CAPS · Capstone Holding Corp.

Capstone Holding Corp. has entered into a material agreement with its institutional investor, 3i, LP, to modify the terms of an existing convertible note. The agreement, executed via a Conversion Price Voluntary Adjustment Notice, reduces the conversion price on a specified portion of the note's principal, potentially making conversion into common stock more attractive to the investor. This adjustment is part of the ongoing relationship established under a securities purchase agreement from July 2025, which authorized up to $10.9 million in convertible notes. The specific note in question, issued in October 2025, had its conversion price previously reduced from $1.10 to $0.75 for a certain amount; this new agreement further reduces the price to $0.57 for $500,000 of principal. The conditions precedent, including board approval and transfer agent verification, indicate procedural safeguards. For investors, this action may signal ongoing financing negotiations and potential future equity dilution, as the company had previously registered over 8.3 million shares for conversion of these notes. The agreement is governed by New York law and is integrated with the existing transaction documents.