Capstone Holding Corp.

We are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 1.01 Entry into a Material Definitive Agreement.

On May 14, 2025, the Company entered into a common stock purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with an accredited investor (the “Equity Line Investor”). 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 Financing”).

The shares of common stock to be issued by the Company and purchased by the Equity Line Investor will be sold at a purchase price equal to 97% of the lowest daily volume-weighted average price of the 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.

Consistent with certain applicable Nasdaq rules, the Company may not issue to the Equity Line Investor more than 1,038,050 shares of its common stock (the “Exchange Cap”) under the Purchase Agreement, which number of shares is equal to 19.99% of the shares of the Company’s common stock issued and outstanding immediately prior to the execution of the Purchase Agreement, unless the Company obtains stockholder approval to issue shares of its common stock in excess of such limit in accordance with applicable rules of Nasdaq.

Moreover, the Company may not issue or sell any shares of common stock to the Equity Line Investor which, when aggregated with all other shares of common stock then beneficially owned by the Equity Line Investor and its affiliates (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated thereunder), would result in the Equity Line Investor beneficially owning more than 4.99% of the issued and outstanding shares of common stock, unless such limit is increased or waived by the Equity Line Investor.

As consideration for the Equity Line Investor’s irrevocable commitment to purchase shares of common stock, upon execution of the Purchase Agreement, the Company became obligated to issue to the Equity Line Investor a number of shares of common stock equal to $400,000 divided by the lower of (i) the Nasdaq official closing price on the trading day immediately prior to the Company’s initial filing of the registration statement, or (ii) the average Nasdaq official closing price over the five consecutive trading days ending on the day immediately prior to such filing (the “Commitment Shares”). The Commitment Shares are to be issued following the effective date of the registration statement. In certain circumstances, the Company may become obligated to pay to the Equity Line Investor a cash fee equal to $400,000 in lieu of issuing such shares of common stock, under the terms and subject to the conditions described in the Purchase Agreement.

The Purchase Agreement provides customary representations, warranties, and covenants of the Company and the Equity Line Investor.

Pursuant to the Registration Rights Agreement, the Company agreed to file a resale registration statement covering the resale of the Equity Line Securities with the Securities and Exchange Commission (the “SEC”) within 30 calendar days after the date of the Registration Rights Agreement (the “Filing Deadline”), and to use commercially reasonable efforts to cause such resale registration statement to be declared effective by the SEC as soon as reasonably practicable following the filing thereof, no later than (i) with respect to the initial registration statement, the earlier of (A) the seventy-fifth (75th) calendar day after the earlier of (1) the date on which the initial registrations statement is filed and (2) the Filing Deadline, if such registration statement is subject to review by the SEC, and (B) the thirtieth (30th) calendar day after the earlier of (1) the date on which the initial registration statement is filed and (2) the Filing Deadline, if the Company is notified by the SEC that such registration statement will not be reviewed; and (ii) with respect to any subsequent registration statements that may be required to be filed by the Company, the earlier of (A) the sixtieth (60th) calendar day following the date on which the Company was required to file such additional registration statement, if such registration statement is subject to review by the SEC, and (B) the thirtieth (30th) calendar day following the date on which the Company was required to file such subsequent registration statement, if the Company is notified by the SEC that such registration statement will not be reviewed.

The foregoing descriptions of the Purchase Agreement and Registration Rights Agreement are qualified in its entirety by reference to the Purchase Agreement and the Registration Rights Agreement, forms of which are filed as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.

Insider trading arrangements and policies.

During the quarter ended March 31, 2025, no director or officer of the Company adopted orterminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.