UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 814-01399

Star Mountain Lower Middle-Market Capital Corp.

(Exact Name of Registrant as Specified in its Charter)

Delaware		86-3924884
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

140 E. 45th Street, 37th Floor New York, NY		10017
(Address of Principal Executive Office)		(Zip Code)

(212) 810-9044

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
None	N/A	N/A

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and, (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting-company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 14, 2025, the registrant had 10,026,043 shares of common stock, $0.001 par value, outstanding.

Table of Contents

		Page
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of June 30, 2025 (Unaudited) and December 31, 2024	2
	Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (Unaudited)	3
	Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2025 and 2024 (Unaudited)	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)	5
	Consolidated Schedules of Investments as of June 30, 2025 (Unaudited) and December 31, 2024	6
	Notes to Consolidated Financial Statements (Unaudited)	16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 4.	Controls and Procedures	51

Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
Signatures		53

Table of Contents

Part I. Financial Information

Item 1.

Financial Statements.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Assets and Liabilities

	June 30, 2025 (unaudited)			December 31, 2024
ASSETS
Non-controlled/non-affiliate investments at fair value (amortized cost of $313,666,345 and $325,265,220 as of June 30, 2025 and December 31, 2024, respectively)	$	303,816,494		$	326,959,520
Controlled/affiliate investments at fair value (amortized cost of $53,680,357 and $52,910,374 as of June 30, 2025 and December 31, 2024, respectively)		52,490,572			50,680,798
Cash		7,880,983			4,028,665
Interest receivable		4,714,443			3,887,028
Deferred financing cost		1,845,836			2,169,211
Paydown receivable		1,828,526			341,471
Other receivable		1,182,154			-
Receivable for investments sold		367,810			-
Prepaid expenses		34,638			6,748
Total assets		374,161,456			388,073,441

LIABILITIES

Credit facility payable		108,700,000			122,500,000
Redemptions payable		5,955,830			5,637,890
Incentive fees payable (Note 6)		4,955,762			2,813,724
Deferred tax liabilities		4,384,229			6,094,196
Credit facility interest payable		2,307,297			2,267,199
Management fees payable (Note 6)		1,460,804			1,157,509
Professional fees payable		624,732			434,744
Taxes payable		391,259			-
Reimbursement expense payable		156,006			77,275
Distributions payable		78,358			5,322,771
Legal fees payable		66,935			37,883
Subscriptions received in advance		32,500			-
Other payable		-			900,145
Total liabilities		129,113,712			147,243,336

Commitments and contingencies (Note 11)

Net assets	$	245,047,744		$	240,830,105

NET ASSETS
Common shares, $0.001 par value (200,000,000 shares authorized, 10,026,343 and 9,857,301 shares issued and outstanding as of June 30, 2025 and December 31, 2024 respectively)	$	10,027		$	9,858
Additional paid-in capital		250,792,551			246,622,366
Accumulated undistributed (overdistributed) earnings		(5,754,834	)		(5,802,119	)
Total net assets	$	245,047,744		$	240,830,105

Net asset value per share	$	24.44		$	24.43

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Operations

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2025			2024			2025			2024
Non-controlled/non-affiliate investment income:
Interest income	$	8,485,427		$	9,369,453		$	16,519,615		$	20,110,443
PIK interest income		668,499			1,000,515			1,508,387			2,425,954
Dividend income		467,432			328,497			688,739			328,497
Other income		259,042			35,816			437,229			173,344
Controlled/affiliate investment income:
Interest income		583,029			732,350			1,445,338			840,076
PIK interest income		213,641			92,701			425,077			137,804
Other income		32,860			-			32,860			-
Total investment income:		10,709,930			11,559,332			21,057,245			24,016,118

Operating expenses:
Interest and other financing fees		1,298,543			3,363,310			3,840,320			7,104,501
Incentive fees (Note 6)		1,275,636			1,118,488			2,142,038			2,344,006
Management fees (Note 6)		1,173,157			1,076,579			2,360,804			2,228,646
Professional fees		411,817			424,727			1,009,862			805,079
General and administrative fees		230,036			183,021			490,416			313,042
Legal expenses		106,960			114,189			193,020			195,707
Director expenses		35,000			23,620			70,000			47,240
Total expenses		4,531,149			6,303,934			10,106,460			13,038,221
Net investment income before taxes		6,178,781			5,255,398			10,950,785			10,977,897
Income tax expense		165,000			-			722,415			-
Net Investment Income		6,013,781			5,255,398			10,228,370			10,977,897

Net gain (loss):
Net realized gain (loss):
Non-controlled/non-affiliate investments		2,488,217			2,034,517			4,352,098			2,034,517
Net realized gain (loss) on investments		2,488,217			2,034,517			4,352,098			2,034,517

Net change in unrealized gain (loss):
Non-controlled/non-affiliate investments		(6,267,639	)		(1,166,412	)		(11,544,151	)		(4,099,607	)
Controlled/affiliate investments		643,864			(6,151,759	)		1,039,791			(6,536,289	)
Net change in unrealized gain (loss) on investments		(5,623,775	)		(7,318,171	)		(10,504,360	)		(10,635,896	)

Net gain (loss)		(3,135,558	)		(5,283,654	)		(6,152,262	)		(8,601,379	)

Benefit (provision) for taxes on change in unrealized appreciation (depreciation) on investments		1,760,115			-			1,709,967			-

Net increase (decrease) in net assets resulting from operations	$	4,638,338		$	(28,256	)	$	5,786,075		$	2,376,518

Per common share data:
Net investment income per share - basic and diluted	$	0.60		$	0.66		$	1.10		$	1.39
Net increase (decrease) in net assets resulting from operations per share - basic and diluted	$	0.30		$	0.00		$	0.48		$	0.30
Weighted average shares outstanding - basic and diluted		10,056,451			8,021,264			9,992,201			7,892,789

See accompanying note.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Changes in Net Assets

(Unaudited)

	Common Stock									Accumulated undistributed
For the three months ended June, 2024	Number of shares			Par value of shares			Additional paid- in capital			(overdistributed) earnings			Total net assets
Balance, March 31, 2024		7,615,428		$	7,616		$	189,822,985		$	1,322,530		$	191,153,131
Net investment income		-			-			-			5,255,398			5,255,398
Net realized gain (loss)					-			-			2,034,517			2,034,517
Net change in unrealized gain (loss) on investments		-			-			-			(7,318,171	)		(7,318,171	)
Issuance of common shares		813,199			813			20,200,937			-			20,201,750
Purchase of shares in repurchase offer		(190,664	)		(191	)		(4,648,362	)		-			(4,648,553	)
Distributions declared to stockholders					-			-			(5,899,259	)		(5,899,259	)
Stock issued in connection with dividend reinvestment plan		113,756			114			2,838,101			-			2,838,215
Balance, June 30, 2024		8,351,719		$	8,352		$	208,213,661		$	(4,604,985	)	$	203,617,028

For the three months ended June, 2025
Balance, March 31, 2025		9,710,243		$	9,711		$	243,003,489		$	(4,654,383	)	$	238,358,817
Net investment income		-			-			-			6,013,781			6,013,781
Net realized gain (loss)					-			-			2,488,217			2,488,217
Net change in unrealized gain (loss) on investments		-			-			-			(5,623,774	)		(5,623,774	)
Benefit (provision) for taxes on change in unrealized appreciation (depreciation) on investments		-			-			-			1,760,115			1,760,115
Issuance of common shares		445,341			445			10,935,073			-			10,935,518
Purchases of shares in repurchase offer		(242,757	)		(243	)		(5,932,715	)		-			(5,932,958	)
Distributions declared to stockholders					-			-			(5,738,790	)		(5,738,790	)
Stock issued in connection with dividend reinvestment plan		113,516			114			2,786,704			-			2,786,818
Balance, June 30, 2025		10,026,343		$	10,027		$	250,792,551		$	(5,754,834	)	$	245,047,744

	Common Stock									Accumulated undistributed
For the six months ended June, 2024	Number of shares			Par value of shares			Additional paid- in capital			(overdistributed) earnings			Total net assets
Balance, December 31, 2023		7,687,482		$	7,688		$	191,535,145		$	(1,082,244	)	$	190,460,589
Net investment income		-			-			-			10,977,897			10,977,897
Net realized gain (loss)					-			-			2,034,517			2,034,517
Net change in unrealized gain (loss) on investments		-			-			-			(10,635,896	)		(10,635,896	)
Issuance of common shares		813,199			813			20,200,937			-			20,201,750
Contribution receivable					-			110,891			-			110,891
Purchase of shares in repurchase offer		(382,851	)		(383	)		(9,472,114	)		-			(9,472,497	)
Distributions declared to stockholders					-			-			(5,899,259	)		(5,899,259	)
Stock issued in connection with dividend reinvestment plan		233,889			234			5,838,802			-			5,839,036
Balance, June 30, 2024		8,351,719		$	8,352		$	208,213,661		$	(4,604,985	)	$	203,617,028

For the six months ended June, 2025
Balance, December 31, 2024		9,857,301		$	9,858		$	246,622,366		$	(5,802,119	)	$	240,830,105
Net investment income		-			-			-			10,228,370			10,228,370
Net realized gain (loss)					-			-			4,352,098			4,352,098
Net change in unrealized gain (loss) on investments		-			-			-			(10,504,360	)		(10,504,360	)
Benefit (provision) for taxes on change in unrealized appreciation (depreciation) on investments		-			-			-			1,709,967			1,709,967
Issuance of common shares		445,341			445			10,935,073			-			10,935,518
Purchases of shares in repurchase offer		(498,990	)		(499	)		(12,223,001	)		-			(12,223,500	)
Distributions declared to stockholders					-			-			(5,738,790	)		(5,738,790	)
Stock issued in connection with dividend reinvestment plan		222,691			223			5,458,113			-			5,458,336
Balance, June 30, 2025		10,026,343		$	10,027		$	250,792,551		$	(5,754,834	)	$	245,047,744

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Cash Flows

(Unaudited)

	For the six months ended June 30,
	2025			2024
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	5,786,075		$	2,376,518
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized (gain) loss on investments		(4,352,098	)		(2,034,517	)
Net change in unrealized (gain) loss on investments		10,504,360			10,635,896
Net accretion of discounts and amortization of premiums		(1,444,728	)		(940,978	)
Purchases of investments		(25,732,737	)		(2,134,380	)
Proceeds from sales of investments		7,393,779			2,749,081
Proceeds from principal payments		35,043,274			46,038,238
Amortization of deferred financing costs		307,750			284,919
Payment-in-kind interest income		(1,933,464	)		(2,563,758	)
Changes in operating assets and liabilities:
Interest receivable		(827,415	)		(1,658,349	)
Other receivables		(1,182,154	)		-
Prepaid expenses		(27,890	)		-
Management fees payable (Note 6)		303,295			107,234
Incentive fees payable (Note 6)		2,142,038			(1,617,470	)
Credit facility interest payable		40,098			(588,870	)
Professional fees payable		189,988			(826	)
Deferred tax liabilities		(1,709,967	)		-
Other payables		(900,145	)		-
Taxes payable		391,259			(38,988	)
Legal fees payable		29,052			36,293
Reimbursement expense payable		78,732			41,774
Net cash provided by (used in) operating activities		24,099,102			50,691,817

Cash flows from financing activities:
Proceeds from issuance of common shares, including subscriptions received in advance		10,968,018			20,201,750
Payments in repurchase of shares		(11,905,560	)		(9,531,587	)
Proceeds from credit facility		33,700,000			6,000,000
Repayments of credit facility		(47,500,000	)		(49,000,000	)
Distributions paid		(5,524,867	)		(6,022,443	)
Deferred financing and debt issuance costs paid		15,625			(1,798,501	)
Net cash provided by (used in) financing activities		(20,246,784	)		(40,150,781	)

Net increase (decrease) in Cash		3,852,318			10,541,036
Cash, beginning of period		4,028,665			5,045,540
Cash, end of period	$	7,880,983		$	15,586,576

Supplemental disclosures of cash flow information:
Non cash operating activities:
Interest received in kind	$	1,933,464		$	2,563,758

Supplemental and non cash financing activities:
Shares issued from dividend reinvestment plan (see Note 10)	$	5,458,336		$	5,839,036

Supplemental Information:
Cash paid for interest	$	4,308,148		$	6,836,432

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments

June 30, 2025

(Unaudited)

Portfolio Company (1)(2)(3)(4)(5)(6)	Footnotes		Spread Above Index (7)	Interest Rate	Acquisition Date	Maturity	Principal, Shares, Units		Amortized Cost (8)		Fair Value (9)		% of Net Assets
Investments
Non-controlled/non-affiliate investments
First lien senior secured term loan
Aerospace & Defense
Consolidated Machine & Tool Holdings, LLC		(17)(19)(22)(23)	S+11.01%	17.35% PIK	1/15/2020	1/15/2025		7,387,121	$	7,190,503	$	6,433,906		2.6	%
Consolidated Machine & Tool Holdings, LLC		(17)(19)(22)(23)	S+12.01%	18.35% PIK	1/19/2023	1/15/2025		80,511		79,025		73,157		0.0
Consolidated Machine & Tool Holdings, LLC		(13)(19)(22)(23)	-	20.00% PIK	11/22/2023	1/15/2025		241,532		241,532		215,618		0.1
Consolidated Machine & Tool Holdings, LLC		(13)(18)(19)(22)(23)	-	13.00% PIK	11/22/2023	1/15/2025		708,154		697,699		708,154		0.3
Consolidated Machine & Tool Holdings, LLC		(13)(19)	-	11.00% Cash + 2.00% PIK	5/22/2024	6/30/2026		885,615		871,578		794,132		0.3
								9,302,933		9,080,337		8,224,967		3.3
Chemicals
Douglas Products and Packaging Company, LLC		(10)(16)	S+8.04%	12.36%	9/20/2023	9/20/2028		14,737,500		14,683,685		14,737,500		6.0
								14,737,500		14,683,685		14,737,500		6.0
Commercial Services & Supplies
Swyft AcquireCo LLC (dba Swyft Filings)		(15)(16)	S+2.75%	7.07%	12/20/2021	12/20/2027		289,046		288,538		289,046		0.1
Swyft AcquireCo LLC (dba Swyft Filings)		(10)(16)	S+7.67%	11.99%	12/20/2021	12/20/2027		3,682,383		3,650,675		3,584,432		1.5
								3,971,429		3,939,213		3,873,478		1.6
Construction & Engineering
Fremont-Wright, LLC		(16)	1M-S +9.10%	13.42%	12/2/2020	6/30/2026		4,098,795		4,098,795		4,098,795		1.7
Kassel Mechanical, LLC		(16)	1M-S + 7.18% Cash + 0.83% PIK	11.50% Cash + 0.83% PIK	3/17/2025	10/1/2029		12,452,126		12,272,407		12,272,407		5.0
Kelso Industries		(17)	3M-S + 5.75%	10.09%	12/31/2024	12/30/2029		9,123,403		8,962,600		9,123,403		3.7
Kelso Industries		(17)(18)	3M-S + 5.75%	10.09%	3/12/2025	12/30/2029		1,168,204		1,821,127		1,821,127		0.7
MechanAir, LLC		(17)	S + 5.43% Cash + 4.17% PIK	9.77% Cash + 4.17% PIK	9/2/2021	9/2/2026		13,278,354		13,191,242		13,145,570		5.4
MechanAir, LLC		(13)	18.00% PIK	18.00% PIK	12/15/2023	9/2/2026		556,221		556,221		545,207		0.2
Versar Inc.		(10)(17)	3M-S + 9.66%	14.00%	8/4/2023	8/4/2028		10,000,000		9,719,563		10,046,500		4.1
Vertical Mechanical Group, LLC		(10)(17)	3M-S + 9.22%	13.56%	5/12/2023	5/12/2028		7,428,571		7,270,020		7,396,629		3.0
								58,105,674		57,891,975		58,449,638		23.8
Distributors
48forty Intermediate Holdings, Inc.		(16)	S + 5.50% Cash + 0.50% PIK	1M-S+5.50%Cash + 0.50% PIK	10/11/2022	11/30/2029		15,236,387		14,831,512		7,861,976		3.2
								15,236,387		14,831,512		7,861,976		3.2
Diversified Telecommunication Services
Gridsource Incorporated, LLC		(17)	S + 6.50	10.84%	12/16/2022	12/16/2027		14,107,023		13,840,772		14,107,023		5.8
								14,107,023		13,840,772		14,107,023		5.8
Electrical Equipment
Masterwork Electronics, Inc.		(17)(19)(22)	S + 7.65%	11.99%	11/17/2022	11/17/2027		8,840,576		8,676,757		1,449,854		0.6
Masterwork Electronics, Inc.		(15)(17)(19)(22)	S + 7.65%	11.99%	11/17/2022	11/17/2027		521,739		521,739		85,565		0.0
								9,362,315		9,198,496		1,535,419		0.6
Entertainment
Chicken Soup For The Soul, LLC		(16)(19)(23)	S + 8.60%	12.92%	10/29/2021	3/31/2024		6,380,856		6,380,856		1,681,994		0.7
Linden Research, Inc. (dba Linden Labs)		(10)(17)	S + 7.73% Cash + 3.54% PIK	12.05% Cash + 3.54% PIK	12/31/2020	9/30/2026		4,209,006		4,176,694		4,209,005		1.7
NW Entertainment, LLC		(17)	S + 7.76%	12.08%	11/4/2022	11/4/2027		6,170,473		6,089,498		6,047,063		2.5
								16,760,335		16,647,048		11,938,062		4.9
Healthcare Providers & Services
BB-HH Platform, Inc. (dba Preferred Care Home Health)		(10)(17)	S + 7.69% Cash + 1.82% PIK	12.01% Cash + 1.82% PIK	5/16/2023	5/16/2028		6,853,419		6,742,022		6,853,420		2.8
IPA Intermediate Co., LLC (dba Integrated Pain Associates)		(17)	S + 8.01%	12.35%	1/9/2023	1/9/2028		12,425,512		12,232,660		12,425,512		5.1
Klein Hersh, LLC		(10)(17)	-	4.06% Cash	4/27/2022	4/27/2028		17,388,473		16,852,193		14,797,735		6.0
								36,667,404		35,826,875		34,076,667		13.9
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)		(17)(18)	S+7.61%	11.95%	9/15/2022	9/15/2027		1,670,168		1,670,168		1,674,678		0.7
The Range NYC, LLC (dba Five Iron Golf)		(17)	S + 7.61%	11.95%	9/15/2022	9/15/2027		4,865,546		4,778,810		4,878,683		2.0
								6,535,714		6,448,978		6,553,361		2.7
Household Durables
SkyBell Technologies, Inc.		(19)(22)(23)	Cash + 0.00% PIK	17.60% PIK	12/13/2019	12/13/2024		4,597,307		4,534,241		3,804,272		1.6
								4,597,307		4,534,241		3,804,272		1.6
Household Products
Coop Home Goods LLC (dba Coop Home Goods)		(10)(17)	S + 8.76%	13.03%	6/18/2021	6/18/2026		3,551,427		3,535,787		3,551,427		1.4
								3,551,427		3,535,787		3,551,427		1.4
IT Services
CSI IT, LLC (dba Consulting Solutions)		(17)	S + 10.76%	15.10%	1/29/2021	1/29/2026		12,173,487		12,099,611		12,173,487		5.0
								12,173,487		12,099,611		12,173,487		5.0
Machinery
Texas Contract Manufacturing Group, Inc.		(17)	S + 12.11%	16.45%	4/27/2022	4/27/2027		4,453,364		4,411,751		3,842,362		1.6
								4,453,364		4,411,751		3,842,362		1.6
Media
PadSquad, LLC		(10)(17)	3MS + 6.77%	11.16%	3/30/2022	3/30/2027		2,704,113		2,679,400		2,704,113		1.1
Trailer Park Group Holdings LLC		(10)(17)	S + 7.71% + 2.07% PIK	11.75% Cash + 1.02% PIK	8/2/2021	8/2/2026		14,904,818		14,774,010		14,067,167		5.7
								17,608,931		17,453,410		16,771,280		6.8
Personal Products
Japonesque, LLC		(10)(17)	S + 9.60%	13.90% Cash + 0.70% PIK	11/23/2021	11/23/2026		4,349,113		4,312,101		4,311,712		1.8
								4,349,113		4,312,101		4,311,712		1.8
Professional Services
CorTech, LLC		(17)	S + 6.35%	10.67%	1/1/1900	9/30/2025		7,597,460		7,575,877		7,435,634		3.0
Jefferson Consulting Group, LLC		(10)(17)	S + 7.94%	13.90% Cash + 0.70% PIK	7/1/2024	7/1/2029		8,547,521		8,409,302		8,032,961		3.3
NSC Technologies, LLC		(10)(17)	S + 8.26%	13.28%	4/26/2019	10/26/2026		4,062,508		4,041,773		4,062,507		1.7
PQT Ayaquhs, LLC (dba WWC Global)		(17)	S + 7.36%	11.66%	8/1/2022	8/1/2027		3,437,642		3,402,785		3,437,642		1.4
Qualified Digital, LLC		(17)(18)	S + 7.00%	11.34%	7/30/2024	7/30/2029		12,240,000		11,908,565		12,134,837		5.0
								35,885,131		35,338,302		35,103,581		14.4
Specialty Retail
Clearview Systems, LLC (dba Rip-it)		(10)(17)	S + 4.15% Cash + 6.50% PIK	8.49% Cash + 6.50% PIK	10/11/2022	10/10/2027		6,929,067		6,853,185		6,929,067		2.9
								6,929,067		6,853,185		6,929,067		2.9
Trading Companies & Distributors
Ambient Enterprises Holdco LLC		(17)(18)	S + 5.75%	10.09%	12/31/2024	6/30/2030		1,264,511		655,486		655,486		0.3
Ambient Enterprises Holdco LLC		(17)(18)	S + 5.75%	10.07%	12/31/2024	6/30/2030		6,404,687		6,309,576		6,309,576		2.6
Ambient Enterprises Holdco LLC		(17)(18)	S + 5.75%	10.07%	12/31/2024	6/30/2030		1,780,348		1,753,075		1,753,075		0.7
Ambient Enterprises Holdco LLC		(17)(18)	S + 5.75%	10.09%	12/31/2024	6/30/2030		509,220		312,807		312,807		0.1
								9,958,766		9,030,944		9,030,944		3.7
Transportation Infrastructure
TCP Acquisition, LLC (dba HighStar Traffic)		(17)	S + 8.00%	12.34%	7/26/2022	7/26/2027		10,068,771		9,968,369		10,028,496		4.1
								10,068,771		9,968,369		10,028,496		4.1
Total first lien senior secured term loan										289,926,592		266,904,719		109.0

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

June 30, 2025

(Unaudited)

Portfolio Company (1)(2)(3)(4)(5)(6)	Footnotes	Spread Above Index (7)	Interest Rate	Acquisition Date	Maturity	Principal, Shares, Units	Amortized Cost (8)		Fair Value (9)		% of Net Assets
Senior unsecured notes	(24)
Electrical Equipment
HH Masterwork Intermediate, Inc.	(19)(22)	-	17.00% PIK	11/17/2022	5/17/2028	2,155,820		2,033,098		-		0.0
						2,155,820		2,033,098		-		0.0
Total senior unsecured notes								2,033,098		-		0.0

Preferred equity securities	(12)(24)
Commercial Services and Supplies
Swyft Filings Holdings, LLC	(13)(20)(21)(25)	-	8.00% PIK	12/20/2021	-	192,444		183,612		213,724		0.1
						192,444		183,612		213,724		0.1
Construction & Engineering
MechanAir Holdings, LLC	(13)(21)(25)	-	13.50% PIK	9/2/2021	-	1,704		1,703,499		2,833,091		1.2
Vertical Mechanical Group Holdings, LLC	(21)(25)	-	8.00% PIK	5/12/2023	-	1,857,143		1,857,143		5,112,714		2.1
						1,858,847		3,560,642		7,945,805		3.3
Diversified Telecommunication Services
Gridsource Holdings, LLC	(21)(25)	-	8.00% PIK	3/9/2023	-	819,088		799,597		1,475,342		0.6
						819,088		799,597		1,475,342		0.6
Entertainment
NW Entertainment, LLC	(21)(25)	-	10.00% PIK	11/4/2022	-	1,183		1,134,428		1,371,318		0.6
NW Entertainment, LLC	(25)	-	12.00% PIK	2/27/2025	-	826		531,143		951,925		0.4
						2,009		1,665,571		2,323,243		1.0
Healthcare Providers & Services
IPA Investors, LP (dba Integrated Pain Associates)	(21)(25)	-	8.00% PIK	1/9/2023	-	2,749		2,573,151		3,017,341		1.2
						2,749		2,573,151		3,017,341		1.2
Media
PadSquad Holdings, LLC	(13)(21)(25)	-	6.00% Cash + 6.00% PIK	3/30/2022	-	720,767		1,964,204		3,379,270		1.4
Trailer Park Group Holdings, LLC Class A-1 Units	(13)(21)(25)	-	15.00% PIK	12/19/2023	-	40,888		73,599		110,402		0.0
Trailer Park Group Holdings LLC - Class A Units	(13)(21)(25)	-	8.00% PIK	8/2/2021	-	409,416		404,702		492,850		0.2
						1,171,071		2,442,505		3,982,522		1.6
Professional Services
Hometown Holdings JV, LLC (dba BWG Strategy)	(13)(21)(25)	-	8.00% Preferred Return	12/24/2020	-	666,667		659,761		859,100		0.4
JCFV Holdings, LLC	(21)(25)	-	8.00% Preferred Return	7/1/2024	-	1,538,462		1,538,462		1,130,769		0.5
PQT Ayaquhs, LLC (dba WWC Global)	(13)(21)(25)	-	10.50% PIK	8/1/2022	-	5,774		1,064,516		4,651,979		1.9
SPC QD SM, LP	(21)	-	-	7/30/2024	-	42		2,207,572		2,655,714		1.1
						2,210,945		5,470,311		9,297,562		3.9
Software
PureCars Technologies, LLC	(13)(21)(25)	-	8.00% PIK	4/17/2019	-	592		267,013		299,540		0.1
						592		267,013		299,540		0.1
Total preferred equity securities								16,962,402		28,555,079		11.8

Warrants and other equity securities	(12)(24)
Aerospace & Defense
Consolidated Machine & Tool Holdings, LLC	(14)(21)(25)	-	-	1/15/2020	-	176		142,485		-		0.0
Consolidated Machine & Tool Holdings, LLC	(25)	-	-	3/21/2025	-	49		-		-		0.0
Consolidated Machine & Tool Holdings, LLC	(25)	-	-	1/15/2020	-	1,178		-		201,431		0.1
						1,403		142,485		201,431		0.0
Commercial Services and Supplies
Swyft Filings Holdings, LLC	(13)(20)(21)	-	-	12/20/2021	-	1,015		-		-		0.0
						1,015		-		-		0.0
Construction & Engineering
Fremont-Wright, LLC		-	-	12/2/2020	-	2		-		1,259,816		0.5
						2		-		1,259,816		0.5
Distributors
48forty Intermediate Holdings, Inc.		-	-	10/11/2022	-	1,994		-		-		0.0
						1,994		-		-		0.0
Electrical Equipment
HH Masterwork Intermediate, Inc.	(19)	-	-	11/17/2022	-	190,019		-		-		0.0
						190,019		-		-		0.0
Entertainment
LRI Holdco, LLC (dba Linden Labs)	(21)(25)	-	-	12/31/2020	-	1		-		185,093		0.1
LRI Holdco, LLC (dba Linden Labs)	(25)	-	-	12/31/2020	-	1		43,478		228,576		0.1
						2		43,478		413,669		0.2
Healthcare Providers & Services
Klein Hersh, LLC		-	-	4/27/2022	-	1,003		-		-		0.0
Nurses 24/7 Holdings, LLC	(21)(25)	-	-	5/26/2023	-	428,571		419,877		208,570		0.1
						429,574		419,877		208,570		0.1
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)		-	-	9/15/2022	-	21,210		71,599		35,463		0.0
						21,210		71,599		35,463		0.0
Household Durables
SkyBell Technologies, Inc.		-	-	12/13/2019	-	1,917,813		-		-		0.0
						1,917,813		-		-		0.0
Household Products
CHG Parent Holding LLC (dba Coop Home Goods)	(21)(25)	-	-	6/18/2021	-	535,714		535,714		1,012,857		0.4
						535,714		535,714		1,012,857		0.4
Machinery
Texas Contract Manufacturing Group, Inc.		-	-	4/27/2022	-	1,602		-		208,387		0.1
						1,602		-		208,387		0.1
Media
Channel Factory Holdings, LLC	(13)(21)(25)	-	-	3/31/2025	-	594		-		1,045,654		0.4
Trailer Park Group Holdings LLC	(13)(21)	-	-			37,594		-		75,127		0.0
						38,188		-		1,120,781		0.4
Professional Services
CorTech, LLC		-	-			1		-		503,862		0.0
NSC Holdings, LLC	(21)(25)	-	-	4/26/2019	-	111		271,262		455,564		0.2
PQT Ayaquhs, LLC (dba WWC Global)		-	-	8/1/2022	-	645		-		387,097		0.2
						757		271,262		1,346,523		0.4
Software
Proactive Dealer Holdings Parent, LLC	(21)	-	-	6/10/2024	-	445		730,271		383,629		0.2
						445		730,271		383,629		0.2
Total warrants and other equity securities								2,214,686		6,191,126		2.3

Fund investments
Diversified Financials
Madryn Select Opportunities, LP	(18)(25)	-	-	1/4/2022	-	2,855,855		2,529,567		2,165,570		0.9
						2,855,855		2,529,567		2,165,570		0.9
Total fund investments								2,529,567		2,165,570		0.9
Total non-controlled/non-affiliate investments								313,666,345		303,816,494		124.0

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

June 30, 2025

(Unaudited)

Portfolio Company (1)(2)(3)(4)(5)(6)	Footnotes	Spread Above Index (7)	Interest Rate	Acquisition Date	Maturity	Principal, Shares, Units	Amortized Cost (8)		Fair Value (9)		% of Net Assets

Controlled/affiliate investments
First lien senior secured term loan
Construction & Engineering
Watt Acquisition, LLC	(10)(11)(17)	S+8.68%	13.03% Cash + 5.6% PIK	4/15/2022	4/15/2027	1,579,986	$	1,567,585	$	1,565,608		0.6	%
						1,579,986		1,567,585		1,565,608		0.6
Diversified Telecommunication Services
Caregility Corporation	(11)(17)	-	3M-S+2.70% Cash + 6.56% PIK	12/29/2021	10/31/2026	2,525,346		2,409,728		2,486,203		1.0
						2,525,346		2,409,728		2,486,203		1.0
Food Products
Uncle John’s Pride, LLC	(11)(16)	1M-S + 8.11%	12.43%	3/31/2022	3/31/2027	1,749,626		1,749,626		1,767,123		0.7
Uncle John’s Pride, LLC	(11)(16)	S+10.11%	12.43%	3/31/2022	3/31/2027	5,143,768		5,082,121		5,195,206		2.1
						6,893,394		6,831,747		6,962,329		2.8
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health)	(11)(17)	3M-S+8.50%	3M-S+8.50%	3/19/2021	3/19/2026	797,086		784,400		723,156		0.3
						797,086		784,400		723,156		0.3
Leisure Products
MPUSA, LLC (dba Mission)	(11)(17)	S+9.26%	13.60% PIK	12/9/2021	12/9/2026	1,668,861		1,661,056		1,457,583		0.6
						1,668,861		1,661,056		1,457,583		0.6
Professional Services
Lasalle Staffing, LLC	(10)(11)(6)	S+8.19%	12.50%	2/15/2022	2/15/2027	7,200,785		7,118,852		7,200,785		2.9
						7,200,785		7,118,852		7,200,785		2.9
Trading Companies & Distributors
USBid Inc.	(10)(11)(17)	S+7.26%	12.84% PIK	11/3/2022	11/3/2027	2,648,797		2,621,443		2,506,556		1.0
						2,648,797		2,621,443		2,506,556		1.0
Total first lien senior secured term loan								22,994,811		22,902,220		9.2

Senior unsecured notes	(24)
Consumer Finance
Microf, LLC	(11)	S+10.85%	15.17%	3/29/2019	6/30/2025	3,714,429		3,691,630		3,733,001		1.5
						3,714,429		3,691,630		3,733,001		1.5
Total senior unsecured notes								3,691,630		3,733,001		1.5

Preferred equity securities	(12)(24)
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(21)(25)	-	15.00% PIK	4/15/2022	-	4,439		4,380,196		4,777,416		1.9
						4,439		4,380,196		4,777,416		1.9
Diversified Telecommunication Services
Caregility Corporation - Series A Units	(11)(13)	-	10% PIK	12/31/2022	-	580,798		2,076,097		1,454,057		0.7
Caregility Corporation - Series B Units	(11)(13)	-	10% PIK	7/3/2023	-	3,883,757		3,591,494		4,548,126		1.9
						4,464,555		5,667,591		6,002,183		2.6
Food Products
UJP Acquisition, LLC (dba Uncle John’s Pride)	(11)(13)(21)(25)	-	8.00% PIK	3/31/2022	-	2,829,787		2,829,787		4,881,383		2.0
						2,829,787		2,829,787		4,881,383		2.0
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health) - Class A Units	(11)(21)(25)	-	10.00% Preferred Return	3/19/2021	-	571,080		564,321		151,376		0.1
Arrow Home Health, LLC (dba Acara Home Health) - Class 1 Units	(11)(13)(21)	-	-	11/13/2023	-	56,005		56,005		112,010		0.0
						627,085		620,326		263,386		0.1
Leisure Products
TS-MP, LLC (dba Mission) - Class A-1	(11)(21)(25)	-	-	12/9/2021	-	69		1,928,409		-		0.0
TS-MP, LLC (dba Mission) - Class AA-1	(11)(21)(25)	-	-	12/10/2024	-	88		1,960,641		2,156,705		0.9
						157		3,889,050		2,156,705		0.9
Professional Services
Capone Holdings JV, LLC (dba LaSalle Staffing)	(11)(21)(25)	-	8.00% Preferred Return	2/15/2022	-	4,000,000		4,000,000		6,268,000		2.6
						4,000,000		4,000,000		6,268,000		2.6
Trading Companies & Distributors
USBid Parent, LLC - Class A	(11)	-	-	11/3/2022	-	2,813		2,812,500		-		0.0
USBid Parent, LLC - Class C	(11)	-	10.00% PIK	11/2/2023	-	9,375		7,324		-		0.0
USBid Parent, LLC - Class C2	(11)	-	10.00% PIK	4/12/2024	-	600,000		468,750		528,000		0.2
USBid Parent, LLC - Class C3	(11)	-	10.00% PIK	4/12/2024	-	2,400,000		1,875,000		951,563		0.4
						3,012,188		5,163,574		1,479,563		0.6
Total preferred equity securities								26,550,524		25,828,636		10.7

Warrants and other equity securities	(12)(24)
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(21)	-	-	4/15/2022	-	295		-		-		0.0
						295		-		-		0.0
Diversified Telecommunication Services
Caregility Corporation	(11)	-	-	12/29/2021	-	221,574		443,392		-		0.0
Caregility Corporation		-	-	12/29/2021	-	46,227		-		-		0.0
						267,801		443,392		-		0.0
Food Products
UJP Acquisition, LLC (dba Uncle John's Pride)	(11)(21)(25)	-	-	3/31/2022	-	127,215		-		26,715		0.0
						127,215		-		26,715		0.0
Trading Companies & Distributors
USBid Parent, LLC	(11)	-	-	11/3/2022	-	204		-		-		0.0
						204		-		-		0.0
Total warrants and other equity securities								443,392		26,715		0.0
Total controlled/affiliate investments								53,680,357		52,490,572		21.4

TOTAL INVESTMENTS							$	367,346,702	$	356,307,066		145.4	%

See accompanying notes.

(1)

All of the Company’s investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company’s investments are issued by U.S. portfolio companies unless otherwise noted.

(2)

All investments are non-controlled/non-affiliated investments as defined by the 1940 Act, unless otherwise noted. The 1940 Act classifies investments based on the level of control that the Company maintains in a particular portfolio company.

(3)

All investments are co-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission (the “SEC”), unless otherwise noted. See Note 6 “Transactions with Related Parties” in the accompanying notes to the consolidated financial statements.

(4)

Unless otherwise indicated, all investments are considered Level 3 assets.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

June 30, 2025

(Unaudited)

(5)

Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Secured Credit Facility (as defined herein).

(6)

Except as otherwise noted, all of the Company’s portfolio company investments are subject to legal restrictions on sales.

(7)

Loan contains a variable rate structure and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the Secured Overnight Financing Rate (“SOFR” or “S”) or an alternate base rate which can include the Federal Funds Effective Rate or the Prime Rate, at the borrower’s option, and which reset periodically based on the terms of the loan agreement. Interest rates subject to SOFR are typically accompanied by a Credit Spread Adjustment (“CSA”).

(8)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(9)

Because there is no readily available market value for these investments, the fair value of each of these investments is determined in good faith using significant unobservable inputs by the Company’s board of directors (the “Board”) as required by the 1940 Act. See Note 4 “Fair Value Measurements” in the accompanying notes to the consolidated financial statements.

(10)

The Company categorized its unitranche loans as First Lien Senior Secured Loans. The First Lien Senior Secured Loan is comprised of two components: a first out tranche (“First Out”) and last out tranche (“Last Out”). The Company syndicates the First Out tranche and retains the Last Out tranche. The First Out and Last Out tranches have the same maturity date. Interest disclosed reflects the contractual rate of First Lien Senior Secured Loan. The First Out tranche has priority as to the Last Out tranche with respect to payments of principal, interest and any amounts due thereunder. The Company may be entitled to receive additional interest as a result of the Agreement Among Lenders (“AAL”) entered into with the First Out lender. In exchange for the higher interest rate, the Last Out portion is at a greater risk of loss.

(11)

As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” and may have “Control” of this portfolio company as the Company and/or its affiliated funds collectively owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). The Company’s investments in affiliates for the six months ended June 30, 2025 were Arrow Home Health, LLC, Caregility Corporation, LaSalle Staffing, LLC, Microf, LLC, Uncle John’s Pride, LLC, USBid Inc, MPUSA LLC and Watt Acquisition, LLC which represented $52,490,572 of Fair Value and 21.4% of Net Assets of the Company. Transactions related to investments in “Controlled/Affiliate Investments” for the six months ended June 30, 2025 were as follows:

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

June 30, 2025

(Unaudited)

Portfolio Company	Type of Investment	Amount of Realized Gain (Loss)		Amount of Interest or Dividends Credited to Income (a)			December 31, 2024 Value		Gross Additions (b)			Gross Reductions (c)			Transfers In/(Out) of Affiliates		Amount of Unrealized Gains (Loss)			June 30, 2025 Value
Arrow Home Health LLC (dba Acara Home Health)	First lien senior secured term loan	$	-	$	26,888		$	701,117	$	1,971		$	-		$	-	$	20,068		$	723,156
	Preferred equity securities (571,080 shares)		-		-			151,376		-			-			-		-			151,376
	Preferred equity securities (56,005 shares)		-		-			112,010		-			-			-		-			112,010
Capone Holdings JV, LLC (dba LaSalle Staffing)	Preferred equity securities (4,000,000 shares)		-		-			6,700,000		-			-			-		(432,000	)		6,268,000
Caregility Corporation	First lien senior secured term loan		-		40,897			2,438,069		96,108			-			-		(47,974	)		2,486,203
	Preferred equity securities (151,018 shares)		-		-			1,188,605		429,779			-			-		(164,327	)		1,454,057
	Preferred equity securities (446,689 shares)		-		-			4,368,416		-			-			-		179,710			4,548,126
	Warrants (267,801 units)		-		-			-		-			-			-		-			-
	Senior secured notes (420,322 units)		-		-			341,103		9,458			(350,561	)		-		-			-
Lasalle Staffing, LLC	First lien senior secured term loan		-		228,098			7,287,039		(10,206	)		(25,000	)		-		(51,048	)		7,200,785
Microf, LLC	First lien senior secured term loan		-		(24,684)	)		3,427,073		264,557			-			-		41,371			3,733,001
MPUSA, LLC (dba Mission)	First lien senior secured term loan		-		1,853			1,448,543		100,319			-			-		(91,279	)		1,457,583
	Preferred equity securities (69 shares)		-		-			-		-			-			-		-			-
	Preferred equity securities (88 shares)		-		-			1,782,334		-			-			-		374,371			2,156,705
Uncle John's Pride, LLC	First lien senior secured term loan		-		187,528			6,999,302		40,587			(25,156	)		-		(53,711	)		6,961,022
UJP Acquisition, LLC (dba Uncle John's Pride)	Warrants and other equity securities (127,215 shares)		-		-			76,329		-			-			-		(49,614	)		26,715
	Preferred equity securities (2,829,787 shares)		-		-			4,532,872		-			-			-		348,511			4,881,383
USBid Inc.	First lien senior secured term loan		-		5,218			2,240,638		171,055			-			-		94,863			2,506,556
USBid Inc.	Warrants and other equity securities (204 shares)		-		-			-		-			-			-		-			-
USBid Inc. - Class A Units	Preferred equity securities (2,813 shares)		-		-			-		-			-			-		-			-
USBid Inc. - Class C Units	Preferred equity securities (9,375 shares)		-		-			-		-			-			-		-			-
USBid Inc. - Class C2 Units	Preferred equity securities (600,000 shares)		-		-			504,000		-			-			-		24,000			528,000
USBid Inc. - Class C3 Units	Preferred equity securities (24,000,000 shares)		-		-			432,000		-			-			-		519,563			951,563
Watt Acquisition, LLC	First lien senior secured term loan		-		111,038			2,430,200		91,237			(1,072,041	)		-		116,212			1,565,608
Watt Contracting Holdings, LLC	Preferred equity securities (3,375 shares)		-		-			3,519,772		1,065,373			-			-		193,578			4,778,723
	Warrants and other equity securities (295 shares)		-		-			-		-			-			-		-			-
Total Affiliate Investments		$	-	$	576,836		$	50,680,798	$	2,260,238		$	(1,472,758	)	$	-	$	1,022,294		$	52,490,572

(a)	Represents the total amount of interest, fees or dividends credited to income for the portion of the period an investment was included in the Affiliate category.

(b)	Gross additions include increase in the cost basis of investments resulting from purchases, PIK interest or amortization of original issue discount.

(c)	Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales.

(12)

Ownership of certain equity investments may occur through a holding company or partnership.

(13)

Investment contains a fixed rate structure.

(14)

The Company has received 46 units of incentive shares which have no Cost or Fair Value as of June 30, 2025.

(15)

Interest disclosed reflects the contractual rate of the First Out tranche under the AAL.

(16)

The interest rate on these loans is subject to 1 month SOFR, which was 4.32% as of June 30, 2025.

(17)

The interest rate on these loans is subject to 3 month SOFR, which was 4.34% as of June 30, 2025.

(18)

Positions have an aggregate unfunded commitment of $13,182,566 in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 11 “Commitments, Contingencies and Risks” in the accompanying notes to the consolidated financial statements.

(19)

The investment is on non-accrual status. See Note 2. “Significant Accounting Policies”.

(20)

The investment includes the fair value and amortized cost of 1,015 shares of common equity issued in conjunction with the preferred equity.

(21)

Investment is held by a subsidiary of the Company. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s wholly-owned subsidiary.

(22)

The investment does not accrue payment-in-kind (“PIK”) for the debt investment as of June 30, 2025. See Note 2. “Significant Accounting Policies”.

(23)

Maturity date is under on-going negotiations with the portfolio company and other lenders, as applicable.

(24)

All investments are non-income producing unless otherwise indicated.

(25)

The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments

December 31, 2024

Portfolio Company (1)(2)(3)(4)(5)(6)	Footnotes	Spread Above Index (7)	Interest Rate	Acquisition Date	Maturity	Principal, Shares, Units		Amortized Cost (8)		Fair Value (9)		% of Net Assets
Investments
Non-controlled/non-affiliate investments
First lien senior secured term loan
Aerospace & Defense
Consolidated Machine & Tool Holdings, LLC	(17)(19)(22)	S+11.01%	15.32%	1/15/2020	1/15/2025		6,092,878	$	5,946,311	$	5,431,800		2.3	%
Consolidated Machine & Tool Holdings, LLC	(17)(19)(22)	S+12.01%	16.32%	1/19/2023	1/15/2025		1,294,243		1,263,109		1,153,818		0.5
Consolidated Machine & Tool Holdings, LLC	(13)(19)(22)	-	20.00% PIK	11/22/2023	1/15/2025		708,154		697,699		708,154		0.3
Consolidated Machine & Tool Holdings, LLC	(13)(19)	-	11.00%	5/22/2024	6/30/2025		885,615		869,176		777,659		0.3
							8,980,890		8,776,295		8,071,431		3.4
Chemicals
Douglas Products and Packaging Company, LLC	(10)(16)	S+6.90%	11.23%	9/20/2023	9/20/2028		14,812,500		14,623,342		14,812,499		6.2
							14,812,500		14,623,342		14,812,499		6.2
Commercial Services & Supplies
Swyft AcquireCo LLC (dba Swyft Filings)	(15)(16)	S+2.75%	7.08%	12/20/2021	12/20/2027		292,443		291,514		288,290		0.1
Swyft AcquireCo LLC (dba Swyft Filings)	(10)(16)	S+5.50%	9.83%	12/20/2021	12/20/2027		3,682,383		3,643,596		3,425,353		1.4
							3,974,826		3,935,110		3,713,643		1.5
Construction & Engineering
DCCM, LLC	(17)	S + 6.76% Cash + 1.00% PIK	11.07% Cash + 1.00% PIK	8/6/2021	12/30/2026		18,148,579		17,949,974		18,232,063		7.5
Fremont-Wright, LLC	(16)	S+9.10%	13.43%	12/2/2020	6/30/2026		4,155,709		4,155,654		4,155,709		1.7
Kelso Industries	(17)(18)	S+5.75%	10.06%	12/31/2024	12/30/2029		13,000,000		12,740,177		12,740,177		5.3
MechanAir, LLC	(17)	S+10.80%	10.57% Cash + 4.53% PIK	9/2/2021	9/2/2026		13,203,004		13,072,674		13,203,004		5.5
MechanAir, LLC	(13)	-	18.00% PIK	12/15/2023	9/2/2026		509,104		509,104		504,726		0.2
Versar Inc.	(10)(17)	S+8.10%	12.41%	8/4/2023	8/4/2028		10,000,000		9,658,174		9,996,000		4.2
Vertical Mechanical Group, LLC	(10)(17)	S+7.76%	12.07%	5/12/2023	5/12/2028		7,428,571		7,234,557		7,428,571		3.1
							66,444,967		65,320,314		66,260,250		27.5
Distributors
48forty Intermediate Holdings, Inc.	(16)	S + 5.10% PIK + 2.00% Cash	9.43% PIK + 2.00% Cash	10/11/2022	11/30/2029		14,817,041		14,323,723		13,163,459		5.5
							14,817,041		14,323,723		13,163,459		5.5
Diversified Telecommunication Services
Gridsource Incorporated, LLC	(17)	S + 8.50% Cash + 2.00% PIK	12.81% Cash + 2.00% PIK	12/16/2022	3/9/2028		14,104,180		13,779,867		13,894,028		5.8
							14,104,180		13,779,867		13,894,028		5.8
Electrical Equipment
Masterwork Electronics, Inc.	(17)(19)(22)	S+7.65%	11.96% PIK	11/17/2022	11/17/2027		8,840,576		8,676,598		5,410,433		2.2
Masterwork Electronics, Inc.	(15)(17)(19)(22)	S+7.65%	11.96% PIK	11/17/2022	11/17/2027		521,739		521,739		319,304		0.1
							9,362,315		9,198,337		5,729,737		2.3
Entertainment
Chicken Soup For The Soul, LLC	(16)(19)(23)	S+8.60%	12.93%	10/29/2021	3/31/2024		6,380,856		6,380,856		1,681,994		0.7
Linden Research, Inc. (dba Linden Labs)	(10)(17)	S + 7.26% Cash + 3.25% PIK	11.57% Cash + 3.25% PIK	12/31/2020	12/31/2025		4,702,225		4,630,079		4,702,225		2.0
NW Entertainment, LLC	(17)	S+7.76%	12.07%	11/4/2022	11/4/2027		6,235,769		6,135,904		6,175,905		2.6
							17,318,850		17,146,839		12,560,124		5.3
Healthcare Providers & Services
BB-HH Platform, Inc. (dba Preferred Care Home Health)	(10)(17)	S + 7.00% Cash + 1.50% PIK	11.31% Cash + 1.50% PIK	5/16/2023	5/16/2028		6,791,230		6,694,095		6,791,230		2.8
IPA Intermediate Co., LLC (dba Integrated Pain Associates)	(17)	S+8.01%	12.32%	1/9/2023	1/9/2028		11,096,086		10,864,449		11,096,086		4.6
Klein Hersh, LLC	(10)(17)	S+7.76%	4.49% Cash	4/27/2022	4/27/2027		17,468,922		16,895,893		14,530,649		6.0
Nurses Staffing, LLC (dba Nurses 24/7)	(17)	S + 7.00% Cash + 3.00% PIK	11.31% Cash + 3.00% PIK	5/26/2023	8/26/2028		5,787,937		5,684,377		5,665,232		2.4
							41,144,175		40,138,814		38,083,197		15.8
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)	(17)(18)	S+7.61%	11.92%	9/15/2022	9/15/2027		4,928,571		4,819,417		4,876,329		2.0
							4,928,571		4,819,417		4,876,329		2.0
Household Durables
SkyBell Technologies, Inc.	(19)(22)	0.00% Cash + 0.00% PIK	0.00% Cash + 0.00% PIK	12/13/2019	12/13/2024		4,597,307		4,534,757		3,057,209		1.3
							4,597,307		4,534,757		3,057,209		1.3
Household Products
Coop Home Goods LLC (dba Coop Home Goods)	(10)(17)	S+8.26%	12.57%	6/18/2021	6/18/2026		4,373,103		4,339,971		4,373,103		1.8
							4,373,103		4,339,971		4,373,103		1.8
IT Services
CSI IT, LLC (dba Consulting Solutions)	(17)	S+10.76%	15.07%	1/29/2021	1/29/2026		12,558,929		12,433,640		12,558,929		5.2
							12,558,929		12,433,640		12,558,929		5.2
Machinery
Texas Contract Manufacturing Group, Inc.	(17)	S+12.11%	16.42%	4/27/2022	4/27/2027		4,605,541		4,547,261		3,968,595		1.6
							4,605,541		4,547,261		3,968,595		1.6
Media
PadSquad, LLC	(10)(17)	S+5.50%	9.81%	3/30/2022	3/30/2027		2,704,113		2,676,832		2,704,113		1.1
Trailer Park Group Holdings LLC	(10)(17)	S + 6.76% + 1.50% PIK	11.07% Cash + 1.50% PIK	8/2/2021	8/2/2026		14,790,995		14,572,105		14,517,362		6.0
							17,495,108		17,248,937		17,221,475		7.1
Personal Products
Japonesque, LLC	(10)(17)	S+8.18%	12.49%	11/23/2021	11/23/2026		4,404,301		4,360,968		4,404,301		1.8
							4,404,301		4,360,968		4,404,301		1.8
Professional Services
Jefferson Consulting Group, LLC	(10)(17)	S+5.75%	10.06%	7/1/2024	7/1/2029		8,461,538		8,303,804		8,303,804		3.4
NSC Technologies, LLC	(10)(17)	S+8.26%	12.57%	4/26/2019	10/26/2026		4,148,472		4,121,315		4,117,773		1.7
PQT Ayaquhs, LLC (dba WWC Global)	(17)	S+7.26%	11.78%	8/1/2022	8/1/2027		7,409,274		7,311,194		7,483,367		3.1
Qualified Digital, LLC	(17)(18)	S+7.00%	11.31%	7/30/2024	7/30/2029		9,097,143		8,793,352		8,793,352		3.7
							29,116,427		28,529,665		28,698,296		11.9
Specialty Retail
Clearview Systems, LLC (dba Rip-It)	(10)(17)	S+ 10.65%	14.96% Cash + 6.50% PIK	10/11/2022	10/10/2027		6,703,118		6,609,366		6,703,118		2.8
							6,703,118		6,609,366		6,703,118		2.8
Trading Companies & Distributors
Ambient Enterprises Holdco LLC	(17)(18)	S+5.75%	10.07%	12/31/2024	6/30/2030		6,436,872		6,327,097		6,327,097		2.6
Ambient Enterprises Holdco LLC	(17)(18)	S+5.75%	10.07%	12/31/2024	6/30/2030		1,789,397		1,758,861		1,758,861		0.7
							8,226,269		8,085,958		8,085,958		3.3
Transportation Infrastructure
TCP Acquisition, LLC (dba HighStar Traffic)	(17)	S+7.50%	11.81%	7/26/2022	7/26/2027		10,339,453		10,193,719		10,339,453		4.3
							10,339,453		10,193,719		10,339,453		4.3
Total first lien senior secured term loan									292,946,300		280,575,134		116.4

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

December 31, 2024

Portfolio Company (1)(2)(3)(4)(5)(6)	Footnotes	Spread Above Index (7)	Interest Rate	Acquisition Date	Maturity	Principal, Shares, Units		Amortized Cost (8)		Fair Value (9)		% of Net Assets
Second lien senior secured loan
Professional Services
CorTech, LLC	(17)	S+6.35%	10.66%	3/13/2020	9/30/2025		6,155,951	$	6,148,061	$	6,034,048		2.5	%
							6,155,951		6,148,061		6,034,048		2.5
Total second lien term loan									6,148,061		6,034,048		2.5

Senior unsecured notes	(24)
Electrical Equipment
HH Masterwork Intermediate, Inc.	(19)(22)	-	17.00% PIK	11/17/2022	5/17/2028		2,155,820		2,033,098		-		0.0
							2,155,820		2,033,098		-		0.0
Total senior unsecured notes									2,033,098		-		0.0

Preferred equity securities	(12)(24)
Commercial Services and Supplies
Swyft Filings Holdings, LLC	(13)(20)(21)	-	8.00% PIK	12/20/2021	-		192,444		183,612		194,996		0.1
							192,444		183,612		194,996		0.1
Construction & Engineering
MechanAir Holdings, LLC	(13)(21)	-	13.50% PIK	9/2/2021	-		1,704		1,703,499		2,193,365		0.9
Vertical Mechanical Group Holdings, LLC	(21)	-	-	5/12/2023	-		185,714		1,857,143		4,828,571		2.0
							187,418		3,560,642		7,021,936		2.9
Diversified Telecommunication Services
Gridsource Holdings, LLC	(21)	-	8.00% PIK	3/9/2023	-		3,959,977		799,597		907,386		0.4
							3,959,977		799,597		907,386		0.4
Entertainment
NW Entertainment, LLC	(21)	-	10.00% PIK	11/4/2022	-		1,183		1,134,428		1,385,764		0.6
							1,183		1,134,428		1,385,764		0.6
Healthcare Providers & Services
IPA Investors, LP (dba Integrated Pain Associates)	(21)	-	8.00% PIK	1/9/2023	-		1,953		2,029,287		1,918,048		0.8
							1,953		2,029,287		1,918,048		0.8
Media
Channel Factory Holdings, LLC	(13)(21)	-	5.00% Cash + 5.00% PIK	8/27/2020	-		2,381,867		2,442,592		5,552,308		2.3
PadSquad Holdings, LLC	(13)(21)	-	6.00% Cash + 6.00% PIK	3/30/2022	-		720,767		1,964,204		3,379,270		1.4
Trailer Park Group Holdings, LLC Class A-1 Units	(13)(21)	-	15.00% PIK	12/19/2023	-		40,888		73,599		110,402		0.0
Trailer Park Group Holdings LLC - Class A Units	(13)(21)	-	8.00% PIK	8/2/2021	-		371,822		367,108		662,587		0.3
							3,515,344		4,847,503		9,704,567		4.0
Professional Services
Hometown Holdings JV, LLC (dba BWG Strategy)	(13)(21)	-	-	12/24/2020	-		666,667		659,761		877,600		0.4
JCFV Holdings, LLC	(21)	-	-	7/1/2024	-		415,916		1,538,462		1,538,462		0.6
PQT Ayaquhs, LLC (dba WWC Global)	(13)(21)	-	10.50% PIK	8/1/2022	-		5,774		1,064,516		4,528,036		1.8
SPC QD SM, LP	(21)	-	-	7/30/2024	-		38		2,000,000		2,000,000		0.8
							1,088,395		5,262,739		8,944,098		3.6
Software
PureCars Technologies, LLC	(13)(21)	-	8.00% PIK	4/17/2019	-		592		267,013		234,876		0.1
							592		267,013		234,876		0.1
Total preferred equity securities									18,084,821		30,311,671		12.5

Warrants and other equity securities	(12)(24)
Aerospace & Defense
Consolidated Machine & Tool Holdings, LLC	(14)(21)	-	-	1/15/2020	-		176		142,485		-		0.0
Consolidated Machine & Tool Holdings, LLC		-	-	1/15/2020	-		1,178		-		32,148		0.0
							1,354		142,485		32,148		0.0
Construction & Engineering
DCCM, LLC	(21)	-	-	8/6/2021	-		897		939,949		3,501,210		1.5
Fremont-Wright, LLC		-	-	12/2/2020	-		2		-		972,068		0.4
							899		939,949		4,473,278		1.9
Electrical Equipment
HH Masterwork Intermediate, Inc.	(19)	-	-	11/17/2022	-		190,019		-		-		0.0
							190,019		-		-		0.0
Entertainment
LRI Holdco, LLC (dba Linden Labs)	(21)	-	-	12/31/2020	-		2		43,478		371,747		0.2
							2		43,478		371,747		0.2
Healthcare Providers & Services
Klein Hersh, LLC		-	-	4/27/2022	-		1,003		-		-		0.0
Nurses 24/7 Holdings, LLC	(21)	-	-	5/26/2023	-		182		419,877		196,856		0.1
							1,185		419,877		196,856		0.1
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)		-	-	9/15/2022	-		21,210		71,599		34,623		-
							21,210		71,599		34,623		-
Household Products
CHG Parent Holding LLC (dba Coop Home Goods)	(21)	-	-	6/18/2021	-		535,714		535,714		617,857		0.3
							535,714		535,714		617,857		0.3
Machinery
Texas Contract Manufacturing Group, Inc.		-	-	4/27/2022	-		1,602		-		249,355		0.1
							1,602		-		249,355		0.1
Professional Services
NSC Holdings, LLC	(21)	-	-	4/26/2019	-		111		271,262		290,774		0.1
PQT Ayaquhs, LLC (dba WWC Global)		-	-	8/1/2022	-		645		-		353,135		0.1
							756		271,262		643,909		0.2
Software
Proactive Dealer Holdings Parent, LLC	(21)	-	-	6/10/2024	-		445		730,271		730,275		0.4
							445		730,271		730,275		0.4
Total warrants and other equity securities									3,154,635		7,350,048		3.2

Fund investments
Diversified Financials
Madryn Select Opportunities, LP	(18)	-	-	1/4/2022	-		2,855,855		2,898,305		2,688,619		1.1
							2,855,855		2,898,305		2,688,619		1.1
Total fund investments									2,898,305		2,688,619		1.1
Total non-controlled/non-affiliate investments									325,265,220		326,959,520		135.7

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

December 31, 2024

Portfolio Company (1)(2)(3)(4)(5)(6)	Footnotes	Spread Above Index (7)	Interest Rate	Acquisition Date	Maturity	Principal, Shares, Units		Amortized Cost (8)		Fair Value (9)		% of Net Assets

Controlled/affiliate investments
First lien senior secured term loan
Construction & Engineering
Watt Acquisition, LLC	(10)(11)(17)	S+14.25%	12.99% Cash + 5.57% PIK	4/15/2022	4/15/2027		2,574,092	$	2,548,389	$	2,430,200		1.0	%
							2,574,092		2,548,389		2,430,200		1.0
Diversified Telecommunication Services
Caregility Corporation	(11)(17)	S+9.26%	7.00% Cash + 6.57% PIK	12/29/2021	1/31/2025		2,443,445		2,313,620		2,438,069		1.0
							2,443,445		2,313,620		2,438,069		1.0
Food Products
Uncle John’s Pride, LLC	(11)(16)	S+10.11%	14.44%	3/31/2022	3/31/2027		6,930,002		6,832,506		6,999,302		2.9
							6,930,002		6,832,506		6,999,302		2.9
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health)	(11)(17)	S+8.50%	12.81%	3/19/2021	3/19/2026		797,086		782,429		701,117		0.3
							797,086		782,429		701,117		0.3
Leisure Products
MPUSA, LLC (dba Mission)	(11)(17)	S + 8.26% Cash + 3.00% PIK	12.57% Cash + 3.00% PIK	12/9/2021	12/9/2026		1,570,577		1,560,737		1,448,543		0.6
							1,570,577		1,560,737		1,448,543		0.6
Professional Services
Lasalle Staffing, LLC	(10)(11)(16)	S+6.86%	11.19%	2/15/2022	2/15/2027		7,250,785		7,154,058		7,287,039		3.0
							7,250,785		7,154,058		7,287,039		3.0
Trading Companies & Distributors
USBid Inc.	(10)(11)(17)	S+7.26%	11.57%	11/3/2022	11/3/2027		2,484,904		2,450,388		2,240,638		0.9
							2,484,904		2,450,388		2,240,638		0.9
Total first lien senior secured term loan									23,642,127		23,544,908		9.7

Senior secured notes
Diversified Telecommunication Services
Caregility Corporation	(13)	8.00%	8.00%	7/3/2023	-		341,103		341,103		341,103		0.1
							341,103		341,103		341,103		0.1
Total senior secured notes									341,103		341,103		0.1

Senior unsecured notes	(24)
Consumer Finance
Microf, LLC	(11)(19)	S+10.85%	15.16%	3/29/2019	6/30/2025		3,427,073		3,427,073		3,427,073		1.4
							3,427,073		3,427,073		3,427,073		1.4
Total senior unsecured notes									3,427,073		3,427,073		1.4

Preferred equity securities	(12)(24)
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(21)	-	15.00% PIK	4/15/2022	-		3,375		3,316,130		3,519,772		1.5
							3,375		3,316,130		3,519,772		1.5
Consumer Finance
Microf, LLC	(11)(19)	-	15.00% PIK	5/5/2020	-		-		-		-		0.0
							-		-		-		0.0
Diversified Telecommunication Services
Caregility Corporation - Series A Units	(11)(13)	-	8.00% PIK	12/31/2022	-		151,018		1,646,318		1,188,605		0.5
Caregility Corporation - Series B Units	(11)(13)	-	8.00% PIK	7/3/2023	-		446,889		3,591,494		4,368,416		1.8
							597,907		5,237,812		5,557,021		2.3
Food Products
UJP Acquisition, LLC (dba Uncle John’s Pride)	(11)(13)(21)	-	8.00% PIK	3/31/2022	-		2,829,787		2,829,787		4,532,872		1.9
							2,829,787		2,829,787		4,532,872		1.9
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health) - Class A Units	(11)(21)	-	-	3/19/2021	-		571,080		564,321		151,376		0.1
Arrow Home Health, LLC (dba Acara Home Health) - Class 1 Units	(11)(13)(21)	-	-	11/13/2023	-		56,005		56,005		112,010		0.0
							627,085		620,326		263,386		0.1
Leisure Products
TS-MP, LLC (dba Mission) - Class A-1	(21)	-	-	12/9/2021	-		69		1,928,409		-		0.0
TS-MP, LLC (dba Mission) - Class AA-1	(21)	-	-	12/10/2024	-		88		1,960,641		1,782,334		0.7
							157		3,889,050		1,782,334		0.7
Professional Services
Capone Holdings JV, LLC (dba LaSalle Staffing)	(11)(21)	-	-	2/15/2022	-		4,000,000		4,000,000		6,700,000		2.8
							4,000,000		4,000,000		6,700,000		2.8
Trading Companies & Distributors
USBid Parent, LLC - Class A	(11)	-	-	11/3/2022	-		2,813		2,812,500		-		0.0
USBid Parent, LLC - Class C	(11)	-	10.00% PIK	11/2/2023	-		3,009,375		2,351,074		936,000		0.4
							3,012,188		5,163,574		936,000		0.4
Total preferred equity securities									25,056,679		23,291,385		9.7

Warrants and other equity securities	(12)(24)
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(21)	-	-	4/15/2022	-		295		-		-		0.0
							295		-		-		0.0
Diversified Telecommunication Services
Caregility Corporation	(11)	-	-	12/29/2021	-		267,801		443,392		-		0.0
							267,801		443,392		-		0.0
Food Products
UJP Acquisition, LLC (dba Uncle John’s Pride)	(11)(21)	-	-	3/31/2022	-		127,215		-		76,329		0.0
							127,215		-		76,329		0.0
Trading Companies & Distributors
USBid Parent, LLC	(11)	-	-	11/3/2022	-		204		-		-		0.0
							204		-		-		0.0
Total warrants and other equity securities									443,392		76,329		0.0
Total controlled/affiliate investments									52,910,374		50,680,798		20.9

TOTAL INVESTMENTS								$	378,175,594	$	377,640,318		156.6	%

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

December 31, 2024

(1)

(2)

(3)

(4)

Unless otherwise indicated, all investments are considered Level 3 assets.

(5)

Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Secured Credit Facility (as defined herein).

(6)

Except as otherwise noted, all of the Company’s portfolio company investments are subject to legal restrictions on sales.

(7)

(8)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(9)

(10)

(11)

As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” and may have “Control” of this portfolio company as the Company and/or its affiliated funds collectively owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). The Company’s investment in affiliates for the year ended December 31, 2024 were Arrow Home Health, LLC and Caregility Corporation which represented $50,680,798 of Fair Value and 20.5% of Net Assets of the Company. Transactions related to investments in “Controlled/Affiliate Investments” for the year ended December 31, 2024 were as follows:

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments – (continued)

December 31, 2024

Portfolio Company	Type of Investment	Amount of Realized Gain (Loss)		Amount of Interest or Dividends Credited to Income (a)		December 31, 2023 Value		Gross Additions (b)		Gross Reductions (c)			Transfers In/(Out) of Affiliates		Amount of Unrealized Gains (Loss)			December 31, 2024 Value
Arrow Home Health LLC (dba Acara Home Health)	First lien senior secured term loan	$	-	$	97,755	$	748,782	$	2,409	$	(1,027	)	$	-	$	(49,047	)	$	701,117
	Preferred equity securities (571,080 shares)		-		-		202,097		-		-			-		(50,721	)		151,376
	Preferred equity securities (56,005 shares)		-		-		112,010		-		-			-		-			112,010
Capone Holdings JV, LLC (dba LaSalle Staffing)	Preferred equity securities (4,000,000 shares)		-		206,284		-		-		-			6,200,800		499,200			6,700,000
Caregility Corporation	First lien senior secured term loan		-		179,274		2,244,216		405,258		(25,128	)		-		(186,277	)		2,438,069
	Warrants (267,801 units)		-		-		571,189		-		-			-		(571,189	)		-
	Preferred equity securities (151,018 shares)		-		-		1,383,250		-		-			-		(194,645	)		1,188,605
	Preferred equity securities (3,833,757 shares)		-		-		4,108,869		-		-			-		259,547			4,368,416
	Senior secured notes (320,385 units)		-		-		-		341,103		-			-		-			341,103
Lasalle Staffing, LLC	First lien senior secured term loan		-		696,525		-		114,945		(268,139	)		7,474,073		(33,840	)		7,287,039
Microf, LLC	Senior unsecured notes		-		360,523		-		-		-			3,427,073		-			3,427,073
	Preferred equity securities (164,332 shares)		-		-		-		-		-			318,483		(318,483	)		-
MPUSA, LLC (dba Mission)	First lien senior secured term loan		-		355,288		-		-		(475,786	)		1,726,068		198,261			1,448,543
	Preferred equity securities (69 shares)		-		-		-		-		-			-		-			-
	Preferred equity securities (88 shares)		-		-		-		1,960,641		-			-		(178,307	)		1,782,334
Uncle John's Pride, LLC	First lien senior secured term loan		-		864,559		-		12,730		(193,514	)		7,142,992		37,094			6,999,302
UJP Acquisition, LLC (dba Uncle John's Pride)	Warrants and other equity securities (127,215 shares)		-		-		-		-		-			47,064		29,265			76,329
	Preferred equity securities (2,829,787 shares)		-		-		-		-		-			4,252,128		280,744			4,532,872
USBid Inc.	First lien senior secured term loan		-		62,299		-		1,149,839		(4,826,396	)		268,292		5,648,903			2,240,638
USBid Inc. - Class C2 Units	Preferred equity securities (600,000 shares)		-		-		-		-		-			-		504,000			504,000
USBid Inc. - Class C3 Units	Preferred equity securities (24,000,000 shares)		-		-		-		-		-			-		432,000			432,000
Watt Acquisition, LLC	First lien senior secured term loan		-		280,497		-		151,864		(32,533	)		2,148,189		162,680			2,430,200
Watt Contracting Holdings, LLC	Preferred equity securities (3,375 shares)		-		-		-		-		-			163,211		3,356,561			3,519,772
	Warrants and other equity securities (295 shares)		-		-		-		-		-			-		-			-
Total Affiliate Investments		$	-	$	3,103,004	$	9,370,413	$	4,138,789	$	(5,822,523	)	$	33,168,373	$	9,825,746		$	50,680,798

(a)	Represents the total amount of interest, fees or dividends credited to income for the portion of the period an investment was included in the Affiliate category.

(b)	Gross additions include increase in the cost basis of investments resulting from purchases, PIK interest or amortization of original issue discount.

(c)	Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales.

(12)

Ownership of certain equity investments may occur through a holding company or partnership.

(13)

Investment contains a fixed rate structure.

(14)

The Company has received 46 units of incentive shares which have no Cost or Fair Value as of December 31, 2024.

(15)

Interest disclosed reflects the contractual rate of the First Out tranche under the AAL.

(16)

The interest rate on these loans is subject to 1 month SOFR, which was 4.33% as of December 31, 2024.

(17)

The interest rate on these loans is subject to 3 month SOFR, which was 4.31% as of December 31, 2024.

(18)

Positions have an aggregate unfunded commitment of $21,455,258 in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 11 “Commitments, Contingencies and Risks” in the accompanying notes to the consolidated financial statements.

(19)

The investment is on non-accrual status. See Note 2 “Significant Accounting Policies”.

(20)

The investment includes the fair value and amortized cost of 1,015 shares of common equity issued in conjunction with the preferred equity.

(21)

Investment is held by a subsidiary of the Company. See Note 2. in the accompanying notes to the consolidated financial statements for additional information on the Company’s wholly-owned subsidiary.

(22)

The investment does not accrue PIK for the debt or equity investment as of December 31, 2024. See Note 2 “Significant Accounting Policies”.

(23)

Maturity date is under on-going negotiations with the portfolio company and other lenders as of December 31, 2024, as applicable.

(24)

All investments are non-income producing unless otherwise indicated.

See accompanying notes.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Organization and Principal Business

Star Mountain Lower Middle-Market Capital Corp. (the “Company”) is an externally managed, closed-end management investment company and has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

Star Mountain Credit Opportunities Fund, LP (the “Private Fund”) was formed as a Delaware limited partnership on August 7, 2019 to make investments in lower middle-market companies and commenced operations on September 16, 2019. On May 14, 2021, Star Mountain Credit Opportunities Fund, LP converted to Star Mountain Lower Middle-Market Capital Corp., via a filing with the State of Delaware of a Certificate of Conversion to a Corporation.

Based on analysis of the attributes of the Star Mountain Credit Opportunities Fund, LP predecessor entity versus the Star Mountain Lower Middle-Market Capital Corp. converted entity, it was determined that Star Mountain Lower Middle-Market Capital Corp. was the accounting survivor.

Star Mountain Lower Middle-Market Capital Holdings, LLC (the “Holding Company”) is a wholly owned taxable subsidiary of the Company that was formed as a Delaware limited liability company on December 13, 2023 to hold certain of the Company’s investments for tax purposes. The Holding Company commenced operations on December 13, 2023.

The Company’s investment objectives are to generate current income and capital appreciation. The Company seeks to achieve its investment objectives by investing primarily in privately negotiated loans and equity investments to small and medium-sized businesses (“SMBs”) generally with annual revenues greater than $15 million and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of less than $50 million. The Company is advised by Star Mountain Fund Management, LLC (“Star Mountain Fund Management”, the “Administrator” or the “Advisor”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. In addition, for U.S. federal income tax purposes, the Company has elected to be treated and intends to continue to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The preparation of these consolidated financial statements is in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. The Company is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies.

Basis of Consolidation

As provided under ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the financial position and results of operations of the Holding Company. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of June 30, 2025, and the reported revenue generated and expenses incurred during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company applies fair value to substantially all of its financial instruments in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 for further discussion regarding the fair value measurements and hierarchy.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 2. Summary of Significant Accounting Policies (continued)

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments, such as cash and cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments.

Revenue Recognition

The Company’s revenue recognition policies are as follows:

Interest income: Interest income is recorded on the accrual basis to the extent that the Company expects to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt investments. For the three and six months ended June 30, 2025, $9,068,456 and $17,964,953, respectively, of interest income, excluding payment in kind (“PIK”) interest income, has been accrued as shown on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, $10,101,803 and $20,950,519, respectively, of interest income, excluding PIK interest income, has been accrued as shown on the Statements of Operations. As of June 30, 2025 and December 31, 2024, $4,714,443 and $3,887,028 of interest income is receivable, respectively, as shown on the Consolidated Statements of Assets and Liabilities.

Payment in-kind income: The Company has certain investments in its portfolio that contain a PIK provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. For loans and debt securities with contractual PIK, the Company generally will not accrue PIK interest for accounting purposes if the portfolio company valuation indicates that such PIK interest is not collectible. To maintain its ability to take a dividend paid deduction, the Company may need to pay out PIK non-cash income amounts in the form of distributions, even though the Company has not yet collected the cash. For the three and six months ended June 30, 2025, $882,140 and $1,933,464, respectively, of PIK income has been accrued as shown on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, $1,093,216 and $2,563,758, respectively, of PIK income has been accrued as shown on the Consolidated Statements of Operations.

Non-accrual: Loans or preferred equity securities are placed on non-accrual status when interest, PIK interest or dividend payments become 90 days or more past due, or when there is reasonable doubt that principal, interest or dividends will be collected. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Any accrued interest receivable in previous years will be written off and corresponding interest income will be reversed, as applicable. Subsequent interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal, interest, PIK interest or dividends are paid, and, in management’s judgment are likely to remain current. Please refer to the Consolidated Schedule of Investments for non-accrual status of investments as of June 30, 2025 and December 31, 2024. As of June 30, 2025 and December 31, 2024, four investments, SkyBell Technologies, Inc., Consolidated Machine & Tool Holdings, LLC, Masterworks Electronics, Inc., and Chicken Soup For The Soul, LLC are on non-accrual status. For the three and six months ended June 30, 2025, no interest receivable was reversed as a result. For the three and six months ended June 30, 2024, $355,625 and $452,655 of interest receivable was reversed, respectively.

Dividend income: Dividend income to be paid in-kind on equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income paid in cash is recorded on the date declared for portfolio companies. Each distribution received from limited liability company and limited partnership interests is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For the three and six months ended June 30, 2025 the Company received $368,738 as return of capital distribution from its investment in Madryn Select Opportunities, LP and for the three and six months ended June 30,2024, the Company did not receive any return of capital distributions from its investments. For the three and six months ended June 30, 2025, $467,432 and $688,739, respectively, of dividend income has been accrued as shown on the Consolidated Statements of Operations. For both the three and six months ended June 30, 2024, $328,497 of dividend income had been accrued as shown on the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, all dividend income has been received.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 2. Summary of Significant Accounting Policies (continued)

Original Issue Discount: Discounts to par on portfolio securities are accreted into income over the tenor of the instrument. Any remaining discount is accreted into income upon prepayment or redemption of the instrument and the Company then amortizes such amounts using the effective interest method as interest income over the life of the investment. The unamortized discount as of June 30, 2025 and December 31, 2024, was $5,384,400 and $6,287,447, respectively. The amount of original issue discount amortized for the three and six months ended June 30, 2025 was $669,547 and $1,444,728, respectively, and is included in interest income on the Consolidated Statements of Operations. The amount of original issue discount amortized for the three and six months ended June 30, 2024 was $637,202 and $940,978, respectively, and is included in interest income on the Consolidated Statements of Operations.

Amendment, waiver, and consent fees: In connection with modifying credit agreements with portfolio companies to provide additional operating or borrowing flexibility, the Company may be entitled to amendment, waiver and consent fees to compensate for the potentially enhanced credit risk. Such fees will be recorded as income on the date earned and accrued to the extent the fee is to be compensated in the form of additional principal balance. For the three and six months ended June 30, 2025, $79,728 and $167,434, respectively, of amendment fees had been earned and included in other income on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, $18,026 and $34,798, respectively, of amendment fees had been earned and included in other income on the Consolidated Statements of Operations.

Early repayment and termination fees: Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income. To the extent the Company receives early repayment fees in connection with pre-maturity loan agreement termination, such income will be recorded on the date of prepayment. The Company and its Advisor generally do not structure transactions with a contractual exit fee to be collected upon loan repayment at maturity. For the three and six months ended June 30, 2025, $0 and $0, respectively, of early repayment and termination fees had been earned and included in other income on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the early repayment and termination fees were $17,790 and $124,945, respectively.

Gains and Losses: Investment transactions are recorded on a trade-date basis. Realized gains or losses on portfolio investments are calculated based upon the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. Realized gains and losses are recorded within net realized gain (loss) on investments on the Consolidated Statements of Operations. Changes in the fair value of investments from the prior period, as approved by the Board based on fair value recommendations from the Advisor in accordance with the Advisor’s valuation policy, are included within net change in unrealized gain (loss) on investments on the Consolidated Statements of Operations. For the three and six months ended June 30, 2025, the Company had $2,488,217 and $4,352,098, respectively, of net realized gain (loss) on investments as represented on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the Company had $2,034,517 and $2,034,517, respectively, of net realized gain (loss) on investments as represented on the Consolidated Statements of Operations.

Distributions

Distributions to Stockholders are recorded on the applicable record date. The Company generally intends to make quarterly distributions to its Stockholders out of assets legally available for distribution. All current income and realization proceeds will be retained by the Company and be available for re-investment. Distributions will be made to Stockholders at such times and in such amounts as determined by the Company’s Board.

The Company has adopted an “opt out” dividend reinvestment plan (“DRP”) for Stockholders. When a distribution is declared, Stockholders’ cash distributions will automatically be reinvested in additional shares of the Company’s common stock (“Common Stock”) unless a Stockholder specifically “opts out” of the Company’s DRP. Stockholders may opt out of the Company’s DRP by providing notice twenty (20) business days in advance of the distribution payment date.

If a Stockholder opts out, that Stockholder will receive cash distributions. Although distributions paid in the form of additional shares of Common Stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, Stockholders participating in the Company’s DRP will not receive any corresponding cash distributions with which to pay any such applicable taxes. If distributions paid exceed tax earnings and profits, portions of the distribution can be recorded as a return of capital.

Earnings per Share

In accordance with the provisions of ASC Topic 260 – Earnings per Share, basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. The weighted average shares outstanding utilized in the calculation of earnings per share take into account share issues on the issuance date and the Company’s repurchases of its Common Stock on the repurchase date. See Note 9 for additional information on the Company’s share activity. For the six months ended June 30, 2025 and for the year ended December 31, 2024, there were no potentially dilutive common shares issued.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 2. Summary of Significant Accounting Policies (continued)

Segments

In accordance with ASC Topic 280 — Segment Reporting, the Company has determined that it has a single reporting segment and operating unit structure.

Cash

Cash is comprised of cash on deposit with major financial institutions. The Company places the majority of its cash with State Street Bank and Trust Company, a high credit quality institution, to minimize credit risk exposure. The Company, at times, may have cash on deposit with major financial institutions that exceeds federally insured limits.

Cash Equivalents

Cash equivalents are highly liquid investments with a current maturity of three months or less at the date of acquisition, which may include temporary investments in U.S. Treasury Bills (of varying maturities) or money market funds. There were no cash equivalents outstanding on the Company’s Consolidated Statements of Assets and Liabilities as of June 30, 2025 and December 31, 2024.

Unamortized Deferred Financing Costs

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. Deferred financing costs are capitalized as incurred and amortized on a straight line basis to maturity of the Secured Credit Facility (as defined herein). For the three and six months ended June 30, 2025, the Company had $170,350 and $307,750, respectively, of expensed financing costs included in interest and other financing fees on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the Company had $144,398 and $284,919, respectively, of expensed financing costs included in interest and other financing fees on the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, the Company had $1,845,836 and $2,169,211, respectively, of unamortized deferred financing costs as shown in deferred financing cost on the Consolidated Statements of Assets and Liabilities.

Offering Costs

Offering costs are expensed as incurred. These expenses consist primarily of legal fees and other costs incurred with Company’s share offerings, the preparation of the Company’s registration statement, and registration fees. For the three and six months ended June 30, 2025, the Company incurred offering costs in the amount of $40,000 and $80,000, respectively, as shown as a component of the general and administrative fees in the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the Company incurred offering costs in the amount of $49,727 and $99,454, respectively, as shown as a component of the general and administrative fees in the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, $0 and $37,000, respectively, of offering costs incurred were payable and included in other payables on the Consolidated Statement of Assets and Liabilities.

Custodian Fees

The Company has entered into a custody agreement with State Street Bank and Trust Company (the “Custodian”). For the three and six months ended June 30, 2025, the Company incurred expenses for services provided by the Custodian of $12,008 and $21,008, respectively, which is included in professional fees on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the Company incurred expenses for services provided by the Custodian of $12,201 and $18,197, respectively, which is included in professional fees on the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, $11,490 and $14,500, respectively, remained payable, which is included in professional fees payable on the Consolidated Statements of Assets and Liabilities.

Income Taxes

On May 14, 2021, the Company elected to be regulated as a BDC under the 1940 Act. The Company also elected to be treated as a RIC under Subchapter M of the Code and intends to qualify annually as a RIC. As long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its Stockholders. Rather, any tax liability related to income earned by the Company represents obligations of the Company’s Stockholders and will not be reflected in the consolidated financial statements of the Company.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 2. Summary of Significant Accounting Policies (continued)

To qualify as a RIC under Subchapter M of the Code, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its Stockholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending October 31 in that calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years and on which the Company paid no U.S. federal income. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. For the three and six months ended June 30, 2025 and 2024, the Company did not record any excise tax expense on the Consolidated Statements of Operations.

The Company accounts for income taxes in conformity with ASC Topic 740 — Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current period. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. For the three months ended June 30, 2025, there was $165,000 in income tax expense and $1,760,115 in change in deferred taxes. For the six months ended June 30, 2025, there was $722,415 in income tax expense and $1,709,967 in change in deferred taxes. For the year ended December 31, 2024, the Company recorded a $6,094,196 deferred tax liability for the unrealized appreciation of investments held in the Holding Company. The Company did not record any uncertain income tax positions for the six months ended June 30, 2025 and for the year ended December 31, 2024 on the Consolidated Statements of Assets and Liabilities.

The aggregate amortized tax basis cost of investments included on the Consolidated Schedule of Investments as of June 30, 2025 and December 31, 2024 were $367,346,702 and $378,175,594, respectively.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company adopted FASB Accounting Standards Update 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”). Adoption of the new standard impacted financial statement disclosures only and did not affect the Company’s financial position or the results of its operations. The ASU 2023-07 is effective for public entities for fiscal years beginning after December 15, 2023, and requires retrospective application for all prior periods presented within the financial statements.

Since its commencement, the Company operates and is managed as a single reportable segment deriving returns mainly in the form of interest income, dividend income and other fees from the investments made in pursuit of its single stated investment objective. The accounting policies of the Company are consistent with those described in these Notes to Financial Statements. The chief operating decision maker (“CODM”) is represented by the Company’s Chief Executive Officer and Chief Financial Officer. The CODM considers net investment income, leverage and increase or decrease in net assets resulting from operations in deciding how to deploy capital and make distributions to shareholders. Detailed financial information for the Company is disclosed within these financial statements with total assets and liabilities disclosed on the Consolidated Statements of Assets and Liabilities, investments held on the Consolidated Statements of Investments, results of operations and significant segment expenses on the Consolidated Statements of Operations and other information about the Company’s performance, including total return, portfolio turnover and ratios within the Financial Highlights in Note 12.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes – Improvements to Income Tax Disclosures. This guidance enhances the transparency and decision usefulness of income tax disclosures. The effective date for the amendments in ASU 2023-09 are for fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of this guidance, however, the Company does not expect a material impact on its financial statements.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 3. Investments

The following tables show the composition of the Company’s investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

	June 30, 2025
	Amortized Cost				Fair Value
First Lien Senior Secured Loan	$	312,921,404	85.3	%	$	289,806,939	81.4	%
Senior Unsecured Notes		5,724,728	1.6			3,733,001	1.0
Preferred Equity Securities		43,512,926	11.8			54,383,715	15.3
Warrants and Other Equity Securities		2,658,077	0.7			6,217,841	1.7
Fund Investments		2,529,567	0.6			2,165,570	0.6
Total	$	367,346,702	100.0	%	$	356,307,066	100.0	%

	December 31, 2024
	Amortized Cost				Fair Value
First Lien Senior Secured Loan	$	316,588,427	83.7	%	$	304,120,042	80.5	%
Second Lien Senior Secured Loan		6,148,061	1.6			6,034,048	1.6
Senior Secured Notes		341,103	0.1			341,103	0.1
Senior Unsecured Notes		5,460,171	1.4			3,427,073	0.9
Preferred Equity Securities		43,141,500	11.4			53,603,056	14.2
Warrants and Other Equity Securities		3,598,027	1.0			7,426,377	2.0
Fund Investments		2,898,305	0.8			2,688,619	0.7
Total	$	378,175,594	100.0	%	$	377,640,318	100.0	%

The following tables show the composition of the Company’s investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

	June 30, 2025
	Amortized Cost				Fair Value
Southeast	$	116,857,367	31.8	%	$	114,384,347	32.1	%
Midwest		63,494,275	17.3			67,031,056	18.8
West		76,276,853	20.8			68,734,948	19.3
Northeast		54,203,767	14.8			47,884,789	13.4
East		31,424,852	8.6			29,315,066	8.2
Southwest		5,816,476	1.6			5,037,291	1.4
South		19,273,112	5.1			23,919,569	6.8
Total	$	367,346,702	100.0	%	$	356,307,066	100.0	%

	December 31, 2024
	Amortized Cost				Fair Value
Southeast	$	117,080,225	30.9	%	$	117,034,924	31.1	%
West		82,054,389	21.7			79,102,675	20.9
Southwest		24,839,939	6.6			26,915,726	7.1
Northeaast		46,304,903	12.2			40,825,353	10.8
Midwest		51,256,396	13.6			55,040,086	14.6
South		21,269,446	5.6			25,378,672	6.7
East		35,370,296	9.4			33,342,882	8.8
Total	$	378,175,594	100.0	%	$	377,640,318	100.0	%

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 3. Investments (continued)

The following tables show the composition of the Company’s investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

	June 30, 2025
	Amortized Cost				Fair Value
Aerospace & Defense	$	9,222,823	2.5	%	$	8,426,398	2.4	%
Chemicals		14,683,685	4.0			14,737,500	4.1
Commercial Services & Supplies		4,122,825	1.1			4,087,202	1.1
Construction & Engineering		67,400,398	18.3			73,998,283	20.8
Consumer Finance		3,691,630	1.0			3,733,001	1.0
Distributors		14,831,512	4.0			7,861,976	2.2
Diversified Financials		2,529,567	0.7			2,165,570	0.6
Diversified Telecommunication Services		23,161,080	6.3			24,070,751	6.8
Electrical Equipment		11,231,594	3.1			1,535,419	0.4
Entertainment		18,356,097	5.0			14,674,974	4.1
Food Products		9,661,534	2.6			11,870,427	3.3
Healthcare Providers & Services		40,224,629	11.0			38,289,120	10.7
Hotels, Restaurants & Leisure		6,520,577	1.8			6,588,824	1.8
Household Durables		4,534,241	1.2			3,804,272	1.1
Household Products		4,071,501	1.1			4,564,284	1.3
IT Services		12,099,611	3.3			12,173,487	3.4
Leisure Products		5,550,106	1.5			3,614,288	1.0
Machinery		4,411,751	1.2			4,050,749	1.1
Media		19,895,915	5.4			21,874,583	6.1
Personal Products		4,312,101	1.2			4,311,712	1.2
Professional Services		52,198,727	14.2			59,216,453	16.6
Software		997,284	0.3			683,169	0.2
Specialty Retail		6,853,185	1.9			6,929,067	2.0
Trading Companies & Distributors		16,815,960	4.6			13,017,063	3.8
Transportation Infrastructure		9,968,369	2.7			10,028,494	2.9
Total	$	367,346,702	100.0	%	$	356,307,066	100.0	%

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 3. Investments (continued)

	December 31, 2024
	Amortized Cost				Fair Value
Aerospace & Defense	$	8,918,780	2.4	%	$	8,103,579	2.1	%
Chemicals		14,623,342	3.9			14,812,499	3.9
Commercial Services & Supplies		4,118,722	1.1			3,908,639	1.0
Construction & Engineering		75,685,424	19.9			83,705,436	22.3
Consumer Finance		3,427,073	0.9			3,427,073	0.9
Distributors		14,323,723	3.8			13,163,459	3.5
Diversified Financials		2,898,305	0.8			2,688,619	0.7
Diversified Telecommunication Services		22,915,391	6.1			23,137,607	6.1
Electrical Equipment		11,231,435	3.0			5,729,737	1.5
Entertainment		18,324,745	4.8			14,317,635	3.8
Food Products		9,662,293	2.6			11,608,503	3.1
Healthcare Providers & Services		43,990,733	11.6			41,162,604	10.9
Hotels, Restaurants & Leisure		4,891,016	1.3			4,910,952	1.3
Household Durables		4,534,757	1.2			3,057,209	0.8
Household Products		4,875,685	1.3			4,990,960	1.3
IT Services		12,433,640	3.3			12,558,929	3.3
Leisure Products		5,449,787	1.4			3,230,877	0.9
Machinery		4,547,261	1.2			4,217,950	1.1
Media		22,096,440	5.8			26,926,042	7.1
Personal Products		4,360,968	1.2			4,404,301	1.2
Professional Services		51,365,785	13.5			58,307,390	15.4
Software		997,284	0.3			965,151	0.3
Specialty Retail		6,609,366	1.7			6,703,118	1.8
Trading Companies & Distributors		15,699,920	4.2			11,262,596	3.0
Transportation Infrastructure		10,193,719	2.7			10,339,453	2.7
Total	$	378,175,594	100.0	%	$	377,640,318	100.0	%

Note 4. Fair Value Measurements Investments

ASC Topic 820 clarifies the definition of fair value as the amount that would be received in the sale of an asset or paid in the transfer of a liability in an orderly transaction between market participants at the measurement date. Where available, the Company uses quoted market prices based on the last sales price on the measurement date.

In accordance with ASC Topic 820, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). To the extent that fair value is based on inputs that are less observable, the determination of fair value requires a significant amount of management judgment. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy.

The three-tier hierarchy of inputs is summarized below.

•	Level 1 - Quoted prices are available in active markets/exchanges for identical investments as of the reporting date.

•

Level 2 - Pricing inputs are observable inputs including, but not limited to, prices quoted for similar assets or liabilities in active markets/exchanges or prices quoted for identical or similar assets or liabilities in markets that are not active, and fair value is determined through the use of models or other valuation methodologies.

•	Level 3 - Pricing inputs are unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs into determination of fair value require significant management judgment and estimation.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements (continued)

The inputs used by management in estimating the fair value of Level 3 investments may include valuations and other reporting provided by representatives of the portfolio companies, original transaction prices, recent transactions for identical or similar instruments, and comparisons to fair values of comparable investments, and may include adjustments to reflect illiquidity or non-transferability. The Company has policies with respect to its investments, which may assist the Advisor in assessing the quality of information provided by, or on behalf of, each portfolio investment and in determining whether such information continues to be provided by a reliable source or whether further investigation is necessary. Any such investigation, as applicable, may or may not require the Advisor to forego its normal reliance on the value supplied by, or on behalf of, such portfolio investment and to independently recommend the fair value of the Company’s interest in such portfolio investments for approval by the Board, consistent with the Company’s valuation procedures.

The Company has engaged an independent third-party valuation provider, which performs valuation procedures to arrive at estimated valuation ranges of the investments on a quarterly basis. Investments that have been completed within the past three months will be fair valued at cost unless there has been a material event. If there has been a material event or material information that was not known as of the close of the transaction, the independent third-party valuation provider will provide an independent valuation range. The types of valuation methodologies employed by the third-party valuation provider include discounted cash flow, recent financing and enterprise value valuation methodologies. The Company’s Board will discuss valuations and determine the fair value of each investment in the Company’s portfolio in good faith, based on the input of the Advisor, the respective independent valuation firms and the audit committee.

The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics and other factors.

The use of these valuation models requires significant estimation and judgment by the Advisor. While the Company believes its valuation methods are appropriate, other market participants may value identical assets differently than the Company at the measurement date. The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The Company may also have risk associated with its concentration of investments in certain geographic regions and industries.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3.

The determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, which may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and observability of prices and inputs may be reduced for many investments. This condition could cause the investment to be reclassified to a lower level within the fair value hierarchy.

The consolidated financial statements include portfolio investments at fair value of $356,307,066 and $377,640,318 as of June 30, 2025 and December 31, 2024, respectively.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements (continued)

The Company valued its investments in underlying funds based on its proportionate interest in net asset value (“NAV”) of the underlying funds. For the purpose of classifying the investments in underlying funds within the fair value hierarchy, the Company makes use of the practical expedient under ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent). As of June 30, 2025 and December 31, 2024, the Company’s investments in underlying funds amounted to $2,165,570 and $2,688,619, respectively.

U.S. GAAP requires that the Company disclose the Company’s pro-rata portion of individual securities, if available, that are reported to the Company by the underlying portfolio funds that exceed 5% of the Company’s capital balance.

The following tables present fair value measurements of investments, by major class according to the fair value hierarchy.

	Fair Value Measurements
June 30, 2025	Level 1		Level 2		Level 3		Total
First Lien Senior Secured Loan	$	-	$	-	$	289,806,939	$	289,806,939
Senior Unsecured Notes		-		-		3,733,001		3,733,001
Preferred Equity Securities		-		-		54,383,715		54,383,715
Warrants and Other Equity Securities		-		-		6,217,841		6,217,841
Total	$	-	$	-	$	354,141,496	$	354,141,496
Fund Investments								2,165,570
Total Investments							$	356,307,066

	Fair Value Measurements
December 31, 2024	Level 1		Level 2		Level 3		Total
First Lien Senior Secured Loan	$	-	$	-	$	304,120,042	$	304,120,042
Senior Secured Notes		-		-		341,103		341,103
Second Lien Senior Secured Loan		-		-		6,034,048		6,034,048
Senior Unsecured Notes		-		-		3,427,073		3,427,073
Preferred Equity Securities		-		-		53,603,056		53,603,056
Warrants and Other Equity Securities		-		-		7,426,377		7,426,377
Total	$	-	$	-	$	374,951,699	$	374,951,699
Fund Investments								2,688,619
Total Investments							$	377,640,318

First Lien Senior Secured Loans and Second Lien Senior Secured Loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates on these loans are either fixed or floating and are based on current market conditions.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements (continued)

The following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three and six months ended June 30, 2025 and 2024:

	Investments
	First Lien Senior Secured Loan			Second Lien Senior Secured Loan			Senior Secured Notes			Senior Unsecured Notes		Preferred Equity Securities		Warrants and Other Equity Securities			Fund Investments			Total Investments
Balance as of March 31, 2025	$	302,968,264		$	6,044,612		$	417,402		$	3,699,200	$	50,798,894	$	9,021,488		$	2,873,702		$	375,823,562
Net realized gain on investments		-			-			-			-		-		2,488,217			-			2,488,217
Net change in unrealized gain (loss) on investments		(5,133,000	)		31,325			12,378			31,917		1,636,698		(1,863,699	)		(339,394	)		(5,623,775	)
Purchases of investments and other adjustments to cost ⁽¹⁾		6,895,122			1,410,595			-			1,884		454,276		-			-			8,761,877
Proceeds from sales of investments		-			-			-			-		-		(3,428,165	)		-			(3,428,165	)
Proceeds from principal repayments⁽²⁾		(21,295,014	)		(50,898	)		-			-		-		-			(368,738	)		(21,714,650	)
Lien status change ⁽³⁾		6,371,567			(7,435,634	)		(429,780	)		-		1,493,847		-			-			-
Balance as of June 30, 2025	$	289,806,939		$	-		$	-		$	3,733,001	$	54,383,715	$	6,217,841		$	2,165,570		$	356,307,066

(1)

Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)

Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3)

Lien conversions are fair valued at beginning of period.

	Investments
	First Lien Senior Secured Loan			Second Lien Senior Secured Loan			Senior Secured Notes			Senior Unsecured Notes		Preferred Equity Securities			Warrants and Other Equity Securities			Fund Investments			Total Investments
Balance as of December 31, 2024	$	304,120,042		$	6,034,048		$	341,103		$	3,427,073	$	53,603,055		$	7,426,377		$	2,688,619		$	377,640,317
Net realized gain on investments		-			-			-			-		1,863,881			2,488,217			-			4,352,098
Net change in unrealized gain (loss) on investments		(10,646,081	)		114,013			-			41,370		409,233			(268,584	)		(154,311	)		(10,504,360	)
Purchases of investments and other adjustments to cost ⁽¹⁾		26,021,932			1,388,643			88,677			264,558		1,347,119			-			-			29,110,929
Proceeds from sales of investments		-			-			-			-		(4,333,420	)		(3,428,169	)		-			(7,761,589	)
Proceeds from principal repayments⁽²⁾		(36,060,521	)		(101,070	)		-			-		-			-			(368,738	)		(36,530,329	)
Lien status change⁽³⁾		6,371,567			(7,435,634	)		(429,780	)		-		1,493,847			-			-			-
Balance as of June 30, 2025	$	289,806,939		$	-		$	-		$	3,733,001	$	54,383,715		$	6,217,841		$	2,165,570		$	356,307,066

(1)

Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)

Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3)

Lien conversions are fair valued at beginning of period.

	Investments
	First Lien Senior Secured Loan			Second Lien Senior Secured Loan			Senior Secured Notes		Senior Unsecured Notes			Preferred Equity Securities			Warrants and Other Equity Securities			Fund Investments		Total Investments
Balance as of March 31, 2024	$	294,455,581		$	6,067,024		$	-	$	1,265,130		$	43,031,287		$	6,039,575		$	2,818,111	$	353,676,708
Net realized gain on investments		-			-			-		-			2,034,517			-			-		2,034,517
Net change in unrealized gain (loss) on investments		802,250			49,593			-		(1,265,130	)		(6,120,457	)		(784,427	)		-		(7,318,171	)
Purchases of investments and other adjustments to cost⁽¹⁾		2,590,720			7,925			-		8,874			210,033			-			-		2,817,552
Proceeds from sales of investments		(116,674	)		-			-		-			(2,632,407	)		-			-		(2,749,081	)
Proceeds from principal repayments ₍₂₎		(22,638,473	)		(50,898	)		-		-			-			-			-		(22,689,371	)
Lien status change⁽³⁾		(8,105,699	)		-			-		3,418,199			3,957,229			730,271			-		-
Balance as of June 30, 2024	$	266,987,705		$	6,073,644		$	-	$	3,427,073		$	40,480,202		$	5,985,419		$	2,818,111	$	325,772,154

(1)

Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)

Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3)

Lien conversions are fair valued at beginning of period.

	Investments
	First Lien Senior Secured Loan			Second Lien Senior Secured Loan			Senior Secured Notes		Senior Unsecured Notes			Preferred Equity Securities			Warrants and Other Equity Securities			Fund Investments		Total Investments
Balance as of December 31, 2023	$	319,229,009		$	6,059,372		$	-	$	1,384,446		$	41,804,395		$	5,706,423		$	2,809,327	$	376,992,972
Net realized gain (loss) on investments		-			-			-		-			2,034,517			-			-		2,034,517
Net change in unrealized gain (loss) on investments		(2,808,050	)		114,382			-		(1,384,446	)		(6,115,291	)		(451,275	)		8,784		(10,635,896	)
Purchases of investments and other adjustments to cost⁽¹⁾		5,412,284			7,925			-		8,874			210,033			-			-		5,639,116
Proceeds from sales of investments		(116,674	)		-			-		-			(2,632,407	)		-			-		(2,749,081	)
Proceeds from principal repayments ⁽²⁾		(45,384,400	)		(108,035	)		-		-			(17,039	)		-			-		(45,509,474	)
Lien status change⁽³⁾		(9,344,464	)		-			-		3,418,199			5,195,994			730,271			-		-
Balance as of June 30, 2024	$	266,987,705		$	6,073,644		$	-	$	3,427,073		$	40,480,202		$	5,985,419			2,818,111	$	325,772,154

(1)

Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)

Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3)

Lien conversions are fair valued at beginning of period.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements (continued)

The net change in unrealized gain (loss) on investments included on the Consolidated Statements of Operations for the three and six months ended June 30, 2025, attributable to Level 3 investments still held as of June 30, 2025 was $(2,858,317) and $(4,629,186), respectively. The net change in unrealized gain (loss) on investments included on the Consolidated Statements of Operations for the three and six months ended June 30, 2024, attributable to Level 3 investments still held as of June 30, 2024 was $(7,318,171) and $(10,635,896), respectively.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 for the three and six months ended June 30, 2025 and 2024.

Purchases (including accretion, amortization, PIK interest) for the three and six months ended June 30, 2025 amounted to $8,761,877 and $29,110,929, respectively. Purchases (including accretion, amortization, PIK interest) for the three and six months ended June 30, 2024 amounted to $2,817,552 and $5,639,116, respectively.

For the six months ended June 30, 2024, the Company did not invest in any new portfolio companies and invested $2,134,380 in three existing portfolio companies as reflected in the Consolidated Schedule of Investments.

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The table below summarizes the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of June 30, 2025.

Range

Fair Value

Valuation Technique

Unobservable

Input

Weighted

Average Mean

Minimum

Maximum

Assets:

First Lien Senior Secured Loans

268,248,543

Discounted Cash Flow

Discount Rate

14.4%

6.6%

30.0%

First Lien Senior Secured Loans

14,122,762

Guideline Public Company Method

Revenue Multiple

0.52

0.22

0.80

Guideline Public Company Method

EBITDA Multiple

10.50

10.00

11.00

First Lien Senior Secured Loans

Other

N/A

First Lien Senior Secured Loans

7,435,634

Discounted Cash Flow

Discount Rate

18.7%

16.9%

20.6%

Senior Secured Notes

Other

N/A

Senior Unsecured Notes

3,733,001

Discounted Cash Flow

Discount Rate

13.7%

12.5%

15.0%

Preferred Equity Securities

18,706,599

Discounted Cash Flow

Discount Rate

23.5%

15.0%

37.0%

Preferred Equity Securities

26,019,167

Guideline Public Company Method

Revenue Multiple

1.32

0.40

4.80

Guideline Public Company Method

EBITDA Multiple

9.13

4.00

15.25

Preferred Equity Securities

9,657,949

Guideline Merged & Acquired Company Method

Revenue Multiple

1.66

0.50

2.50

Guideline Merged & Acquired Company Method

EBITDA Multiple

9.79

7.50

12.50

Warrants and Other Equity Securities

206,906

Discounted Cash Flow

Discount Rate

19.3%

17.5%

32.00%

Warrants and Other Equity Securities

4,890,155

Guideline Public Company Method

Revenue Multiple

1.64

0.22

2.95

Guideline Public Company Method

EBITDA Multiple

7.98

5.50

24.00

Warrants and Other Equity Securities

1,120,780

Other

N/A

Partnership Interests

2,165,570

Other

N/A

Total Level 3 Assets

356,307,066

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements (continued)

The table below summarizes the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of December 31, 2024.

Range

Fair Value

Valuation Technique

Unobservable

Input

Weighted

Average Mean

Minimum

Maximum

Assets:

First Lien Senior Secured Loan

265,968,375

Discounted Cash Flow

Discount Rate

15.1%

7.7%

27.5%

First Lien Senior Secured Loan

14,268,323

Guideline Public Company Method

Revenue Multiple

0.91

0.65

1.17

EBITDA Multiple

8.74

0.53

11.24

First Lien Senior Secured Loan

23,883,344

Other

N/A

Second Lien Senior Secured Loan

6,034,048

Discounted Cash Flow

Discount Rate

16.7%

15.4%

18.0%

Senior Secured Note

341,103

Other

N/A

Senior Unsecured Note

3,427,073

Discounted Cash Flow

Discount Rate

13.8%

12.5%

15.0%

Preferred Equity Securities

16,391,316

Discounted Cash Flow

Discount Rate

23.9%

15.0%

44.5%

Preferred Equity Securities

26,931,469

Guideline Public Company Method

Revenue Multiple

1.42

0.40

4.60

EBITDA Multiple

10.12

6.25

16.00

Gross Profit Multiple

2.76

2.38

3.14

Preferred Equity Securities

8,741,809

Guideline Merged & Acquired Company Method

Revenue Multiple

1.69

0.50

2.50

EBITDA Multiple

9.46

7.50

12.50

Preferred Equity Securities

1,538,462

Other

N/A

Warrants and Other Equity Securities

214,733

Discounted Cash Flow

Discount Rate

22.9%

20.0%

32.5%

Warrants and Other Equity Securities

7,211,644

Guideline Public Company Method

Revenue Multiple

1.05

0.65

3.01

Warrants and Other Equity Securities

Guideline Public Company Method

EBITDA Multiple

10.20

5.16

55.75

Warrants and Other Equity Securities

Other

N/A

Fund Investments

2,688,619

Other

N/A

Total Level 3 Assets

377,640,318

An increase or decrease in any of the significant unobservable inputs used in the fair value measurement of the investments would result in a higher or lower fair value measurement, respectively.

The significant unobservable input used in the income approach of fair value measurement of the Company’s investments is the discount rate (derived from market yields, EBITDA Multiple and Revenue Multiple) used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.

Note 5. Transactions with Affiliated Companies

The Company and the Advisor have received an exemptive order from the SEC that permits the Company to co-invest with certain accounts managed by the Advisor and/or certain affiliates of the Company, subject to the terms and conditions specified in the exemptive order.

An affiliated company is a company in which the Company has an ownership interest of 5% or more of its voting securities. A controlled affiliate company is a company in which the Company and its affiliated funds have an ownership interest of more than 25% of its voting securities. Please see the Company’s Consolidated Schedule of Investments for the type of investment, principal amount, interest rate including the spread, and the maturity date.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 5. Transactions with Affiliated Companies (continued)

Transactions related to the Company’s investments with controlled affiliates for the six months ended June 30, 2025 and for the year ended December 31, 2024, were as follows:

The three months ended June 30, 2025	Equity Ownership Held by the Company			Equity Ownership Held by Star Mountain Affiliate Funds
Issuer:
Arrow Home Health LLC		2.6	%		72.2	%
Caregility Corporation		7.9	%		37.4	%
Lasalle Staffing, LLC		5.8	%		21.9	%
Microf, LLC		0.0	%		83.7	%
MPUSA, LLC (dba Mission)		4.3	%		34.4	%
Uncle John’s Pride, LLC		5.6	%		18.8	%
USBid Inc.		13.5	%		57.7	%
Watt Acquisition, LLC		9.8	%		30.5	%

The year ended December 31, 2024	Equity Ownership Held by the Company			Equity Ownership Held by Star Mountain Affiliate Funds
Issuer:
Arrow Home Health LLC		2.5	%		72.2	%
Caregility Corporation		7.9	%		37.4	%
Lasalle Staffing, LLC		5.8	%		21.9	%
Microf, LLC		0.0	%		83.7	%
MPUSA, LLC (dba Mission)		4.3	%		34.4	%
Uncle John’s Pride, LLC		5.6	%		18.8	%
USBid Inc.		13.5	%		57.7	%
Watt Acquisition, LLC		5.6	%		17.4	%

Note 6. Transactions with Related Parties

Star Mountain Lower Middle-Market (Offshore) Ltd. (the “Feeder Fund”) was formed as a Cayman Islands exempted company and commenced operations on August 17, 2021. The Feeder Fund has been formed to invest all or substantially all of its investable assets in the common stock of the Company. As of June 30, 2025 and December 31, 2024, the Feeder Fund had $46,488,800 and $46,488,800 in capital committed to the Company, respectively, and an ownership percentage in the Company of 16.38% and 17.02%, respectively.

Management Fees

The Company has entered into an investment advisory agreement with the Advisor (as amended and restated, the “Investment Advisory Agreement”), under which the Advisor, subject to the overall supervision of the Board, provides investment advisory services to the Company. The Company pays the Advisor a fee for its services under the Investment Advisory Agreement consisting of two components – a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee are borne by the Company’s Stockholders, unless such fees are waived by the Advisor.

The Company pays the Advisor a base management fee of 1.25% per annum of the average of the Company’s total gross assets (excluding cash or cash equivalents but including assets purchased with borrowed amounts) as of the end of each of the two most recently completed calendar quarters.

Management fees for the three and six months ended June 30, 2025 were $1,173,157 and $2,360,804, respectively. For the three and six months ended June 30, 2025, the Advisor elected to voluntarily waive $0 and $0, respectively, of such management fees. Management fees for the three and six months ended June 30, 2024 were $1,076,579 and $2,228,646, respectively.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 6. Transactions with Related Parties (continued)

The management fees waived are not recoupable by the Advisor. There is no guarantee that the Advisor will waive management fees in the future, and the Advisor may discontinue or modify any such waivers in the future at its discretion. As of June 30, 2025 and December 31, 2024, $1,460,804 and $1,157,509 of management fees remained payable, respectively.

Incentive Fees

The incentive fee (“Incentive Compensation”) consists of two parts. The first component of the income incentive fee is payable quarterly in arrears. The Income Incentive Fee will be determined by comparing the Company’s pre-incentive fee net investment income for the preceding quarter. Pre-incentive fee net investment income means interest income, dividend income, PIK interest and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee), any expenses payable under the administration agreement (the “Administration Agreement”) between the Company and the Administrator and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee. Pre-incentive fee net investment income will include, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash. The Advisor is not under any obligation to reimburse the Company for any part of the incentive fee it receives that was based on accrued interest that the Company never actually receives.

Pre-incentive fee net investment income does not include any realized capital gains or losses or unrealized capital gains or losses. If any distributions from portfolio companies are characterized as a return of capital, such returns of capital would affect the capital gains incentive fee to the extent a gain or loss is realized. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where it incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, the Company will pay the applicable incentive fee even if it has incurred a loss in that quarter due to realized and unrealized capital losses.

Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.75% per quarter (7% annually).

Under the Investment Advisory Agreement, the Company pays the Advisor an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:

•

no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate of 1.75% (7% annually);

•

100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to the product of (i) 2.1212% per quarter (8.4848% annualized) and (ii) the Company’s net assets at the end of the immediately preceding quarter. The Company refers to this portion of the Company’s pre-incentive fee net investment income as the “catch-up” provision. The catch-up is meant to provide the Advisor with approximately 17.5% of the pre-incentive fee net investment income if a hurdle rate did not apply; and

•

17.5% of the Company’s pre-incentive fee net investment income that exceeds the “catch-up” provision. This provides that once the hurdle amount and the catch-up provision are achieved, 17.5% of all pre-incentive fee net investment income thereafter is allocated to the Advisor.

These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

The second part of the incentive fee is a capital gains incentive fee that is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date). Under the Investment Advisory Agreement, the Capital Gains Incentive Fee is 17.5% of cumulative realized capital gains as of the end of the fiscal year.

Table of Contents

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 6. Transactions with Related Parties (continued)

In determining the capital gains incentive fee payable to the Advisor, the Company calculates the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since the Company’s inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in the Company’s portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the amortized cost of such investment. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the amortized cost of such investment since the Company’s inception. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the amortized cost of such investment. At the end of the applicable year, the amount of capital gains that will serve as the basis for the calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to the Company’s portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year equals 17.5% of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of the Company’s portfolio in all prior years.

While the Investment Advisory Agreement with the Advisor neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, the Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to the Advisor if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though the Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Incentive fees for the three and six months ended June 30, 2025 were $1,275,636 and $2,142,038, respectively. For the three and six months ended June 30, 2025, the Advisor elected to voluntarily waive $0 and $0 of such incentive fees, respectively. Incentive fees for the three and six months ended June 30, 2024 were $1,118,488 and $2,344,006, respectively. The incentive fees waived for the period ended June 30, 2025 are not recoupable and there is no guarantee that the Advisor will waive incentive fees in the future. The Advisor may discontinue or modify any such waivers in the future at its discretion. As of June 30, 2025 and December 31, 2024, $4,955,762 and $2,813,724, respectively, of incentive fees remained payable as shown in the Consolidated Statements of Assets and Liabilities.

Administration Fees

The Company has entered into the Administration Agreement with the Advisor, under which the Company reimburses the Administrator for its allocable portion of overhead and other expenses, including the costs of furnishing the Company with office facilities and equipment and providing clerical, bookkeeping, record-keeping and other administrative services at such facilities, and the Company’s allocable portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit, to the Administrator. For the three and six months ended June 30, 2025, the Company incurred reimbursement expenses of $156,006 and $336,381, respectively, included under General and Administrative fees on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the Company incurred reimbursement expenses of $84,503 and $125,809, respectively, included under General and Administrative fees on the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, $156,006 and $77,275, respectively, of reimbursement expense was payable as shown in the Consolidated Statements of Assets and Liabilities as reimbursement expense payable.

The Administrator has entered into a sub-administration agreement with SS&C Technologies, Inc. (the “Sub-Administrator”), under which the Sub-Administrator provides various accounting and administrative services to the Company. Administrative services may include maintenance of the Company’s books and records, processing of investor transactions, and calculation of the NAV. For the three and six months ended June 30, 2025, the Company incurred expenses for services provided by the Sub-Administrator of $202,303 and $445,861, respectively, which is included in professional fees on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, the Company incurred expenses for services provided by the Sub-Administrator of $186,606 and $354,042, respectively, which is included in professional fees on the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, there were $202,303 and $0 payable, respectively, for expenses incurred for services provided by the Sub-Administrator.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 6. Transactions with Related Parties (continued)

Directors’ Fees

The Company incurs certain fees and expenses paid to the Company’s independent directors (including expenses and costs related to meetings of the independent directors); for the three and six months ended June 30, 2025, directors’ expenses are $35,000 and $70,000, respectively, as shown on the Consolidated Statements of Operations. For the three and six months ended June 30, 2024, directors’ expenses are $23,620 and $47,240, respectively, as shown on the Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, $35,000 and $35,000 of directors’ expenses remained payable, respectively, which are included in professional fees payable as shown on the Consolidated Statements of Assets and Liabilities.

Note 7. Borrowings

On July 2, 2021, the Company entered into a Loan and Servicing Agreement (the “Loan Agreement”) with Sterling National Bank (“SNB”), which provides for a $55 million senior secured revolving credit facility (“Secured Credit Facility”). In February 2022, SNB was subsequently acquired by Webster Bank (“Webster”), which took over the relationship with the Company. On January 12, 2022, the Company entered into a second amendment to the Secured Credit Facility to upsize the Secured Credit Facility to $80 million. On May 6, 2022, the Company entered into an amendment to the Secured Credit Facility to upsize the Secured Credit Facility to $125 million. On September 16, 2022, the Company entered into an amendment to the Secured Credit Facility to upsize the Secured Credit Facility to $200 million. On May 9, 2024, the Company entered into an amendment to the Secured Credit Facility to reassign commitment amounts and negotiate Secured Credit Facility fees.

In May 2024, the Company extended its $200,000,000 Secured Credit Facility with Webster, the Administrative Agent, to June 30, 2028. The Secured Credit Facility carries an interest rate of 3M SOFR plus 2.9%. On June 27, 2025, the Company entered into an amendment to the Secured Credit Facility to reduce the Applicable Spread to 2.30%, plus following the occurrence and during the continuation of an Event of Default, 2.00%.

As of June 30, 2025 and December 31, 2024, the Secured Credit Facility commitment amounts were as follows:

	As of June 30, 2025		As of December 31, 2024
Secured Credit Facility Lender	Commitment		Commitment
Webster Bank	$	67,500,000	$	67,500,000
Dime Community Bank		25,000,000		25,000,000
First Foundation Bank		20,000,000		20,000,000
Mitsubishi HC Capital America, Inc.		20,000,000		20,000,000
Woodforest National Bank		20,000,000		20,000,000
Peapack-Gladstone Bank		17,000,000		17,000,000
Hanmai Bank		15,500,000		15,500,000
Apple Bank		15,000,000		15,000,000
Total Commitment	$	200,000,000	$	200,000,000

Borrowings can be increased to a maximum of $350 million in accordance with the Secured Credit Facility accordion feature terms and conditions and are limited by various advance rates and concentration limits.

As of June 30, 2025 and December 31, 2024, the total fair value of the borrowings outstanding under the Secured Credit Facility was $108,700,000 and $122,500,000, respectively. The fair value of the borrowings outstanding under the Secured Credit Facility is based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

Inclusive of syndication, agency, and administrative fees paid to Webster, the total annualized cost of capital is estimated to be 8.0%. The Company will also pay a non-utilization fee on the average daily unused amount of the aggregate commitments until the commitment termination date (as defined in the Loan Agreement). As of June 30, 2025, the total commitments under the Secured Credit Facility were $200 million. Proceeds from borrowings under the Secured Credit Facility may be used to finance certain investments, fulfill payment obligations under the Secured Credit Facility, make distributions/payments permitted by the Loan Agreement. All amounts outstanding under the Secured Credit Facility must be repaid by June 30, 2028. The Company’s obligations to the lenders under the Secured Credit Facility are secured by a first priority security interest in substantially all of the Company’s assets, subject to certain exclusions.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 7. Borrowings (continued)

Borrowings under the Secured Credit Facility are limited by various advance rates and concentration limits. In connection with the Secured Credit Facility, the Company has made certain customary representations/warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Secured Credit Facility is subject to customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, Webster may declare the outstanding advances and all other obligations under the Secured Credit Facility immediately due and payable.

The components of the Company’s interest expense and other debt financing expenses, average outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows:

	For the three months ended June 30,
	2025			2024
Interest expense - Secured Credit Facility	$	2,208,438		$	2,954,331
Unused commitment fees		98,859			71,160
Amortization of deferred financing costs		170,350			144,398
Administration fees		(1,179,104	)		193,421
Total interest and other debt financing fees	$	1,298,543		$	3,363,310
Average debt outstanding	$	121,781,319		$	143,697,802
Average stated interest rate		7.27	%		8.25	%

	For the six months ended June 30,
	2025			2024
Interest expense - Secured Credit Facility	$	4,377,859		$	6,242,500
Unused commitment fees		198,423			118,847
Amortization of deferred financing costs		307,750			284,919
Administration fees		(1,043,712	)		458,235
Total interest and other debt financing fees	$	3,840,320		$	7,104,501
Average debt outstanding	$	121,069,061		$	152,983,516
Average stated interest rate		7.29	%		8.18	%

Note 8. Income Taxes

The amount of taxable income to be paid out as a distribution is determined by the Board each quarter and generally is based upon the annual earnings estimated by management of the Company. Net capital gains, if any, are distributed at least annually, although the Company may decide to retain all or some of those capital gains for investment and pay corporate-level income taxes on those retained amounts. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders. In the event the Company’s taxable income (including any net capital gains) for a fiscal year fall below the amount of distributions declared and paid with respect to that year, however, a portion of the total amount of those distributions may be deemed a return of capital for tax purposes to the Company’s stockholders.

Because federal income tax regulations differ from accounting principles generally accepted in the United States, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 8. Income Taxes (continued)

The calculation of reclassifications due to permanent book-to-tax differences and tax character of distributions declared are performed at each calendar year end and have no impact on net assets.

The following permanent differences were reclassified for tax purposes for the year ended December 31, 2024:

	For the year ended December 31, 2024
Increase (decrease) in capital in excess of par value	$	2,281,202
Increase (decrease) in accumulated undistributed (overdistributed) earnings		(2,281,202	)

Taxable income generally differs from net increase (decrease) in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses and generally excludes unrealized gain (loss) on investments as investment gains and losses are not included in taxable income until they are realized. The temporary and permanent differences in the recognition of income and expenses for the year ended December 31, 2024 are primarily due to organizational cost amortization.

Capital losses in excess of capital gains earned in a tax year may generally be carried forward and used to offset capital gains, subject to certain limitations. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred after September 30, 2011 are not subject to expiration and retain their character as either short-term or long-term capital losses. As of December 31, 2024, the Company had no short-term capital loss carryforwards. As of December 31, 2024, the Company had no long-term capital loss carryforwards.

For income tax purposes, distributions paid to stockholders are reported as ordinary income, return of capital, redemption, long term capital gains or a combination thereof.

The following table provides the tax character of distributions declared for the year ended December 31, 2024:

	For the year ended December 31, 2024
Ordinary income	$	20,652,462
Long-term capital gains		671,887
Total	$	21,324,349

As of June 30, 2025, the estimated cost basis of investment for U.S. federal income tax purposes was $367,346,702, resulting in estimated net unrealized loss of $4,470,924, comprised of estimated gross unrealized gains of $21,266,915 and gross unrealized losses of $25,737,839. As of December 31, 2024, the estimated cost basis of investment for U.S. federal income tax purposes was $381,076,946, resulting in estimated net unrealized loss of $3,436,628, comprised of estimated gross unrealized gains of $22,403,590 and gross unrealized losses of $25,840,218.

The Company recognized the following excise taxes related to the Company’s status as a RIC:

	For the six months ended June 30, 2025		For the year ended December 31, 2024
Excise tax expense	$	-	$	37,907
Total	$	-	$	37,907

The Company recognized the following benefits (provisions) for deferred taxes on the change in unrealized appreciation and depreciation on investments held in the Holding Company:

	For the six months ended June 30, 2025		For the year ended December 31, 2024
Benefit (provision) for taxes on change in unrealized appreciation (depreciation) on investments	$	1,709,967	$	(6,094,196	)
Total	$	1,709,967	$	(6,094,196	)

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 8. Income Taxes (continued)

As of June 30, 2025 and December 31, 2024, $4,384,229 and $6,094,196, respectively, was included in deferred tax liabilities on the Consolidated Statements of Assets and Liabilities primarily relating to deferred taxes on unrealized gains on investments held in the Company’s subsidiary and other temporary book to tax differences of the subsidiary.

Note 9. Stock Issuances

As of June 30, 2025 and December 31, 2024, the total number of shares of all classes of capital stock that the Company has the authority to issue was 200,000,000 shares of Common Stock, par value $0.001 per share.

New Stockholders admitted to the Company or existing Stockholders increasing their Capital Commitments at a particular closing will be required to purchase shares of the Company with an aggregate purchase price necessary to ensure that all Stockholders in the Company have generally contributed the same percentage of their Capital Commitments to the Company immediately following such purchase (a “Catch-up Purchase”) and each such Stockholder shall be issued a number of shares of the Company based on a per share purchase price determined by the Board. A Catch-up Purchase may be made in multiple installments as determined by the Advisor

based on the Company’s capital requirements. The per share purchase price shall be at least equal to the NAV per share in accordance with the limitations of Section 23 of the 1940 Act. The Board may set the price per share above the NAV per share based on a variety of factors, including without limitation, the total amount of the Company’s organizational and other expenses that will have accrued following the Company’s initial closing.

The Company has entered into subscription agreements (collectively, the “Subscription Agreements”) with investors, providing for the private placement of common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase common shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of 8 business days’ prior notice. As of June 30, 2025 and December 31, 2024, the Company had received capital commitments totaling $283,685,780 and $273,072,762, respectively.

As of June 30, 2025, net contributions of $277,441,519 had been made by Stockholders and $6,244,261 remained available to be drawn by the Company.

The following tables summarize the issuance of shares for the six months ended June 30, 2025 and 2024:

Date	Price per share		Shares Issued		Proceeds
For the six months ended June 30, 2025
April 21, 2025	$	24.52		357,811	$	8,773,518
June 13, 2025		24.70		87,530		2,162,000
				445,341	$	10,935,518

Date	Price per share		Shares Issued		Proceeds
Stock issued in connection with dividend reinvestment plan
January 31, 2025	$	24.47		109,175	$	2,671,518
May 20, 2025		24.55		113,516		2,786,818
				222,691	$	5,458,336
Total				668,032	$	16,393,854

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 9. Stock Issuances (continued)

Date	Purchase Price		Shares Repurchased		Amounts
For the six months ended June 30, 2024
April 8, 2024	$	24.96		250,250	$	6,246,250
June 11, 2024		24.79		562,949		13,955,500
				813,199	$	20,201,750

Stock issued in connection with dividend reinvestment plan
January 31, 2024	$	24.98		120,133	$	3,000,821
May 16, 2024		24.95		113,756		2,838,215
				233,889	$	5,839,036
Total				1,047,088	$	26,040,786

Note 10. Discretionary Repurchase of Shares of Common Stock and Distributions

Beginning with the quarter ended September 30, 2022, the Company began to conduct quarterly tender offers, at the Board’s discretion, in accordance with the requirements of Rule 13e-4 under the Exchange Act and the 1940 Act, to permit Stockholders to tender their shares of common stock at a specific per share price (“Purchase Price”) based on the Company’s NAV as of the last date of the quarter in which the tender offer is conducted. The Company intends to conduct each tender offer to repurchase up to 2.5% of the number of shares of common stock outstanding as of the end of the prior quarter in which the tender offer is conducted, subject to numerous restrictions that limit Stockholders’ ability to sell their shares of common stock.

The following tables summarize the repurchase of shares for the six months ended June 30, 2025 and 2024.

Date	Purchase Price		Shares Repurchased		Amounts
Stock repurchased in connection with tender offer
March 31, 2025	$	24.55		256,233.52		$	6,290,542
June 30, 2025		24.44		242,756.06			5,932,958
Total				498,989.58		$	12,223,500

Date	Purchase Price		Shares Repurchased		Amounts
Stock repurchased in connection with tender offer
March 29, 2024	$	25.10		192,187.05		$	4,823,944
June 28, 2024		24.38		190,664.58			4,648,553
Total				382,851.63		$	9,472,497

The following table summarizes the settlement of distributions declared and recorded and the subsequent payment and issuance of those distributions for the six months ended June 30, 2025:

Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
For the six months ended June 30, 2025
December 31, 2024	December 31, 2024	January 31, 2025	$	0.54	$	2,651,213	$	2,671,518	$	5,322,731
April 1, 2025	April 23, 2025	May 20, 2025		0.57		2,951,972		2,786,818		5,738,790
Total			$	1.11	$	5,603,185	$	5,458,336	$	11,061,521

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 10. Discretionary Repurchase of Shares of Common Stock and Distributions (continued)

The following table summarizes the settlement of distributions declared and recorded as of December 31, 2023 and the subsequent payment and issuance of those distributions for the six months ended June 30, 2024.

Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
For the six months ended June 30, 2024:
December 31, 2023	December 31, 2023	January 31, 2024	$	0.79	$	2,961,399	$	3,000,821	$	5,962,220
April 3, 2024	April 3, 2024	May 16, 2024		0.75		3,061,044		2,838,215		5,899,259
Total			$	1.54	$	6,022,443	$	5,839,036	$	11,861,479

Note 11. Commitments, Contingencies, and Risks

Commitments: As of June 30, 2025 and December 31, 2024, the Company had $12,080,871 and $20,353,563 in outstanding commitments to direct investments and $1,101,695 and $1,101,695 in outstanding commitments to fund investments.

June 30, 2025	Outstanding Commitments
Direct Investments
Ambient Enterprises Holdco LLC	$	1,460,924
The Range NYC, LLC (dba Five Iron Golf)		1,680,672
Consolidated Machine & Tool Holdings, LLC		161,021
Kelso Industries		1,921,111
Qualified Digital		6,857,143
Total Direct Investments	$	12,080,871

Fund Investments
Madryn Select Opportunities, LP	$	1,101,695
Total Fund Investments	$	1,101,695

Total	$	13,182,566

December 31, 2024	Outstanding Commitments
Direct Investments
Ambient Enterprises Holdco LLC	$	1,773,731
Kelso Industries		5,000,000
Qualified Digital, LLC		6,857,143
The Range NYC, LLC (dba Five Iron Golf)		6,722,689
Total Direct Investments	$	20,353,563

Fund Investments
Madryn Select Opportunities, LP	$	1,101,695
Total Fund Investments	$	1,101,695

Total	$	21,455,258

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Management believes that the Company’s available cash balances and line of credit provide sufficient funds to cover its unfunded commitments as of June 30, 2025 and December 31, 2024.

Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnification. The Company’s maximum exposure under these agreements is unknown, as these involve future claims that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations under these indemnification provisions to be remote.

Note 11. Commitments, Contingencies, and Risks (continued)

Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company is not currently aware of any such proceedings or disposition that would have a material adverse effect on the Company’s consolidated financial statements.

Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of the contract. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.

Note 12. Financial Highlights

The following is a schedule of financial highlights for the six months ended June 30, 2025 and 2024:

	For the six months ended June 30,
	2025			2024
Per share data:
Net asset value at beginning of period	$	24.43		$	24.78
Net investment income (loss) ⁽¹⁾		1.10			1.39
Net realized and unrealized gain (loss)⁽¹⁾		(0.62	)		(1.09	)
Net increase (decrease) in net assets resulting from operations⁽¹⁾		0.48			0.30
Stockholder distributions⁽²⁾		(1.11	)		(0.75	)
Dividend reinvestment plan distributions⁽²⁾		(0.55	)		(0.76	)
Other ⁽³⁾		1.19			0.81
Net asset value at end of period	$	24.44		$	24.38
Net assets at end of period	$	245,047,744		$	203,617,028
Shares outstanding at end of period		10,026,343			8,351,719
Total return ⁽⁴⁾		4.62	%		4.57	%
Ratio/Supplemental data:
Ratio of expenses to average net assets before incentive fees⁽⁵⁾		7.07	%		11.00	%
Ratio of expenses to average net assets after incentive fees and waivers⁽⁵⁾		7.95	%		12.20	%
Ratio of net investment income (loss) to average net assets before incentive fees and waivers⁽⁵⁾		9.35	%		13.70	%
Ratio of net investment income (loss) to average net assets after incentive fees and waivers⁽⁵⁾		8.48	%		12.50	%
Portfolio turnover⁽⁶⁾		7.22	%		0.59	%

(1)

The per share data was derived by using the weighted average shares outstanding during the periods presented.

(2)

Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The tax character of distributions will be determined at the end of the fiscal year.

(3)

Includes the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of a period end or transaction date.

(4)

Total return is calculated as the change in NAV per share during the period, divided by the beginning NAV per share and assumes reinvestment of dividends at NAV. Total return is not annualized.

(5)

Ratios are annualized for periods less than one year. To the extent incentive fees and waivers are included within the ratio, they are not annualized.

(6)

Ratio is not annualized.

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STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

13. Subsequent Events

The Company has evaluated subsequent events through August 14, 2025, the date on which the consolidated financial statements were issued.

On July 7, 2025, the Company issued a capital call of $3,735,000.

On July 8, 2025, the Company declared a dividend of $0.59 per share to stockholders of record as of June 30, 2025, which will be payable in the form of cash and shares on August 19, 2025.

On August 19, 2025, the Company intends to pay a total distribution of $5,915,542, of which $3,183,327 will be paid in cash and $2,732,215 in the form of shares.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of Star Mountain Lower Middle-Market Capital Corp. (the “Company”), Star Mountain Fund Management, LLC (the “Advisor”) and Star Mountain Capital, LLC (“Star Mountain”). Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Quarterly Report on Form 10-Q constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond the Company’s control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors the Company identifies in the section entitled “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 and in “Item 1A. Risk Factors” in Part II of our subsequently filed Quarterly Reports on Form 10-Q and in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Although the Company believes that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that the Company’s plans and objectives will be achieved. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. The Company does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Quarterly Report on Form 10-Q because the Company is an investment company.

The following factors are among those that may cause actual results to differ materially from the Company’s forward-looking statements:

•

the Company’s future operating results;

•

changes in the general interest rate environment;

•

inflation could adversely affect the business, results of operations and financial condition of the Company’s portfolio companies;

•

the Company’s business prospects and the prospects of the Company’s prospective portfolio companies;

•

the impact of increased competition;

•

the Company’s contractual arrangements and relationships with third parties;

•

the dependence of the Company’s future success on the general economy and its impact on the industries in which the Company invests;

•

the ability of the Company’s prospective portfolio companies to achieve their objectives;

•

the relative and absolute performance of the Advisor;

•

the ability of the Advisor and its affiliates to retain talented professionals;

•

the Company’s expected financings and investments;

•

the Company’s ability to pay dividends or make distributions;

•

the adequacy of the Company’s cash resources;

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•

risks associated with possible disruptions in the Company’s operations or the economy generally due to war or terrorism or other disruptive geopolitical events domestically and/or globally;

•

geopolitical conflicts, including sanctions and market volatility related to such conflicts, may adversely impact the industries and portfolio companies in which the Company invests;

•

the impact of future acquisitions and divestitures;

•

the Company’s regulatory structure as a business development company (“BDC”) and tax status as a regulated investment company (a “RIC”); and

•

future changes in laws or regulations and conditions in the Company’s operating areas.

Overview:

Star Mountain Lower Middle-Market Capital Corp. is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act, as amended. In addition, for U.S. federal income tax purposes, the Company has elected to be treated and intends to continue to be treated as a RIC under the Subchapter M of the Internal Revenue Code of 1986, as amended. As such, the Company is required to comply with various regulatory requirements, such as the requirement to invest at least 70% of the Company’s assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of the Company’s taxable income.

The Company’s investment objectives are to generate current income and capital appreciation. The Company seeks to achieve its investment objectives by investing primarily in privately negotiated loans and equity investments to SMBs generally with annual revenues greater than $15 million and earnings before interest, taxes, depreciation and amortization of less than $50 million. Generally, these businesses are owner-operated with an average 20+ year operating history. To accomplish this, the Company makes direct investments in SMBs and makes investments in investment funds focused primarily on investing in SMBs generally not owned by large private equity firms.

The Company seeks to provide investors with access to a diversified portfolio of credit investments generating current income distributions with equity upside. Capital protection is achieved through defensive structures with affirmative, negative and financial maintenance covenants and active portfolio management which results in generally low volatility and low correlation to public market indices. The Company aims to target diversification of assets by vintage, industry and geography through direct originations and acquisitions of loan portfolios.

The Company’s investment strategy may be complemented by secondary fund investments and secondary loans, consisting of generally non-brokered purchases of limited partnership interests in lower middle-market credit-oriented funds and secondary loans. This complementary strategy may result in portfolio construction and diversification benefits.

The Company’s investments are subject to a number of risks. See “Part I. Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as filed with the SEC on March 31, 2025.

Portfolio and Investment Activity:

For the six months ended June 30, 2025, the Company invested (net of original issue discount) $12,312,500 in one new portfolio company and invested $15,353,701 in 17 existing portfolio companies as reflected in the Consolidated Schedule of Investments. For the six months ended June 30, 2024, the Company did not invest in any new portfolio companies and invested $2,134,380 in three existing portfolio companies as reflected in the Consolidated Schedule of Investments.

The Company had $21,714,650 and $36,530,329, respectively, in principal repayments for the three and six months ended June 30, 2025, of which $34,701,803 was received in cash as of June 30, 2025 (with the remaining balance as the change in receivable from December 31, 2024). The Company had $22,689,371 and $45,509,474, respectively in principal repayments for the three and six months ended June 30, 2024, of which $46,038,238 was received in cash as of June 30, 2024 (with the remaining balance as the change in receivable from December 31, 2023).

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As of June 30, 2025 and December 31, 2024, the Company’s investments consisted of the following:

	June 30, 2025				December 31, 2024
Fair Value:
First Lien Senior Secured Loan	$	289,806,939	81.40	%	$	304,120,042	80.50	%
Second Lien Senior Secured Loan		-	-			6,034,048	1.60
Senior Secured Notes		-	-			341,103	0.10
Senior Unsecured Notes		3,733,001	1.00			3,427,073	0.90
Preferred Equity Securities		54,383,715	15.30			53,603,056	14.20
Warrants and Other Equity Securities		6,217,841	1.70			7,426,377	2.00
Fund Investments		2,165,570	0.60			2,688,619	0.70
Total	$	356,307,066	100.00	%	$	377,640,318	100.00	%

The table below describes investments by industry composition based on fair value as of June 30, 2025 and December 31, 2024:

	June 30, 2025				December 31, 2024
Fair Value:
Aerospace & Defense	$	8,426,398	2.40	%	$	8,103,579	2.10	%
Chemicals		14,737,500	4.10			14,812,499	3.90
Commercial Services & Supplies		4,087,202	1.10			3,908,639	1.00
Construction & Engineering		73,998,283	20.80			83,705,436	22.30
Consumer Finance		3,733,001	1.00			3,427,073	0.90
Distributors		7,861,976	2.20			13,163,459	3.50
Diversified Financials		2,165,570	0.60			2,688,619	0.70
Diversified Telecommunication Services		24,070,751	6.80			23,137,607	6.10
Electrical Equipment		1,535,419	0.40			5,729,737	1.50
Entertainment		14,674,974	4.10			14,317,635	3.80
Food Products		11,870,427	3.30			11,608,503	3.10
Healthcare Providers & Services		38,289,120	10.70			41,162,604	10.90
Hotels, Restaurants & Leisure		6,588,824	1.80			4,910,952	1.30
Household Durables		3,804,272	1.10			3,057,209	0.80
Household Products		4,564,284	1.30			4,990,960	1.30
IT Services		12,173,487	3.40			12,558,929	3.30
Leisure Products		3,614,288	1.00			3,230,877	0.90
Machinery		4,050,749	1.10			4,217,950	1.10
Media		21,874,583	6.10			26,926,042	7.10
Personal Products		4,311,712	1.20			4,404,301	1.20
Professional Services		59,216,453	16.60			58,307,390	15.40
Software		683,169	0.20			965,151	0.30
Specialty Retail		6,929,067	2.00			6,703,118	1.80
Trading Companies & Distributors		13,017,063	3.80			11,262,596	3.00
Transportation Infrastructure		10,028,494	2.90			10,339,453	2.70
Total	$	356,307,066	100.00	%	$	377,640,318	100.00	%

Portfolio Asset Quality:

The Advisor employs an investment risk rating to assign each investment an investment grade no less than quarterly. The system is intended primarily to reflect the underlying risk of a portfolio investment relative to the Company’s initial cost basis in respect of such portfolio investment (i.e., at the time of origination), although it may also take into account under certain circumstances, the portfolio company’s cash flow generation relative to underwriting expectations, recent business performance trends, collateral coverage and other relevant factors. When necessary, the Advisor will update its investment risk ratings, borrowing base criteria and covenant compliance reports. The investment risk rating of a particular investment should not, however, be deemed to be a guarantee of the investment’s future performance.

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Investment Performance Risk Rating		Summary Description
Grade 1		Investment is performing above expectations. Full return of principal, interest and dividend income is expected.
Grade 2		Investment is performing in-line with expectations. Risk factors remain neutral or favorable compared with initial underwriting. All investments are given a “2” at the time of origination
Grade 3		Investment is performing below expectations. Capital impairment or payment delinquency is not anticipated. The investment may also be out of compliance with certain financial covenants.
Grade 4		Investment is performing below expectations. Quantitative or qualitative risks have increased materially. Delinquency of interest and / or dividend payments is anticipated. No loss of principal anticipated.
Grade 5		Investment is performing substantially below expectations. It is anticipated that the Company will not recoup its initial cost basis and may realize a loss upon exit. Most or all of the debt covenants are out of compliance. Amortization, interest and / or dividend payments are substantially delinquent.

In the event of credit deterioration, the Advisor may form a team or engage outside advisors to preserve the value of the Company’s investment, including requirement of additional equitization from the ownership group or exercising other creditor rights.

For investments rated Grade 4 or Grade 5, the Advisor enhances its level of scrutiny over the monitoring of such portfolio company and will develop an action plan to address the underperformance. The Advisor’s senior investment team has extensive experience managing investments through workouts, restructurings, and bankruptcies.

The following table shows the distribution of the Company’s investments on the 1 to 5 investment performance risk rating scale as of June 30, 2025 and December 31, 2024:

	June 30, 2025					December 31, 2024
Investment Performance Risk Rating	Investments at Fair Value		Percentage of Total Investments			Investments at Fair Value		Percentage of Total Investments
1	$	28,882,546		8.10	%	$	59,536,590		15.80	%
2		222,846,137		62.50			216,885,848		57.40
3		50,914,206		14.30			46,456,529		12.30
4		46,642,492		13.10			50,022,148		13.20
5		7,021,685		2.00			4,739,203		1.30
Total	$	356,307,066		100.00	%	$	377,640,318		100.00	%

Results of Operations:

The following tables represent the operating results for the three and six months ended June 30, 2025 and 2024:

	For the three months ended June 30,
	2025			2024
Total investment income	$	10,709,930		$	11,559,332
Total expenses		4,531,149			6,303,934
Net investment income before fee waivers		6,178,781			5,255,398
Net investment income		6,178,781			5,255,398
Net realized gain (loss) on investments		2,488,217			2,034,517
Net change in unrealized gain (loss) on investments		(5,623,775	)		(7,318,171	)
Income tax expense		(165,000	)		-
Benefit (provision) for taxes change in unrealized appreciation (depreciation) on investments		1,760,115			-
Net increase (decrease) in net assets resulting from operations	$	4,638,338		$	(28,256	)

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	For the six months ended June 30,
	2025			2024
Total investment income	$	21,057,245		$	24,016,118
Total expenses		10,106,460			13,038,221
Net investment income before fee waivers		10,950,785			10,977,897
Net investment income after fee waivers		10,950,785			10,977,897
Net realized gain (loss) on investments		4,352,098			2,034,517
Net change in unrealized gain (loss) on investments		(10,504,360	)		(10,635,896	)
Income tax expense		(722,415	)		-
Benefit (provision) for taxes change in unrealized appreciation (depreciation) on investments		1,709,967			-
Net increase (decrease) in net assets resulting from operations	$	5,786,075		$	2,376,518

Revenues:

The Company generates revenues primarily through receipt of interest income from the Portfolio Investments the Company holds. In addition, the Company generates income from various loan origination and other fees and dividends on direct equity investments. The debt the Company invests in will typically not be rated by any rating agency, but if it were, it is likely that such debt would be rated below investment grade.

Investment Income:

The composition of the Company’s investment income was as follows for the three and six months ended June 30, 2025 and 2024:

	For the three months ended June 30, 2025		For the three months ended June 30, 2024
Non-controlled/non-affiliate investment income
Interest income	$	8,485,427	$	9,369,453
PIK interest income		668,499		1,000,515
Dividend income		467,432		328,497
Other income		259,042		35,816
Controlled/affiliate investment income
Interest income		583,029		732,350
PIK interest income		213,641		92,701
Other income		32,860		-
Total investment income	$	10,709,930	$	11,559,332

	For the six months ended June 30, 2025		For the six months ended June 30, 2024
Non-controlled/non-affiliate investment income
Interest income	$	16,519,615	$	20,110,443
PIK interest income		1,508,387		2,425,954
Dividend income		688,739		328,497
Other income		437,229		173,344
Controlled/affiliate investment income
Interest income		1,445,338		840,076
PIK interest income		425,077		137,804
Other income		32,860		-
Total investment income	$	21,057,245	$	24,016,118

Operating Expenses:

The composition of the Company’s operating expenses was as follows for the three and six months ended June 30, 2025 and 2024:

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	For the three months ended June 30,
	2025		2024

Interest and other financing fees	$	1,298,543	$	3,363,310
Incentive fees (Note 6)		1,275,636		1,118,488
Management fees (Note 6)		1,173,157		1,076,579
Professional fees		411,817		424,727
General and administrative fees		230,036		183,021
Legal expenses		106,960		114,189
Director expenses		35,000		23,620
Expenses		4,531,149		6,303,934
Income tax expense		165,000		-
Total Expenses	$	4,696,149	$	6,303,934

	For the six months ended June 30,
	2025		2024
Interest and other financing fees	$	3,840,320	$	7,104,501
Management fees (Note 6)		2,360,804		2,228,646
Incentive fees (Note 6)		2,142,038		2,344,006
Professional fees		1,009,862		805,079
General and administrative fees		490,416		313,042
Legal expenses		193,020		195,707
Director expenses		70,000		47,240
Expenses		10,106,460		13,038,221
Income tax expense		722,415		-
Total Expenses	$	10,828,875	$	13,038,221

Income Taxes, Including Excise Tax:

The Company has elected to be regulated as a BDC under the 1940 Act. The Company has also elected to be treated as a RIC under Subchapter M of the Code and intends to qualify annually as a RIC. As long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its Stockholders. Rather, any tax liability related to income earned by the Company represents obligations of the Company’s Stockholders and will not be reflected in the consolidated financial statements of the Company.

To qualify as a RIC under Subchapter M of the Code, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its Stockholders, for each taxable year, at least 90.0% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98.0% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one year period ending October 31 in that calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years and on which the Company paid no U.S. federal income tax. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4.0% nondeductible U.S. federal excise tax on this income. For the six months ended June 30, 2025 the Company recorded a net tax expense of $722,415, and a benefit in deferred taxes on unrealized depreciation on investments of $1,709,967. For the year ended December 31, 2024 the Company recorded a tax expense of $37,907, and a provision in deferred taxes on unrealized appreciation on investments of $6,094,196.

Net Increase (Decrease) in Net Assets Resulting from Operations:

For the three and six months ended June 30, 2025, the net increase (decrease) in net assets resulting from operations was $4,638,338 and $5,786,075, respectively. Based on the weighted average shares of Common Stock outstanding for the three and six months ended June 30, 2025, the Company’s per share net increase (decrease) in net assets resulting from operations was $0.30 and $0.48, respectively.

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For the three and six months ended June 30, 2024, the net increase (decrease) in net assets resulting from operations was $(28,256) and $2,376,518, respectively. Based on the weighted average shares of Common Stock outstanding for the three and six months ended June 30, 2024, the Company’s per share net increase (decrease) in net assets resulting from operations was $0.0 and $0.30, respectively.

Financial Condition, Liquidity and Capital Resources:

The Company will generate cash primarily from the net proceeds generated from private offerings, and from cash flows from fees, interest and dividends earned from investments and principal repayments, proceeds from sales of investments and borrowings under the Company’s Secured Credit Facility. The Company’s primary use of funds will be direct credit and equity investments in SMBs, payments of expenses and distributions to holders of the Company’s Common Stock and, to a lesser extent, the Company may invest in limited partnership interests of funds focused on making investments in SMBs. As of June 30, 2025 and December 31, 2024, the Company had approximately $7.9 million and $4.0 million, respectively, in cash on deposit with financial institutions and $108.7 million and $122.5 million, respectively, in debt outstanding.

In accordance with the 1940 Act, the Company generally is required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all borrowings and any preferred stock that may be issued in the future, of at least 150%. If this ratio declines below 150%, the Company cannot incur additional debt and could be required to sell a portion of the Company’s investments to repay some debt when it is disadvantageous to do so. On May 14, 2021, Stockholders of the Company approved the adoption of the 150% threshold pursuant to Section 61(a)(2) of the 1940 Act and such election became effective that same day. As of June 30, 2025 and December 31, 2024, the Company's asset coverage for total borrowings and other senior securities was 325% and 209%, respectively.

Capital Contributions:

For the three and six months ended June 30, 2025 and for the year ended December 31, 2024, the Company entered into subscription agreements (collectively, the “Subscription Agreements”) with new investors, providing for the private placement of common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase common shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of 8 business days’ prior notice. As of June 30, 2025 and December 31, 2024, the Company had received capital commitments totaling $283.7 million and $273.1 million, respectively.

The following tables summarize the issuance of shares for the six months ended June 30, 2025 and 2024:

Date	Price per share		Shares Issued		Proceeds
For the six months ended June 30, 2025
April 21, 2025	$	24.52		357,811	$	8,773,518
June 13, 2025		24.70		87,530		2,162,000
				445,341	$	10,935,518

Date	Price per share		Shares Issued		Proceeds
Stock issued in connection with dividend reinvestment plan
January 31, 2025	$	24.47		109,175	$	2,671,518
May 20, 2025		24.55		113,516		2,786,818
				222,691	$	5,458,336
Total				668,032	$	16,393,854

Distributions:

The Board will determine the timing and amount, if any, of the Company’s distributions. The Company intends to pay distributions on a quarterly basis. In order to avoid corporate-level tax on the distributed income as a RIC, the Company must distribute to Stockholders at least 90.0% of ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, on an annual basis out of the assets legally available for such distributions. In order for the Company to avoid certain excise taxes imposed on RICs, the Company currently intends to distribute, or be deemed to distribute, during each calendar year an amount at least equal to the sum of (1) 98.0% of the Company’s ordinary income for the calendar year, (2) 98.2% of the Company’s capital gain in excess of capital loss for the one-year period ending on October 31 of such calendar year and (3) any ordinary income and net capital gain for preceding years that were not distributed during such years and on which the Company paid no U.S. federal income tax.

The Company has adopted an “opt out” dividend reinvestment program (“DRP”) for Stockholders. When a distribution is declared, Stockholders’ cash distributions will automatically be reinvested in additional shares of Common Stock unless a Stockholder specifically “opts out” of the Company’s DRP. Stockholders may opt out of the Company’s DRP by providing notice twenty (20) business days in advance of the distribution payment date.

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The following table summarizes the settlement of distributions declared and recorded and the subsequent payment and issuance of those distributions for the six months ended June 30, 2025.

Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
For the six months ended June 30, 2025
December 31, 2024	December 31, 2024	January 31, 2025	$	0.54	$	2,651,213	$	2,671,518	$	5,322,731
April 1, 2025	April 23, 2025	May 20, 2025		0.57		2,951,972		2,786,818		5,738,790
Total			$	1.11	$	5,603,185	$	5,458,336	$	11,061,521

The following table summarizes the settlement of distributions declared and recorded and the subsequent payment and issuance of those distributions for the six months ended June 30, 2024:

Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
For the six months ended June 30, 2024
December 31, 2023	December 31, 2023	January 31, 2024	$	0.79	$	2,961,399	$	3,000,821	$	5,962,220
April 3, 2024	April 3, 2024	May 16, 2024		0.75		3,061,044		2,838,215		5,899,259
Total			$	1.54	$	6,022,443	$	5,839,036	$	11,861,479

Contractual Obligations:

Advisory Agreement; Administration Agreement

The Company’s investment activities are managed by Star Mountain Fund Management, LLC and supervised by the Board, a majority of whom are independent. Under the Investment Advisory Agreement, the Company pays Star Mountain Fund Management, LLC a quarterly management fee based on the Company’s average gross assets (excluding cash or cash equivalents but including assets purchased with borrowed amounts) as of the end of each of the two most recently completed calendar quarters as well as incentive fees based on the Company’s performance.

The Company has entered into an Administration Agreement with Star Mountain Fund Management, LLC to serve as Administrator for the Company. Pursuant to the Administration Agreement, Star Mountain Fund Management, LLC provides the Company with services such as accounting, financial reporting, legal and compliance support and investor relations support, necessary for the Company to operate or engage a third-party firm to perform some or all of these functions. The Company has entered into a sub-administration agreement with SS&C Technologies, Inc. (the "Sub-Administrator"), under which the Sub-Administrator provides various accounting and administrative services to the Company.

See “Note 6. Transactions with Related Parties” to our Consolidated Financial Statements for additional information regarding the Advisory Agreement, the Administration Agreement, and the fee arrangements thereunder.

Credit Agreements

As of June 30, 2025 and December 31, 2024, the Secured Credit Facility commitment amounts were as follows:

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Secured Credit Facility Lender	As of June 30, 2025 Commitment		As of December 31, 2024 Commitment
Webster Bank	$	67,500,000	$	67,500,000
Dime Community Bank		25,000,000		25,000,000
First Foundation Bank		20,000,000		20,000,000
Mitsubishi HC Capital America, Inc.		20,000,000		20,000,000
Woodforest National Bank		20,000,000		20,000,000
Peapack-Gladstone Bank		17,000,000		17,000,000
Hanmai Bank		15,500,000		15,500,000
Apple Bank		15,000,000		15,000,000
Total Commitment	$	200,000,000	$	200,000,000

As of June 30, 2025 and December 31, 2024, the total fair value of the borrowings outstanding under the Secured Credit Facility was $108,700,000 and $122,500,000, respectively.

The fair value of the borrowings outstanding under the Secured Credit Facility is based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. The components of the Company’s interest expense and other debt financing expenses, average outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows:

	For the six months ended June 30,
	2025			2024
Interest expense - Secured Credit Facility	$	4,377,859		$	6,242,500
Unused commitment fees		198,423			118,847
Amortization of deferred financing costs		307,750			284,919
Administration fees		(1,043,712	)		458,235
Total interest and other debt financing fees	$	3,840,320		$	7,104,501
Average debt outstanding	$	121,069,061		$	152,983,516
Average stated interest rate		7.29	%		8.18	%

Off-Balance Sheet Arrangements:

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.

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Critical Accounting Policies:

This discussion of the Company’s operating plans is based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S., or GAAP. The preparation of these consolidated financial statements will require the Advisor to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, the Company’s critical accounting policies, including revenue recognition and taxes, have been described in Item 1. Note 2. Summary of Significant Accounting Policies.

Valuation of Portfolio Investments:

Investments for which market quotations are readily available are typically valued at those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued quarterly at fair value as determined in good faith by the Board, based on, among other considerations, the input of the Advisor, the Company’s audit committee and an independent third-party valuation firm, engaged at the direction of the Board.

The Board oversees a multi-step valuation process, which includes, among other procedures, the following:

•

the quarterly valuation process commences with each portfolio company or investment being initially evaluated by the investment professionals of the Advisor responsible for the monitoring of the portfolio investment;

•

the Advisor’s Valuation Committee reviews the valuations provided by the independent third-party valuation firm and develops a valuation recommendation. Valuation recommendations are presented to the audit committee of the Board;

•

the audit committee of the Board reviews valuation recommendations of the Advisor incorporating any adjustments or further supplements by the Advisor to the valuations; and

•

the Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of the Advisor, the independent valuation firm, and the audit committee.

The Company applies Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurement (“ASC Topic 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC Topic 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC Topic 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC Topic 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value.

The three-tier hierarchy of inputs is summarized below.

•	Level 1 - Quoted prices are available in active markets/exchanges for identical investments as of the reporting date.

•

•	Level 3 - Pricing inputs are unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs into determination of fair value require significant management judgment and estimation.

The use of these valuation models requires significant estimation and judgment by the Advisor. The Advisor uses a third-party valuation firm to ensure fair values are determined on an independent basis. While the Company believes its valuation methods are appropriate, other market participants may value identical assets differently than the Company at the measurement date. The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The Company may also have risk associated with its concentration of investments in certain geographic regions and industries.

The determination of what constitutes (“observable”) requires significant judgment by the Company. The Company considers observable data to be market data, which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, which may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and observability of prices and inputs may be reduced for many investments. This condition could cause the investment to be reclassified to a lower level within the fair value hierarchy.

The Board, with the assistance of the Advisor, the Company’s audit committee, and an independent third-party valuation firm engaged at the direction of the Board, will determine the fair value of the Company’s assets, including such assets that are not publicly traded or whose market prices are not readily available, on at least a quarterly basis, in accordance with the terms of ASC Topic 820, Fair Value Measurement and Disclosures. The audit committee is comprised of the Independent Directors.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company is subject to financial market risks, including changes in interest rates. The Company invests primarily in illiquid debt securities of private companies. Most of the Company’s investments do not have a readily available market price, and the Company values these investments at fair value as determined in good faith by the Board, based on, among other considerations, the input of the Advisor, the Company’s audit committee and an independent third-party valuation firm, engaged at the direction of the Board in accordance with the Company’s valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each Portfolio Investment while employing a consistently applied valuation process for the types of investments the Company makes.

The majority of the loans in the Company’s portfolio have floating interest rates, and we expect that the Company’s loans in the future may also have floating interest rates. These loans are usually based on a floating benchmark rate (e.g., 3-month SOFR) plus a spread and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly or quarterly basis. The majority of the loans in the Company’s current portfolio have interest rate floors which will effectively convert the loans to fixed rate loans for certain periods of time during which the floating rate benchmark is less than such interest rate floor.

All of the Company’s relevant credit agreements have transitioned to Secured Overnight Financing Rate (“SOFR”) as of December 31, 2024.

In addition, the transition from LIBOR to SOFR, Sterling Overnight Index Average (“SONIA”) and the adoption of these or other alternative reference rates may also introduce operational risks in our accounting, financial reporting, loan servicing, liability management and other aspects of our business.

A reduction in the interest rates on new investments relative to interest rates on current investments could also have an adverse impact on the Company’s net interest income. An increase in interest rates could decrease the value of any investments the Company holds which earn fixed interest rates, including subordinated loans, senior and junior secured and unsecured debt securities and loans and high yield bonds, and also could increase the Company’s interest expense, thereby decreasing its net income. Also, an increase in interest rates available to investors could make investment in the Company less attractive if the Company is not able to increase its dividend or distribution rate, which could reduce the value of an investment in the Company.

Investors should also be aware that a change in the general level of interest rates can be expected to lead to a change in the interest rate the Company may receive on many of its debt investments. Accordingly, a change in the interest rate could make it easier for the Company to meet or exceed the performance threshold and may result in a substantial increase in the amount of incentive fees payable to the Advisor with respect to the portion of the incentive fee based on income.

Assuming that the Consolidated Statements of Assets and Liabilities as of June 30, 2025 was to remain constant and that we took no actions to alter the Company’s existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:

Change in Interest Rates	Increase (decrease) in interest income			Increase (decrease) in interest expense			Net increase (decrease) in net investment income
Down 100 basis points	$	(2,730,825	)	$	(1,087,000	)	$	(1,643,825	)
Down 50 basis points		(1,378,408	)		(543,500	)		(834,908	)
Down 25 basis points		(695,202	)		(271,750	)		(423,452	)
Up 25 basis points		695,202			271,750			423,452
Up 50 basis points		1,390,404			543,500			846,904
Up 100 basis points		2,780,809			1,087,000			1,693,809
Up 200 basis points		5,561,618			2,174,000			3,387,618
Up 300 basis points		8,342,426			3,261,000			5,081,426

Although we believe that this analysis is indicative of the Company’s existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in the Company’s portfolio and other business developments, including borrowing under the credit facility or other borrowings that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.

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Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s disclosure controls and procedures are designed to provide reasonable assurances that information required to be disclosed in this Quarterly Report on Form 10-Q and other reports that we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the required time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025. It should be noted that any system of controls, regardless of design and execution, can provide only reasonable assurance of achieving the desired control objectives.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1.

Legal Proceedings

The Company is not currently subject to any material legal proceedings, nor, to the Company’s knowledge, is any material legal proceeding threatened against us. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under loans to or other contracts with the Company’s portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon the Company’s financial condition or results of operations.

Item 1A.

Risk Factors

There have been no material changes during the six months ended June 30, 2025 to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025. If any of such changes or risks actually occur, our business, financial condition or results of operations could be materially adversely affected. If that happens, the value of our securities could decline, and you may lose all or part of your investment.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Except as previously reported by the Company on its current reports on Form 8-K, the Company did not sell any securities during the period covered by this Form 10-Q that were not registered under the Securities Act.

Item 3.

Defaults Upon Senior Securities

Not applicable.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

During the fiscal quarter ended June 30, 2025, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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Item 6.

Exhibits

The exhibits filed as part of this Form 10-Q are set forth on the Index to Exhibits, which is incorporated herein by reference.

INDEX TO EXHIBITS

Exhibit Number		Description of Document
3.1		Certificate of Incorporation (incorporated by reference to the Company’s Form 10 Registration Statement filed on May 7, 2021)

3.1.1		Certificate of Conversion to a Corporation (incorporated by reference to the Company’s Form 10 Registration Statement filed on May 7, 2021)

3.2		By-Laws (incorporated by reference to the Company’s Form 10 Registration Statement filed on May 7, 2021)

4.1		Form of Subscription Agreement (incorporated by reference to the Company’s Form 10 Registration Statement filed on May 7, 2021)

10.1		Investment Advisory Agreement between Star Mountain Credit Opportunities Fund, LP and Star Mountain Fund Management, LLC (incorporated by reference to the Company’s Form 10 Registration Statement filed on May 7, 2021)

10.2		Amended and Restated Investment Advisory Agreement dated as of June 14, 2023 between Star Mountain Credit Opportunities Fund, LP and Star Mountain Fund Management, LLC (incorporated by reference to the Company’s Current Report on Form 8-K (File No. 814-01399), filed on June 16, 2023)

10.3		Administration Agreement between Star Mountain Credit Opportunities Fund, LP and Star Mountain Fund Management LLC (incorporated by reference to the Company’s Form 10 Registration Statement filed on May 7, 2021)

10.4		Loan and Servicing Agreement, dated as of July 2, 2021, by and among Star Mountain Lower Middle-Market Capital Corp., as borrower, the lenders party thereto and Sterling National Bank, in its capacities as collateral agent and administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-56259), filed on July 15, 2021)

10.5		First Amendment to Revolving Credit Agreement, dated as of November 10, 2021, by and among the Company, as Borrower, and Sterling National Bank, as Administrative Agent and the Letter of Credit Issuer, and the Lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on November 12, 2021)

10.6		Second Amendment to Revolving Credit Agreement, dated as of January 12, 2022, by and among the Company, as Borrower, and Sterling National Bank, as Administrative Agent and the Letter of Credit Issuer, and the Lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 14, 2022)

10.7		Amendment to Loan and Servicing Agreement and Joinder Agreement, dated as of May 6, 2022, by and among the Company, as Borrower, and Webster Bank, N.A. (f/k/a Sterling National Bank), as Administrative Agent and the Letter of Credit Issuer, and the Lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on May 12, 2022)

10.8^		Second Amendment to Loan and Servicing Agreement, dated as of September 16, 2022, by and among the Company, as Borrower, and Webster Bank, N.A. (f/k/a Sterling National Bank), as Collateral Agent, Administrative Agent, Swing Lender, and Sole Lead Arranger, and the Lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on September 20, 2022)

10.9^		Fourth Amendment to Loan and Servicing Agreement, dated as of May 9, 2024, by and among the Company, as Borrower, and Webster Bank, N.A. (f/k/a Sterling National Bank), as Collateral Agent, Administrative Agent, Swing Lender, and Sole Lead Arranger, and the Lenders party thereto (incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 15, 2024)

10.10^		Fifth Amendment to Loan and Servicing Agreement, dated as of June 27, 2025, by and among the Company, as the Borrower, and Webster Bank, N.A. (f/k/a Sterling National Bank), as the Agent, and the Lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on July 1, 2025)

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Filed herewith.

**	Furnished herewith.

^	Certain portions of this exhibit have been omitted in accordance with Item 601(b)(10)(vi) of Regulation S-K. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon its request.

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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, thereunto duly authorized.

Star Mountain Lower Middle-Market Capital Corp.

Date: August 14, 2025	By:	/s/ Brett A. Hickey
	Name:	Brett A. Hickey
	Title:	Chief Executive Officer and President

Date: August 14, 2025	By:	/s/ Christopher J. Gimbert
	Name:	Christopher J. Gimbert
	Title:	Chief Financial Officer