SecProbe.io

November 4, 2024
Matthew Lipman
Chief Executive Officer
Capstone Holding Corp.
5141 W. 122nd Street
Alsip, IL 60803
Re:Capstone Holding Corp.
Draft Registration Statement on Form S-1
Submitted October 8, 2024
CIK No. 0000887151
Dear Matthew Lipman:
            We have reviewed your draft registration statement and have the following
comment(s).
            Please respond to this letter by providing the requested information and either
submitting an amended draft registration statement or publicly filing your registration
statement on EDGAR. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing the information you provide in response to this letter and your
amended draft registration statement or filed registration statement, we may have additional
comments.
Draft Registration Statement on Form S-1 submitted October 8, 2024
Cover Page
1.Here and elsewhere as appropriate, please disclose that you will be considered a
"controlled company" following this offering under Nasdaq listing standards, if true.
If this is the case, please also disclose whether you intend to rely on the exemptions to
corporate governance requirements as a controlled company.
2.Please disclose here that BP Peptides, LLC, a related party, will have the ability to
control all matters requiring shareholder approval, if true. Also disclose their percent
voting power and the natural persons, namely, your chief executive officer and
chairman, who control BP Peptides, LLC.

November 4, 2024
Page 2
Business Overview, page 1
3.Please clarify what you mean by the following statement in the fourth paragraph in
this sub-section: "Over financial cycles the sector has grown by 5-7%, with the peak
of the interest rate cycle providing the ideal backdrop to execute value-creating,
accretive acquisitions."
Our Business Strategy and Operating Model, page 1
4.Please revise here and on page 38 to provide support for your statement that your
team has a "a proven track record of identifying, acquiring and building successful
building products companies." Similarly revise to provide support for your statement
on page 41 that your management team has a "proven track record of driving growth
and delivering results."
5.Here and elsewhere in the prospectus, such as on pages 38 and 39, please explain
what you mean when you state that you intend to expand your "market leadership."
TotalStone, LLC, page 2
6.Here and elsewhere, where you disclose that you have a controlling interest in
TotalStone, please disclose the percentage interest you hold.
Risk Factors, page 13
7.Please revise this section to provide a risk factor addressing the risks associated with
future issuances of securities with rights that are superior to the rights of holders of
your common stock (e.g., superior voting rights).
8.Please revise to provide a risk factor addressing whether you have been able to
historically retain your clients and attract new clients. To the extent that the loss of
any particular client(s) would have a material impact on your results of operations,
please disclose the client(s) and discuss your dependence on this client(s). To this
extent, we note your disclosure on page 31 that you have over 620 customers, and
your disclosure on page 41 that you have 350 active and recurring customers. Please
revise to clarify what figure properly represents current customers, and if your figure
citing 620 customers refers to total number of customers historically, please state as
much.
Risk Factors
Risks related to our securities
Capstone Holding Corp. is a holding company ... , page 21
9.You disclose here you are a holding company with no operations of your own, your
operations are conducted entirely through your subsidiaries and your ability to
generate cash for the noted items is highly dependent on funds from your subsidiaries.
In view of this, please explain to us your consideration of Rules 4-08(e), 5-04(c)
Schedule I and 12-04 of Regulation S-X.

November 4, 2024
Page 3
Use of Proceeds, page 26
10.Please revise to disclose the amount, by percentage, of proceeds that will be used for
each intended purpose disclosed here. Refer to Item 504 of Regulation S-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations,
page 31
11.Please provide support for, or explain what you mean by, your statement that your
"sales and marketing tools are industry leading."
Results of Operations, page 32
12.Please quantify each factor cited in your explanations of period-to-period variances
for annual and interim periods. For example, between the annual periods 2023 and
2022, you state revenue for your owned and controlled brands was down $4.8 million
driven by price reductions and offset by a slight increase in volume, and for your other
brands revenue was down $8.4 million primarily attributed to price reductions and
lower volume. Refer to the guidance in Item 303(b) of Regulation S-K and section
III.D of Release No. 33-6835 (501.04 of our Codification of Financial Reporting
Policies).
13.Please disclose the reason for the decrease in your profit margin in the latest annual
and interim periods relative to the corresponding prior periods.
14.In your explanation of the change in sales between the interim periods, it appears the
third paragraph under "Sales" on page 34 is a copy of the explanation for the annual
period comparison. Please revise for the interim period as appropriate.
Liquidity and Capital Resources, page 34
15.You state in the third paragraph hereunder you believe cash provided from operations
in 2024, in addition to cash from other sources, will be sufficient to satisfy your cash
requirements for at least the next 12 months. For the six months ended June 30, 2024
you report cash used in operations. Please discuss why you believe cash will be
provided from operations in 2024. Refer to Item 303(a), (b) and (b)(1).
Critical Accounting Policies and Significant Judgments and Estimates
Goodwill and Other Intangible Assets, page 36
16.Goodwill comprises approximately 44% and 43% of total assets as of December 31,
2023 and June 30, 2024, respectively. It appears any impairment charges that may be
required could have a material impact on your results of operations. Please
significantly revise your discussion of your policy for assessing goodwill for
impairment to include qualitative and quantitative information necessary to
understand the estimation uncertainty and how it relates to required impairment
testing and assessment of the necessity of an impairment test for both annual and
interim periods. Include in this discussion how you considered your loss from
operations position for the year ended December 31, 2023 and interim period ended
June 30, 2024, as well as your accumulated deficit and total equity at these respective
dates in your assessment of whether an impairment test was necessary. Refer to the
guidance in Item 303(b)(3) of Regulation S-K.

November 4, 2024
Page 4
Business, page 38
17.We note your disclosure that Instone is your current operating platform, which is
integral to your business strategy and competitive edge. Please revise to provide a
discussion of this platform, including how the platform operates, how it is accessed by
customers, distribution methods of the products or services, and any other detail
material to an understanding of this platform. Refer to Item 101(h) of Regulation S-K.
18.Please provide support for your statement that your management team has a "proven
track record of driving growth and delivering results" on page 41.
19.Where you discuss your market share, please revise to disclose what your market
share is, if known.
20.We note your disclosure on page 15 referring to your intellectual property rights.
Please disclose here the intellectual property you hold and the duration and effect of
such intellectual property. Refer to Item 101 of Regulation S-K.
21.We note your disclosure on page 43 regarding regulatory and environmental matters.
Please revise this section to disclose (a) your need for any government approval of
principal products or services, and if government approval is necessary, that you have
not yet received that approval, and discuss the status of the approval within the
government approval process; (b) the effect of existing or probable governmental
regulations on your business; and (c) costs and effects of compliance with
environmental laws. Refer to Item 101(h)(4)(viii), (ix), and (xi) of Regulation S-K.
Item 1. Business
TotalStone, LLC
Future TotalStone Equity Interests Transactions, page 45
22.There are several equity transactions detailed here that appear will impact your
ownership structure and capitalization post offering. Please tell us how you plan to
reflect the pro forma impact of these transactions in "Capitalization." Also explain to
us whether there is a basis for these transactions to impact the historical financial
statements included in the filing.
Security Ownership of Certain Beneficial Owners and Management, page 53
23.Please increase the holdings for Lipman and Toporek to reflect the holdings of BP
Peptides, LLC as well. In this regard, we note that by virtue of their roles with BP
Peptides, LLC each would appear to beneficially own BP Peptides, LLC's holdings for
reporting purposes. In addition, please revise footnote 5 to disclose the percent
ownership interest Lipman and Toporek each have in BP Peptides, LLC.
Consolidated Financial Statements of Capstone Holding Corp. as of December 31, 2023
Notes to Consolidated Financial Statements
Note 6 - Investment in Non-Marketable Securities, page F-11
You disclose here that on November 16, 2023 you transferred 100% of your
ownership in DPH to a third party and, as a result, you wrote-off in full your $8.0
million investment in DPH and wrote-down its debt liability to $800.0 thousand plus
interest. Please tell us whether:24.

November 4, 2024
Page 5
•the third party assumed the associated $7.2 million in debt liability and whether
any other consideration was transferred;
•our understanding is correct that the $800.0 thousand represents limited payment
guaranty of Beta's promissory note to Brookstone XXI. If correct, tell us and
disclose what, if any, assets now secure this liability.

General
25.Throughout the prospectus where you disclose that you are controlled by a private
equity group, please disclose that this group is Brookstone Partners, which is
controlled by your chief executive officer, Matthew Lipman, and your chairman,
Michael Toporek.
26.Please provide us with supplemental copies of all written communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your
behalf, present to potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they retain copies of the communications.
27.Where you discuss that you own or control over 50% of the brands you sell, please
also disclose that this reflects five out of eight brands, if true.
28.Throughout the prospectus, where you disclose that you are strategically positioned
to capitalize on market conditions, please explain what you mean.
            Please contact Amy Geddes at 202-551-3304 or Doug Jones at 202-551-3309 if you
have questions regarding comments on the financial statements and related matters. Please
contact Jenna Hough at 202-551-3063 or Dietrich King at 202-551-8071 with any other
questions.
Sincerely,
Division of Corporation Finance
Office of Trade & Services
cc:Lawrence Metelitsa