CAPS Issues Convertible Notes with $1.72 Conversion Price and 8.34% OID

Rhea-AI Filing Summary

Capstone Holding Corp. entered into a securities purchase agreement to issue senior secured convertible notes in an aggregate original principal amount of up to $10,909,885. The notes carry an 8.34% original issue discount and are convertible into the company's common stock, $0.0005 par value, at an initial conversion price of $1.72 per share. The first note issued had an original principal amount of approximately $3,272,966.

The structure provides immediate financing through secured convertible debt while allowing conversion into equity under specified terms. Key contractual terms disclosed include the aggregate principal cap, the original issue discount, the initial conversion price, and that the notes are senior and secured.

Positive

• Authorizes up to $10,909,885 in senior secured convertible notes, providing access to new capital.
• First tranche issued (~$3,272,966), indicating immediate funding availability under the agreement.
• Convertible feature at a fixed $1.72 conversion price gives clear terms for potential equity conversion.

Negative

• Notes issued with an 8.34% original issue discount, which reduces net proceeds relative to principal amount.
• Debt is senior and secured, which prioritizes repayment over unsecured creditors and could affect capital structure.

Insights

Securities Analyst

TL;DR: Company secured up to $10.91M of senior secured convertible notes with an 8.34% OID and $1.72 conversion price.

The transaction represents a material financing event: up to $10,909,885 of senior secured convertible notes were authorized, with the first note at about $3,272,966. The 8.34% original issue discount increases the effective cost of the financing and lowers proceeds relative to face value. The $1.72 conversion price fixes the equity conversion mechanics and will determine the number of shares issuable upon conversion. As disclosed, the notes are secured and senior, which affects creditor priority compared with unsecured obligations.

Corporate Finance Specialist

TL;DR: This is a secured convertible-debt financing that provides liquidity now with a path to equity conversion at a set price.

The agreement provides the company with immediate access to capital via senior secured convertible notes up to $10,909,885. The 8.34% OID indicates the notes were issued at a discount to par, reducing upfront cash proceeds relative to principal amount. The initial conversion price of $1.72 specifies conversion economics and will be central to any future equity issuance tied to these instruments. The filing discloses transaction mechanics but does not include use of proceeds or dilution estimates.

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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): August 14, 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 1.01. Entry into a Material Definitive Agreement.

As previously disclosed, on July 29, 2025, Capstone Holding Corp. (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 $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 (the “Conversion Price)”.

Pursuant to an effective registration statement on Form S-1 (File No. 333-289222), the Company registered 4,081,672 shares of Common Stock issuable upon conversion of the Convertible Notes.

On August 14, 2025, pursuant to Section 7(h) of the Note, the Company and the Buyer agreed, pursuant to a Conversion Price Voluntary Adjustment Notice signed by both parties, to reduce the Conversion Price of the Note to $1.00 starting on August 15, 2025 through the maturity date of the Note. The Buyer may not convert more than $1,363,736 of principal amount of the Note at the new Conversion Price of $1.00.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Exhibits
10.1		Conversion Price Voluntary Adjustment Notice
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: August 15, 2025	Capstone Holding Corp.
	By:	/s/ Matthew E. Lipman
	Name:	Matthew E. Lipman
	Title:	Chief Executive Officer

2

FAQ

What financing did Capstone Holding Corp. (CAPS) announce in this 8-K?

The company authorized senior secured convertible notes in an aggregate original principal amount of up to $10,909,885 and issued a first note of approximately $3,272,966.

What is the original issue discount on the convertible notes?

The convertible notes are being issued with an 8.34% original issue discount.

At what price are the convertible notes convertible into CAPS common stock?

The notes are convertible into common stock at an initial conversion price of $1.72 per share.

Are the convertible notes secured or unsecured?

The disclosure describes the instruments as senior secured convertible notes.

How much was the first convertible note issued for?

The first convertible note was issued in the original principal amount of approximately $3,272,966.