Capstone’s financing tweak speeds access to $20M facility, raises dilution risk

Rhea-AI Filing Summary

Capstone Holding (Nasdaq: CAPS) filed an 8-K announcing a first amendment to its May 14 2025 common-stock purchase agreement with Tumim Stone Capital.

• Raises the single VWAP Purchase limit to $3 million (from $2 million)
• Eliminates the 100% five-day average volume restriction; new ceiling is the lesser of 40% same-day volume or $3 million divided by prior-day VWAP
• Aggregate facility size remains up to $20 million; shares still priced at 97% of the lowest three-day VWAP

The amendment provides faster, larger draws for working-capital needs but may accelerate dilution and trading pressure because more shares can be issued below market in a single transaction.

Positive

• Amendment increases maximum cash per draw from $2 million to $3 million, enhancing near-term liquidity
• Removal of volume cap allows quicker access to the remaining $20 million equity line

Negative

• Accelerated draw capacity could result in greater share dilution at a 3% discount to market
• Permitting sales up to 40% of daily volume may pressure CAPS share price during draw periods

Insights

Financial Analyst

TL;DR: Liquidity up, dilution risk up—net neutral.

The larger $3 million draw and removal of the volume cap materially improve funding flexibility, letting management tap the $20 million facility in fewer transactions and at a predictable 3% discount. This is helpful if cash burn accelerates or opportunistic growth projects arise. However, the same features heighten dilution: each VWAP Purchase can now equal up to 40% of daily volume, intensifying supply and potentially suppressing price momentum. Because aggregate proceeds stay unchanged and no draw is mandatory, the amendment’s value hinges on capital deployment discipline. With no immediate financial metrics disclosed, the overall effect is balanced—better liquidity countered by faster dilution potential.

Capital Markets Specialist

TL;DR: Facility maturity unchanged; execution dynamics shifted.

Structurally, the amendment makes the equity line more issuer-friendly. It removes the historical liquidity throttle tied to 5-day volumes and upsizes the per-draw cap by 50%. Investors should note that Tumim Stone’s obligation is unchanged—still capped at $20 million—so credit exposure does not increase. Yet the market-impact coefficient rises: issuing up to 40% of daily volume can create short-term order-book imbalance. The 97% VWAP formula limits price protection to a modest 3%, so Tumim may hedge aggressively, exacerbating pressure. Strategic takeaway: management secured a faster on-ramp to capital, but trading volatility could follow if draws are frequent.

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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): June 26, 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, $0.0005 par value		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 1.01. Entry into a Material Definitive Agreement.

As previously disclosed in Item 5 of the Quarterly Report on Form 10-Q for the period ended March 31, 2025 filed with the Securities and Exchange Commission on May 15, 2025, Capstone Holding Corp. (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) $20,000,000 in aggregate gross purchase price of the Company’s common stock (the “Equity Line Securities”) and (b) the Exchange Cap (as defined in the Purchase Agreement). The Equity Line Securities to be issued by the Company and purchased by the Equity Line Investor, if any, will be sold at a purchase price equal to 97% of the lowest daily volume-weighted average price of the Company’s common stock on the Nasdaq Capital Market during the three consecutive trading days immediately following the trading date on which a valid purchase notice is delivered to the Equity Line Investor by the Company.

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 100% of the five-day average trading volume, and (b) increase the dollar-based limitation on the number of Equity Line Securities that may be purchased pursuant to a single VWAP Purchase from $2 million to $3 million. As amended, the term “VWAP Purchase Maximum Amount” now means the maximum number of Equity Line Securities that can be purchased in a single VWAP Purchase is equal to the lesser of (a) 40% of the trading volume in the Company’s common stock on the relevant exchange on the day the VWAP Purchase is exercised, or (b) $3 million divided by the volume-weighted average price of the common stock on the trading day immediately preceding the date the VWAP Purchase is exercised.

The foregoing description of the First Amendment to Purchase Agreement is qualified in its entirety by reference to the full text of such agreement filed as Exhibit 10.1 hereto, which is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Exhibits
10.1		First Amendment to Common Stock Purchase Agreement, dated June 26, 2025, by and between Capstone Holding Corp. and Tumim Stone Capital, LLC
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

1

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: June 27, 2025	Capstone Holding Corp.
	By:	/s/ Matthew E. Lipman
	Name:	Matthew E. Lipman
	Title:	Chief Executive Officer

2

FAQ

How much can Capstone (CAPS) now sell in a single VWAP Purchase?

Up to the lesser of $3 million or 40% of that day’s trading volume.

What is the total size of Capstone’s equity line facility after the amendment?

The aggregate limit remains unchanged at $20 million.

At what discount will Tumim Stone Capital purchase CAPS shares?

Shares are priced at 97% of the lowest daily VWAP during the three days after a purchase notice (a 3% discount).

Does the amendment obligate Capstone to issue additional shares immediately?

No. The company still has the right, but not the obligation, to draw on the facility.

Why could the amendment increase dilution risk for CAPS shareholders?

Larger, faster draws enable more shares to be issued below market in a single day, potentially expanding the share count more quickly.