Capstone Holding Corp.
For the period ended Jun 30, 2025. Filed Aug 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 15, 2025
CAPS$1.90+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-044408
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-15.
0001213900-25-077016
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 68 previous paragraphs and 86 current paragraphs.
49 unchanged; 18 reworded; 18 added; 1 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Equity Line of Credit
Current report
On May 14, 2025, we entered into a purchase agreement with the Equity Line Investor (as defined in Note 9 to the consolidated financials statements included in this Quarterly Report), pursuant to which the Equity Line Investor committed to purchase up to $20.0 million in shares of our Common Stock, subject to certain limitations and conditions as described in Note 4.
Current report
On June 26, 2025, the Company and the Equity Line Investor entered into a first amendment to the Purchase Agreement as described in Note 9 to the consolidated financials statements included in this Quarterly Report.
Current report
Convertible Note Financing
Current report
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 $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 “Convertible Note Financing”). 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 Company received gross proceeds of $3,000,000, prior to the deduction of transaction related expenses, from the initial closing of the Convertible Note Financing. Concurrently with the Convertible Note Financing and the Purchase Agreement, the Company entered into a registration rights agreement and a security agreement with the Buyer.
Current report
The decrease in cost of goods sold was driven primarily by product mix, lower outbound freight, and lower landed cost goods.
Current report
Other expenses, net, increased by $46.0 thousand, or 12%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase is largely attributed the amortization of debt costs related to our Mezzanine Term Loan.
Current report
Results of Operations Comparing Six Months Ended June 30, 2025 to 2024.
Current report
Sales
Current report
Sales were $20.7 million for the six months ended June 30, 2025 compared to $22.2 million for the six months ended June 30, 2024. Revenue decreased between the six months ended June 30, 2025 and 2024 by $1.5 million.
Current report
Cost of goods sold
Current report
Cost of goods sold decreased by $1.4 million, or 8%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
Current report
The decrease in cost of goods sold was driven primarily by product mix, lower outbound freight, and lower landed cost goods.
Current report
Gross profit margin increased from 20.3% for the six months ended June 30, 2024 to 21.5% for the six months ended June 30, 2025. The increase in gross profit margin was primarily driven by product mix, lower outbound freight, and lower landed cost goods.
Current report
Selling general and administrative expenses
Current report
Interest and other expense
Current report
Income Tax Expense
Current report
Income tax expense decreased by $17.0 thousand or 100% for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Removed paragraphs (1)
Previous report
The decrease in cost of goods sold was driven primarily by lower volumes and higher fixed freight costs. We experienced lower volumes on our veneer products with a slight increase in volume on our landscape products.
Reworded paragraphs (18)
Previous wording
We operate in a market environment where there are about 7,000 building products dealers, most of which are privately held. Many of these dealers are not able to efficiently purchase or optimize storage space, which constrains their ability to sell the diverse range of products we offer. Our website enables dealers to buy in the quantities they require thus driving a more optimal level of inventory while also significantly reducing logistical challenges. We believe the ability for customers to buy in the quantities they need across many product lines instead of buying single product lines form different manufacturers helps them manage cash and, in turn, allows them to offer a higher level of service to their own customers. According to a December 2023 study jointly released by the management consulting firm, Roland Berger, and the financial advisory firm, Lazard, “Trends in the Building Envelope Industry,” the sector has recently grown by 5 – 7%. Given the recent peak of the interest rate cycle constraining the revenue of building products companies (due to fewer housing starts and less commercial construction) we believe current conditions are the ideal backdrop for us to execute value-creating, accretive acquisitions.
Current wording
We operate in a market environment where there are about 7,000 building products dealers, most of which are privately held. Many of these dealers are not able to efficiently purchase or optimize storage space, which constrains their ability to sell the diverse range of products we offer. Our website enables dealers to buy in the quantities they require thus driving a more optimal level of inventory while also significantly reducing logistical challenges. We believe the ability for customers to buy in the quantities they need across many product lines instead of buying single product lines form different manufacturers helps them manage cash and, in turn, allows them to offer a higher level of service to their own customers.
Previous wording
The following is management’s discussion of the Company’s consolidated financial statements and results of operations for the three months ended March 31, 2025 and 2024 in thousands:
Current wording
The following is management’s discussion of the Company’s consolidated financial statements and results of operations for the three and six months ended June 30, 2025 and 2024 in thousands:
Previous wording
Sales were $7.9 million for the three months ended March 31, 2025 compared to $9.4 million for the three months ended March 31, 2024. Revenue decreased between the three months ended March 31, 2025 and 2024 by $1.5 million.
Current wording
Sales were $12.9 million for the three months ended June 30, 2025 compared to $12.9 million for the three months ended June 30, 2024. Revenue slightly decreased between the three months ended June 30, 2025 and 2024 by $34.0 thousand.
Previous wording
Cost of goods sold decreased by $1.0 million, or 14%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Current wording
Cost of goods sold decreased by $400.0 thousand, or 4%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Previous wording
Gross profit margin decreased from 18.6% for the three months ended March 31, 2024 to 16.8% for the three months ended March 31, 2025. The decrease in gross profit margin was primarily driven by lower volumes and higher fixed freight costs.
Current wording
Gross profit margin increased from 21.4% for the three months ended June 30, 2024 to 24.4% for the three months ended June 30, 2025. The increase in gross profit margin was primarily driven by product mix, lower outbound freight, and lower landed cost goods.
Previous wording
Selling general and administrative expenses increased by $291.0 thousand, or 12.0%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase results primarily from an increase in investor relations of $172.0 thousand and audit and legal fees of $111.0 thousand.
Current wording
Selling general and administrative expenses increased by $640.0 thousand, or 23.0%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase results primarily from an increase in investor relations of $510.0 thousand.
Previous wording
Income tax expense decreased by $16.0 thousand or 100% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease is largely attributed to financial performance.
Current wording
Income tax expense decreased by $1.0 thousand or 100% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Previous wording
The first quarter of 2025 was slower due to challenging economic conditions attributable to trade policies, interest rates, concerns about inflation as well as colder winter temperatures experienced when compared to prior year.
Current wording
Sales decreased in 2025 due to colder winter temperatures experienced when compared to prior year, along with challenging economic conditions attributable to trade policies, interest rates, and concerns about inflation.
Previous wording
The majority of decline was driven by lower volumes in our veneer products resulting in $1.3 million in lower revenues.
Current wording
The majority of the decline was driven by lower volumes in our veneer products resulting in $2.4 million in lower revenues; offset by an increase in our landscaping products of $760.0 thousand.
Previous wording
Other expenses, net, decreased by $80.0 thousand, or 21%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease consists of lower interest expense of $80.0 thousand, largely attributed to our revolving line of credit.
Current wording
Other expenses, net, decreased by $34.0 thousand, or 4%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease is primarily attributed to our revolving line of credit.
Previous wording
Working capital was $2.1 million as of March 31, 2025, an increase of $1.9 million as compared to $250.0 thousand as of December 31, 2024. The increase in working capital is primarily attributable to an increase in accounts receivable and cash and a reduction in the current portion of long-term debt; offset by an increase in accounts payable and our revolving line of credit.
Current wording
Working capital excluding the current portion of long-term debt was $2.5 million and $2.1 million as of June 30, 2025 and December 31, 2024, respectively. The $400.0 thousand increase in working capital is primarily attributable to an increase in accounts receivable and cash; offset by an increase in our revolving line of credit.
Previous wording
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 March 31, 2025, the Company was not in compliance with the Revolver’s financial covenant which has not been waived as of the issuance date of these interim consolidated financial statements. In April 2025, the Company executed an amendment to the Revolver that extended the maturity date from April 2025 to June 2025. The Company and the lender are working on a longer-term extension to the Revolver and future financial covenants that the Company anticipates executing in June 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.
Current wording
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 June 30, 2025, the Company was in compliance with the Revolver’s financial covenant as of the issuance date of these interim consolidated financial statements. In June 2025, the Company executed an amendment to the Revolver that extended the maturity date from April 2025 to 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.
Previous wording
The liquidity of the Company is largely dependent on our ability to borrow funds on our Revolver. The longer-term extension of the Revolver and future compliance with financial covenants are subject to risks and uncertainties which could have a material adverse effect on our business, financial condition and results of operations. The Company currently believes that it will have sufficient working capital to operate for a period of at least one year from the issuance date of the March 31,2025 interim consolidated financial statements based on future expected results. Future acquisitions may be financed through other forms of financing that will depend on existing conditions
Current wording
The liquidity of the Company is largely dependent on our ability to borrow funds on our Revolver. The longer-term extension of the Revolver and future compliance with financial covenants are subject to risks and uncertainties which could have a material adverse effect on our business, financial condition and results of operations. The Company currently believes that it will have sufficient working capital to operate for a period of at least one year from the issuance date of the June 30,2025 interim consolidated financial statements based on future expected results. Future acquisitions may be financed through other forms of financing that will depend on existing conditions.
Previous wording
Net cash used in operating activities was $2.3 million for the three months ended March 31, 2025, primarily resulting from our net loss of $1.7 million and 674.0 thousand used in changes in our non-cash working and non-cash expenses.
Current wording
Net cash used in operating activities was $4.0 million for the six months ended June 30, 2025, primarily resulting from our net loss of $2.4 million and $1.8 million used in changes in our non-cash working capital and non-cash expenses.
Previous wording
Net cash used in operating activities was $1.2 million for the three months ended March 31, 2024, primarily resulting from our net loss of $1.1 million.
Current wording
Net cash used in operating activities was $1.1 million for the six months ended June 30, 2024, primarily resulting from our net loss of $1.5 million; offset by $117.0 thousand provided by changes in our non-cash working and non-cash expenses.
Previous wording
There were no cash flows used in investing activities for three months ended March 31, 2025 compared to $100.0 thousand for the three months ended March 31, 2024. These cash outflows were related to purchases of property and equipment.
Current wording
Net cash used in investing activities was $2.0 thousand for six months ended June 30, 2025 compared to $121.0 thousand for the six months ended June 30, 2024. These cash outflows were related to purchases of property and equipment.
Previous wording
Net cash provided by financing activities was $4.0 million for the three months ended March 31, 2025. The cash inflow was a result of funds received from our public offering of $3.3 million and a net increase in our line of credit of $1.5 million, offset by the repayment of term debt of $910.0 thousand. Net cash provided by financing activities was $1.3 million for the three months ended March 31, 2024. The cash inflow was a result of a $1.6 million net increase in our line of credit, offset primarily by the repayment of term debt of $250.0 thousand.
Current wording
Net cash provided by financing activities was $4.8 million for the six months ended June 30, 2025. The cash inflow was a result of funds received from our public offering of $3.3 million and a net increase in our line of credit of $2.5 million, offset by the repayment of term debt of $910.0 thousand. Net cash provided by financing activities was $1.3 million for the six months ended June 30, 2024. The cash inflow was a result of a $1.8 million net increase in our line of credit, offset primarily by the repayment of term debt of $500.0 thousand.
Previous wording
The Company plans to raise additional funds to finance the growth of our operations through equity financing or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted.
Current wording
The Company, as described in Note 9 to the consolidated financials statements included in this Quarterly Report and in the Recent Developments section of this Management’s Discussion and Analysis, received $3 million in gross proceeds pursuant to the Convertible Note Financing. In addition, as described in Note 4, the Company may receive up to $20.0 million from the sale of the Equity Line Securities to the Equity Line Investor. The Company plans to raise additional funds to finance the growth of our operations through equity financing or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Selling general and administrative expenses increased by $932.0 thousand, or 18.0%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase results primarily from an increase in investor relations of $681.0 thousand.