10-Q

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, 2026

☐ 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,
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 ☒

The number of shares of registrant’s common stock (“Common Stock”), $0.001 par value per share, outstanding as of August 13, 2026, was 5,273,674, 4,651,024, 0 and 0 of Class I, Class SP, Class S and Class D common shares, respectively.

Table of Contents


		Page

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of June 30, 2026 (Unaudited) and December 31, 2025	2
	Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025 (Unaudited)	3
	Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2026 and 2025 (Unaudited)	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 (Unaudited)	5
	Consolidated Schedules of Investments as of June 30, 2026 (Unaudited) and December 31, 2025	6
	Notes to Consolidated Financial Statements (Unaudited)	16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	53
Item 4.	Controls and Procedures	54

Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55
Signatures		57

Part I. Financial Information

Item 1. Financial Statements.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Assets and Liabilities


	June 30, 2026 (unaudited)			December 31, 2025
ASSETS
Non-controlled/non-affiliate investments at fair value (amortized cost of $356,232,908 and $324,546,406 as of June 30, 2026 and December 31, 2025, respectively)	$	351,784,704		$	312,185,808
Controlled/affiliate investments at fair value (amortized cost of $56,385,494 and $62,459,798 as of June 30, 2026 and December 31, 2025, respectively)		59,311,611			62,857,937
Interest receivable		5,049,145			3,410,139
Cash		3,390,592			5,470,978
Deferred financing cost - Credit facility		1,229,083			1,537,817
Deferred financing cost - Unsecured Note		414,759			-
Paydown receivable		194,109			392,623
Receivable for investments sold		104,359			367,810
Due from affiliate		68,271			-
Other receivable		57,498			57,498
Prepaid expenses		47,518			42,423
Dividend receivable		-			62,136
Due from feeder fund		-			765
Total assets		421,651,649			386,385,934

LIABILITIES

Credit facility payable		137,450,000			122,300,000
Unsecured Note payable		25,000,000			-
Incentive fees payable (Note 6)		6,922,004			6,223,804
Redemptions payable		5,858,040			5,903,771
Distributions payable		5,643,882			5,800,098
Deferred tax liabilities		5,004,352			4,034,663
Credit facility interest payable		2,018,382			1,869,030
Professional fees payable		721,669			659,177
Management fees payable (Note 6)		507,262			1,184,837
Unsecured Note interest payable		387,003			-
Reimbursement expense payable		277,108			146,408
Legal fees payable		156,176			33,735
Other payables		20,386			73,008
Subscriptions received in advance		12,500			467,500
Taxes payable		-			64,147
Trade payable		-			394,737
Total liabilities		189,978,764			149,154,915

Commitments and contingencies (Note 11)

Net assets	$	231,672,885		$	237,231,019

NET ASSETS
Common shares, $0.001 par value (200,000,000 shares authorized, 9,924,698 and 10,105,559 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively)	$	9,925		$	10,106
Additional paid-in capital		252,388,984			256,564,590
Accumulated undistributed (overdistributed) earnings		(20,726,024	)		(19,343,677	)
Total net assets	$	231,672,885		$	237,231,019


Class I Shares
Net assets	$	123,105,872		$	237,231,019
Shares issued and outstanding		5,273,674			10,105,559
Net asset value per share	$	23.34		$	23.48

Class SP Shares
Net assets		108,567,013			-
Shares issued and outstanding		4,651,024			-
Net asset value per share	$	23.34		$	-

See accompanying notes.

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,
	2026			2025			2026			2025
Non-controlled/non-affiliate investment income:
Interest income	$	8,173,340		$	8,485,427		$	15,923,596		$	16,519,615
PIK interest income		396,860			668,499			756,495			1,508,387
Dividend income		348,926			467,432			497,898			688,739
Other income		68,701			259,042			233,158			437,229
Controlled/affiliate investment income:
Interest income		433,027			583,029			850,848			1,445,338
PIK interest income		159,654			213,641			473,100			425,077
Other income		-			32,860			30,856			32,860
Total investment income:		9,580,508			10,709,930			18,765,951			21,057,245

Operating expenses:
Interest and other financing fees		2,661,352			1,298,543			5,021,751			3,840,320
Management fees (Note 6)		1,257,262			1,173,157			2,443,154			2,360,804
Incentive fees (Note 6)		530,401			1,275,636			698,201			2,142,038
Professional fees		504,649			411,817			983,774			1,009,862
General and administrative fees		390,643			230,036			698,119			490,416
Legal expenses		240,860			106,960			677,002			193,020
Director expenses		35,000			35,000			70,000			70,000
Total expenses before fee waiver		5,620,167			4,531,149			10,592,001			10,106,460
Expense waiver (Note 6)		(68,271	)		-			(68,271	)		-
Total expenses, net of fee waiver		5,551,896			4,531,149			10,523,730			10,106,460
Net investment income before taxes		4,028,612			6,178,781			8,242,221			10,950,785
Income tax expense (benefit)		(61,397	)		165,000			728			722,415
Net investment income		4,090,009			6,013,781			8,241,493			10,228,370

Net gain (loss):
Net realized gain (loss):
Non-controlled/non-affiliate investments		-			2,488,217			(7,802,110	)		4,352,098
Net realized gain (loss) on investments		-			2,488,217			(7,802,110	)		4,352,098

Net change in unrealized gain (loss):
Non-controlled/non-affiliate investments		166,178			(6,267,638	)		7,912,394			(11,544,151	)
Controlled/affiliate investments		1,946,052			643,864			2,527,978			1,039,791
Net change in unrealized gain (loss) on investments		2,112,230			(5,623,774	)		10,440,372			(10,504,360	)

Net gain (loss)		2,112,230			(3,135,557	)		2,638,262			(6,152,262	)

Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments		(516,310	)		1,760,115			(969,689	)		1,709,967
Net increase (decrease) in net assets resulting from operations	$	5,685,929		$	4,638,339		$	9,910,066		$	5,786,075

Per common share data:
Net increase (decrease) in net assets resulting from operations per share - basic and diluted	$	0.56		$	0.30		$	0.98		$	0.48
Weighted average shares outstanding - basic and diluted		10,082,964			10,056,451			10,133,291			9,992,201

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Changes in Net Assets

(Unaudited)


	For the three months ended June 30,						For the six months ended June 30,
	2026			2025			2026			2025
Net increase (decrease) in net assets resulting from operations
Net investment income	$	4,090,009		$	6,013,781		$	8,241,493		$	10,228,370
Net realized gain (loss)		-			2,488,217			(7,802,110	)		4,352,098
Net change in unrealized gain (loss) on investments		2,112,230			(5,623,774	)		10,440,372			(10,504,360	)
Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments		(516,310	)		1,760,115			(969,689	)		1,709,967
Net increase (decrease) in net assets resulting from operations		5,685,929			4,638,339			9,910,066			5,786,075

Distributions declared to stockholders
Class I		(2,997,537	)		(5,738,790	)		(8,646,068	)		(5,738,790	)
Class SP		(2,646,345	)		-			(2,646,345	)		-
Net decrease in net assets resulting from distributions		(5,643,882	)		(5,738,790	)		(11,292,413	)		(5,738,790	)

Share transactions*
Class I
Transfer out**		(108,671,913	)		-			(108,671,913	)		-
Issuance of common shares		1,064,000			10,935,518			2,219,000			10,935,518
Purchases of shares in repurchase offer		(4,117,613	)		(5,932,958	)		(10,024,302	)		(12,223,500	)
Stock issued in connection with dividend reinvestment plan		2,642,106			2,786,818			5,369,942			5,458,336
Conversion of shares***		(1,619,721	)		-			(1,619,721	)		-
Net increase (decrease) from share transactions - Class I		(110,703,141	)		7,789,378			(112,726,994	)		4,170,354
Class SP
Transfer in**		108,671,913			-			108,671,913			-
Purchases of shares in repurchase offer		(1,740,427	)		-			(1,740,427	)		-
Conversion of shares***		1,619,721			-			1,619,721			-
Net increase (decrease) from share transactions - Class SP		108,551,207			-			108,551,207			-
Net increase (decrease) from share transactions		(2,151,934	)		7,789,378			(4,175,787	)		4,170,354
Total increase (decrease) in net assets		(2,109,887	)		6,688,927			(5,558,134	)		4,217,639
Net assets, beginning of period		233,782,772			238,358,817			237,231,019			240,830,105
Net assets, end of period	$	231,672,885		$	245,047,744		$	231,672,885		$	245,047,744

* On March 31, 2026, all issued and outstanding shares of the Company's Common Stock were reclassified as Class I Shares.

** On May 20, 2026, the Company converted 4,656,219 existing shareholders Class I shares to Class SP shares with an aggregate net asset value of $108,671,913.

*** On May 20, 2026 and May 29, 2026, respectively, the Company converted 56,543 and 12,853 Class I shares to Class SP shares with an aggregate net asset value, respectively, of $1,319,721 and $300,000.

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Statements of Cash Flows

(Unaudited)


	For the six months ended June 30,
	2026			2025
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	9,910,066		$	5,786,075
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		7,802,110			(4,352,098	)
Net change in unrealized (gain) loss on investments		(10,440,372	)		10,504,360
Net accretion of discounts and amortization of premiums		(759,095	)		(1,444,728	)
Purchases of investments		(44,956,488	)		(25,732,737	)
Proceeds from sales of investments		80,898			7,393,779
Proceeds from principal payments		13,648,486			35,043,274
Amortization of deferred financing costs		364,965			307,750
Payment-in-kind interest income		(1,229,595	)		(1,933,464	)
Changes in operating assets and liabilities:
Interest receivable		(1,639,006	)		(827,415	)
Other receivables		-			(1,182,154	)
Receivable for investments sold		263,451			-
Prepaid expenses		(5,095	)		(27,890	)
Due from affiliates		(68,271	)
Dividend receivable		62,136			-
Due from feeder fund		765			-
Trade payable		(394,737	)		-
Taxes payable		(64,147	)		391,259
Management fees payable (Note 6)		(677,575	)		303,295
Incentive fees payable (Note 6)		698,200			2,142,038
Credit facility interest payable		149,352			40,098
Unsecured Note interest payable		387,003			-
Professional fees payable		62,492			189,988
Deferred tax liabilities		969,689			(1,709,967	)
Other payables		(52,622	)		(900,145	)
Legal fees payable		122,441			29,052
Reimbursement expense payable		130,700			78,732
Net cash provided by (used in) operating activities		(25,634,249	)		24,099,102

Cash flows from financing activities:
Proceeds from issuance of common shares, including subscriptions received in advance		1,764,000			10,968,018
Payments in repurchase of shares		(11,810,460	)		(11,905,560	)
Proceeds from credit facility		71,350,000			33,700,000
Repayments of credit facility		(56,200,000	)		(47,500,000	)
Proceeds from unsecured note		25,000,000			-
Distributions paid		(6,078,687	)		(5,524,867	)
Deferred financing and debt issuance costs paid		(470,990	)		15,625
Net cash provided by (used in) financing activities		23,553,863			(20,246,784	)

Net increase (decrease) in Cash		(2,080,386	)		3,852,318
Cash, beginning of period		5,470,978			4,028,665
Cash, end of period	$	3,390,592		$	7,880,983

Supplemental information and non-cash activities:
Non cash operating activities:
Interest received in kind	$	1,229,595		$	1,933,464
Supplemental and non cash financing activities:
Shares issued from dividend reinvestment plan (see Note 10)	$	5,369,942		$	5,458,336
Supplemental Information:
Cash paid for interest	$	3,846,154		$	4,308,148

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments

June 30, 2026

(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)(20)(21)	S + 13.01% PIK	16.74% PIK	1/15/2020	1/15/2025		467,915	$	585,091	$	-		0.0	%
Consolidated Machine & Tool Holdings, LLC	(17)(20)(21)	-	20.00% PIK	11/22/2023	1/15/2025		30,319		62,094		-		0.0
Consolidated Machine & Tool Holdings, LLC	(17)(20)(21)	-	11.00% PIK	11/22/2023	6/30/2026		38,003		25,452		-		0.0
Consolidated Machine & Tool Holdings, LLC	(13)(17)(21)	-	11.00% Cash	5/22/2024	6/30/2026		54,317		68,504		-		0.0
							590,554		741,141		-		0.0
Building Products
Built by Grid, LLC	(10)(15)	S + 7.15%	10.88%	12/5/2025	12/5/2030		1,883,561		1,845,350		1,890,342		0.8
							1,883,561		1,845,350		1,890,342		0.8
Chemicals
Douglas Products and Packaging Company, LLC	(10)(14)	S + 8.04%	11.69%	9/20/2023	9/20/2028		14,587,500		14,325,359		14,587,500		6.3
Douglas Products and Packaging Company, LLC	(10)(14)	S + 7.65%	11.30%	8/28/2025	9/20/2028		5,209,875		5,116,258		5,209,875		2.2
							19,797,375		19,441,617		19,797,375		8.5
Commercial Services & Supplies
Swyft AcquireCo LLC (dba Swyft Filings)	(10)(15)	S + 2.75%	6.48%	12/20/2021	12/20/2027		282,252		281,923		282,252		0.1
Swyft AcquireCo LLC (dba Swyft Filings)	(10)(15)	S + 7.63%	11.36%	12/20/2021	12/20/2027		3,682,383		3,662,633		3,638,563		1.6
Versar Inc.	(10)(15)	S + 9.46%	13.19%	8/4/2023	8/4/2028		10,000,000		9,800,434		10,000,000		4.3
							13,964,635		13,744,990		13,920,815		6.0
Construction & Engineering

Fremont-Wright, LLC	(14)	S + 9.10%	12.75%	12/2/2020	9/30/2027		197,634		197,634		197,634		0.1
Fremont-Wright, LLC	(14)	S + 9.10%	12.75%	12/2/2020	9/30/2027		3,816,234		3,816,234		3,816,234		1.6
Kassel Mechanical, LLC	(14)	S + 7.88% Cash + 0.12% PIK	11.53% Cash + 0.12% PIK	3/17/2025	9/17/2029		22,332,761		22,056,888		22,332,761		9.6
Kelso Industries	(15)(16)	S + 5.75%	9.48%	12/31/2024	12/30/2029		13,076,319		12,963,394		12,990,750		5.6
MechanAir, LLC	(16)(24)	S + 6.00%	9.85%	12/18/2025	12/18/2031		652,987		652,987		652,987		0.3
MechanAir, LLC	(24)	S + 6.00%	9.85%	12/18/2025	12/18/2031		5,760,526		5,721,145		5,721,355		2.5
Vertical Mechanical Group, LLC	(10)(15)	S + 8.52%	12.25%	5/12/2023	5/12/2028		15,237,143		15,054,139		15,237,143		6.5
The Stonewall Group LLC	(10)(14)(16)	S + 8.89%	12.54%	1/16/2026	11/18/2029		3,843,536		3,826,660		3,534,132		1.5
							64,917,140		64,289,081		64,482,996		27.7
Distributors
48forty Intermediate Holdings, Inc.	(14)(16)	S + 5.00%	8.65%	1/14/2026	1/15/2031		1,213,788		1,213,788		1,213,788		0.5
48forty Intermediate Holdings, Inc.	(14)	S + 5.25%	8.90%	1/14/2026	1/15/2031		1,620,140		1,620,140		1,620,140		0.7
							2,833,928		2,833,928		2,833,928		1.2
Diversified Telecommunication Services
Gridsource Incorporated, LLC	(15)	S + 7.00%	10.73%	12/16/2022	3/30/2029		13,965,264		13,835,536		13,965,264		6.0
							13,965,264		13,835,536		13,965,264		6.0
Electrical Equipment
Masterwork Electronics, Inc.	(15)(17)	S + 7.65%	11.38%	11/17/2022	11/17/2027		8,839,272		8,646,643		-		0.0
Masterwork Electronics, Inc.	(15)(17)	S + 7.65%	11.38%	11/17/2022	11/17/2027		521,739		521,739		-		0.0
							9,361,011		9,168,382		-		0.0
Entertainment
Chicken Soup For The Soul, LLC	(14)(17)(21)	S + 8.60%	12.25%	10/29/2021	3/31/2024		6,380,856		6,380,856		3,476,929		1.5
Chicken Soup For The Soul, LLC	(17)	-	19.00% PIK	8/7/2025	8/7/2026		1,200,136		1,200,136		1,200,136		0.5
Linden Research, Inc. (dba Linden Labs)	(10)(15)	S + 7.26%	10.99%	12/31/2020	9/30/2028		17,648,912		17,562,393		17,648,912		7.6
NW Entertainment, LLC	(15)	S + 8.51% Cash + 1.50% PIK	12.24% Cash + 1.50% PIK	11/4/2022	11/4/2027		6,145,285		6,097,526		6,008,245		2.6
							31,375,189		31,240,911		28,334,222		12.2
Healthcare Providers & Services
BB-HH Platform, Inc. (dba Preferred Care Home Health)	(10)(15)	S + 7.00% Cash + 1.5% PIK	10.73% Cash + 1.5% PIK	5/16/2023	5/16/2028		8,179,550		8,097,670		8,179,550		3.5
IPA Intermediate Co., LLC (dba Integrated Pain Associates)	(15)(16)	S + 7.75%	11.48%	1/9/2023	1/9/2028		12,107,622		11,989,047		12,107,622		5.2
Klein Hersh, LLC	(10)(15)	S + 0.79%	4.52%	4/27/2022	4/27/2028		17,195,155		16,773,746		15,715,512		6.8
							37,482,327		36,860,463		36,002,684		15.5
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)	(15)	S + 5.46%	9.19%	9/15/2022	9/15/2027		3,302,521		3,302,521		3,330,262		1.4
The Range NYC, LLC (dba Five Iron Golf)	(15)	S + 5.46%	9.19%	9/15/2022	9/15/2027		4,745,798		4,697,449		4,787,561		2.1
							8,048,319		7,999,970		8,117,823		3.5
Household Durables
SkyBell Technologies, Inc.	(17)(20)(21)	S + 13.26% PIK	16.99% PIK	12/13/2019	12/13/2024		4,828,409		4,534,395		4,062,384		1.7
							4,828,409		4,534,395		4,062,384		1.7
Household Products
CHG Parent Holding LLC (dba Coop Home Goods)	(10)(15)	S + 7.36%	11.09%	6/18/2021	6/27/2028		11,501,265		11,352,625		11,501,265		4.9
The Clean People	(15)	S + 7.71%	11.44%	4/30/2026	4/30/2031		14,307,132		14,011,667		14,009,067		6.0
							25,808,397		25,364,292		25,510,332		10.9
Machinery
AqueoUS Vets	(14)(16)	S + 7.00%	10.65%	5/18/2026	5/18/2031		5,329,977		5,183,435		5,183,403		2.2
Texas Contract Manufacturing Group, Inc.	(15)(17)	S + 4.11% Cash + 4.00% PIK	7.84% Cash + 4.00% PIK	4/27/2022	4/27/2027		4,427,923		4,382,029		483,394		0.2
							9,757,900		9,565,464		5,666,797		2.4
Media
PadSquad, LLC	(10)(15)	S + 7.29%	11.02%	3/30/2022	3/30/2027		2,620,175		2,602,739		2,554,670		1.1
Trailer Park Group Holdings LLC	(10)(15)	S + 7.26%	10.99%	8/2/2021	8/2/2027		13,750,706		13,742,287		11,791,231		5.1
Trailer Park Group Holdings LLC	(10)(15)	S + 8.76% PIK	12.49% PIK	5/22/2026	8/2/2027		466,671		466,671		529,205		0.2
							16,837,552		16,811,697		14,875,106		6.4
Personal Products
Japonesque, LLC	(10)(15)	S + 5.56% Cash + 3.82% PIK	9.29% Cash + 3.82% PIK	11/23/2021	6/30/2027		4,365,503		4,339,469		4,365,503		1.9
Japonesque, LLC	(20)	-	18.00% PIK	8/5/2025	6/30/2027		231,148		226,525		219,983		0.1
							4,596,651		4,565,994		4,585,486		2.0
Professional Services
CorTech, LLC	(15)	S + 7.60% Cash + 2.00% PIK	11.33% Cash + 2.00% PIK	6/3/2025	6/30/2027		7,518,624		7,495,070		7,392,311		3.2
Jefferson Consulting Group, LLC	(10)(15)	S + 3.95% Cash + 3.73% PIK	7.68% Cash + 3.73% PIK	7/1/2024	7/1/2029		8,942,461		8,836,217		8,202,025		3.5
PQT Ayaquhs, LLC (dba WWC Global)	(15)	S + 7.32%	11.05%	8/1/2022	8/1/2029		3,095,502		3,078,955		3,095,502		1.3
Qualified Digital, LLC	(14)	S + 7.00%	10.65%	7/30/2024	7/30/2029		11,879,286		11,731,613		11,998,079		5.2
Qualified Digital, LLC	(14)	S + 7.00%	10.65%	7/30/2024	7/30/2029		2,411,071		2,331,411		2,435,183		1.0
							33,846,944		33,473,266		33,123,100		14.2
Specialty Retail						`
Clearview Systems, LLC (dba Rip-it)	(10)(15)	S + 7.66% Cash + 3.00% PIK	11.39% Cash + 3.00% PIK	10/11/2022	10/11/2027		6,993,992		6,955,067		6,993,992		3.0
							6,993,992		6,955,067		6,993,992		3.0
Trading Companies & Distributors
Ambient Enterprises Holdco LLC	(15)	S + 5.50%	9.23%	12/31/2024	6/30/2030		1,250,223		1,250,223		1,250,223		0.5
Ambient Enterprises Holdco LLC	(15)	S + 5.50%	9.23%	10/31/2025	6/30/2030		416,107		408,165		413,501		0.2
Ambient Enterprises Holdco LLC	(15)(16)	S + 5.50%	9.23%	10/31/2025	6/30/2030		335,432		330,916		335,432		0.1
Ambient Enterprises Holdco LLC	(15)	S + 5.50%	9.23%	12/31/2024	6/30/2030		6,340,319		6,270,766		6,340,319		2.7
Ambient Enterprises Holdco LLC	(15)	S + 5.50%	9.23%	12/31/2024	6/30/2030		1,762,250		1,742,299		1,762,250		0.8
Ambient Enterprises Holdco LLC	(15)	S + 5.50%	9.23%	7/3/2025	6/30/2030		511,972		502,219		511,972		0.2
Ambient Enterprises Holdco LLC	(15)(16)	S + 5.50%	9.23%	7/3/2025	6/30/2030		876,100		876,100		876,100		0.4
							11,492,403		11,380,688		11,489,797		4.9
Transportation Infrastructure
TCP Acquisition, LLC (dba HighStar Traffic)	(15)	S + 5.54% Cash + 3.96% PIK	9.27% Cash + 3.96% PIK	7/26/2022	7/26/2027		9,801,544		9,749,665		9,201,689		4.0
							9,801,544		9,749,665		9,201,689		4.0
Total first lien senior secured term loan								$	324,401,897	$	304,854,132		130.9	%

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

June 30, 2026

(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
Second lien senior secured loan
Machinery
AqueoUS Vets		-	18.00% PIK	5/18/2026		5/18/2031		1,814,857	$	1,766,070	$	1,765,999		0.8	%
								1,814,857		1,766,070		1,765,999		0.8
Total second lien term loan										1,766,070		1,765,999		0.8

Senior unsecured notes	(22)
Electrical Equipment
HH Masterwork Intermediate, Inc.	(17)(20)	-	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)(22)
Building Products
Built by Grid, LLC	(19)(23)	-	-	12/5/2025		-		214		214,378		241,247		0.1
								214		214,378		241,247		0.1
Commercial Services and Supplies
Swyft Filings Holdings, LLC	(13)(18)(19)(23)	-	8% Preferred Return	12/20/2021		-		192,444		183,612		149,001		0.1
								192,444		183,612		149,001		0.1
Construction & Engineering		-	-
MechanAir Holdings, LLC	(13)(19)(23)	-	13.50% PIK	9/2/2021		-		1,704		1,703,499		3,113,348		1.3
MechanAir Holdings, LLC	(13)(19)(23)	-	-	9/17/2025		-		65		61,608		724,487		0.3
Vertical Mechanical Group Holdings, LLC	(19)(23)	-	8% Preferred Return	5/12/2023		-		185,714		1,857,143		7,534,286		3.2
Vertical Mechanical Group Holdings, LLC	(19)(23)	-	-	4/14/2026		-		42,857		428,571		400,000		0.2
		-	-					230,340		4,050,821		11,772,121		5.0
Distributors
48forty Intermediate Holdings, Inc. (Alpine Acquisition Corp)	(23)	-	-	1/14/2026		-		810		4,177,998		3,862,855		1.7
								810		4,177,998		3,862,855		1.7

Diversified Telecommunication Services
Gridsource Holdings, LLC	(19)(23)	-	8.00% PIK	3/9/2023		-		3,959,977		799,597		1,023,615		0.4
Gridsource Holdings, LLC, Series B	(19)(23)	-	-	6/22/2026		-		450,408		76,335		245,921		0.1
		-	-					4,410,385		875,932		1,269,536		0.5
Entertainment
NW Entertainment, LLC	(19)(23)	-	10.00% PIK	11/4/2022		-		1,183		1,134,428		1,450,065		0.6
NW Entertainment, LLC	(19)(23)	-	12.00% PIK	2/27/2025		-		826		531,143		986,071		0.4
								2,009		1,665,571		2,436,136		1.0
Healthcare Providers & Services
IPA Investors, LP (dba Integrated Pain Associates)	(19)(23)	-	8.00% PIK	1/9/2023		-		2,749		2,573,151		2,832,431		1.2
								2,749		2,573,151		2,832,431		1.2
Household Products
The Clean People	(23)	-	-	4/30/2026		-		1,590		1,589,681		1,589,680		0.7
								1,590		1,589,681		1,589,680		0.7
Media
PadSquad Holdings, LLC	(13)(19)(23)	-	6.00% Cash + 6.00% PIK	3/30/2022		-		720,767		1,964,204		3,402,430		1.5
Trailer Park Group Holdings, LLC Class A-1 Units	(13)(19)(23)	-	15.00% PIK	12/19/2023		-		40,888		73,599		-		0.0
Trailer Park Group Holdings LLC - Class A Units	(13)(19)(23)	-	8.00% PIK	8/2/2021		-		371,822		404,702		-		0.0
Trailer Park Group Holdings LLC	(13)(19)(23)	-	15.00% PIK		-	-		37,594		-		-		0.0
		-	-					1,171,071		2,442,505		3,402,430		1.5
Professional Services		-	-
Hometown Holdings JV, LLC (dba BWG Strategy)	(13)(19)(23)	-	8% Preferred Return	12/24/2020		-		666,667		659,761		553,500		0.2
JCFV Holdings, LLC	(19)(23)	-	8.00% PIK	7/1/2024		-		415,916		1,538,462		853,846		0.4
PQT Ayaquhs, LLC (dba WWC Global)	(13)(19)(23)	-	10.50% PIK	8/1/2022		-		5,774		1,064,516		4,519,352		1.9
SPC QD SM, LP	(19)(23)	-	-	7/30/2024		-		42		2,207,572		2,655,748		1.1
		-	-					1,088,399		5,470,311		8,582,446		3.6
Software		-	-
PureCars Technologies, LLC	(13)(19)(23)	-	8.00% PIK	4/17/2019		-		592		267,013		566,059		0.2
								592		267,013		566,059		0.2
Total preferred equity securities										23,510,973		36,703,942		15.6

Warrants and other equity securities	(12)(22)
Commercial Services and Supplies
Swyft Filings Holdings, LLC	(13)(19)(20)	-	-	12/20/2021		-		1,015		-		-		0.0
								1,015		-		-		0.0
Construction & Engineering
Fremont-Wright, LLC	(23)	-	-	12/2/2020		-		2		-		1,199,981		0.5
The Stonewall Group LLC	(23)	-	-	1/16/2026		-		1		-		297,917		0.1
								3		-		1,497,898		0.6
Distributors
48forty Intermediate Holdings, Inc.	(23)	-	-	10/11/2022		-		1,994		-		-		0.0
								1,994		-		-		0.0
Electrical Equipment
HH Masterwork Intermediate, Inc.	(17)(23)	-	-	11/17/2022		-		190,019		-		-		0.0
								190,019		-		-		0.0
Entertainment
LRI Holdco, LLC (dba Linden Labs)	(19)(23)	-	-	12/31/2020		-		1		-		146,561		0.1
LRI Holdco, LLC (dba Linden Labs)	(23)	-	-	12/31/2020		-		1		43,478		192,567		0.1
								2		43,478		339,128		0.2
Healthcare Providers & Services
Klein Hersh, LLC		-	-	4/27/2022		-		1,003		-		-		0.0
Nurses 24/7 Holdings, LLC	(19)(23)	-	-	5/26/2023		-		182		419,877		-		0.0
								1,185		419,877		-		0.0
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)	(23)	-	-	9/15/2022		-		40,593		71,599		263,872		0.1
								40,593		71,599		263,872		0.1
Household Durables
SkyBell Technologies, Inc.	(17)(23)	-	-	12/13/2019		-		1,917,813		-		-		0.0
								1,917,813		-		-		0.0
Household Products
CHG Parent Holding LLC (dba Coop Home Goods)	(19)(23)	-	-	6/18/2021		-		535,714		535,714		1,463,578		0.6
								535,714		535,714		1,463,578		0.6
Machinery
Texas Contract Manufacturing Group, Inc.	(17)(23)	-	-	4/27/2022		-		1,602		-		-		0.0
								1,602		-		-		0.0
Media
Channel Factory Holdings, LLC	(13)(19)(23)	-	-	3/31/2025		-		819,478		-		1,476,092		0.6
								819,478		-		1,476,092		0.6
Professional Services
CorTech, LLC	(23)	-	-	6/30/2025		-		1		-		26,173		0.0
NSC Holdings, LLC	(19)(23)	-	-	4/26/2019		-		111		271,262		775,415		0.3
PQT Ayaquhs, LLC (dba WWC Global)	(23)	-	-	8/1/2022		-		645		-		330,645		0.1
								757		271,262		1,132,233		0.4
Software
Proactive Dealer Holdings Parent, LLC	(19)(23)	-	10% Preferred Return	6/10/2024		-		445		730,271		64,729		0.0
								445		730,271		64,729		0.0
Total warrants and other equity securities										2,072,201		6,237,530		2.5

Fund investments
Diversified Financials
Madryn Select Opportunities, LP	(16)(23)	-		1/4/2022		-		-		2,448,669		2,223,101		1.0
								-		2,448,669		2,223,101		1.0
Total fund investments										2,448,669		2,223,101		1.0
Total non-controlled/non-affiliate investments									$	356,232,908	$	351,784,704		150.8	%

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

June 30, 2026

(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
Aerospace & Defense
Delva Master Holdings	(11)(14)(25)	S + 10.26%	13.91%	8/13/2025	9/1/2030		1,651,442	$	901,698	$	1,523,125		0.7	%
							1,651,442		901,698		1,523,125		0.7
Construction & Engineering
Watt Acquisition, LLC	(10)(11)(15)	S + 8.87% Cash + 5.38% PIK	12.60% Cash + 5.38% PIK	4/15/2022	4/15/2027		1,669,549		1,663,349		1,669,549		0.7
Watt Acquisition, LLC	(10)(11)(15)	S + 8.00%	11.73%	2/5/2026	2/4/2027		530,899		530,899		520,759		0.2
							2,200,448		2,194,248		2,190,308		0.9
Diversified Telecommunication Services
Caregility Corporation	(11)(15)	S + 3.31% Cash + 5.96% PIK	7.04% Cash + 5.96% PIK	12/29/2021	10/31/2026		2,688,222		2,601,178		2,677,200		1.2
							2,688,222		2,601,178		2,677,200		1.2
Food Products
Uncle John's Pride, LLC	(11)(14)	S + 8.11%	11.76%	3/31/2022	3/31/2027		1,731,518		1,731,518		1,731,518		0.7
Uncle John's Pride, LLC	(11)(14)	S + 8.11%	11.76%	3/31/2022	3/31/2027		5,088,662		5,056,430		5,088,662		2.2
							6,820,180		6,787,948		6,820,180		2.9
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health)	(11)(15)	S + 10.50% PIK	14.23% PIK	3/19/2021	7/6/2026		1,026,453		1,017,529		968,048		0.4
							1,026,453		1,017,529		968,048		0.4
Leisure Products
MPUSA, LLC (dba Mission)	(11)(15)	S + 9.26% PIK	12.99% PIK	12/9/2021	12/31/2028		1,906,060		1,903,858		1,823,146		0.8
							1,906,060		1,903,858		1,823,146		0.8
Trading Companies & Distributors
USBid Inc.	(10)(11)(15)	S + 8.18%	11.91%	11/3/2022	11/3/2027		2,648,797		2,630,456		2,702,567		1.2
							2,648,797		2,630,456		2,702,567		1.2
Total first lien senior secured term loan									18,036,915		18,704,574		8.1

Senior unsecured notes	(22)
Consumer Finance
Microf, LLC	(11)(15)	S + 10.85%	14.58%	3/29/2019	11/30/2027		3,714,429		3,675,236		3,713,686		1.6
							3,714,429		3,675,236		3,713,686		1.6
Total senior unsecured notes									3,675,236		3,713,686		1.6

Preferred equity securities	(12)(22)
Aerospace & Defense
Delva Master Holdings	(11)(23)	-	18.00% PIK	8/13/2025	-		1,636		7,679,427		7,783,140		3.3
							1,636		7,679,427		7,783,140		3.3
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(19)(23)	-	15.00% PIK	4/15/2022	-		4,439		4,380,196		7,566,423		3.3
							4,439		4,380,196		7,566,423		3.3
Diversified Telecommunication Services
Caregility Corporation - Series A-1 Units	(11)(13)(23)	-	8.00% PIK	12/31/2022	-		296,611		2,076,097		1,369,779		0.6
Caregility Corporation - Series B Units	(11)(13)(23)	-	8.00% PIK	7/3/2023	-		446,689		3,591,494		4,922,523		2.1
							743,300		5,667,591		6,292,302		2.7
Food Products		-	-
UJP Acquisition, LLC (dba Uncle John's Pride)	(11)(13)(19)(23)	-	8.00% PIK	3/31/2022	-		2,829,787		2,829,787		5,022,872		2.2
							2,829,787		2,829,787		5,022,872		2.2
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health) - Class A Units	(11)(19)(23)	-	10% Preferred Return	3/19/2021	-		571,080		564,321		613,566		0.3
Arrow Home Health, LLC (dba Acara Home Health) - Class 1 Units	(11)(13)(19)(23)	-	-	11/13/2023	-		56,005		56,005		112,010		0.0
							627,085		620,326		725,576		0.3
Leisure Products		-	-
TS-MP, LLC (dba Mission) - Class A-1	(11)(19)(23)	-	-	12/9/2021	-		69		1,928,409		-		0.0
TS-MP, LLC (dba Mission) - Class AA-1	(11)(19)(23)	-	-	12/10/2024	-		88		1,960,641		1,628,940		0.7
		-	-				157		3,889,050		1,628,940		0.7
Professional Services
Capone Holdings JV, LLC (dba LaSalle Staffing)	(11)(19)(23)	-	8% Preferred Return	2/15/2022	-		4,000,000		4,000,000		6,093,333		2.6
							4,000,000		4,000,000		6,093,333		2.6
Trading Companies & Distributors
USBid Parent, LLC - Class A	(11)(23)	-	-	11/3/2022	-		2,813		2,812,500		-		0.0
USBid Parent, LLC - Class C	(11)(23)	-	10.00% PIK	11/2/2023	-		9,375		7,324		-		0.0
USBid Parent, LLC - Class C2	(11)(23)	-	10.00% PIK	4/12/2024	-		600,000		468,750		583,594		0.3
USBid Parent, LLC - Class C3	(11)(23)	-	10.00% PIK	4/12/2024	-		2,400,000		1,875,000		1,155,469		0.5
							3,012,188		5,163,574		1,739,063		0.8
Total preferred equity securities									34,229,951		36,851,649		15.9

Warrants and other equity securities	(12)(22)
Aerospace & Defense
Delva Master Holdings	(11)(23)	-	-	8/13/2025	-		10,493		-		-		0.0
Delva Master Holdings	(11)(23)	-	-	8/13/2025	-		1,354		-		-		0.0
		-	-				11,847		-		-		0.0
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(19)(23)	-	-	4/15/2022	-		100,408		-		-		0.0
							100,408		-		-		0.0
Diversified Telecommunication Services
Caregility Corporation	(11)(23)	-	-	12/29/2021	-		221,574		443,392		-		0.0
Caregility Corporation	(11)(23)	-	-	12/29/2021	-		46,227		-		-		0.0
							267,801		443,392		-		0.0
Food Products		-	-
UJP Acquisition, LLC (dba Uncle John's Pride)	(11)(19)(23)	-	-	3/31/2022	-		127,215		-		41,702		0.0
							127,215		-		41,702		0.0
Trading Companies & Distributors
USBid Parent, LLC	(11)(23)	-	-	11/3/2022	-		204		-		-		0.0
							204		-		-		0.0
Total warrants and other equity securities									443,392		41,702		0.0
Total controlled/affiliate investments									56,385,494		59,311,611		25.5

TOTAL INVESTMENTS								$	412,618,402	$	411,096,315		176.4	%

(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.

(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.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

June 30, 2026

(Unaudited)

(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 of Investments” 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 as of June 30, 2026 represented $59,311,611 of Fair Value and 25.6% of Net Assets of the Company. Transactions related to investments in “Controlled/Affiliate Investments” for the six months ended June 30, 2026 were as follows:

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

June 30, 2026

(Unaudited)


Portfolio Company	Type of Investment		Amount of Realized Gain (Loss)			Amount of Interest or Dividends Credited to Income (a)				December 31, 2025 Value			Gross Additions (b)					Gross Reductions (c)				Transfers In/(Out) of Affiliates			Amount of Unrealized Gains (Loss)				June 30, 2026 Value
Arrow Home Health LLC (dba Acara Home Health)	First lien senior secured term loan	$		-	$		(145,161	)	$		764,370	$		239,426		$			-		$		-	$		(35,748	)	$		968,048
	Preferred equity securities (571,080 shares)			-			-				252,425			-					-				-			361,141				613,566
	Preferred equity securities (56,005 shares)			-			-				112,010			-					-				-			-				112,010
Capone Holdings JV, LLC (dba LaSalle Staffing)	Preferred equity securities (4,000,000 shares)			-			-				6,093,333			-					-				-			-				6,093,333
Caregility Corporation	First lien senior secured term loan			-			109,359				2,581,303			95,033					-				-			864				2,677,200
	Preferred equity securities (151,018 shares)			-			-				194,014			-					-				-			1,175,765				1,369,779
	Preferred equity securities (446,689 shares)			-			-				4,732,688			-					-				-			189,835				4,922,523
	Warrants (267,801 units)			-			-				-			-			-		-				-			-				-
	Senior secured notes (0 units)			-			-				-			-					-				-			-				-
Delva Master Holdings	First lien senior secured term loan			-			-				850,931			-					-				-			672,194				1,523,125
	Preferred equity securities (1,636 shares)			-			-				7,905,825			-					-				-			(122,685	)			7,783,140
Lasalle Staffing, LLC	First lien senior secured term loan			-			172,699				7,150,785			3,261					(7,080,036	)			-			(74,010	)			-
Microf, LLC	Senior Unsecured Note			-			(20,615	)			3,763,831			(20,615	)				-				-			(29,530	)			3,713,686
MPUSA, LLC (dba Mission)	First lien senior secured term loan			-			2,527				1,712,240			122,667					-				-			(11,761	)			1,823,146
	Preferred equity securities (88 shares)			-			-				1,695,478			-					-				-			(66,538	)			1,628,940
Uncle John's Pride, LLC	First lien senior secured term loan			-			320,102				5,116,215			17,290					(27,356	)			-			(17,487	)			5,088,662
	First lien senior secured term loan			-			102,956				1,740,572			-					(9,054	)			-			-				1,731,518
UJP Acquisition, LLC (dba Uncle John's Pride)	Warrants and other equity securities (127,215 shares)			-			-				29,787			-					-				-			11,915				41,702
	Preferred equity securities (2,829,787 shares)			-			-				4,966,277			-					-				-			56,595				5,022,872
USBid Inc.	First lien senior secured term loan			-			164,098				2,599,529			5,454					-				-			97,584				2,702,567
USBid Inc. - Class C2 Units	Preferred equity securities (600,000 shares)			-			-				555,469			-					-				-			28,125				583,594
USBid Inc. - Class C3 Units	Preferred equity securities (2,400,000 shares)			-			-				1,155,469			-					-				-			-				1,155,469
Watt Acquisition, LLC	First lien senior secured term loan			-			129,977				1,625,086			48,727					-				-			(4,264	)			1,669,549
	First lien senior secured term loan						25,130				-			530,899					-				-			(10,140	)			520,759
Watt Contracting Holdings, LLC	Preferred equity securities (4,439 shares)			-			-				7,260,300			-					-				-			306,123				7,566,423
Total Affiliate Investments		$		-	$		861,072		$		62,857,937	$		1,042,142		$			(7,116,446	)	$		-	$		2,527,978		$		59,311,611

(12)

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

(13)

Investment contains a fixed rate structure.

(14)

The interest rate on these loans is subject to 1 month SOFR, which was 3.65% as of June 30, 2026.

(15)

The interest rate on these loans is subject to 3 month SOFR, which was 3.73% as of June 30, 2026.

(16)

Positions have an aggregate unfunded commitment of $16,067,467 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.

(17)

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

(18)

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

(19)

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.

(20)

The investment does not accrue payment-in-kind (“PIK”) for the debt investment as of June 30, 2026. See Note 2. “Significant Accounting Policies”.

(21)

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

(22)

All investments are non-income producing unless otherwise indicated.

(23)

The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 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.

(24)

The interest rate on these loans is subject to 6 month SOFR, which was 3.85% as of June 30, 2026.

(25)

Delva Master Holdings was removed from non-accrual status effective June 1, 2026.

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments

December 31, 2025


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 + 13.01% PIK	16.66% PIK	1/15/2020	1/15/2025		581,276	$	581,276	$	-		0.0	%
Consolidated Machine & Tool Holdings, LLC	(13)(19)(22)(23)	-	13.00% PIK	11/22/2023	1/15/2025		68,577		68,577		-		0.0
Consolidated Machine & Tool Holdings, LLC	(13)(19)	-	11.00% PIK	5/22/2024	6/30/2026		69,865		69,865		-		0.0
							745,414		745,414		-		0.0
Building Products
Built by Grid, LLC	(10)(17)	S + 7.18%	10.83%	12/5/2025	12/5/2030		1,883,561	$	1,841,720	$	1,841,720		0.8	%
							1,883,561		1,841,720		1,841,720		0.8
Chemicals
Douglas Products and Packaging Company, LLC	(10)(16)	S + 8.04%	11.73%	9/20/2023	9/20/2028		19,898,602		19,494,185		19,898,603		8.4
							19,898,602		19,494,185		19,898,603		8.4
Commercial Services & Supplies
Swyft AcquireCo LLC (dba Swyft Filings)	(15)(16)	S + 2.75%	6.44%	12/20/2021	12/20/2027		285,649		285,293		285,650		0.1
Swyft AcquireCo LLC (dba Swyft Filings)	(10)(16)	S + 7.65%	11.34%	12/20/2021	12/20/2027		3,682,383		3,658,259		3,682,383		1.6
Versar Inc.	(10)(17)	S + 9.58%	13.23%	8/4/2023	8/4/2028		10,000,000		9,755,014		10,002,500		4.2
							13,968,032		13,698,566		13,970,533		5.9
Construction & Engineering
Fremont-Wright, LLC	(16)	S + 9.20%	12.89%	12/2/2020	6/30/2026		4,042,177		4,042,177		4,042,177		1.7
Kassel Mechanical, LLC	(16)	S + 7.66% Cash + 0.34% PIK	11.35% Cash + 0.34% PIK	3/17/2025	9/17/2029		12,337,305		12,178,493		12,242,307		5.2
Kelso Industries	(17)	S + 5.75%	9.40%	12/31/2024	12/30/2029		9,007,713		8,866,218		9,007,713		3.8
Kelso Industries	(17)	S + 5.75%	9.40%	3/12/2025	12/30/2029		3,433,239		3,433,239		3,433,239		1.4
MechanAir, LLC	(17)(18)	S + 6.00%	9.65%	12/18/2025	12/18/2031		652,987		646,769		646,769		0.3
MechanAir, LLC	(17)(26)	S + 6.00%	9.65%	12/18/2025	12/18/2031		5,789,474		5,745,056		5,745,056		2.4
Vertical Mechanical Group, LLC	(10)(17)	S + 8.76%	12.41%	5/12/2023	5/12/2028		12,037,143		11,870,297		11,902,327		5.0
							47,300,038		46,782,249		47,019,588		19.8
Distributors
48forty Intermediate Holdings, Inc.	(16)(19)	S + 6.15%	9.84%	10/11/2022	11/30/2029		15,221,270		14,822,272		7,300,311		3.1
							15,221,270		14,822,272		7,300,311		3.1
Diversified Telecommunication Services
Gridsource Incorporated, LLC	(17)	S + 7.00%	10.65%	12/16/2022	3/30/2029		14,036,143		13,814,057		13,446,625		5.7
							14,036,143		13,814,057		13,446,625		5.7
Electrical Equipment
Masterwork Electronics, Inc.	(17)(19)	S + 7.65%	11.30%	11/17/2022	11/17/2027		8,840,576		8,638,547		828,362		0.3
Masterwork Electronics, Inc.	(15)(17)(19)	S + 7.65%	11.30%	11/17/2022	11/17/2027		521,739		521,739		48,887		0.0
							9,362,315		9,160,286		877,249		0.3
Entertainment
Chicken Soup For The Soul, LLC	(16)(19)(23)	S + 8.60%	12.29%	10/29/2021	3/31/2024		6,380,856		6,380,856		3,269,232		1.4
Chicken Soup For The Soul, LLC	(19)	-	19.00% PIK	8/7/2025	8/7/2026		900,010		900,010		900,010		0.4
Linden Research, Inc. (dba Linden Labs)	(10)(17)	S + 7.67% Cash + 3.56% PIK	11.32% Cash + 3.56% PIK	12/31/2020	9/30/2028		18,260,031		18,080,381		18,260,031		7.7
NW Entertainment, LLC	(17)	S + 8.51% Cash + 1.50% PIK	12.16% Cash + 1.50% PIK	11/4/2022	11/4/2027		6,164,071		6,095,887		6,038,324		2.5
							31,704,968		31,457,134		28,467,597		12.0
Healthcare Providers & Services
BB-HH Platform, Inc. (dba Preferred Care Home Health)	(10)(17)	S + 7.62% Cash + 1.79% PIK	11.27% Cash + 1.79% PIK	5/16/2023	5/16/2028		6,916,484		6,815,782		6,916,484		2.9
IPA Intermediate Co., LLC (dba Integrated Pain Associates)	(17)(18)	S + 7.75%	11.40%	1/9/2023	1/9/2028		12,361,934		12,198,461		12,361,934		5.2
IPA Intermediate Co., LLC (dba Integrated Pain Associates)	(17)(18)	S + 7.75%	11.40%	12/18/2025	1/9/2028		425,532		425,532		425,532		0.2
Klein Hersh, LLC	(10)(17)	S + 0.24%	3.89%	4/27/2022	4/27/2028		17,285,870		16,790,860		15,081,922		6.4
							36,989,820		36,230,635		34,785,872		14.7
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)	(17)	S + 7.61%	11.26%	9/15/2022	9/15/2027		3,329,832		3,329,832		3,357,803		1.4
The Range NYC, LLC (dba Five Iron Golf)	(17)	S + 7.61%	11.26%	9/15/2022	9/15/2027		4,802,521		4,732,570		4,844,303		2.0
							8,132,353		8,062,402		8,202,106		3.4
Household Durables
SkyBell Technologies, Inc.	(19)(22)(23)	-	16.91% PIK	12/13/2019	12/13/2024		4,828,409		4,534,395		3,867,034		1.6
							4,828,409		4,534,395		3,867,034		1.6
Household Products
CHG Parent Holding LLC (dba Coop Home Goods)	(10)(17)	S + 7.70%	11.35%	6/18/2021	6/27/2026		12,683,981		12,525,367		12,683,981		5.3
							12,683,981		12,525,367		12,683,981		5.3
Machinery
Texas Contract Manufacturing Group, Inc.	(17)	S + 5.11% Cash + 4.00% PIK	S + 8.76% Cash + 4.00% PIK	4/27/2022	4/27/2027		4,427,923		4,382,109		3,645,509		1.5
							4,427,923		4,382,109		3,645,509		1.5
Media
PadSquad, LLC	(10)(17)	S + 7.42%	11.07%	3/30/2022	3/30/2027		2,620,175		2,600,278		2,620,175		1.1
Trailer Park Group Holdings LLC	(10)(17)	S + 7.32% Cash + 0.99% PIK	10.97% Cash + 0.99% PIK	8/2/2021	8/2/2026		14,981,089		14,902,350		13,662,753		5.8
							17,601,264		17,502,628		16,282,928		6.9
Personal Products
Japonesque, LLC	(10)(17)	S + 9.48% Cash + 0.69% PIK	13.13% Cash + 0.69% PIK	11/23/2021	6/30/2027		4,304,034		4,270,684		4,304,034		1.8
Japonesque, LLC		-	18.00% PIK	8/5/2025	6/30/2027		231,148		226,525		228,189		0.1
							4,535,182		4,497,209		4,532,223		1.9
Professional Services
CorTech, LLC	(17)	S + 7.60%	11.25%	6/3/2025	6/30/2026		7,546,280		7,536,366		7,285,934		3.1
Jefferson Consulting Group, LLC	(10)(17)	S + 3.89% Cash + 3.91% PIK	7.54% Cash + 3.91% PIK	7/1/2024	7/1/2029		8,722,712		8,598,222		7,565,829		3.2
PQT Ayaquhs, LLC (dba WWC Global)	(17)	S + 5.76%	9.41%	8/1/2022	8/1/2027		3,437,642		3,408,886		3,437,642		1.4
Qualified Digital, LLC	(17)	S + 7.00%	10.65%	7/30/2024	7/30/2029		12,032,857		11,858,587		11,881,243		5.0
							34,181,277		33,759,502		32,526,227		13.7
Specialty Retail						`
Clearview Systems, LLC (dba Rip-it)	(10)(17)	S + 4.54% Cash + 6.50% PIK	8.19% Cash + 6.50% PIK	10/11/2022	10/11/2027		7,052,922		6,993,393		7,052,922		3.0
							7,052,922		6,993,393		7,052,922		3.0
Trading Companies & Distributors
Ambient Enterprises Holdco LLC	(17)(18)	S + 5.25%	8.90%	12/31/2024	6/30/2030		1,256,546		1,256,546		1,256,546		0.5
Ambient Enterprises Holdco LLC	(17)(18)	S + 5.25%	8.90%	10/31/2025	6/30/2030		418,203		412,167		418,203		0.2
Ambient Enterprises Holdco LLC	(17)(18)	S + 5.25%	8.90%	12/31/2024	6/30/2030		6,372,503		6,282,393		6,367,431		2.7
Ambient Enterprises Holdco LLC	(17)(18)	S + 5.25%	8.90%	12/31/2024	6/30/2030		1,771,299		1,746,933		1,771,299		0.7
Ambient Enterprises Holdco LLC	(17)(18)	S + 5.25%	8.90%	7/3/2025	6/30/2030		514,558		502,388		514,558		0.2
Ambient Enterprises Holdco LLC	(17)(18)	S + 5.25%	8.90%	7/3/2025	6/30/2030		165,521		165,521		165,521		0.1
							10,498,630		10,365,948		10,493,558		4.4
Transportation Infrastructure
TCP Acquisition, LLC (dba HighStar Traffic)	(17)	S + 5.45% Cash + 4.05% PIK	9.10% Cash + 4.05% PIK	7/26/2022	7/26/2027		10,088,323		10,003,681		9,816,947		4.1
							10,088,323		10,003,681		9,816,947		4.1
Total first lien senior secured term loan								$	300,673,152	$	276,711,533		116.5	%

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

December 31, 2025


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)
Building Products
Built by Grid, LLC	(21)(25)	-	-	12/5/2025	-		214,378		214,378		214,378			0.1
							214,378		214,378		214,378			0.1
Commercial Services and Supplies
Swyft Filings Holdings, LLC	(13)(20)(21)(25)	-	8.00% PIK	12/20/2021	-		192,444		183,612		213,265			0.1
							192,444		183,612		213,265			0.1
Construction & Engineering
MechanAir Holdings, LLC	(13)(21)(25)	-	13.50% PIK	9/2/2021	-		1,704		1,703,499		2,578,541			1.1
MechanAir Holdings, LLC	(13)(21)(25)	-	-	9/17/2025	-		65		61,608		735,515			0.3
Vertical Mechanical Group Holdings, LLC	(21)(25)	-	8.00% PIK	5/12/2023	-		185,714		1,857,143		5,727,143			2.4
							187,483		3,622,250		9,041,199			3.8
Diversified Telecommunication Services
Gridsource Holdings, LLC	(21)(25)	-	8.00% PIK	3/9/2023	-		3,959,977		799,597		175,121			0.1
							3,959,977		799,597		175,121			0.1
Entertainment
NW Entertainment, LLC	(21)(25)	-	10.00% PIK	11/4/2022	-		1,183		1,134,428		1,550,416			0.7
NW Entertainment, LLC	(21)(25)	-	12.00% PIK	2/27/2025	-		826		531,143		1,024,009			0.4
							2,009		1,665,571		2,574,425	-		1.1
Healthcare Providers & Services
IPA Investors, LP (dba Integrated Pain Associates)	(21)(25)	-	8.00% PIK	1/9/2023	-		2,749		2,573,151		3,160,558			1.3
							2,749		2,573,151		3,160,558			1.3
Media
PadSquad Holdings, LLC	(13)(21)(25)	-	6.00% Cash + 6.00% PIK	3/30/2022	-		720,767		1,964,204		3,326,343			1.4
Trailer Park Group Holdings, LLC Class A-1 Units	(13)(21)(25)	-	15.00% PIK	12/19/2023	-		40,888		73,599		36,419			0.0
Trailer Park Group Holdings LLC - Class A Units	(13)(21)(25)	-	8.00% PIK	8/2/2021	-		371,822		404,702		-			0.0
Trailer Park Group Holdings LLC	(13)(21)(25)	-	15.00% PIK	-	-		37,594		-		75,127			0.0
							1,171,071		2,442,505		3,437,889			1.4
Professional Services
Hometown Holdings JV, LLC (dba BWG Strategy)	(13)(21)(25)	-	8.00% Preferred Return	12/24/2020	-		666,667		659,761		693,300			0.3
JCFV Holdings, LLC	(21)(25)	-	8.00% PIK	7/1/2024	-		415,916		1,538,462		519,231			0.2
PQT Ayaquhs, LLC (dba WWC Global)	(13)(21)(25)	-	10.50% PIK	8/1/2022	-		5,774		1,064,516		4,577,419			1.9
SPC QD SM, LP	(21)(25)	-	-	7/30/2024	-		42		2,207,572		2,655,714			1.1
							1,088,399		5,470,311		8,445,664			3.5
Software
PureCars Technologies, LLC	(13)(21)(25)	-	8.00% PIK	4/17/2019	-		592		267,013		293,634			0.1
							592		267,013		293,634			0.1
Total preferred equity securities									17,238,388		27,556,133			11.5

Warrants and other equity securities	(12)(24)
Construction & Engineering
DCCM, LLC	(21)	-	-	8/6/2021	-		-		-		-			0.0
Fremont-Wright, LLC	(25)	-	-	12/2/2020	-		2		-		1,565,233			0.7
							2		-		1,565,233			0.7
Distributors
48forty Intermediate Holdings, Inc.	(19)(25)	-	-	10/11/2022	-		1,994		-		-			0.0
							1,994		-		-			0.0
Electrical Equipment
HH Masterwork Intermediate, Inc.	(19)(25)	-	-	11/17/2022	-		190,019		-		-			0.0
							190,019		-		-			0.0
Entertainment
LRI Holdco, LLC (dba Linden Labs)	(21)(25)	-	-	12/31/2020	-		1		-		150,697			0.1
LRI Holdco, LLC (dba Linden Labs)	(25)	-	-	12/31/2020	-		1		43,478		196,056			0.1
							2		43,478		346,753			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	-		182		419,877		35,143			0.0
							1,185		419,877		35,143			0.0
Hotels, Restaurants & Leisure
The Range NYC, LLC (dba Five Iron Golf)	(25)	-	-	9/15/2022	-		40,593		71,599		64,875			0.0
							40,593		71,599		64,875			0.0
Household Durables
SkyBell Technologies, Inc.	(19)(25)	-	-	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		1,150,000			0.5
							535,714		535,714		1,150,000			0.5
Machinery
Texas Contract Manufacturing Group, Inc.	(25)	-	-	4/27/2022	-		1,602		-		-			0.0
							1,602		-		-			0.0
Media
Channel Factory Holdings, LLC	(13)(21)(25)	-	-	3/31/2025	-		819,478		-		1,384,954			0.6
							819,478		-		1,384,954			0.6
Professional Services
CorTech, LLC	(25)	-	-	6/30/2025	-		1		-		81,853			0.0
NSC Holdings, LLC	(21)(25)	-	-	4/26/2019	-		111		271,262		639,920			0.3
PQT Ayaquhs, LLC (dba WWC Global)	(25)	-	-	8/1/2022	-		645		-		377,419			0.2
							757		271,262		1,099,192			0.5
Software
Proactive Dealer Holdings Parent, LLC	(21)(25)	-	10.00% PIK	6/10/2024	-		445		730,271		346,746			0.1
							445		730,271		346,746			0.1
Total warrants and other equity securities									2,072,201		5,992,896			2.6

Fund investments
Diversified Financials
Madryn Select Opportunities, LP	(18)(25)	-	-	1/4/2022	-		-		2,529,567		1,925,246			0.8
							-		2,529,567		1,925,246			0.8
Total fund investments									2,529,567		1,925,246			0.8
Total non-controlled/non-affiliate investments								$	324,546,406	$	312,185,808			131.4	%

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

December 31, 2025


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
Aerospace & Defense
Delva Master Holdings	(11)(16)(19)	S + 10.26%	13.95%	8/13/2025	9/1/2030		901,698	$	901,698	$	850,931		0.4	%
							901,698		901,698		850,931		0.4
Construction & Engineering
Watt Acquisition, LLC	(10)(11)(17)	S + 8.77% Cash + 5.48% PIK	12.42% Cash + 5.48% PIK	4/15/2022	4/15/2027		1,625,086		1,614,622		1,625,086		0.7
							1,625,086		1,614,622		1,625,086		0.7
Diversified Telecommunication Services
Caregility Corporation	(11)(17)	S + 3.00% Cash + 6.26% PIK	6.65% Cash + 6.26% PIK	12/29/2021	10/31/2026		2,609,221		2,506,145		2,581,303		1.1
							2,609,221		2,506,145		2,581,303		1.1
Food Products
Uncle John's Pride, LLC	(11)(16)	S + 8.11%	11.80%	3/31/2022	3/31/2027		1,740,572		1,740,572		1,740,572		0.7
Uncle John's Pride, LLC	(11)(16)	S + 8.11%	11.80%	3/31/2022	3/31/2027		5,116,215		5,066,496		5,116,215		2.2
							6,856,787		6,807,068		6,856,787		2.9
Healthcare Providers & Services
Arrow Home Health, LLC (dba Acara Home Health)	(11)(17)	S + 8.50%	12.15%	3/19/2021	3/19/2026		789,190		778,103		764,370		0.3
							789,190		778,103		764,370		0.3
Leisure Products
MPUSA, LLC (dba Mission)	(11)(17)	S + 9.26 PIK	12.91% PIK	12/9/2021	12/9/2026		1,786,561		1,781,191		1,712,240		0.7
							1,786,561		1,781,191		1,712,240		0.7
Professional Services
Lasalle Staffing, LLC	(10)(11)(16)	S + 8.45%	12.14%	2/15/2022	2/15/2027		7,150,785		7,076,775		7,150,785		3.0
							7,150,785		7,076,775		7,150,785		3.0
Trading Companies & Distributors
USBid Inc.	(10)(11)(17)	S + 8.34%	11.99%	11/3/2022	11/3/2027		2,648,797		2,625,002		2,599,529		1.1
							2,648,797		2,625,002		2,599,529		1.1
Total first lien senior secured term loan									24,090,604		24,141,031		10.2

Senior secured notes
Diversified Telecommunication Services
Caregility Corporation	(13)	10.00%	10.00% PIK	7/3/2023	-		-		-		-		0.0
							-		-		-		0.0
Total senior secured notes									-		-		0.0

Senior unsecured notes	(24)
Consumer Finance
Microf, LLC	(11)(17)	S + 10.85%	14.50%	3/29/2019	11/30/2027		3,714,429		3,695,851		3,763,831		1.6
							3,714,429		3,695,851		3,763,831		1.6
Total senior unsecured notes									3,695,851		3,763,831		1.6

Preferred equity securities	(12)(24)
Aerospace & Defense
Delva Master Holdings	(11)(19)(25)	-	18.00% PIK	8/13/2025	-		1,636		7,679,427		7,905,825		3.4
							1,636		7,679,427		7,905,825		3.4
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(21)(25)	-	15.00% PIK	4/15/2022	-		4,439		4,380,196		7,260,300		3.1
							4,439		4,380,196		7,260,300		3.1
Diversified Telecommunication Services
Caregility Corporation - Series A-1 Units	(11)(13)(25)	-	8.00% PIK	12/31/2022	-		151,018		1,579,910		147,483		0.2
Caregility Corporation - Series A-2 Units	(11)(13)(25)			12/31/2022	-		145,593		496,187		46,531
Caregility Corporation - Series B Units	(11)(13)(25)	-	8.00% PIK	7/3/2023	-		446,689		3,591,494		4,732,688		2.0
							743,300		5,667,591		4,926,702		2.2
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		4,966,277		2.1
							2,829,787		2,829,787		4,966,277		2.1
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		252,425		0.1
Arrow Home Health, LLC (dba Acara Home Health) - Class 1 Units	(11)(13)(21)(25)	-	-	11/13/2023	-		56,005		56,005		112,010		0.0
							627,085		620,326		364,435		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		1,695,478		0.7
							157		3,889,050		1,695,478		0.7
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		6,093,333		2.6
							4,000,000		4,000,000		6,093,333		2.6
Trading Companies & Distributors
USBid Parent, LLC - Class A	(11)(25)	-	-	11/3/2022	-		2,813		2,812,500		-		0.0
USBid Parent, LLC - Class C	(11)(25)	-	10.00% PIK	11/2/2023	-		9,375		7,324		-		0.0
USBid Parent, LLC - Class C2	(11)(25)	-	10.00% PIK	4/12/2024	-		600,000		468,750		555,469		0.2
USBid Parent, LLC - Class C3	(11)(25)	-	10.00% PIK	4/12/2024	-		2,400,000		1,875,000		1,155,469		0.5
							3,012,188		5,163,574		1,710,938		0.7
Total preferred equity securities									34,229,951		34,923,288		14.9

Warrants and other equity securities	(12)(24)
Aerospace & Defense
Delva Master Holdings	(11)(19)(25)	-	18.00% PIK	8/13/2025	-		10,493		-		-		0.0
Delva Master Holdings	(11)(19)(25)	-	-	8/13/2025	-		1,354		-		-		0.0
							11,847		-		-		0.0
Construction & Engineering
Watt Contracting Holdings, LLC	(11)(21)(25)	-	-	4/15/2022	-		100,408		-		-		0.0
							100,408		-		-		0.0
Diversified Telecommunication Services
Caregility Corporation	(11)(25)	-	-	12/29/2021	-		221,574		443,392		-		0.0
Caregility Corporation	(11)(25)	-	-	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		-		29,787		0.0
							127,215		-		29,787		0.0
Professional Services									-

									-		-		0.0
Trading Companies & Distributors
USBid Parent, LLC	(11)(25)	-	-	11/3/2022	-		204		-		-		0.0
							204		-		-		0.0
Total warrants and other equity securities									443,392		29,787		0.0
Total controlled/affiliate investments									62,459,798		62,857,937		26.5

TOTAL INVESTMENTS								$	387,006,204	$	375,043,745		158.1	%

(1)

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

December 31, 2025

(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, 2025 represented $62,857,937 of Fair Value and 26.5% of Net Assets of the Company. Transactions related to investments in “Controlled/Affiliate Investments” for the year ended December 31, 2025 were as follows:

See accompanying notes.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Consolidated Schedule of Investments - (continued)

December 31, 2025


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)				December 31, 2025 Value
Arrow Home Health LLC (dba Acara Home Health)	First lien senior secured term loan	$		-	$		106,047		$		701,117	$		3,570	$		(7,896	)	$		-	$		67,579		$		764,370
	Preferred equity securities (571,080 shares)			-			-				151,376			-			-				-			101,049				252,425
	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			-			-				-			(606,667	)			6,093,333
Caregility Corporation	First lien senior secured term loan			-			220,754				2,438,069			192,525			-				-			(49,291	)			2,581,303
	Preferred equity securities (151,018 shares)			-			-				1,188,605			429,779			-				-			(1,424,370	)			194,014
	Preferred equity securities (446,689 shares)			-			-				4,368,416			-			-				-			364,272				4,732,688
	Warrants (267,801 units)			-			-				-			-			-				-			-				-
	Senior secured notes (0 units)			-			-				341,103			88,677			(429,780	)			-			-				-
Delva Master Holdings	First lien senior secured term loan			-			-				-			901,698			-				-			(50,767	)			850,931
	Preferred equity securities (1,636 shares)			-			-				-			4,386,820			-				-			3,360,200				7,747,020
	Warrants and other equity securities (10,493 units)			-			-				-			201,111			-				-			(201,431	)			(320	)
	Warrants and other equity securities (1,354 units)			-			-				-			3,091,496			-				-			(2,932,371	)			159,125
Lasalle Staffing, LLC	First lien senior secured term loan			-			942,610				7,287,039			22,717			(100,000	)			-			(58,971	)			7,150,785
Microf, LLC	First lien senior secured term loan			-			(18,658	)			3,427,073			287,760			(18,982	)			-			67,980				3,763,831
	Preferred equity securities (0 shares)			-			-				-			-			-				-			-				-
MPUSA, LLC (dba Mission)	First lien senior secured term loan			-			31,136				1,448,543			232,297			(11,843	)			-			43,243				1,712,240
	Preferred equity securities (69 shares)			-			-				-			-			-				-			-				-
	Preferred equity securities (88 shares)			-			-				1,782,334			-			-				-			(86,856	)			1,695,478
Uncle John's Pride, LLC	First lien senior secured term loan			-			796,743				6,999,302			52,303			(1,818,313	)			-			(117,077	)			5,116,215
	First lien senior secured term loan			-			170,635				-			1,758,680			(18,108	)			-			-				1,740,572
UJP Acquisition, LLC (dba Uncle John's Pride)	Warrants and other equity securities (127,215 shares)			-			-				76,329			-			-				-			(46,542	)			29,787
	Preferred equity securities (2,829,787 shares)			-			-				4,532,872			-			-				-			433,405				4,966,277
USBid Inc.	First lien senior secured term loan			-			103,675				2,240,638			259,511			(84,897	)			-			184,277				2,599,529
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			-			-				-			51,469				555,469
USBid Inc. - Class C3 Units	Preferred equity securities (2,400,000 shares)			-			-				432,000			-			-				-			723,469				1,155,469
Watt Acquisition, LLC	First lien senior secured term loan			-			300,849				2,430,200			134,362			(1,068,129	)			-			128,653				1,625,086
Watt Contracting Holdings, LLC	Preferred equity securities (4,439 shares)			-			-				3,519,772			1,064,066			-				-			2,676,462				7,260,300
	Warrants and other equity securities (100,408 shares)			-			-				-			-			-				-			-				-
Total Affiliate Investments		$		-	$		2,653,791		$		50,680,798	$		13,107,372	$		(3,557,948	)	$		-	$		2,627,715		$		62,857,937

(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, 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 3.69% as of December 31, 2025.

(17) The interest rate on these loans is subject to 3 month SOFR, which was 3.65% as of December 31, 2025.

(18) Positions have an aggregate unfunded commitment of $6,794,311 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, 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 1940 Act. Under the 1940 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.

(26) The interest rate on these loans is subject to 6 month SOFR, which was 3.57% as of December 31, 2025.

See accompanying notes.

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”) 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”).

On July 29, 2025, the Company received an exemptive order from the Securities and Exchange Commission (“SEC”) that permits the Company to offer multiple classes of shares of its Common Stock (the “Multi-Class Order”). On February 25, 2026, the Company’s board of directors (the “Board”) held a meeting in which the Board, including a majority of the directors who are not “interested persons” (as defined in the 1940 Act) (“Independent Directors”), approved certain matters related to the Company’s ability to issue and sell Class D shares, Class S shares, Class I shares and Class SP shares pursuant to the Multi-Class Order (the “Multi-Class Offering”). In connection with the Multi-Class Offering, effective March 31, 2026, all issued and outstanding shares of the Company's Common Stock were reclassified as Class I shares. As of June 30, 2026, there were 5,273,674 Class I shares and 4,651,024 Class SP shares outstanding and no Class S or Class D shares outstanding.

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 Topic 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 its wholly owned subsidiary 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, 2026, and the reported revenue generated and expenses incurred during the reporting period. Actual results could differ from those estimates.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 2. Summary of Significant Accounting Policies (continued)

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.

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, 2026, $8,606,367 and $16,774,444, 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, 2025, $9,068,456 and $17,964,953, respectively, of interest income, excluding PIK interest income, has been accrued as shown on the Consolidated Statements of Operations. As of June 30, 2026 and December 31, 2025, $5,049,145 and $3,410,139, respectively, of interest income is receivable 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, 2026, $556,514 and $1,229,595, respectively, of PIK income has been accrued as shown on the Consolidated Statements of Operations. 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.

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. As of June 30, 2026, five investments, SkyBell Technologies, Inc., Consolidated Machine & Tool Holdings, LLC, Masterwork Electronics, Inc., Chicken Soup For The Soul, LLC and Texas Contract Manufacturing Group Inc. are on non-accrual status. As of December 31, 2025, six investments, 48forty Intermediate Holdings, Inc., SkyBell Technologies, Inc., Consolidated Machine & Tool Holdings, LLC, Delva Master Holdings, Masterwork Electronics, Inc and Chicken Soup For The Soul, LLC were on non-accrual status. For the three and six months ended June 30, 2026, $0 and $232,015 of interest receivable, respectively, was reversed as a result of these investments being on non-accrual status. For the three and six months ended June 30, 2025, no interest receivable was reversed.

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 six months ended June 30, 2026 and for the year ended December 31, 2025, the Company did not receive any return of capital distributions from its equity investments. 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. For the three and six months ended June 30, 2026, $348,926 and $497,898, respectively, of dividend income has been accrued as shown on the Consolidated Statements of Operations. 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. As of June 30, 2026, all dividend income has been received. As of December 31, 2025, there was $62,136 of dividend income receivable.

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, 2026 and December 31, 2025, was $4,019,488 and $4,721,160, respectively. The amount of original issue discount amortized for the three and six months ended June 30, 2026 was $222,458 and $759,095, 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.

Amendment, waiver, Agency draw and consent fees, etc.: 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, 2026, $0 and $0, 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, 2025, $79,728 and $167,434, 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. No such fees were earned during the three and six months ended June 30, 2026 and 2025.

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, 2026, the Company had $0 and $(7,802,110), 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, 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.

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 (net applicable withholding tax) 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 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, 2026 and for the year ended December 31, 2025, there were no potentially dilutive common shares issued.

Segments

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

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 2. Summary of Significant Accounting Policies (continued)

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 chief executive officer and the chief financial officer of the Company. 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.

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, 2026 and December 31, 2025.

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, 2026, the Company had $184,026 and $364,965, 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, 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. As of June 30, 2026 and December 31, 2025, the Company had $1,643,842 and $1,537,817, respectively, of unamortized deferred financing costs as shown in deferred financing cost on the Consolidated Statements of Assets and Liabilities.

Organizational and Offering Costs

Organizational and 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 months ended June 30, 2026 and 2025, the Company had incurred no organizational costs. For the three and six months ended June 30, 2026, the Company incurred offering costs in the amount of $50,000 and $100,000, respectively, as shown as a component of the general and administrative fees in the Consolidated Statements of Operations. As of June 30, 2026 and December 31, 2025, no organizational costs remained payable on the Consolidated Statements of Assets and Liabilities. 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. As of June 30, 2026 and December 31, 2025, $19,950 and $40,000, respectively, of offering costs incurred were included in other payables on the Consolidated Statements 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, 2026, the Company incurred expenses for services provided by the Custodian of $12,000 and $24,000, respectively, which is included in professional fees on the Consolidated Statements of Operations. 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. As of June 30, 2026 and December 31, 2025, $12,852 and $11,449, 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.

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 tax. 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, 2026 and 2025, 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 six months ended June 30, 2026, the Company recorded an income tax expense of $728 and an increase of $969,689 in deferred tax liability for the change in unrealized appreciation of investments held in the Holding Company. As of June 30, 2026 and December 31, 2025, $5,004,352 and $4,034,663, respectively, was included in deferred tax liabilities on the Consolidated Statement of Assets and Liabilities primarily relating to deferred taxes on 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, 2026 and for the year ended December 31, 2025 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, 2026 and December 31, 2025 were $412,618,402 and $387,006,204, respectively.

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, 2026
	Amortized Cost				Fair Value
First Lien Senior Secured Loan	$	342,438,812	83.0	%		$	323,558,706	78.8		%
Second Lien Senior Secured Loan		1,766,070	0.4				1,765,999		0.4
Senior Unsecured Notes		5,708,334	1.4				3,713,686		0.9
Preferred Equity Securities		57,740,924	14.0				73,555,591		17.9
Warrants and Other Equity Securities		2,515,593	0.6				6,279,232		1.5
Fund Investments		2,448,669	0.6				2,223,101		0.5
Total	$	412,618,402	100.0	%		$	411,096,315		100.0	%


	December 31, 2025
	Amortized Cost				Fair Value
First Lien Senior Secured Loan	$	324,763,756	83.8	%		$	300,852,563	80.2	%
Senior Unsecured Notes		5,728,949	1.5				3,763,831	1.0
Preferred Equity Securities		51,468,339	13.3				62,479,421	16.7
Warrants and Other Equity Securities		2,515,593	0.7				6,022,684	1.6
Fund Investments		2,529,567	0.7				1,925,246	0.5
Total	$	387,006,204	100.0	%		$	375,043,745	100.0	%

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 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, 2026
	Amortized Cost				Fair Value
Southeast	$	106,973,568	25.9	%		$	117,185,476	28.5	%
Midwest		63,387,409	15.4				67,637,335	16.5
West		124,031,278	30.1				114,469,571	27.8
Northeast		60,008,247	14.5				54,759,717	13.3
East		31,432,619	7.6				29,850,057	7.3
Southwest		8,079,612	2.0				4,308,607	1.0
South		18,705,669	4.5				22,885,552	5.6
Total	$	412,618,402	100.0	%		$	411,096,315	100.0	%


	December 31, 2025
	Amortized Cost				Fair Value
Southeast	$	105,532,002	27.2	%		$	103,998,979	27.7	%
Midwest		60,910,065	15.7				64,907,855	17.3
West		103,275,095	26.8				94,822,761	25.3
Northeast		58,378,552	15.1				50,530,770	13.5
East		31,403,307	8.1				29,612,464	7.9
Southwest		7,836,636	2.0				6,830,412	1.8
South		19,670,547	5.1				24,340,504	6.5
Total	$	387,006,204	100.0	%		$	375,043,745	100.0	%

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, 2026
	Amortized Cost					Fair Value
Aerospace & Defense	$	9,322,266		2.3	%		$	9,306,265	2.3	%
Building Products		2,059,728		0.5				2,131,589	0.5
Chemicals		19,441,617		4.7				19,797,375	4.8
Commercial Services & Supplies		13,928,602	3.4					14,069,816	3.4
Construction & Engineering		74,914,346		18.2				87,509,746	21.3
Consumer Finance		3,675,236		0.9				3,713,686	0.9
Distributors		7,011,926		1.7				6,696,783	1.6
Diversified Financials		2,448,669	0.6					2,223,101	0.5
Diversified Telecommunication Services		23,423,629		5.7				24,204,302	5.9
Electrical Equipment		11,201,480	2.7					-	0.0
Entertainment		32,949,960	7.9					31,109,486	7.6
Food Products		9,617,735		2.3				11,884,754	2.9
Healthcare Providers & Services		41,491,346		10.1				40,528,739	9.9
Hotels, Restaurants & Leisure		8,071,569		2.0				8,381,695	2.0
Household Durables		4,534,395	1.1					4,062,384	1.0
Household Products		27,489,687	6.7					28,563,590	6.9
Leisure Products		5,792,908	1.4					3,452,086	0.8
Machinery		11,331,534		2.7				7,432,796	1.8
Media		19,254,202	4.7					19,753,628	4.8
Personal Products		4,565,994	1.1					4,585,486	1.1
Professional Services		43,214,839	10.4					48,931,112	12.0
Software		997,284		0.2				630,788	0.2
Specialty Retail		6,955,067		1.7				6,993,992	1.7
Trading Companies & Distributors		19,174,718	4.6					15,931,427	3.9
Transportation Infrastructure		9,749,665	2.4					9,201,689	2.2
Total	$	412,618,402		100.0	%		$	411,096,315	100.0	%

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 3. Investments (continued)


	December 31, 2025
	Amortized Cost				Fair Value
Aerospace & Defense	$	9,326,539	2.3	%		$	8,756,759	2.4	%
Building Products		2,056,099	0.5				2,056,098	0.6
Chemicals		19,494,186	5.0				19,898,602	5.4
Commercial Services & Supplies		13,882,178	3.6				14,183,797	3.8
Construction & Engineering		56,399,317	14.6				66,511,406	17.7
Consumer Finance		3,695,851	0.9				3,763,831	1.0
Distributors		14,822,272	3.8				7,300,311	1.9
Diversified Financials		2,529,567	0.7				1,925,246	0.5
Diversified Telecommunication Services		23,230,783	6.0				21,129,751	5.6
Electrical Equipment		11,193,385	2.9				877,249	0.2
Entertainment		33,166,183	8.6				31,388,774	8.4
Food Products		9,636,856	2.5				11,852,852	3.2
Healthcare Providers & Services		40,622,092	10.5				39,110,377	10.4
Hotels, Restaurants & Leisure		8,134,000	2.1				8,266,981	2.2
Household Durables		4,534,395	1.2				3,867,034	1.0
Household Products		13,061,081	3.4				13,833,981	3.7
Leisure Products		5,670,240	1.5				3,407,718	0.9
Machinery		4,382,109	1.1				3,645,509	1.0
Media		19,945,133	5.1				21,105,771	5.6
Personal Products		4,497,209	1.2				4,532,223	1.2
Professional Services		50,577,849	13.1				55,315,203	14.7
Software		997,283	0.3				640,379	0.2
Specialty Retail		6,993,393	1.8				7,052,922	1.9
Trading Companies & Distributors		18,154,523	4.7				14,804,024	3.9
Transportation Infrastructure		10,003,681	2.6				9,816,947	2.6
Total	$	387,006,204	100.0	%		$	375,043,745	100.0	%

Note 4. Fair Value Measurements of 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.

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.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements of Investments (continued)

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 two independent third-party valuation providers, which perform 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 providers will provide an independent valuation range. The types of valuation methodologies employed by the third-party valuation providers include discounted cash flow, recent financing and market approach 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 $411,096,315 and $375,043,745 as of June 30, 2026 and December 31, 2025, respectively.

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, 2026 and December 31, 2025, the Company's investments in underlying funds amounted to $2,223,101 and $1,925,246, 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.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements of Investments (continued)

The following tables present fair value measurements of investments, by major class according to the fair value hierarchy as of June 30, 2026 and December 31, 2025:


	Fair Value Measurements
June 30, 2026	Level 1		Level 2		Level 3		Total
First Lien Senior Secured Loan	$	-	$	-	$	323,558,706	$	323,558,706
Second Lien Senior Secured Loan		-		-		1,765,999		1,765,999
Senior Unsecured Notes		-		-		3,713,686		3,713,686
Preferred Equity Securities		-		-		73,555,591		73,555,591
Warrants and Other Equity Securities		-		-		6,279,232		6,279,232
Total	$	-	$	-	$	408,873,214	$	408,873,214
Fund Investments								2,223,101
Total Investments							$	411,096,315


	Fair Value Measurements
December 31, 2025	Level 1		Level 2		Level 3		Total
First Lien Senior Secured Loan	$	-	$	-	$	300,852,563	$	300,852,563
Senior Unsecured Notes		-		-		3,763,831		3,763,831
Preferred Equity Securities		-		-		62,479,421		62,479,421
Warrants and Other Equity Securities		-		-		6,022,684		6,022,684
Total	$	-	$	-	$	373,118,499	$	373,118,499
Fund Investments								1,925,246
Total Investments							$	375,043,745

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.

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, 2026, and 2025:


	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, 2026	$	302,130,532		$	-		$		-	$		3,698,085	$	67,974,382	$	6,281,368		$	1,925,246	$		382,009,613
Net realized gain on investments		-			-				-			-		-		-			-			-
Net change in unrealized gain (loss) on investments		(1,685,641	)		(71	)			-			15,601		3,486,622		(2,136	)		297,855			2,112,230
Purchases of investments and other adjustments to cost (1)		26,957,417			1,766,070				-			-		2,094,587		-			-			30,818,074
Proceeds from sales of investments		-			-				-			-		-		-			-			-
Proceeds from principal repayments (2)		(3,843,602	)		-				-			-		-		-			-			(3,843,602	)
Transfer / Restructure of Investments (3)		-			-				-			-		-		-			-			-
Balance as of June 30, 2026	$	323,558,706		$	1,765,999		$		-	$		3,713,686	$	73,555,591	$	6,279,232		$	2,223,101	$		411,096,315

(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 or at time of restructure.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements of Investments (continued)


	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, 2025	$	300,852,563		$	-		$		-	$		3,763,831		$		62,479,421	$		6,022,684	$		1,925,246		$		375,043,745
Net realized gain (loss) on investments		(7,802,110	)		-				-			-				-			-			-				(7,802,110	)
Net change in unrealized gain (loss) on investments		5,031,087			(71	)			-			(29,530	)			4,803,585			256,548			378,753				10,440,372
Purchases of investments and other adjustments to cost (1)		43,105,136			1,766,070				-			(20,615	)			2,094,587			-			-				46,945,178
Proceeds from sales of investments		-			-				-			-				-			-			(80,898	)			(80,898	)
Proceeds from principal repayments (2)		(13,449,972	)		-				-			-				-			-			-				(13,449,972	)
Transfer / Restructure of Investments (3)		(4,177,998	)		-				-			-				4,177,998			-			-				-
Balance as of June 30, 2026	$	323,558,706		$	1,765,999		$		-	$		3,713,686		$		73,555,591	$		6,279,232	$		2,223,101		$		411,096,315

(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 or at time of restructure.


	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 or at time of restructure.


	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 or at time of restructure.

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, 2026, attributable to Level 3 investments still held as of June 30, 2026 was $2,112,230 and $10,440,372, 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, 2025, attributable to Level 3 investments still held as of June 30, 2025 was $(2,858,317) and $(4,629,186), respectively.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements of Investments (continued)

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, 2026 and 2025.

Purchases (including accretion, amortization, PIK interest) for the three and six months ended June 30, 2026 amounted to $30,818,074 and $46,945,178, respectively. 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.

For the six months ended June 30, 2026, the Company invested (net of original issue discount) $24,495,839 in three new portfolio companies and invested $20,976,695 in fourteen existing portfolio companies as reflected in the Consolidated Schedule of Investments. 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 seventeen existing portfolio companies as reflected in the Consolidated Schedule of Investments.

During the six months ended June 30, 2026, 48Forty Intermediate Holdings, Inc. underwent a restructuring resulting in a new preferred equity investment and loan facilities.

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, 2026.

          
         Range

          
         Fair Value

         Valuation Technique

         Unobservable
Input

         Weighted
Average Mean

         Minimum

         Maximum

         Assets:

First Lien Senior Secured Loan

$

296,371,850

Discounted Cash Flow

Discount Rate

14.5

7.0

87.0

First Lien Senior Secured Loan

7,510,993

Guideline Public Company Method

Revenue Multiple

0.4x

0.2x

0.5x

          
         Guideline Public Company Method

         EBITDA Multiple

         11.5x

         10.8x

         12.3x

First Lien Senior Secured Loan

19,675,863

Transaction Price

N/A

N/A

N/A

N/A

Second Lien Senior Secured Loan

1,765,999

Transaction Price

N/A

N/A

N/A

N/A

Senior Unsecured Note

3,713,686

Discounted Cash Flow

Discount Rate

14.7

13.5

16.0

Preferred Equity Securities

27,429,840

Discounted Cash Flow

Discount Rate

22.6

14.5

33.0

Preferred Equity Securities

34,195,418

Guideline Public Company Method

Revenue Multiple

1.7x

0.7x

4.3x

          
         Guideline Public Company Method

         EBITDA Multiple

         9.3x

         5.6x

         14.7x

Preferred Equity Securities

10,340,653

Guideline Merged & Acquired Company Method

Revenue Multiple

2.3x

0.8x

4.0x

          
         Guideline Merged & Acquired Company Method

         EBITDA Multiple

         9.2x

         7.5x

         12.2x

Preferred Equity Securities

1,589,680

Transaction Price

N/A

N/A

N/A

N/A

Warrants and Other Equity Securities

186,173

Discounted Cash Flow

Discount Rate

24.1

14.5

33.0

Warrants and Other Equity Securities

6,093,059

Guideline Public Company Method

Revenue Multiple

0.9x

0.9x

3.6x

          
         Guideline Public Company Method

         EBITDA Multiple

         9.8x

         5.8x

         32.0x

Total Level 3 Assets

$

408,873,214

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 4. Fair Value Measurements of Investments (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, 2025.

          
         Range

          
         Fair Value

         Valuation Technique

         Unobservable
Input

         Weighted
Average Mean

         Minimum

         Maximum

         Assets:

First Lien Senior Secured Loans

$

278,977,857

Discounted Cash Flow

Discount Rate

13.7

5.9

23.9

First Lien Senior Secured Loans

23,143,096

Guideline Public Company Method

Revenue Multiple

0.5x

0.2x

0.9x

          
         Guideline Public Company Method

         EBITDA Multiple

         11.0x

         10.5x

         11.5x

First Lien Senior Secured Loans

2,267,252

Transaction Price

N/A

N/A

N/A

N/A

Senior Unsecured Notes

228,189

Discounted Cash Flow

Discount Rate

13.3

12.1

14.6

Preferred Equity Securities

23,887,117

Discounted Cash Flow

Discount Rate

22.8

13.0

31.5

Preferred Equity Securities

28,548,928

Guideline Public Company Method

Revenue Multiple

1.4x

0.5x

4.5x

          
         Guideline Public Company Method

         EBITDA Multiple

         8.9x

         4.8x

         25.1x

Preferred Equity Securities

9,828,998

Guideline Merged & Acquired Company Method

Revenue Multiple

1.7x

0.5x

2.5x

          
         Guideline Merged & Acquired Company Method

         EBITDA Multiple

         9.9x

         7.5x

         14.4x

Preferred Equity Securities

214,378

Transaction Price

N/A

N/A

N/A

N/A

Warrants and Other Equity Securities

203,603

Discounted Cash Flow

Discount Rate

24.0

15.5

31.5

Warrants and Other Equity Securities

5,819,080

Guideline Public Company Method

Revenue Multiple

1.0x

0.2x

2.5x

          
         Guideline Public Company Method

         EBITDA Multiple

         9.3x

         4.8x

         13.5x

Total Level 3 Assets

$

373,118,499

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 for investments in affiliated companies. For the six months ended June 30, 2026 and for the year ended December 31, 2025, the Advisor’s managed funds had an ownership interest of more than 25% or the Company had an ownership interest of 5% or more in companies voting securities, respectively.

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 affiliated and controlled affiliates for the six months ended June 30, 2026 and for the year ended December 31, 2025, were as follows:


The six months ended June 30, 2026	Equity Ownership Held by the Company			Equity Ownership Held by Star Mountain Affiliate Funds
Issuer:
Caregility		5.7	%		28.8	%
LaSalle Network		5.8	%		21.9	%
Uncle John's Pride		5.6	%		18.8	%
USBid Inc.		13.5	%		57.7	%
Watt Contracting Holdings		30.2	%		89.6	%
Acara Home Health		2.5	%		72.2	%
Mission		4.3	%		34.4	%
Delva Master Holdings		2.7	%		74.5	%
Microf		0.0	%		88.9	%


The year ended December 31, 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	%
Delva Master Holdings		2.7	%		74.5	%
Lasalle Staffing, LLC		5.8	%		21.9	%
Microf, LLC		0.0	%		77.3	%
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		30.2	%		89.6	%

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, 2026 and December 31, 2025, the Feeder Fund had $46,888,800 and $46,888,800 in capital committed to the Company, respectively, and a share ownership percentage in the Company of 15.54% and 16.08%, 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, 2026 were $1,257,262 and $2,443,154, respectively. 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, 2026 and 2025, the Advisor elected to not voluntarily waive any management fees. Any 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, 2026 and December 31, 2025, $507,262 and $1,184,837, respectively, of management fees remained payable.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 6. Transactions with Related Parties (continued)

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.

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

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 6. Transactions with Related Parties (continued)

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.

Income incentive fees for the three and six months ended June 30, 2026 were $530,401 and $698,201, respectively. Income incentive fees for the three and six months ended June 30, 2025 were $1,275,636 and $2,142,038, respectively. For the six months ended June 30, 2026 and 2025 the Advisor elected to not voluntarily waive any incentive fees. Any incentive fees waived 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, 2026 and December 31, 2025, $6,922,004 and $6,223,804, 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, 2026, the Company incurred reimbursement expenses of $262,108 and $461,330, respectively, included under General and Administrative fees on the Consolidated Statements of Operations. For the three and six months ended June 30, 2025, the Company incurred reimbursement expenses of $156,006 and $336,381, respectively, which is included under General and Administrative fees on the Consolidated Statements of Operations. As of June 30, 2026 and December 31, 2025, $277,108 and $146,408, 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, 2026, the Company incurred expenses for services provided by the Sub-Administrator of $158,663 and $318,330 respectively, which is included in professional fees on the Consolidated Statements of Operations. 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. As of June 30, 2026 and December 31, 2025, there were $3,225 and $0 payable, respectively, for expenses incurred for services provided by the Sub-Administrator.

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, 2026, 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, 2025, directors’ expenses are $35,000 and $70,000, respectively, as shown on the Consolidated Statements of Operations. As of June 30, 2026 and December 31, 2025, $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.

Distribution and Servicing Plan

Effective March 31, 2026, the Company entered into a distribution and servicing plan (“Distribution and Servicing Plan”) in compliance with Rule 12b-1 under the 1940 Act and a multiple class plan in compliance with Rule 18f-3 under the 1940 Act.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 6. Transactions with Related Parties (continued)

The following table shows the stockholder servicing and/or distribution fees the Company will pay to any participating brokers with respect to Class S and Class D shares on an annualized basis as a percentage of the Company’s NAV for such class pursuant to the Distribution and Servicing Plan. The stockholder servicing and/or distribution fees will be paid quarterly in arrears, calculated using the NAV of the applicable class as of the beginning of the first calendar day of the quarter.


Class		Stockholder Servicing and/or Distribution Fee as a % of NAV
Class S		0.75%
Class D		0.25%
Class I		-%
Class SP		-%

Any placement agent will reallow (pay) all or a portion of the stockholder servicing and/or distribution fees to participating brokers and servicing brokers for ongoing services performed by such brokers, and will waive stockholder servicing and/or distribution fees to the extent a broker is not eligible to receive it for failure to provide such services. Because the stockholder servicing and/or distribution fees with respect to Class S shares and Class D shares are deducted from the gross distributions for each such share class, the per share amount of distributions on Class S, Class D, Class I and Class SP shares generally differ.

Eligibility to receive the stockholder servicing and/or distribution fee is conditioned on a broker providing the following ongoing services with respect to the Class S or Class D shares, which may include the following: assistance with recordkeeping, answering investor inquiries regarding us, including regarding distribution payments and reinvestments, helping investors understand their investments upon their request, and assistance with share repurchase requests. If the applicable broker is not eligible to receive the stockholder servicing and/or distribution fee due to failure to provide these services, any placement agent will waive the stockholder servicing fee and/or distribution that broker would have otherwise been eligible to receive. The stockholder servicing and/or distribution fees are ongoing fees that are not paid at the time of purchase.

As of March 31, 2026, all issued and outstanding shares of the Company's Common Stock were reclassified as Class I shares. As of June 30, 2026, there were 5,273,674 Class I shares and 4,651,024 Class SP shares outstanding and no Class S or Class D shares outstanding.

Expense Waiver Agreement

Effective March 31, 2026, the Company entered into an expense waiver agreement between the Company and the Advisor, whereby the Advisor agreed to reimburse a portion of Class SP’s expenses (excluding management fees, acquired fund fees and expenses, taxes and custody fees) equal to 0.25% of Class SP’s average quarterly net assets, on an annualized basis (the “Expense Waiver Agreement”). The Advisor may not recoup expenses reimbursed pursuant to the Expense Waiver Agreement for Class SP’s other expenses.

During the period from May 20, 2026 to June 30, 2026, the Company waived $68,271 of Class SP expenses as shown on the Consolidated Statements of Operations.

Note 7. Borrowings

The Secured Credit Facility

In May 2024, the Company extended its $200,000,000 senior secured revolving facility (the "Secured Credit Facility") with Webster Bank, the Administrative Agent for a syndicated lending group, 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 2.3%, plus following the occurrence and during the continuation of an Event of Default, 2.00%.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 7. Borrowings (continued)

As of June 30, 2026 and December 31, 2025, the Secured Credit Facility commitment amounts were as follows:


	As of June 30, 2026 Commitment		As of December 31, 2025 Commitment
Webster Bank	$	87,500,000	$	67,500,000
Dime Community Bank		25,000,000		25,000,000
First Foundation Bank		-		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
Hanmi 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, 2026 and December 31, 2025, the total fair value of the borrowings outstanding under the Secured Credit Facility was $137,450,000 and $122,300,000, respectively. The fair value of the borrowings outstanding under the Secured Credit Facility are 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 and fees related to the Note Purchase Agreement (as defined below), the total annualized cost of capital is estimated to be 6.3%. 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, 2026, 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. Some of the Company's assets may be excluded due to their underlying leverage ratios, financial performance, or other financial metrics.

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.

Note Purchase Agreement

On January 2, 2026, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”) governing the issuance of $25,000,000 in aggregate principal amount of Floating Rate Senior Unsecured Notes (“Notes”) due January 15, 2029, with a floating interest rate per annum equal to the SOFR (which is based on the TSFR3M Index Screen Rate and more fully defined in the Note Purchase Agreement) plus 3.75% to a qualified institutional investor in a private placement.

Interest on the Notes will be due quarterly on the 15th day of January, April, July and October each year, beginning on April 15, 2026. The Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if applicable, a make-whole premium. In addition, the Company is obligated to offer to prepay the Notes at par plus accrued and unpaid interest up to, but excluding, the date of prepayment, if certain change in control events occur. The Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Note Purchase Agreement contains customary terms and conditions for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, and a minimum asset coverage ratio of 1.50 to 1.00.

In addition, in the event that a Credit Rating Event (as defined in the Note Purchase Agreement) occurs, the Notes will bear interest at a fixed rate per annum which is 0.50% above the stated rate of the Notes from the date of the occurrence of the Credit Rating Event to and until the date on which the Credit Rating Event is no longer continuing.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

The Note Purchase Agreement also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, certain cross-defaults or cross-acceleration under other indebtedness of the Company, certain judgments and orders and certain events of bankruptcy.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 7. Borrowings (continued)

As of June 30, 2026, the fair value of the outstanding Notes was $25,000,000. The fair value determination of the Note 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 three months ended June 30,
	2026			2025
Interest expense - Secured Credit Facility	$	1,874,971		$	2,208,438
Interest expense - Senior Unsecured Note		458,945			-
Unused commitment fees		96,539			98,859
Amortization of deferred financing costs - Secured Credit Facility		155,220			170,350
Amortization of deferred financing costs - Senior Unsecured Note		28,806			-
Utilization fees		46,871			(1,179,104	)
Total interest and other debt financing fees	$	2,661,352		$	1,298,543
Average debt outstanding	$	148,617,582		$	121,781,319
Average stated interest rate		6.30	%		7.27	%


	For the six months ended June 30,
	2026			2025
Interest expense - Secured Credit Facility	$	3,438,914		$	4,377,859
Interest expense - Senior Unsecured Note		916,292			-
Unused commitment fees		215,353			198,423
Amortization of deferred financing costs - Secured Credit Facility		308,734			307,750
Amortization of deferred financing costs - Senior Unsecured Note		56,231			-
Utilization fees		86,227			(1,043,712	)
Total interest and other debt financing fees	$	5,021,751		$	3,840,320
Average debt outstanding	$	139,334,807		$	121,069,061
Average stated interest rate		6.30	%		7.29	%

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.

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, 2025:


	For the year ended December 31, 2025
Increase (decrease) in capital in excess of par value	$	3,844,330
Increase (decrease) in accumulated undistributed (overdistributed) earnings		(3,844,330	)

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

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 8. Income Taxes (continued)

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, 2025 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, 2025, the Company had no short-term capital loss carryforwards. As of December 31, 2025, 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, 2025:


	For the year ended December 31, 2025
Ordinary income	$	22,467,977
Long-term capital gains		812,178
Total	$	23,280,155

As of June 30, 2026, the estimated cost basis of investment for U.S. federal income tax purposes was $412,618,402 resulting in estimated net unrealized loss of $1,522,087 comprised of estimated gross unrealized gains of $32,545,068 and gross unrealized losses of $34,067,155. As of December 31, 2025, the estimated cost basis of investment for U.S. federal income tax purposes was $390,821,061 resulting in estimated net unrealized loss of $15,777,316 comprised of estimated gross unrealized gains of $24,160,846 and gross unrealized losses of $39,938,162. As of June 30, 2026, the estimated cost basis of investment held in the Holding Company for U.S. federal income tax purposes was $27,474,575 resulting in estimated net unrealized gains of $5,597,215, comprised of estimated gross unrealized gains of $26,968,844 and gross unrealized losses of $21,371,629. As of December 31, 2025, the estimated cost basis of investment held in the Holding Company for U.S. federal income tax purposes was $27,474,575 resulting in estimated net unrealized gains of $19,212,681 comprised of estimated gross unrealized gains of $25,050,814 and gross unrealized losses of $5,838,133.

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


	As of June 30, 2026		As of December 31, 2025
Excise tax expense	$	-	$	79,746
Total	$	-	$	79,746

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:


	As of June 30, 2026			As of December 31, 2025
Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments	$	(969,689	)	$	2,059,533
Total	$	(969,689	)	$	2,059,533

As of June 30, 2026 and December 31, 2025, $5,004,352 and $4,034,663, 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 and Discretionary Repurchase of Shares of Common Stock

On July 29, 2025, the SEC issued the Multi-Class Order granting the Company’s application for exemptive relief from sections 18(a)(2), 18(c), 18(i) and 61(a) under the 1940 Act. Under the terms of the Multi-Class Order, effective March 31, 2026, the Company is offering Class I, Class S, Class D and Class SP shares of Common Stock under the Multi-Class Offering. Effective March 31, 2026, all issued and outstanding shares of Common Stock were reclassified as Class I shares. As of June 30, 2026, there were 5,273,674 Class I shares and 4,651,024 Class SP shares outstanding and no Class S or Class D shares outstanding.

As of June 30, 2026 and December 31, 2025, 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.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 9. Stock Issuances and Discretionary Repurchase of Shares of Common Stock (continued)

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.

For the six months ended June 30, 2026 and 2025, the Company entered into subscription agreements (collectively, the “Subscription Agreements”) with new investors, providing for the private placement of shares of Common Stock. 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, 2026 and December 31, 2025, the Company had received capital commitments totaling $291,901,310 and $292,885,780 respectively.

As of June 30, 2026, net contributions of $286,116,070 had been made by Stockholders and $5,785,240 remained available to be drawn by the Company.

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 table summarizes the issuance and repurchase of shares of Common Stock for the three and six months ended June 30, 2026 and 2025. There were no issuances or repurchases of Class SP shares during the six months ended June 30, 2025.


	Three Months Ended June 30, 2026						Three Months Ended June 30, 2025						Six months ended June 30, 2026						Six months ended June 30, 2025
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Class I Shares
Issuance of common shares		45,587		$	1,064,000			445,341		$	10,935,518			94,778		$	2,219,000			445,341		$	10,935,518
Stock issued in connection with dividend reinvestment plan		113,114			2,642,106			113,516			2,786,818			228,420			5,369,942			222,691			5,458,336
Purchases of shares in repurchase offer		(176,396	)		(4,117,613	)		(242,757	)		(5,932,958	)		(429,468	)		(10,024,302	)		(498,990	)		(12,223,500	)
Transfer out*		(4,656,219	)		(108,671,913	)		-			-			(4,656,219	)		(108,671,913	)		-			-
Conversion of shares**		(69,396	)		(1,619,721	)		-			-			(69,396	)		(1,619,721	)		-			-
Net increase (decrease)		(4,743,310	)	$	(110,703,141	)		316,100		$	7,789,378			(4,831,885	)	$	(112,726,994	)		169,042		$	4,170,354

Class SP Shares
Transfer in*		4,656,219		$	108,671,913			-		$	-			4,656,219		$	108,671,913			-		$	-
Conversion of shares**		69,396			1,619,721			-			-			69,396			1,619,721			-			-
Purchases of shares in repurchase offer		(74,591	)		(1,740,427	)		-			-			(74,591	)		(1,740,427	)		-			-
Net increase (decrease)		4,651,024			108,551,207			-			-			4,651,024			108,551,207			-			-
Total increase (decrease)		(92,286	)	$	(2,151,934	)		316,100		$	7,789,378			(180,861	)	$	(4,175,787	)		169,042		$	4,170,354

* On May 20, 2026, the Company converted 4,656,219 existing shareholders Class I shares to Class SP shares with an aggregate net asset value of $108,671,913.

** On May 20, 2026 and May 29, 2026, respectively, the Company converted 56,543 and 12,853 Class I shares to Class SP shares with an aggregate net asset value, respectively, of $1,319,721 and $300,000.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 9. Stock Issuances and Discretionary Repurchase of Shares of Common Stock (continued)

The following tables summarize the repurchase of shares of Common Stock for the six months ended June 30, 2026 and 2025.


Date	Purchase Price		Shares Repurchased		Amount
Class I
March 31, 2026*	$	23.34		253,072	$	5,906,689
June 30, 2026**	$	23.34		176,396		4,117,613
Total				429,468	$	10,024,302
Class SP
June 30, 2026**	$	23.34		74,591	$	1,740,427
Total				74,591	$	1,740,427

* Repurchase offer by the Company to purchase up to 252,639 shares of the Company’s common stock, par value $0.001 per share, which represented 2.5% of the Company’s outstanding shares as of December 31, 2025, at a price per share equal to the Company’s net asset value per share as of March 31, 2026, upon the terms and subject to the conditions described in the Offer to Purchase, dated March 3, 2026. 1,328,452 shares were validly tendered and not withdrawn prior to the expiration of the Offer. The Company accepted for purchase a total of 253,072 shares on a pro rata basis in accordance with the terms of the Offer.

** Repurchase offer by the Company to purchase up to 250,425 shares of the Company’s common stock, par value $0.001 per share, which represented 2.5% of the Company’s outstanding shares as of March 31, 2026, at a price per share equal to the Company’s net asset value per share as of June 30, 2026, upon the terms and subject to the conditions described in the Offer to Purchase, dated June 1, 2026. 1,013,565 shares were validly tendered and not withdrawn prior to the expiration of the Offer. The Company accepted for purchase a total of 250,987 shares on a pro rata basis in accordance with the terms of the Offer.


Date	Purchase Price		Shares Repurchased		Amount
Class I
March 31, 2025*	$	24.55		256,234	$	6,290,542
June 30, 2025**		24.44		242,756		5,932,958
Total				498,990	$	12,223,500

* Repurchase offer by the Company to purchase up to 256,234 shares of the Company’s common stock, par value $0.001 per share, which represented 2.5% of the Company’s outstanding shares as of December 31, 2025, at a price per share equal to the Company’s net asset value per share as of March 31, 2025, upon the terms and subject to the conditions described in the Offer to Purchase, dated March 3, 2025. 1,289,373 shares were validly tendered and not withdrawn prior to the expiration of the Offer. The Company accepted for purchase a total of 256,234 shares on a pro rata basis in accordance with the terms of the Offer.

** Repurchase offer by the Company to purchase up to 242,756 shares of the Company’s common stock, par value $0.001 per share, which represented 2.5% of the Company’s outstanding shares as of March 31, 2025, at a price per share equal to the Company’s net asset value per share as of June 30, 2025, upon the terms and subject to the conditions described in the Offer to Purchase, dated May 30, 2025. 1,088,935 shares were validly tendered and not withdrawn prior to the expiration of the Offer. The Company accepted for purchase a total of 242,756 shares on a pro rata basis in accordance with the terms of the Offer.

As of June 30, 2026, the Company received subscriptions in advance of $12,500.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 10. Distributions

The Company’s distributions are recorded on the record date. For the six months ended June 30, 2026 and 2025, the following table summarizes the distributions declared on shares of Common Stock. There were no distributions on Class SP shares during the six months ended June 30, 2025.


For the six months ended June 30, 2026
Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
Class I
December 30, 2025	December 31, 2025	January 30, 2026	$	0.56	$	3,072,262	$	2,727,836	$	5,800,098
March 30, 2026	March 30, 2026	May 20, 2026		0.55		3,006,425		2,642,106		5,648,531
June 29, 2026	June 29, 2026	August 20, 2026		0.55		1,676,334		1,321,203		2,997,537
Total			$	1.66	$	7,755,021	$	6,691,145	$	14,446,166

Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
Class SP
June 29, 2026	June 29, 2026	August 20, 2026		0.56		1,326,624		1,319,721		2,646,345
Total			$	0.56	$	1,326,624	$	1,319,721	$	2,646,345

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

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

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 11. Commitments, Contingencies, and Risks

Commitments: As of June 30, 2026 and December 31, 2025, the Company had $14,965,772 and $5,692,616 in outstanding commitments to direct investments and $1,101,695 and $1,101,695 in outstanding commitments to fund investments, respectively.


June 30, 2026	Outstanding Commitments
Direct Investments
Ambient Enterprises Holdco LLC	$	1,221,016
IPA Intermediate Co., LLC		638,298
Kelso Industries		1,748,571
MechanAir, LLC		3,557,541
The Stonewall Group LLC		1,862,664
48forty Intermediate Holdings, Inc. (Alpine Acquisition Corp)		607,705
AqueoUS Vets		5,329,977
Total Direct Investments	$	14,965,772

Fund Investments
Madryn Select Opportunities, LP	$	1,101,695
Total Fund Investments	$	1,101,695
Total	$	16,067,467


December 31, 2025	Outstanding Commitments
Direct Investments
Ambient Enterprises Holdco LLC	$	1,922,310
IPA Intermediate Co., LLC		212,766
MechanAir, LLC		3,557,540
Total Direct Investments	$	5,692,616

Fund Investments
Madryn Select Opportunities, LP	$	1,101,695
Total Fund Investments	$	1,101,695
Total	$	6,794,311

Management believes that the Company’s available cash balances provide sufficient funds to cover its unfunded commitments as of June 30, 2026 and December 31, 2025.

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.

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.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 12. Financial Highlights

The following is a schedule of financial highlights for the six months ended June 30, 2026 and 2025:


	Class I						Class SP
	For the six months ended June 30,						May 20, 2026 (Issuance date) to
	2026			2025			June 30, 2026
Per share data:
Net asset value at beginning of period	$	23.48		$	24.43		$	23.34
Net investment income (loss) (1)		0.81			1.10			0.41
Net realized and unrealized gain (loss) (1)		0.12			(0.62	)		0.16
Net increase (decrease) in net assets resulting from operations (1)		0.93			0.48			0.57
Stockholder distributions (2)		(1.10	)		(1.11	)		(0.56	)
Other (3)		0.03			0.64			(0.01	)
Net asset value at end of period	$	23.34		$	24.44		$	23.34
Net assets at end of period	$	123,105,872		$	245,047,744		$	108,567,013
Shares outstanding at end of period (7)		5,273,674			10,026,343			4,651,024
Total return (4)		4.14	%		4.62	%		2.41	%
Ratio/Supplemental data:
Ratio of expenses to average net assets before incentive fees and expense waivers (5)(8)		8.38	%		7.07	%		8.57	%
Ratio of expenses to average net assets after incentive fees and expense waivers (5)(8)		8.62	%		7.95	%		8.73	%
Ratio of net investment income to average net assets before incentive fees and expense waivers (5)(8)		7.49	%		9.35	%		7.76	%
Ratio of net investment income to average net assets after incentive fees and expense waivers (5)(8)		7.24	%		8.48	%		7.59	%
Portfolio turnover (6)		3.68	%		7.22	%		3.68	%

(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 net asset value ("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.

(7)

Effective March 31, 2026, as part of the Company's offering of multiple classes of shares of Common Stock, all shares of the Company's Common Stock issued prior to March 31, 2026 were reclassified as Class I shares of Common Stock to conform with the current period presentation. For the period ending June 30, 2026, there were 7,777,267 and 4,686,158, respectively, Class I and Class SP weighted average shares outstanding.

(8)

These ratios have been calculated as if the transfer between Class I and Class SP was effective at the beginning of the quarter.

STAR MOUNTAIN LOWER MIDDLE-MARKET CAPITAL CORP.

Notes to Consolidated Financial Statements – (continued)

(Unaudited)

Note 13. Subsequent Events

The Company has evaluated subsequent events through August 13, 2026, the date on which the consolidated financial statements were issued.

On June 29, 2026, the Company declared a dividend of $0.55 per share and $0.56 per share, respectively, for Class I and Class SP Stockholders of record as of June 29, 2026, which will be paid in the form of cash and shares on or about August 20, 2026. On August 20, 2026, the Company will pay distributions totaling $5,643,882, consisting of $3,002,958 payable in cash and $2,640,924 payable in the form of shares. Class I Stockholders will receive distributions totaling $2,997,537, consisting of $1,676,334 payable in cash and $1,321,203 payable in the form of shares. Class SP Stockholders will receive distributions totaling $2,646,345, consisting of $1,326,624 payable in cash and $1,319,721 payable in the form of shares.

On August 6, 2026, the Company entered into a Note Purchase Agreement (the “August 2026 Note Purchase Agreement”) governing the issuance of $25,000,000 in aggregate principal amount of Floating Rate Senior Unsecured Notes due January 15, 2029, with a floating interest rate per annum equal to the Benchmark (which is based on the TSFR3M Index Screen Rate and more fully defined in the August 2026 Note Purchase Agreement) plus 3.75% (375 basis points) (the “New Notes”), to a qualified institutional investor in a private placement. The New Notes are an additional issuance of the Company’s $25,000,000 Floating Rate Senior Unsecured Notes due January 15, 2029 (the “Existing Notes” and, together with the New Notes, the “Notes”) issued pursuant to that certain Note Purchase Agreement, dated January 2, 2026, by and between the Company and the purchaser thereto. Except for the date of original issuance, the purchase price of the New Notes, the date from which interest will initially begin to accrue and the first interest payment date, the New Notes offered by the Company pursuant to the August 2026 Note Purchase Agreement will have identical terms to the Existing Notes, including that they will be fungible, rank equally, and be treated as a single series with the Existing Notes.

Interest on the New Notes will be due quarterly on the 15th day of January, April, July and October each year, beginning on October 15, 2026. The Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if applicable, a make-whole premium. In addition, the Company is obligated to offer to prepay the Notes at par plus accrued and unpaid interest up to, but excluding, the date of prepayment, if certain change in control events occur. The Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

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, 2025 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;

•

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, 2025 as filed with the SEC on March 31, 2026.

Portfolio and Investment Activity:

The Company had $3,843,602 and $13,449,972, respectively, in principal repayments for the three and six months ended June 30, 2026, of which an amount of $13,648,486 was received in cash as of June 30, 2026 (with the remaining balance as the change in receivable from December 31, 2025). 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).

As of June 30, 2026 and December 31, 2025, the Company’s investments consisted of the following:


	June 30, 2026				December 31, 2025
Fair Value:
First Lien Senior Secured Loan	$	323,558,706	78.8	%	$	300,852,563	80.2	%
Second Lien Senior Secured Loan		1,765,999	0.4			-	-
Senior Unsecured Notes		3,713,686	0.9			3,763,831	1.0
Preferred Equity Securities		73,555,591	17.9			62,479,421	16.7
Warrants and Other Equity Securities		6,279,232	1.5			6,022,684	1.6
Fund Investments		2,223,101	0.5			1,925,246	0.5
Total	$	411,096,315	100.0	%	$	375,043,745	100.0	%

The table below describes investments by industry composition based on fair value as of June 30, 2026 and December 31, 2025:


	June 30, 2026				December 31, 2025
Fair Value:
Aerospace & Defense	$	9,306,265	2.3	%	$	8,756,759	2.4	%
Building Products		2,131,589	0.5			2,056,098	0.6
Chemicals		19,797,375	4.8			19,898,602	5.4
Commercial Services & Supplies		14,069,816	3.4			14,183,797	3.8
Construction & Engineering		87,509,746	21.3			66,511,406	17.7
Consumer Finance		3,713,686	0.9			3,763,831	1.0
Distributors		6,696,783	1.6			7,300,311	1.9
Diversified Financials		2,223,101	0.5			1,925,246	0.5
Diversified Telecommunication Services		24,204,302	5.9			21,129,751	5.6
Electrical Equipment		-	-			877,249	0.2
Entertainment		31,109,486	7.6			31,388,774	8.4
Food Products		11,884,754	2.9			11,852,852	3.2
Healthcare Providers & Services		40,528,739	9.9			39,110,377	10.4
Hotels, Restaurants & Leisure		8,381,695	2.0			8,266,981	2.2
Household Durables		4,062,384	1.0			3,867,034	1.0
Household Products		28,563,590	6.9			13,833,981	3.7
Leisure Products		3,452,086	0.8			3,407,718	0.9
Machinery		7,432,796	1.8			3,645,509	1.0
Media		19,753,628	4.8			21,105,771	5.6
Personal Products		4,585,486	1.1			4,532,223	1.2
Professional Services		48,931,112	12.0			55,315,203	14.7
Software		630,788	0.2			640,379	0.2
Specialty Retail		6,993,992	1.7			7,052,922	1.9
Trading Companies & Distributors		15,931,427	3.9			14,804,024	3.9
Transportation Infrastructure		9,201,689	2.2			9,816,947	2.6
Total	$	411,096,315	100.0	%	$	375,043,745	100.0	%

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.


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, 2026 and December 31, 2025:


	June 30, 2026					December 31, 2025
Investment Performance Risk Rating	Investments at Fair Value		Percentage of Total Investments			Investments at Fair Value		Percentage of Total Investments
1	$	68,553,544		16.7	%	$	70,383,783		18.8	%
2		210,661,187		51.2			170,700,370		45.5
3		100,750,965		24.6			73,906,574		19.7
4		21,907,776		5.3			51,139,493		13.6
5		9,222,843		2.2			8,913,525		2.4
Total	$	411,096,315		100.0	%	$	375,043,745		100.0	%

Results of Operations:

The following tables represent the operating results for the three and six months ended June 30, 2026 and 2025:


	For the three months ended June 30,
	2026			2025
Total investment income	$	9,580,508		$	10,709,930
Total expenses, before fee waiver		5,620,167			4,531,149
Expense waiver		(68,271	)		-
Total expenses, net of fee waiver		5,551,896			4,531,149
Net investment income before tax		4,028,612			6,178,781
Net realized gain (loss) on investments		-			2,488,217
Net change in unrealized gain (loss) on investments		2,112,230			(5,623,774	)
Income tax expense (benefit)		(61,397	)		165,000
Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments		(516,310	)		1,760,115
Net increase (decrease) in net assets resulting from operations	$	5,685,929		$	4,638,339


	For the six months ended June 30,
	2026			2025
Total investment income	$	18,765,951		$	21,057,245
Total expenses, before fee waiver		10,592,001			10,106,460
Expense waiver		(68,271	)		-
Total expenses, net of fee waiver		10,523,730
Net investment income before tax		8,242,221			10,950,785
Net realized gain (loss) on investments		(7,802,110	)		4,352,098
Net change in unrealized gain (loss) on investments		10,440,372			(10,504,360	)
Income tax expense (benefit)		728			722,415
Benefit (provision) for taxes change in unrealized appreciation (depreciation) on investments		(969,689	)		1,709,967
Net increase (decrease) in net assets resulting from operations	$	9,910,066		$	5,786,075

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, 2026 and 2025:


	For the three months ended June 30,
	2026		2025
Non-controlled/non-affiliate investment income
Interest income	$	8,173,340	$	8,485,427
PIK interest income		396,860		668,499
Dividend income		348,926		467,432
Other income		68,701		259,042
Controlled/affiliate investment income
Interest income		433,027		583,029
Other income		159,654		213,641
PIK interest income		-		32,860
Total investment income	$	9,580,508	$	10,709,930


	For the six months ended June 30,
	2026		2025
Non-controlled/non-affiliate investment income
Interest income	$	15,923,596	$	16,519,615
PIK interest income		756,495		1,508,387
Dividend income		497,898		688,739
Other income		233,158		437,229
Controlled/affiliate investment income
Interest income		850,848		1,445,338
PIK interest income		473,100		425,077
Other income		30,856		32,860
Total investment income	$	18,765,951	$	21,057,245

Operating Expenses:

The composition of the Company’s operating expenses was as follows for the three and six months ended June 30, 2026 and 2025:


	For the three months ended June 30,
	2026			2025
Interest and other financing fees	$	2,661,352		$	1,298,543
Management fees (Note 6)		1,257,262			1,173,157
Professional fees		504,649			411,817
Incentive fees (Note 6)		530,401			1,275,636
General and administrative fees		390,643			230,036
Legal expenses		240,860			106,960
Director expenses		35,000			35,000
Expenses, before waiver		5,620,167			4,531,149
Expense waiver		(68,271	)		-
Expenses before tax		5,551,896			4,531,149
Income tax expense (benefit)		(61,397	)		165,000
Total net expenses	$	5,490,499		$	4,696,149


	For the six months ended June 30,
	2026			2025
Interest and other financing fees	$	5,021,751		$	3,840,320
Management fees (Note 6)		2,443,154			2,360,804
Professional fees		983,774			1,009,862
Incentive fees (Note 6)		698,201			2,142,038
General and administrative fees		698,119			490,416
Legal expenses		677,002			193,020
Director expenses		70,000			70,000
Expenses, before waiver		10,592,001			10,106,460
Expense waiver		(68,271	)		-
Expenses before tax		10,523,730			10,106,460
Income tax expense (benefit)		728			722,415
Total net expenses	$	10,524,458		$	10,828,875

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, 2026, the Company did not record an expense for U.S. federal excise tax. For the year ended December 31, 2025, the Company recorded a net expense on the Consolidated Statements of Operations for U.S. federal excise tax of $79,746.

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 year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. As of June 30, 2026 and December 31, 2025, $5,004,352 and $4,034,663, respectively, was included in deferred tax liabilities on the Consolidated Statements of Assets and Liabilities primarily relating to deferred taxes on the unrealized appreciation of investments held in the Holding Company.

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

For the three and six months ended June 30, 2026, the net increase (decrease) in net assets resulting from operations was $5,685,929 and $9,910,066, respectively. Based on the weighted average Class I and Class SP shares of Common Stock outstanding for the three and six months ended June 30, 2026, the Company’s Class I and Class SP per share net increase (decrease) in net assets resulting from operations was $0.56 and $0.98, respectively.

For the three and six months ended June 30, 2025, the net increase (decrease) in net assets resulting from operations was $4,638,339 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.

Net Gain (Loss):

We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments within net change in unrealized gain (loss) on the Consolidated Statements of Operations.

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, 2026 and December 31, 2025, the Company had approximately $3.4 million and $5.5 million, respectively, in cash on deposit with financial institutions and $162.5 million and $122.3 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, 2026 and December 31, 2025, the Company's asset coverage for total borrowings and other senior securities was 246% and 294%, respectively.

Capital Contributions:

For the three and six months ended June 30, 2026 and for the year ended December 31, 2025, 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, 2026 and December 31, 2025, the Company had received capital commitments totaling $291,901,310 and $292,885,780, respectively.

The following table summarizes the issuance of shares for the three and six months ended June 30, 2026 and 2025:


	Three months ended June 30, 2026						Three months ended June 30, 2025				Six months ended June 30, 2026						Six months ended June 30, 2025
	Shares			Amount			Shares		Amount		Shares			Amount			Shares		Amount
Class I Shares
Issuance of common shares		45,587		$	1,064,000			445,341	$	10,935,518		94,778		$	2,219,000			445,341	$	10,935,518
Stock issued in connection with dividend reinvestment plan		113,114			2,642,106			113,516		2,786,818		228,420			5,369,942			222,691		5,458,336
Conversion of shares*		(69,396	)		(1,619,721	)		-		-		(69,396	)		(1,619,721	)		-		-
		89,305		$	2,086,385			558,857	$	13,722,336		253,802		$	5,969,221			668,032	$	16,393,854

Class SP Shares
Conversion of shares*		69,396		$	1,619,721							69,396		$	1,619,721
		69,396		$	1,619,721							69,396		$	1,619,721

* On May 20, 2026 and May 29, 2026, respectively, the Company converted 56,543 and 12,853 Class I shares to Class SP with an aggregate net asset value, respectively, of $1,319,721 and $300,000.

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 plan (“DRP”) for Stockholders. When a distribution is declared, Stockholders’ cash distributions will automatically be reinvested (net applicable withholding tax) 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.

The following table summarizes the settlement of distributions declared and recorded on common shares and the subsequent payment and issuance of those distributions for the six months ended June 30, 2026 and 2025:


For the six months ended June 30, 2026
Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
Class I
December 30, 2025	December 31, 2025	January 30, 2026	$	0.56	$	3,072,262	$	2,727,836	$	5,800,098
March 30, 2026	March 30, 2026	May 20, 2026		0.55		3,006,425		2,642,106		5,648,531
June 29, 2026	June 29, 2026	August 20, 2026		0.55		1,676,334		1,321,203		2,997,537
Total			$	1.66	$	7,755,021	$	6,691,145	$	14,446,166

Date Declared	Record Date	Payment/Issuance Date	Amount Per Share		Amount Paid in Cash		Amount Settled via Newly Issued Shares		Total
Class SP
June 29, 2026	June 29, 2026	August 20, 2026		0.56		1,326,624		1,319,721		2,646,345
Total			$	0.56	$	1,326,624	$	1,319,721	$	2,646,345

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

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

Contractual Obligations:

Investment 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.

Expense Waiver Agreement

During the period from May 20, 2026 to June 30, 2026, the Company waived $68,271 of Class SP expenses as shown on the Consolidated Statements of Operations.

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

The Secured Credit Facility

In May 2024, the Company extended its $200,000,000 Secured Credit Facility with Webster, the Administrative Agent for a syndicated lending group, 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 2.3%, plus following the occurrence and during the continuation of an Event of Default, 2.00%.

As of June 30, 2026 and December 31, 2025, the Secured Credit Facility commitment amounts were as follows:


	As of June 30, 2026 Commitment		As of December 31, 2025 Commitment
Webster Bank	$	87,500,000	$	67,500,000
Dime Community Bank		25,000,000		25,000,000
First Foundation Bank		-		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
Hanmi 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, 2026 and December 31, 2025, the total fair value of the borrowings outstanding under the Secured Credit Facility was $137,450,000 and $122,300,000, respectively.

Inclusive of syndication, agency, and administrative fees paid to Webster, the total annualized cost of capital is estimated to be 6.3%. 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, 2026, 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.

Note Purchase Agreement

On January 2, 2026, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”) governing the issuance of $25,000,000 in aggregate principal amount of Floating Rate Senior Unsecured Notes due January 15, 2029 (“Notes”), with a floating interest rate per annum equal to the SOFR (which is based on the TSFR3M Index Screen Rate and more fully defined in the Note Purchase Agreement) plus 3.75% to a qualified institutional investor in a private placement.

As of June 30, 2026, the fair value of the outstanding Floating Rate Senior Unsecured Notes was $25,000,000. The fair value determination of the Floating Rate Senior Unsecured Note is based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

The fair value of the borrowings outstanding under the Secured Credit Facility and Notes 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 three months ended June 30,
	2026			2025
Interest expense - Secured Credit Facility	$	1,874,971		$	2,208,438
Interest expense - Senior Unsecured Note		458,945			-
Unused commitment fees		96,539			98,859
Amortization of deferred financing costs - Secured Credit Facility		155,220			170,350
Amortization of deferred financing costs - Senior Unsecured Note		28,806			-
Utilization fees		46,871			(1,179,104	)
Total interest and other debt financing fees	$	2,661,352		$	1,298,543
Average debt outstanding	$	148,617,582		$	121,781,319
Average stated interest rate		6.30	%		7.27	%


	For the six months ended June 30,
	2026			2025
Interest expense - Secured Credit Facility	$	3,438,914		$	4,377,859
Interest expense - Senior Unsecured Note		916,292			-
Unused commitment fees		215,353			198,423
Amortization of deferred financing costs - Secured Credit Facility		308,734			307,750
Amortization of deferred financing costs - Senior Unsecured Note		56,231			-
Utilization fees		86,227			(1,043,712	)
Total interest and other debt financing fees	$	5,021,751		$	3,840,320
Average debt outstanding	$	139,334,807		$	121,069,061
Average stated interest rate		6.30	%		7.29	%

The unused fees payable and interest expense payable as of June 30, 2026 and December 31, 2025 are included in the credit facility interest payable on the Consolidated Statements of Assets and Liabilities. The utilization fees payable as of June 30, 2026 and December 31, 2025 are included in other payables on the Consolidated Statements of Assets and Liabilities.

See “Note 7. Borrowings” to our Consolidated Financial Statements for additional information regarding the credit agreements and the fee arrangement thereunder.

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.

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 two independent third-party valuation firms, 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 firms 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.

•

The use of these valuation models requires significant estimation and judgment by the Advisor. The Advisor uses two third-party valuation firms 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 two independent third-party valuation firms 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.

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 two independent third-party valuation firms, 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.

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, 2026 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	$	(3,085,280	)	$	(1,624,500	)	$	(1,460,780	)
Down 50 basis points		(1,581,502	)		(812,250	)		(769,252	)
Down 25 basis points		(790,751	)		(406,125	)		(384,626	)
Up 25 basis points		797,046			406,125			390,921
Up 50 basis points		1,606,593			812,250			794,343
Up 100 basis points		3,225,689			1,624,500			1,601,189
Up 200 basis points		6,463,880			3,249,000			3,214,880
Up 300 basis points		9,702,071			4,873,500			4,828,571

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.

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, 2026. 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, 2026 to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 31, 2026, except as set forth below. If any 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.

Illiquid Nature of the Company’s Common Stock and Restrictions on Withdrawal The shares may be issued in reliance upon certain exemptions from registration or qualification under applicable Federal and state securities laws and so may be subject to certain restrictions on transferability. There is no public market for the shares and none is expected to develop. In addition, Stockholders will not be entitled to withdraw their Capital Contributions, and shares may not be assigned or transferred without the consent of the Advisor, subject to certain exceptions. Accordingly, the shares constitute illiquid investments and should only be purchased by persons that are “accredited investors” as such term is defined under the Securities Act of 1933, as amended, and able to bear the risk of their investment in shares for an indefinite period of time.

At the discretion of the Board, the Company commenced a share repurchase program in which the Advisor will, in its commercially reasonable judgment subject to market conditions, cause the Company to offer to repurchase shares from Stockholders on a quarterly basis in an amount not to exceed 2.5% of the Company’s net asset value. In recent periods, there has been heightened scrutiny and growing negative sentiment in respect of the private credit market, driven by concerns over liquidity, concentration risk and valuation uncertainty, which may result in an increase in the volume of repurchase requests the Company receives.

Significant repurchase requests, whether for a single period or for a sustained period, by Stockholders could adversely affect our ability to conduct our investment program, strain our capacity to source investment opportunities and/or deploy capital promptly on attractive terms and/or increase operational complexity and/or expenses. In addition, Stockholders seeking liquidity may experience delays in fully liquidating their investments and will remain subject to net asset value fluctuations during such periods. Additionally, the presence of large Stockholders or platform concentrations may increase the likelihood of oversubscription in future repurchase offers, further constraining liquidity available to other Stockholders.

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, 2026, 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.”

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 Annual Report on Form 10K, filed with the SEC on March 31, 2026)

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 Borrower, and Webster Bank, N.A. (f/k/a Sterling National Bank), as Collateral Agent, Administrative Agent, Swing Lender, and Sole Lead Arranger, and Lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on July 1, 2025)

10.11		Note Purchase Agreement, dated as of January 2, 2026, between the Company and the purchasers party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 2, 2026)

10.12		Star Mountain Lower Middle-Market Capital Corp. Distribution and Servicing Plan (incorporated by reference to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2026)

10.13		Star Mountain Lower Middle-Market Capital Corp. Class SP Shares Expense Support Agreement (incorporated by reference to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2026)
10.14		Note Purchase Agreement, dated as of August 6, 2026, between the Company and the purchaser party thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2026.)


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.

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 13, 2026	By:	/s/ Brett A. Hickey
		Name:	Brett A. Hickey
		Title:	Chief Executive Officer and President


Date: August 13, 2026	By:	/s/ Christopher J. Gimbert
		Name:	Christopher J. Gimbert
		Title:	Chief Financial Officer