. The weighted average share amounts reported in the Original Report did not reflect the day weighted average of shares outstanding during the periods. The restatement affects only the weighted average share amounts and the per share amounts. Net loss, net loss attributable to Capstone Holding Corp. stockholders, the consolidated balance sheets, the consolidated statements of stockholders’ equity (deficit) and the consolidated statements of cash flows are not affected.
The restatement has the following effect:
| Three Months Ended September 30, 2025 |
||||||||||||
| As Previously |
Adjustment |
As Restated |
||||||||||
| Net loss attributable to Capstone Holding Corp. stockholders (in thousands) |
$ | (2,014 | ) | $ | — | $ | (2,014 | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted |
5,700,214 | 137,920 | 5,838,134 | |||||||||
| Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted |
$ | (0.35 | ) | $ | 0.01 | $ | (0.34 | ) | ||||
| Nine Months Ended September 30, 2025 |
||||||||||||
| As Previously |
Adjustment |
As Restated |
||||||||||
| Net loss attributable to Capstone Holding Corp. stockholders (in thousands) |
$ | (5,147 | ) | $ | — | $ | (5,147 | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted |
3,560,035 | 665,299 | 4,225,334 | |||||||||
| Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted |
$ | (1.45 | ) | $ | 0.23 | $ | (1.22 | ) | ||||
On August 7, 2026, the Company’s Chief Financial Officer concluded that the Company’s previously issued unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025 should no longer be relied upon with respect to the weighted average share and per share amounts described above. The Audit Committee of the Company’s Board of Directors concurred in that conclusion on August 10, 2026. The Company reported that conclusion in a Current Report on Form 8-K filed with the SEC on August 12, 2026.
This Amendment sets forth the complete text of the following items, as amended:
●Part I, Item 1. Financial Statements, which is amended to restate the weighted average share and per share amounts in the consolidated statements of operations, to correct the schedule of potentially dilutive securities in Note 3, and to add Note 1A, Restatement of Previously Issued Financial Statements; and
●Part I, Item 4. Controls and Procedures, which is amended to describe a material weakness in internal control over financial reporting identified in connection with the restatement.
The Company’s principal executive officer and principal financial officer have provided new certifications dated as of the date of this Amendment, filed or furnished as Exhibits 31.1, 31.2, 32.1 and 32.2, and Part II, Item 6 is set forth in full to reflect the filing of those certifications. The financial statement information formatted in Inline XBRL (Exhibit 101) is also amended.
Except as described above, this Amendment does not amend, update or change any other item or disclosure in the Original Report. This Amendment speaks as of the date of the Original Report and does not reflect events occurring after the filing of the Original Report. This Amendment should be read together with the Original Report and the Company’s other filings with the SEC.
PART I
ITEM 1. FINANCIAL STATEMENTS
CAPSTONE HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
| September 30, | December 31, | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Long-term Assets: | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangible assets | ||||||||
| Right of use assets | ||||||||
| Deferred tax asset | ||||||||
| Other long-term assets | ||||||||
| Total long-term assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES & EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Line of credit | ||||||||
| 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 | ||||||||
| Earn-out payable | ||||||||
| Total long-term liabilities | ||||||||
| Total Liabilities | ||||||||
| TotalStone, LLC – Class B Preferred Units | ||||||||
| TotalStone, LLC – Special Preferred Units | ||||||||
| Equity: | ||||||||
| Series B Preferred Stock, par value; shares authorized; issued as of September 30, 2025. shares were authorized or issued as of December 31, 2024. | ||||||||
| Series Z Preferred Stock, par value; shares authorized; issued as of September 30, 2025. shares were authorized or issued as of December 31, 2024. | ||||||||
| Common Stock $ par value; and shares authorized; and issued as of September 30, 2025 and December 31, 2024, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Equity | ( | ) | ||||||
| Total Liabilities, TotalStone, LLC Preferred Units & Equity | $ | $ | ||||||
See notes to consolidated financial statements
CAPSTONE HOLDING CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Sales returns and allowances | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net sales | ||||||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Transaction expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) before taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Less: Net loss attributable to: | ||||||||||||||||
| Special preferred units | ( | ) | ( | ) | ||||||||||||
| Class B units preferred return | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss attributable to Capstone Holding Corp. stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Earnings (loss) per share: | ||||||||||||||||
| Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||||||||||
See notes to consolidated financial statements
CAPSTONE HOLDING CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except Common Stock Shares)
| Retained | TotalStone, LLC | |||||||||||||||||||||||||||||||||||||||||||
| Common | Common | Series B | Series B | Series Z (Shares) | Series Z Preferred Stock | Additional | Earnings | Total | Class B | Special | ||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | — | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Accrued Class B Distributions | — | — | — | ( | ) | ( | ) | — | ||||||||||||||||||||||||||||||||||||
| Conversion of Class B Preferred Units to Common stock | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Conversion of Special Preferred Units to Debt | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Public Offering | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Nectarine Management, LLC. Subscription Agreement | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of commitment shares pursuant to equity line of credit | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to equity line of credit | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to equity line of credit | — | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to Senior Convertible Note | — | |||||||||||||||||||||||||||||||||||||||||||
| Conversion of note payable to BP Peptides, LLC. to Series Z Preferred Stock | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of note payable to Brookstone to Series Z Preferred Stock | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Retained |
TotalStone, LLC |
|||||||||||||||||||||||
| Common |
Additional |
Earnings |
Total |
Class B |
Special |
|||||||||||||||||||
| Balance at January 1, 2024 |
$ | $ | ( |
) | $ | $ | $ | |||||||||||||||||
| Net Loss |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||
| Accrued Class B Preferred Units Distributions |
— | ( |
) | ( |
) | — | ||||||||||||||||||
| Accrued Special Preferred Units Distributions |
— | ( |
) | ( |
) | — | ||||||||||||||||||
| Balance at March 31, 2024 |
$ | $ | ( |
) | $ | $ | $ | |||||||||||||||||
| Net Loss |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||
| Accrued Class B Preferred Units Distributions |
— | ( |
) | ( |
) | — | ||||||||||||||||||
| Accrued Special Preferred Units Distributions |
— | ( |
) | ( |
) | — | ||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||
| Net Income |
— | — | — | — | ||||||||||||||||||||
| Accrued Class B Preferred Units Distributions |
— | ( |
) | ( |
) | — | ||||||||||||||||||
| Accrued Special Preferred Units Distributions |
— | ( |
) | ( |
) | — | ||||||||||||||||||
| Balance at September 30, 2024 |
$ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||
See notes to consolidated financial statements
CAPSTONE HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Non cash items: | ||||||||
| Depreciation and amortization | ||||||||
| Net, amortization (accretion) to interest expense | ||||||||
| Loss on extinguishment of debt | ||||||||
| Change in other operating items: | ||||||||
| Accounts receivable and other assets | ( | ) | ||||||
| Change in operating leases, net | ( | ) | ||||||
| Accounts payable and other accrued liabilities | ||||||||
| Cash flows provided by (used in) operating activities | ( | ) | ||||||
| INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment, net | ( | ) | ( | ) | ||||
| Purchase of intangible assets | ( | ) | ||||||
| Acquisition, net cash acquired | ( | ) | ||||||
| Cash flows used in investing activities | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from debt issuance | ||||||||
| Payments on financing lease liabilities | ( | ) | ( | ) | ||||
| Financing fees paid | ( | ) | ( | ) | ||||
| Borrowings under line of credit, net | ( | ) | ||||||
| Debt payments | ( | ) | ( | ) | ||||
| Proceeds from IPO and stock issuances | ||||||||
| Cash paid for IPO and stock issuance costs | ( | ) | ||||||
| Proceeds from equity line of credit | ||||||||
| Cash flows provided (used in) by 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) | $ | $ | ||||||
| Conversion of Special Preferred Units to debt | ||||||||
| Conversion of Class B Preferred Units to 3,782,641 share of Common Stock | ||||||||
| Conversion of long term debt to Series Z Preferred Stock | ||||||||
| Conversion of debt to stock | ||||||||
| TotalStone preferred stock dividends charged to retained earnings | ||||||||
| Operating cash flows from operating leases | ||||||||
| Interest Paid | ||||||||
| Taxes Paid | ||||||||
See notes to consolidated financial statements
CAPSTONE HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Nature of Operations
Capstone Holding Corp. (the “Capstone”) is a holding company and its operations consist substantially of the operations of its consolidated subsidiary, TotalStone, LLC (“TotalStone”). On April 1, 2020, Capstone obtained controlling interest in TotalStone, a materials distribution company that distributes masonry stone products for residential and commercial construction in the Midwest and Northeast United States under the trade names Instone and Northeast Masonry Distributors (“NMD”). On August 22, 2025, Capstone purchased all of the issued and outstanding membership interests (the “Holdings Membership Interests”) in Carolina Stone Holdings, LLC (“Carolina Stone Holdings”), which owns all of the issued and outstanding membership interests of Carolina Stone Distributors, LLC. Carolina Stone Holdings 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.
Note 1A Restatement of Previously Issued Financial Statements
Subsequent to the issuance of the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025, management determined that the weighted average number of common shares outstanding used to compute basic and diluted net loss per share for those periods was incorrect. The amounts previously reported did not reflect the day weighted average of shares outstanding during the periods, as required by ASC 260, Earnings Per Share. The Company has restated the weighted average share amounts and the related per share amounts in the accompanying consolidated statements of operations in accordance with ASC 250, Accounting Changes and Error Corrections.
The correction to the weighted average share amounts and the per share amounts does not affect any other amount in the financial statements. The Company has separately corrected the schedule of potentially dilutive securities in Note 3 to include the Representative’s Warrant issued in March 2025. Net loss, net loss attributable to Capstone Holding Corp. stockholders, the consolidated balance sheets, the consolidated statements of stockholders’ equity (deficit) and the consolidated statements of cash flows are not affected. The weighted average share amounts for the comparable 2024 periods are also not affected.
The following table presents the effect of the restatement on the accompanying consolidated statements of operations:
| Three Months Ended September 30, 2025 | ||||||||||||
| As Previously | Adjustment | As Restated | ||||||||||
| Net loss attributable to Capstone Holding Corp. stockholders (in thousands) | $ | ( | ) | $ | $ | ( | ) | |||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||||||
| Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted | $ | ( | ) | $ | $ | ( | ) | |||||
| Nine Months Ended September 30, 2025 | ||||||||||||
| As Previously | Adjustment | As Restated | ||||||||||
| Net loss attributable to Capstone Holding Corp. stockholders (in thousands) | $ | ( | ) | $ | $ | ( | ) | |||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||||||
| Net loss per share attributable to Capstone Holding Corp. stockholders – basic and diluted | $ | ( | ) | $ | $ | ( | ) | |||||
Note 2 IPO and Restructuring
On March 7, 2025 (the “Restructuring Date”), Capstone closed its Public Offering of
On March 7, 2025, TotalStone entered into a fifth amended and restated limited liability company agreement to govern its operations and affairs and its relationship with its members, which post restructuring is solely Capstone.
On March 10, 2025, TotalStone paid Brookstone Partners IAC, Inc. $
Outstanding warrants to purchase
On the Restructuring Date, pursuant to a master exchange agreement (the “Master Exchange Agreement”) entered into by the Capstone, TotalStone and TotalStone’s Class B and Class C Members, all of TotalStone’s Class B and Class C Preferred Interests were exchanged for
TotalStone’s Special Preferred Membership Interests were exchanged on the Restructuring Date for loans in an aggregate principal amount of $
In connection with the Restructuring, Capstone also increased its authorized shares of Common Stock to
Note 3 Summary of Significant Accounting Policies
Basis of Presentation and Preparation
The accompanying consolidated financial statements include the accounts of Capstone and its consolidated subsidiaries (collectively, the “Company”). Intercompany accounts and transactions have been eliminated. Prior-year amounts may include instances of changes to prior-year amounts to achieve comparability to the most recent fiscal year.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the rules and regulations for reporting the Quarterly Report on Form 10-Q (“Form 10-Q”). Accordingly, they do not include all of the information and notes required by GAAP for annual consolidated financial statements.
The consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements. These financial statements have been prepared on a basis that is consistent with the accounting principles applied in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“2024 Form 10-K”). This report should be read in conjunction with our 2024 Form 10-K filed with the SEC on March 31, 2025.
In our opinion, the accompanying unaudited interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates, and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of September 30, 2025 and its results of operations, cash flows, and changes in stockholders’ deficit for the three and nine months ended September 30, 2025 and 2024. The results for the three and nine months ending September 30, 2025, are not necessarily indicative of the results expected for any future period or the full year.
Use of Estimates
The preparation of financial statements in accordance with US GAAP requires management to make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, and expenses in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s assumptions regarding current events and actions that may impact on the Company in the future, actual results may differ from these estimates and assumptions.
Business Combinations
The Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. The fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.
The Company’s management exercises significant judgments in determining the fair value of assets acquired and liabilities assumed, as well as intangibles and their estimated useful lives. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to the fair value of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results.
Accounts Receivable
Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. The Company estimates expected credit losses for the allowance for expected credit losses based upon its assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. As of September 30, 2025 and December 31, 2024, the allowance for doubtful accounts totaled approximately $
Certain of the Company’s contracts with customers include retainage provisions. Retainage represents amounts withheld from billings by customers until installation 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 September 30, 2025, retainage receivables were $
Note 3 Summary of Significant Accounting Policies (cont.)
Inventories
Inventories consisting of finished goods are stated at the lower of cost, determined by the average cost method, or net realizable value. Inventories also include deposits placed on inventory purchases for shipments not yet received. Significant prepaid inventory may be located overseas. At September 30, 2025 and December 31, 2024, the total prepaid inventory balance was $
Property and Equipment
Property and equipment is stated at cost and is depreciated over the estimated useful lives ranging from to years. Depreciation is computed by using the straight-line method for financial reporting purposes and straight-line and accelerated methods for income tax purposes. Property and equipment is comprised of building, machinery & equipment, computer equipment, leasehold improvements, software, office equipment, vehicles, and furniture & fixtures. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization expense on property and equipment for the three and nine months ended September 30, 2025 and 2024 were $
Goodwill and Other Intangible Assets
Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill and indefinite lived intangible assets are not amortized but rather are tested for impairment annually as of the 1st day of the fourth quarter of each year or more frequently if indications of potential impairment exist. The Company’s goodwill is recognized in reporting units, TotalStone and Carolina Stone.
In evaluating potential goodwill impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative analysis. If the quantitative analysis indicates the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company determined that no impairment was required for the periods presented.
Intangible assets with finite lives, consist of a distribution agreement, customer relationships and non-compete agreements that are amortized over the terms of the agreements or expected useful lives.
Long-lived Asset Impairments
Long-lived assets and finite lived identifiable intangibles are reviewed for impairment whenever events of changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the assets is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount of which the carrying amount of the assets exceeds the fair value of the assets. The Company determined that
Convertible Debt
The Company accounts for convertible debt in accordance with ASC 470-20, Debt – Debt with Conversion and Other Options. Convertible debt instruments are evaluated at issuance to determine whether they contain embedded features that require bifurcation as derivatives or equity components. If the embedded conversion feature meets the criteria for derivative accounting under ASC 815, Derivatives and Hedging, it is bifurcated and recorded separately at fair value, with subsequent changes in fair value recognized in earnings. Upon modification, conversion or repurchase of convertible debt, the Company evaluates the potential of a gain or loss in accordance with ASC 470-20 and ASC 470-50, Debt Modifications and Extinguishments.
Revenue Recognition
Our sales primarily consist of distributing manufactured and natural stone cladding products, natural stone landscape products, and related goods for residential and commercial construction through a dealer network in 32 states in the Midwestern, Northeastern and Southeastern United States. For distribution sales, the Company recognizes revenue when control over the products has been transferred to the customer, and the Company has a present right to payment. For installation and project-based work, the Company recognizes revenue over time as performance obligations are satisfied. For production and custom residential jobs, revenue is generally recognized upon completion, as substantially all projects are short-term in nature. A small portion of commercial projects are recognized based on progress toward completion, typically through monthly billings.
Note 3 Summary of Significant Accounting Policies (cont.)
Shipping and Handling
The Company includes amounts billed to customers related to shipping and handling and shipping and handling expenses in cost of goods sold.
Earnings Per Share
Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to the common stockholders of Capstone Holding Corp. by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method and the if-converted method for convertible notes. Potential common shares are excluded from the computation when their effect is antidilutive.
For the nine months ended September 30, 2025 and 2024, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have had an anti-dilutive effect. The number of incremental common shares from potentially dilutive securities consisted of the following:
| September 30, | September 30, | |||||||
| Stock options | ||||||||
| Convertible notes | ||||||||
| Warrants | ||||||||
| Representative's warrant | ||||||||
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires companies to disclose disaggregated information related to the effective tax rate reconciliation and income taxes paid. This guidance is effective for public entities for fiscal years beginning after December 15, 2024. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires disclosures about specific types of expenses included in expense captions presented on the face of the Consolidated Statement of Operations. This guidance is effective for public entities for fiscal years beginning after December 15, 2026. We are currently reviewing this guidance and its impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the assessment of whether certain settlements of convertible debt instruments should be accounted for as an inducement conversion or extinguishment of convertible debt. The new guidance is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods. We are currently reviewing this guidance and its impact on our consolidated financial statements.
Note 4 Business Combination
On August 22, 2025, Capstone completed its membership interest purchase to purchase all of the issued and outstanding membership interests in Carolina Stone Holdings, LLC, (“Carolina Stone Holdings”), which owns all of the issued and outstanding membership interests of Carolina Stone Distributors, LLC, ( the “Business Combination”). The aggregate purchase price is (i) $
Note 4 Business Combination (cont.)
The following table presents the preliminary purchase price allocation of the identifiable assets acquired and liabilities assumed and goodwill recognized, measured in accordance with ASC 805 (“000’s”):
| Amount | ||||
| Cash purchase price | $ | |||
| Seller note | ||||
| Earn-out agreement | ||||
| Aggregate purchase consideration | ||||
| Identifiable assets acquired and liabilities assumed: | ||||
| Cash | ||||
| Accounts receivable, net | ||||
| Inventories | ||||
| Prepaid expenses | ||||
| Property and equipment, net | ||||
| Other intangible assets | ||||
| Right of use assets | ||||
| Other long-term assets | ||||
| Accounts payable | ( | ) | ||
| Accrued expenses | ( | ) | ||
| Current portion, lease liability | ( | ) | ||
| Lease liability, net of current portion | ( | ) | ||
| Total identifiable net assets | ||||
| Goodwill | $ | |||
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. 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 preliminary purchase price allocation.
The table below represents the pro forma revenue and net income (loss) for the nine months ended September 30, 2025 and 2024, assuming the acquisition had occurred on January 1, 2024, pursuant to ASC Subtopic 805-10-50. This pro forma information does not purport to represent what the actual results of our operations would have been had the acquisition occurred on this date nor does it purport to predict the results of operations for future periods.
| Nine Months Ended | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Net income (loss) | ( | ) | ( | ) | ||||
| Earnings (loss) per common share: | ( | ) | ( | ) | ||||
Note 5 Liquidity and Uncertainties
The Company has recognized operating losses and net losses on a year-to-date basis in 2025 and for the years ended December 31, 2024 and 2023. Although losses have been recognized, the Company recognized positive operating cash flows for the years ended December 31, 2024 and 2023. Operating results and cash flows fluctuate based on seasonality with the first and fourth quarter typically slower periods in our calendar year. Working capital as of September 30, 2025 excluding the current portion of long-term debt is $
The Company primarily funds operations through cash provided from operations and available capacity under our ABL Facility (“Revolver”). In 2024 the Company was not in compliance with certain of the Revolver’s financial covenants which have been waived by our lender. As of September 30, 2025, the Company was in compliance with the Revolver’s financial covenants. In June 2025, the Company executed an amendment to the Revolver that extended the maturity date from June 2025 through December 2025. The Company believes the Revolver will continue to be available and the longer-term extension will be executed with financial covenants aligned to the Company’s anticipated future results.
Forecasted future results, the longer-term extension of the Revolver, future compliance with financial covenants and expecting regarding the conversion of the convertible notes are subject to risks and uncertainties which could have a material adverse effect on our business, financial condition and results of operations.
As more fully described in Note 10, on May 15, 2025, the Company entered into a common stock purchase equity line agreement with an accredited investor. Under that agreement, the Company has the right, but not the obligation, to sell to the Equity Line Investor, and the Equity Line Investor is obligated to purchase the Company’s common stock.
On July 29, 2025, the Company entered into a securities purchase agreement with an institutional investor pursuant to which the Company authorized the issuance of senior secured convertible notes in the aggregate original principal amount of up to $
Additionally, on October 22, 2025, a second Convertible Note was issued in the original principal amount of approximately $
The Company currently believes that it will have sufficient liquidity to operate for a period of at least one year from the issuance date of the September 30, 2025 interim consolidated financial statements.
Note 6 Related Party Transactions
TotalStone is party to an agreement with a related party, Brookstone Partners IAC, Inc. (“Brookstone”), the Company’s majority shareholder. Pursuant to this agreement, Brookstone provides annual consulting services totaling $
Stream Finance, LLC, which serves as a creditor on TotalStone’s mezzanine term loan of $
On March 10, 2025, TotalStone paid Brookstone $
Note 7 Line of Credit
TotalStone has a Revolving Credit Note (“Revolver”) available and outstanding pursuant to a Revolving Credit, Term Loan and Security Agreement, as amended, with Berkshire Bank. TotalStone’s maximum revolving advance amount is $
Note 8 Debt
As of September 30, 2025, the Company had $
| September 30, | December 31, | |||||||
| Long-term Debt | ||||||||
| Note payable to BP Peptides, LLC “Brookstone”. The unsecured loan bears interest at % per annum, with interest payable quarterly and the amended maturity date is . On September 30, 2025 $ of combined principal and interest was converted into shares of Series Z non-convertible preferred stock at a conversion price of $ a share. | $ | $ | ||||||
| Mezzanine term loan to Stream Finance, LLC, collateralized by substantially all of TotalStone’s assets and subordinated to the Bank term notes. Interest is calculated monthly as the Base Rate divided by an Adjustment Factor of , not to exceed % per annum (see further details below), with a maturity date of . On March 7, 2025, the Special Preferred Membership Interests were exchanged for loans in an aggregate principal of $ and an amendment fee of $ payable on the deferral date of September 30, 2027 which are included in this amount. At September 30, 2025 and December 31, 2024, $ thousand and $ thousand of accrued interest remains unpaid and is included within this amount, respectively. | ||||||||
| Seller’s note with Avelina Masonry, LLC, which required monthly payments of $ thousand. The original maturity date was but the loan has not been paid in full and is in default. The loan bears interest at one-month SOFR plus % plus % default (% and % at September 30, 2025 and December 31, 2024, respectively). At September 30, 2025 and December 31, 2024, $ thousand and $ thousand of accrued interest remains unpaid and is included within this amount, respectively. | ||||||||
| Seller’s note with D22L, Inc., which requires quarterly interest payments commencing December 31, 2025 and quarterly principal payments of $ commencing December 31, 2026. This Subordinated Promissory Note has a maturity date of and bears interest of % plus SOFR (% at September 30, 2025). | ||||||||
| Senior Convertible Note with 3i, LP. issued on July 29, 2025 with a principal amount of $ and bears interest at the rate of % per annum, with a maturity date of At September 30, 2025, $ thousand of interest remains unpaid and is included with this amount. During the quarter ended September 30, 2025, approximately $ thousand of the note was converted to common stock and the conversion rate was amended (see Note 10). | ||||||||
| Term note agreement with Berkshire Bank, due in consecutive monthly payments of $ thousand. The term note was paid in full on March 10, 2025. The loan was secured by all assets of TotalStone. Interest was charged at the one- month SOFR plus % (% at December 31, 2024). | ||||||||
| In December 2022, TotalStone sold its facility in Navarre, Ohio to a nonaffiliated third party for a purchase price of $ million and concurrently entered into a leaseback transaction. The transaction is treated as a failed sale in accordance with U.S. GAAP. The Company therefore recorded a financing liability related to the sale-leaseback in the amount of the sale price. The obligation matures in January 2048 and requires monthly payments of principal and interest. With the sale leaseback, TotalStone signed a lease agreement with a -year lease term. The initial annual lease payment of $ thousand increases % per annum. The imputed interest rate is %. | ||||||||
| Unsecured promissory note with Brookstone plus accrued interest to acquire a minority interest in DPH. Interest accrues at % per annum and the maturity date is . On September 30, 2025 $ of combined principal and interest was converted into shares of Series Z non-convertible preferred stock at a conversion price of $ a share. | ||||||||
| 11,664 | 8,444 | |||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Less: unamortized premiums, discounts and issuance costs | ( | ) | ( | ) | ||||
| Total Long-term debt | $ | $ | ||||||
Note 8 Debt (cont.)
Scheduled maturities of long-term as of September 30, 2025, are as follows:
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ |
Note 9 Leases
As of September 30, 2025, the balance of our right-of-use (“ROU”) assets was $
| Year | Finance | Operating | ||||||
| 2026 | $ | $ | ||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total undiscounted Lease Payments | ||||||||
| Less: Present value discount | ( | ) | ( | ) | ||||
| Total Lease Liability | $ | $ | ||||||
Lease expense recognized on our leases is as follows in (“000’s”):
| Nine months | Nine months | Three months | Three months | |||||||||||||
| Finance leases | ||||||||||||||||
| Amortization expense | $ | $ | $ | $ | ||||||||||||
| Interest expense | ||||||||||||||||
| Operating leases | ||||||||||||||||
| Straight-line rent expense | ||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||
The following summarizes additional information related to our leases for 2025 and 2024 in (“000’s”):
| Nine months ended | Nine months ended | |||||||||||||||
| Finance | Operating | Finance | Operating | |||||||||||||
| Weighted-average remaining lease terms (years) | ||||||||||||||||
| Weighted-average discount rate | % | % | % | % | ||||||||||||
| ROU assets obtained in exchange for new lease liabilities | $ | $ | $ | $ | ||||||||||||
Note 10 Stockholders’ Equity
Prior to 2025, Capstone had
Series B Preferred Stock:
In connection with the IPO and Restructuring. Capstone filed with the Delaware Secretary of State to designate shares of the Company’s authorized preferred stock as Series B Preferred Stock (“Series B Preferred Stock”),
In February 2025, Nectarine Management, LLC, an entity controlled by Michael Toporek, purchased
The holders of shares of Series B Preferred Stock (“Series B Preferred Stockholders”) have the right to vote, together with the holders of all the outstanding shares of Common Stock on all matters on which holders of Common Stock have the right to vote. The holders of shares of Series B Preferred Stock have the right to cast one vote for each share of Series B Preferred Stock held by them.
Series B Preferred Stock is convertible into Common Stock at the holder’s option any time after the two-year anniversary of the Company’s February 2025 initial public offering, provided the Common Stock’s closing price meets or exceeds $
The Series B Preferred Stockholders have certain protective rights. Until less than
Series Z Preferred Stock:
A number of Brookstone entities controlled by Messrs. Lipman and Toporek control over
On September 30, 2025, following approval by the Audit Committee of the Board, the Company and each of BP Peptides and Brookstone Acquisition (collectively, the “Brookstone Lenders”), entered into an Exchange Agreement (the “Exchange Agreement”) whereby the Brookstone Lenders agreed to exchange their notes for shares of the Company’s newly created Series Z
On September 30, 2025, following Board approval, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series Z
Pursuant to the Certificate of Designation, the Series Z Preferred shares are not convertible into shares of Common Stock, have voting rights of one vote per share and will vote together as a single class with the Common Stock shareholders. Each share of Series Z Preferred will accrue cumulative dividends at a rate of eight percent (
Note 10 Stockholders’ Equity (cont.)
Recent Transactions
The Company entered into a common stock purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Equity Line Investor”), dated May 14, 2025. Under the terms and subject to the conditions set forth in the Purchase Agreement, the Company has the right, but not the obligation, to sell to the Equity Line Investor, and the Equity Line Investor is obligated to purchase, up to the lesser of (a) $
On June 26, 2025, the Company and the Equity Line Investor entered into a first amendment to the Purchase Agreement (the “First Amendment to Purchase Agreement”), which amended the definition of “VWAP Purchase Maximum Amount” in the Purchase Agreement to (a) remove the volume limitation on the number of Equity Line Securities that may be purchased pursuant to a single VWAP Purchase (as defined in the Purchase Agreement) based on
On July 29, 2025, the Company entered into a securities purchase agreement (the “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 $
Effective August 14, 2025, the conversion price per share of the Convertible Notes was amended to decrease the conversion price to $
On October 22, 2025, the Company issued to the Buyer a second Convertible Note in the original principal amount of $
The Second Note bears interest at a rate of
Note 11 Segment Information
The Company has
The Company’s chief executive officer is also the Company’s chief operating decision maker (“CODM”). The Company’s chief operating decision maker evaluates the performance of segments based on operating income (loss). Cost of goods sold and selling, general and administrative expenses, as reported on the statement of operations, are the significant segment expenses provided to the CODM on a regular basis.
The following tables present financial information regarding the Company’s reportable segment reconciled to the Company’s consolidated totals.
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||
| TotalStone | Carolina | Parent | Eliminations | Consolidated | TotalStone | Parent | Carolina | Eliminations | Consolidated | |||||||||||||||||||||||||||||||
| Income (loss) from operations before taxes: | ||||||||||||||||||||||||||||||||||||||||
| Sales | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Transaction Expenses | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other income (expense) net | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations before taxes | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Other financial information: | ||||||||||||||||||||||||||||||||||||||||
| Depreciation & amortization | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||
| TotalStone | Carolina Stone Holdings | Parent | Eliminations | Consolidated | TotalStone | Parent | Carolina Stone Holdings | Eliminations | Consolidated | |||||||||||||||||||||||||||||||
| Income (loss) from operations before taxes: | ||||||||||||||||||||||||||||||||||||||||
| Sales | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Transaction Expenses | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other income (expense) net | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Income (loss) from operations before taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||
| Other financial information: | ||||||||||||||||||||||||||||||||||||||||
| Depreciation & amortization | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||||||||||||||||||||||
| As of September 30, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||
| TotalStone | Carolina Stone Holdings | Parent | Eliminations | Consolidated | TotalStone | Carolina Stone Holdings | Parent | Eliminations | Consolidated | |||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
Note 12 Subsequent Events
On October 5, 2025, the conversion price with regard to the entire principal of the convertible note issued on July 29, was decreased to $
As more fully disclosed in Note 10, on October 22, 2025 the Company issued a convertible note in the original principal amount of $
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our Company’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial officer, evaluated our Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of September 30, 2025, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses in our internal control over financial reporting.
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.
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 has historically been held primarily by a single person, though the Company engages multiple accounting consultants for accounting, tax and audit support. In April 2025, the Company hired a controller.
Material Weakness Identified in Connection with the Restatement
In connection with the restatement described in Note 1A to the consolidated financial statements included in this Amendment, management identified an additional material weakness in the Company’s internal control over financial reporting. The Company’s controls over the computation and review of the weighted average number of common shares outstanding used to compute net loss per share did not operate effectively. As a result, the weighted average share and per share amounts for the three and nine months ended September 30, 2025 were misstated, and the Company has restated those amounts in this Amendment. This control deficiency existed as of September 30, 2025 and is in addition to the material weaknesses described above. It does not change management’s conclusion that the Company’s disclosure controls and procedures were not effective as of September 30, 2025.
The Company has designed and implemented a remediation plan directed at the material weaknesses described above. The Company has expanded its accounting staff so that the preparation of the financial statements is no longer dependent on a single individual, and it has established layers of review under which the preparer of a financial statement and the reviewer of that statement are different individuals. The error described above was identified through that review process.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
ITEM 6: EXHIBITS
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| Number |
Exhibit Description |
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| 2.1 |
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| 3.1 |
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| 10.1 |
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| 10.2 |
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| 10.3 |
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| 10.4 |
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| 10.5 |
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| 10.6 |
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| 10.7 |
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| 31.1* |
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| 31.2* |
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| 32.1** |
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| 32.2** |
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| 101.INS* |
Inline XBRL Instance Document |
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| 101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104* |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * |
Filed herewith. |
| ** |
Furnished herewith |
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, thereunto duly authorized.
| CAPSTONE HOLDING CORP. |
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| Date: August 12, 2026 | By: |
/s/ Matthew E. Lipman |
| Matthew E. Lipman |
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| Chief Executive Officer |
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| Date: August 12, 2026 | /s/ Edward Schultz |
| Edward Schultz |
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| Chief Financial Officer |
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| (Principal Financial and |
Exhibit 31.1
SECTION 302 CERTIFICATION
I, Matthew E. Lipman, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q/A (Amendment No. 1) for the period ended on September 30, 2025 of Capstone Holding Corp.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on Capstone Holding Corp.’s most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
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Date: August 12, 2026 |
By: |
/s/ Matthew E. Lipman |
|
Matthew E. Lipman |
||
|
Chief Executive Officer |
Exhibit 31.2
SECTION 302 CERTIFICATION
I, Edward Schultz, certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q/A (Amendment No. 1) for the period ended on September 30, 2025 of Capstone Holding Corp.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on Capstone Holding Corp.’s most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
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Date: August 12, 2026 |
By: |
/s/ Edward Schultz |
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Edward Schultz |
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Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Capstone Holding Corp. (the “Company”) on Form 10-Q/A (Amendment No. 1) for the period ended September 30, 2025 (the “Report”) I, Matthew E. Lipman, Chief Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
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(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Date: August 12, 2026 |
By: |
/s/ Matthew E. Lipman |
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Matthew E. Lipman |
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Chief Executive Officer |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Capstone Holding Corp. (the “Company”) on Form 10-Q/A (Amendment No. 1) for the period ended September 30, 2025 (the “Report”) I, Edward Schultz, Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
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(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Date: August 12, 2026 |
By: |
/s/ Edward Schultz |
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Edward Schultz |
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|
Chief Financial Officer |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.