What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-03-10 compared with 2021-02-26 · 1377 added, 21 removed, 0 unchanged (100% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Valuation Risk.

The majority of our portfolio investments take the form of securities for which no market quotations are readily available.

fair value of securities and other investments that are not publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith by our Board of Directors, including to reflect significant events

affecting the value of our securities.

Most of our investments are classified as Level 3 under ASC Topic 820 which means that our portfolio valuations are based on unobservable inputs and our own assumptions about how market participants would

price the asset or liability in question.

Inputs into the determination of fair value of our portfolio investments require significant management judgment or estimation.

Because such valuations are inherently uncertain, they may fluctuate over short

periods of time and may be based on estimates.

The determination of fair value may differ materially from the values that would have been used if a liquid trading market for these instruments existed.

Our net asset value (NAV) could be

adversely affected if the determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such investments.

Interest Rate Risk.

We will be subject to financial market risks, including changes in interest rates.

As a result, there can be no assurance that a

significant change in market interest rates will not have a material adverse effect on our net investment income.

We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts

subject to the requirements of the 1940 Act.

While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of

investments with fixed interest rates.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks,

including changes in interest rates.

Interest rate sensitivity refers to the change in our earnings that may result from changes in the

level of interest rates.

Because we fund a portion of our investments with borrowings, our net investment income will be affected by

the difference between the rate at which we invest and the rate at which we borrow.

As a result, there can be no assurance that a significant

change in market interest rates will not have a material adverse effect on our net investment income.

Assuming that the consolidated statement

of assets and liabilities as of December 31, 2021 were to remain constant and that we took no actions to alter our existing interest

rate sensitivity, the following table shows the annualized impact ($ in millions) of hypothetical base rate changes in interest rate

(considering interest rate floors for floating rate instruments).

Change in Interest Rates

(Decrease) in

Down 25 basis points

Up 75 basis points

Up 100 basis points

Up 200 basis points

Up 300 basis points

The data in the table is based on the Company’s

current statement of assets and liabilities.

We may hedge against interest rate fluctuations

by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act.

hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits

of lower interest rates with respect to our portfolio of investments with fixed interest rates.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting

Firm (PCAOB ID 238)

Consolidated Statements of Assets and Liabilities

as of December 31, 2021 and 2020

Consolidated Statements of Operations for the years

ended December 31, 2021 and 2020

Consolidated Statements of Changes in Net Assets for

the years ended December 31, 2021 and 2020

Consolidated Statement of Cash Flows for the years ended December 31, 2021 and 2020

Consolidated Schedule of Investments as of December 31,

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Kayne Anderson BDC, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and

liabilities, including the consolidated schedule of investments, of Kayne Anderson BDC, Inc.

(the “Company”) as of December

31, 2021, the consolidated statement of assets and liabilities as of December 31, 2020, the related consolidated statements of operations,

changes in net assets and cash flows for each of the two years in the period ended December 31, 2021, including the related notes, and

financial highlights for the year ended December 31, 2021 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2021 and December 31, 2020, and the results of its operations, changes in its net assets and its cash flows for each

of the two years in the period ended December 31, 2021 and the financial highlights for the year ended December 31, 2021 in conformity

with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the

Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based

on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements

in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements.

Our procedures included confirmation of securities owned

as of December 31, 2021 by correspondence with the custodian.

We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

March 10, 2022

We have served as the auditor of one or more investment companies

in the Kayne Anderson Funds Family since 2004.

Anderson BDC, Inc.

Statements of Assets and Liabilities

in 000’s, except share and per share amounts)

Investments, at fair value:

Long-term investments (amortized cost of $566,616)

Short-term investments (amortized cost of $3,674)

Cash and cash equivalents

Deferred offering costs

Interest receivable

Prepaid expenses and other assets

Loan and Security Agreement (Note 6)

Unamortized Loan and Security Agreement issuance costs

Subscription Credit Agreement (Note 6)

Unamortized Subscription Credit Facility issuance costs

Accrued organizational and offering costs

Distributions payable

Payables to affiliates (Note 3)

Management fee payable

Incentive fee payable

Accrued expenses and other liabilities

Total Liabilities

Commitments and contingencies (Note 8)

Common Shares, $0.001 par value;

100,000,000 shares authorized;

19,227,902 as

of December 31, 2021 issued and outstanding

Additional paid-in capital

Total distributable earnings (deficit)

Total member’s capital (deficit)

Total Net Assets

Total Liabilities

and Net Assets

Net Asset Value Per Common Share

accompanying notes to consolidated financial statements.

Anderson BDC, Inc.

Statements of Operations

in 000’s, except share and per share amounts)

For the years ended

Investment income from investments:

Interest income

Total Investment Income

Management fees

Incentive fees

Interest expense

Professional fees

Directors fees

Offering costs

Initial organization costs

Other general and administrative expenses

Total Expenses

Net Investment Income (Loss)

Realized and unrealized gains (losses) on investments

Net realized gains (losses):

Total net realized gains (losses)

Net change in unrealized gains (losses):

Total net change in unrealized gains (losses)

Total realized and unrealized gains (losses)

Net Increase (Decrease) in Net Assets Resulting from Operations

Per Common Share Data:

Basic and diluted net investment income per common share

Basic and diluted net increase in net assets resulting from operations

Weighted Average Common Shares Outstanding - Basic and Diluted

accompanying notes to consolidated financial statements.

Anderson BDC, Inc.

Statements of Changes in Net Assets

in 000’s)

For the years ended

Increase (Decrease) in Net Assets Resulting from Operations:

Net investment income (loss)

Net realized gains (losses) on investments

Net change in unrealized gains (losses) on investments

Net Increase (Decrease) in Net Assets Resulting from Operations

Decrease in Net Assets Resulting from Stockholder Distributions

Dividends and distributions to stockholders

Net Decrease in Net Assets Resulting from Stockholder Distributions

Increase in Net Assets Resulting from Capital Share Transactions

Issuance of common shares

Reinvestment of distributions

Net Increase in Net Assets Resulting from Capital Share Transactions

Total Increase (Decrease) in Net Assets

Net Assets, Beginning of Period

Net Assets, End of Period

accompanying notes to consolidated financial statements.

Anderson BDC, Inc.

Statements of Cash Flows

in 000’s)

For the years ended

Cash Flows from Operating Activities:

Net increase (decrease) in net assets resulting from operations

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:

Net realized (gains)/losses on investments

Net change in unrealized (gains)/losses on investments

Net accretion of discount on investments

Purchases of short-term investments, net

Purchases of portfolio investments

Proceeds from sales of investments and principal repayments

Paid-in-kind interest from portfolio investments

Amortization of deferred financing cost

Increase/(decrease) in operating assets and liabilities:

(Increase)/decrease in interest and dividends receivable

(Increase)/decrease in deferred offering costs

(Increase)/decrease in prepaid expenses and other assets

Increase/(decrease) in management fees payable

Increase/(decrease) in payable to affiliate

Increase/(decrease) in accrued organizational and offering costs, net

Increase/(decrease) in incentive fee payable

Increase/(decrease) in accrued other general and administrative expenses

Net cash used in operating activities

Cash Flows from Financing Activities:

Borrowings on Loan and Security Agreement, net

Borrowings on Subscription Credit Facility, net

Payments of debt issuance costs

Distributions paid in cash

Proceeds from issuance of common shares

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental and Non-Cash Information:

Interest paid during the period

Non-cash financing activities not included herein consisted of reinvestment of dividends

accompanying notes to consolidated financial statements.

Kayne Anderson BDC, Inc.

Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

of Net Assets

and Equity Investments

Credit Investments (4)

First lien senior

First lien senior secured delayed

Accessories, Inc.

First lien senior secured loan

lien senior secured revolving loan

(US) Holdings, Inc.

First lien senior secured loan

First lien senior secured delayed

First lien senior secured loan

CGI Automated

Manufacturing, LLC

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

Wholesale Fence

First lien senior secured revolving

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

Distribution Holdings, LLC

First lien senior secured delayed

First lien senior secured loan

Acquisition, LLC

First lien senior secured delayed

First lien senior secured revolving

First lien senior secured loan

Refrigeration

First lien senior secured loan

Safety & Survivability Corporation (USSC)

First lien senior secured loan

First lien senior secured revolving

First lien senior secured delayed

& professional services

International, LLC

First lien senior secured loan

Environmental Monitoring (5)

First lien senior secured loan

Equipment Holdings LLC

First lien senior secured delayed

First lien senior secured revolving

First lien senior secured loan

Acquisition LLC

First lien senior secured revolving

First lien senior secured loan

Enterprises, Inc.

First lien senior secured delayed

First lien senior secured revolving

First lien senior secured loan

PMFC Holding,

First lien senior secured delayed

First lien senior secured loan

First lien senior secured revolving

Security Partners LLC

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

Kleinfelder Group, Inc.

lien senior secured loan

durables & apparel

Holding Corp.

First lien senior secured loan

First lien senior secured revolving

First lien senior secured delayed

First lien senior secured loan

(L + 7.00%, includes 1.275% PIK)

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

First lien senior secured delayed

First lien senior secured loan

Cap Company, Inc.

First lien senior secured loan

First lien senior secured revolving

First lien senior secured delayed

Garments, LLC

lien senior secured loan

Wealth Solutions, Inc.

lien senior secured loan

See accompanying notes to

financial statements.

Kayne Anderson BDC, Inc.

Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

of Net Assets

and Equity Investments

Credit Investments (4)

First lien senior secured loan

lien senior secured revolving loan

care equipment & services

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

Dermatologists

of Southwestern Ohio, LLC

First lien senior secured loan

Dentistry Partners

First lien senior secured loan

First lien senior secured delayed

OMH-HealthEdge

Holdings, LLC

First lien senior secured loan

Partners Holdings, LLC

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

Dermatology Management Holdings, LLC

lien senior secured loan

& personal products

Scholl’s)

First lien senior secured loan

First lien senior secured revolving

Group Holdings, Inc.

First lien senior secured loan

First lien senior secured revolving

Beauty Holdings III, Inc.

lien senior secured loan

Technologies Holdings, Inc.

First lien senior secured loan

Companies, Inc.

First lien senior secured loan

First lien senior secured revolving

lien senior secured loan

Pharmaceuticals,

biotech & life sciences

Consumer Brands

First lien senior secured loan

lien senior secured revolving loan

Holdings Group, LLC (5)

lien senior secured loan

Acquisition LLC

First lien senior secured loan

Peak Technologies

First lien senior secured loan

lien senior secured loan

Telecommunication

Communications, LLC

First lien senior secured loan

First lien senior secured delayed

First lien senior secured revolving

First lien senior secured loan

Technology Solutions, Inc.

First lien senior secured revolving

First lien senior secured delayed

First lien senior secured loan

Connex (f/k/a NTI Connect, LLC)

lien senior secured loan

Private Credit Debt Investments

See accompanying notes to

financial statements.

Kayne Anderson BDC, Inc.

Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

of Net Assets

Equity Investments

Food & beverage

Parent, LLC (6)

Private Equity Investments

Private Investments

Short-Term Investments

American Treasury Obligations Fund - Institutional Class Z, 0.01% (7)

Total Short-Term Investments

Total Investments

Liabilities in Excess of Other Assets

(1) As of December 31, 2021, all

investments are non-controlled, non-affiliated investments.

Non-controlled, non-affiliated

investments are defined as investments in which the Company owns less than 5% of the portfolio

company’s outstanding voting securities and does not have the power to exercise control

over the management or policies of such portfolio company.

(2) 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.

(3) As of December 31, 2021, the

tax cost of the Company’s investments approximates their amortized cost.

(4) Loan contains a variable rate

structure, that 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 London Interbank Offered Rate

(“LIBOR”

or “L”) (which can include one-, two-, three- or six-month

LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the

(5) The Company may be entitled

to receive additional interest as a result of an arrangement with other lenders in the syndication.

In exchange for the higher interest rate, the “last-out”

portion is at a greater

risk of loss.

Certain lenders represent a “first out”

portion of the investment

and have priority to the “last-out”

portion with respect to payments of principal

and interest.

Company owns 50% of a pass-through LLC, KSCF IV Equity Aggregator, LLC (the “Aggregator”),

which holds 500 Class A units of Siegel Parent, LLC.

The Aggregator’s

ownership of Siegel Parent, LLC is 1.1442%.

Through the Company’s ownership of the

Aggregator, the Company owns 250 Class A units of Siegel Parent, LLC.

(7) The indicated rate is the

yield as of December 31, 2021.

See accompanying notes to

financial statements.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Kayne Anderson BDC, Inc.

(the “Company”)

is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as

a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

In addition, for U.S.

federal income tax purposes, the Company intends to qualify as a regulated investment company (“RIC”)

under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company was formed as a Delaware limited

liability company in May 2018.

Prior to February 5, 2021, the Company was devoting substantially all of its efforts to establishing the

business and conducted organizational and marketing efforts.

The Company began incurring costs related to these activities in the third

quarter of 2020.

The Company was formed to make investments in middle-market companies and commenced operations on February 5, 2021.

On this same date, prior to the Company’s election to be regulated as a BDC under the 1940 Act, the Company completed a conversion

from a Delaware limited liability company into a Delaware corporation and Kayne Anderson BDC, Inc.

succeeded to the business of Kayne

Anderson BDC, LLC.

As of December 31, 2021, the Company has entered

into subscription agreements with investors for an aggregate capital commitment of $607,950 to purchase shares of the Company’s

common stock (including a $64,250 capital commitment that is contingent on the Company meeting certain conditions).

See Note 12 –

Subsequent Events.

KA Credit Advisors, LLC (the “Advisor”)

is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P.

(“KACALP”

or “Kayne Anderson”).

is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under the Investment Advisory

Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible

for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment

opportunities, negotiating and structuring investments and monitoring its investments and portfolio companies on an ongoing basis.

Board consists of five directors, three of whom are independent (including the Board’s chairperson).

The Company’s investment objective

is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies.

The Company conducts private offerings of

its Common Stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the

“Securities Act”).

At the closing of any private offering, each investor will make a capital commitment (a “Capital

Commitment”) to purchase shares of its Common Stock (“Shares”) pursuant to a subscription agreement entered into with

Investors will be required to fund drawdowns to purchase Shares up to the amount of their respective Capital Commitments

each time the Company delivers a notice to the investors.

Following the initial closing of the private offering (the “Initial Closing”)

on February 5, 2021 and prior to any Liquidity Event (as defined below), the Advisor may, in its sole discretion, permit additional closings

of the private offering.

A “Liquidity Event”

is defined as (a) an initial public offering of Shares (the “Initial

Public Offering”) or the listing of Shares on an exchange (together with the Initial Public Offering, an “Exchange Listing”),

(b) the sale of the Company or (c) a disposition of the Company’s investments and distribution of the net proceeds (after repayment

of borrowed funds or other forms of leverage) to the Company’s investors.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Significant Accounting Policies

Basis of Presentation —the

accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“GAAP”).

The Company is an investment company and follows accounting and reporting guidance of the Financial

Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 —

“Financial Services —

Companies.”

In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the

fair statement of the consolidated financial statements for the periods presented, have been included.

Consolidation —As provided

under Regulation S-X and ASC Topic 946 –

“Financial Services –

Investment Companies”, the Company will generally

not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business

consists of providing services to the Company.

Accordingly, the Company consolidated the accounts of the Company’s wholly-owned

subsidiaries, Kayne Anderson BDC Financing, LLC, (“KABDCF”) and KABDC Corp, LLC, in its consolidated financial statements.

All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates —the

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the

reported amounts of income and expenses during the period.

Actual results could differ materially from those estimates.

Cash and Cash Equivalents —cash

and cash equivalents include short-term, liquid investments with an original maturity of three months or less and include money market

fund accounts.

Investment Valuation, Fair Value —the

Company conducts the valuation of its investments consistent with GAAP and the 1940 Act.

The Company’s investments will be valued

no less frequently than quarterly, in accordance with the terms of Topic 820 of the Financial Accounting Standards Board’s Accounting

Standards Codification, Fair Value Measurement and Disclosures (“ASC 820”).

Traded Investments (Level 1 or Level 2)

Investments for which market quotations are

readily available will typically be valued at those market quotations.

Traded investments such as corporate bonds, preferred stock, bank

notes, loans or loan participations are valued by using the bid price provided by an independent pricing service, by an independent broker,

the agent bank, syndicate bank or principal market maker.

When price quotes for investments are not available, or such prices are stale

or do not represent fair value in the judgment of the Company’s Advisor, fair market value will be determined using the Company’s

valuation process for investments that are privately issued or otherwise restricted as to resale.

The Company may also invest, to a lesser

extent, in equity securities purchased in conjunction with debt investments.

While the Company anticipates these equity securities to

be issued by privately held companies, the Company may hold equity securities that are publicly traded.

Equity securities listed on any

exchange other than the NASDAQ Stock Market, Inc.

(“NASDAQ”) are valued, except as indicated below, at the last sale price

on the business day as of which such value is being determined.

If there has been no sale on such day, the securities are valued at the

mean of the most recent bid and ask prices on such day.

Securities admitted to trade on the NASDAQ are valued at the NASDAQ official

closing price.

Equity securities traded on more than one securities exchange are valued at the last sale price on the business day as

of which such value is being determined at the close of the exchange representing the principal market for such securities.

Equity securities

traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the closing

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Non-Traded Investments (Level 3)

Investments that are privately issued or

otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment

of the Company’s Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides

a price that in the judgment of the Company’s Advisor is stale or does not represent fair value, shall each be valued in a manner

that most fairly reflects fair value of the security on the valuation date.

The Company expects that a significant majority of its investments

will be Level 3 investments.

Unless otherwise determined by the Board, the following valuation process is used for the Company’s

Level 3 investments:

Investment Team Valuation .

The applicable investments are valued by senior professionals of Kayne Anderson who are responsible for the portfolio investments.

The value of each portfolio company or investment will be initially reviewed by the investment professionals responsible for such

portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments), a standardized

template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable

inputs will be used to determine a preliminary value.

The investments will be valued no less frequently than quarterly, with new

investments valued at the time such investment was made.

Investment Team Valuation Documentation .

valuation conclusions will be determined by the Company’s executive officers.

Such valuation and supporting documentation is

submitted to the Audit Committee (a committee of the Board) and the Board on a quarterly basis.

Audit Committee .

The Audit Committee meets to

consider the valuations submitted by our executive officers at the end of each quarter.

Between meetings of the Audit Committee,

the executive officers of the Company are authorized to make valuation determinations.

All valuation determinations of the Audit

Committee are subject to ratification by the Board at its next regular meeting.

Valuation Firm.

Quarterly, third-party valuation

firms engaged by the Board review the valuation methodologies and calculations employed for each of the Company’s investments

that the Company has placed on the “watch list”

and approximately 25% of its remaining investments.

These third-party

valuation firms will review all of the Level 3 investments at least once per year, on a rolling twelve-month basis.

expects the quarterly report issued by these third-party valuation firms will assist the Board in determining the fair values of

the investments reviewed.

Board Determination.

The Company’s Board

meets quarterly to consider the valuations provided by the Company’s executive officers and the Audit Committee and ratify

valuations for the applicable investments.

The Company’s Board considers the report provided by the third-party valuation firms

in reviewing and determining in good faith the fair value of the applicable portfolio investments.

The Board of Directors will be ultimately

responsible for the determination, in good faith, of the fair value of our portfolio investments.

Determination of fair value involves

subjective judgments and estimates.

Accordingly, the notes to our financial statements will express the uncertainty with respect to the

possible effect of such valuations, and any change in such valuations, on our financial statements.

Interest Income Recognition —

Interest income is recorded on an accrual basis and includes the accretion of discounts, amortization of premiums and payment-in-kind

(“PIK”) interest.

Discounts from and premiums to par value on investments purchased are accreted/amortized into interest

income over the life of the respective security using the effective yield method.

To the extent loans contain PIK provisions, PIK interest,

computed at the contractual rate specified in each applicable agreement, is accrued and recorded as interest income and added to the

principal balance of the loan.

PIK interest income added to the principal balance is generally collected upon repayment of the outstanding

To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders in the form

of dividends for the year the income was earned, even though the Company has not yet collected the cash.

The amortized cost of investments

represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Loans are generally placed on non-accrual

status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest

will be collected in full.

Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status.

Interest payments

received on non-accrual loans may be recognized as income or applied to principal depending upon the Company’s judgment regarding

collectability.

Non-accrual loans are restored to accrual status when past due principal and interest are paid or there is no longer

any reasonable doubt that such principal or interest will be collected in full and, in the Company’s judgment, are likely to remain

The Company may make exceptions to this policy if the loan has sufficient collateral value (i.e., typically measured as enterprise

value of the portfolio company) or is in the process of collection.

Debt Issuance Costs —Costs

incurred by the Company related to the issuance of its debt (credit facilities) are capitalized and amortized over the period the debt

is outstanding.

The Company has classified the costs incurred to issue its credit facilities as a deduction from the carrying value of

the credit facilities on the Statement of Assets and Liabilities.

For the purpose of calculating the Company’s asset coverage ratios

pursuant to the 1940 Act, deferred issuance costs are not deducted from the carrying value of debt or preferred stock.

Dividends to Common Stockholders —Distributions

to common stockholders are recorded on the record date.

The amount to be paid out as a dividend is determined by the Company’s

board of directors each quarter and is generally based upon the earnings estimated by management and considers the level of undistributed

taxable income carried forward from the prior year for distribution in the current year.

Net realized capital gains, if any, are generally

distributed, although the Company may decide to retain such capital gains for investment.

Organizational Costs —organizational

expenses include costs and expenses relating to the formation and organization of the Company.

The Company has agreed to reimburse the

Advisor for these costs which are expensed as incurred.

Offering Costs —offering

costs include costs and expenses incurred in connection with the offering of the Company’s common stock.

These initial costs are

capitalized as deferred offering expenses and included in prepaid expenses and other assets on the Statement of Assets and Liabilities.

These costs are amortized over a twelve-month period beginning with the commencement of operations.

These expenses consist primarily

of legal fees and other costs incurred in connection with the Company’s share offerings, the preparation of the Company’s

registration statement and registration fees.

The Company has agreed to reimburse the Advisor for these costs.

Income Taxes —it is the

Company’s intention to continue to be treated as and to qualify each year for special tax treatment afforded a RIC under the Code.

As long as the Company meets certain requirements that govern its sources of income, diversification of assets and timely distribution

of earnings to stockholders, the Company will not be subject to U.S.

federal income tax.

The Company must pay distributions equal

to 90% of its investment company taxable income (ordinary income and short-term capital gains) to qualify as a RIC and it must distribute

all of its taxable income (ordinary income, short-term capital gains and long-term capital gains) to avoid federal income taxes.

Company will be subject to federal income tax on any undistributed portion of income.

For purposes of the distribution test, the Company

may elect to treat as paid on the last day of its taxable year all or part of any distributions that are declared after the end of its

taxable year if such distributions are declared before the due date of its tax return, including any extensions (October 15th).

All RICs are subject to a non-deductible

4% excise tax on income that is not distributed on a timely basis in accordance with the calendar year distribution requirements.

avoid the tax, the Company must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary income

for the calendar year, (ii) 98.2% of its net capital gains for the one-year period ending on December 31, the last day of our taxable

year, and (iii) undistributed amounts from previous years on which the Company paid no U.S.

federal income tax.

A distribution will be

treated as paid during the calendar year if it is paid during the calendar year or declared by the Company in October, November or December,

payable to stockholders of record on a date during such months and paid by the Company during January of the following year.

distributions paid during January of the following year will be deemed to be received by stockholders on December 31 of the year the

distributions are declared, rather than when the distributions are actually received.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

The Company does not currently qualify as

a “publicly offered regulated investment company,”

as defined in the Code.

A “publicly offered regulated investment

company”

is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded

on an established securities market, or (iii) held by at least 500 persons at all times during the taxable year.

The Company cannot

determine when it will qualify as a publicly offered RIC.

If the Company does not qualify as a publicly offered RIC during the tax year, a non-corporate shareholder’s allocable

portion of the Company’s affected expenses, including its management fees, may be treated as an additional distribution to shareholders.

A non-corporate shareholder’s allocable portion of these expenses may be treated as miscellaneous itemized deductions

that are not currently deductible by such shareholders.

The Company evaluates tax positions taken

or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not”

sustained by the applicable tax authority.

Tax positions not deemed to meet the “more-likely-than-not”

threshold are

reserved and recorded as a tax benefit or expense in the current year.

All penalties and interest associated with income taxes are included

in income tax expense.

Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors

including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

LIBOR Transition —

Financial Conduct Authority (“FCA”) has announced that certain London Interbank Offered Rate (“LIBOR”) tenors

in certain currencies will cease to be provided at the end of 2021 with all remaining tenors ceasing in June 2023.

Alternatives to LIBOR

have been established, or are in development, in most major currencies including the Secured Overnight Financing Rate (“SOFR”)

that is intended to replace U.S.

dollar LIBOR.

Markets are developing in response to these new reference rates.

Uncertainty exists related

to the liquidity impact of the change in rates, and how to appropriately adjust these rates at the time of transition.

Although SOFR appears

to be the preferred replacement rate for LIBOR, at this time, it is not possible to predict the full effect of any such changes or any

establishment of alternative reference rates.

Commitments and Contingencies —in

the normal course of business, the Company may enter into contracts that provide a variety of general indemnifications.

to the Company under these arrangements could involve future claims that may be made against the Company.

Currently, no such claims exist

or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

Agreements and Related Party Transactions

Administration Agreement —on

February 5, 2021, the Company entered into an Administration Agreement with its Advisor, which serves as its Administrator and will provide

or oversee the performance of its required administrative services and professional services rendered by others, which will include (but

not limited to), accounting, payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and

filing of its tax returns, and preparation of financial reports provided to its stockholders and filed with the SEC.

The Company will reimburse the Administrator

for its costs and expenses incurred in performing its obligations under the Administration Agreement, which may include, after completion

of our Exchange Listing, its allocable portion of office facilities, overhead, and compensation paid to or compensatory distributions

received by its officers (including our Chief Compliance Officer and Chief Financial Officer) and its respective staff who provide services

to the Company.

As the Company reimburses the Administrator for its expenses, the Company will indirectly bear such cost.

The Administration

Agreement may be terminated by either party with 60 days’

written notice.

Investment Advisory Agreement —on

February 5, 2021, the Company entered into an Investment Advisory Agreement with its Advisor.

Pursuant to the Investment Advisory Agreement

with its Advisor, the Company will pay its Advisor a fee for investment advisory and management services consisting of two components—a

base management fee and an incentive fee.

The Advisor may, from time-to-time, grant waivers on the Company’s obligations, including

waivers of the base management fee and/or incentive fee, under the Investment Advisory Agreement.

The Investment Advisory Agreement may

be terminated by either party with 60 days’

written notice.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

The Company has agreed to reimburse the Advisor

and its affiliates for the third-party costs incurred on its behalf in connection with the formation and the offering of shares of the

Company’s common stock.

Amounts shown as payables to affiliates on the Statement of Assets and Liabilities represent organizational

expenses and offering costs of the Company that were paid by the Advisor and its affiliates on behalf of the Company.

Base Management Fee

Prior to an Exchange Listing, the base management

fee will be calculated at an annual rate of 0.90% of the fair market value of the Company’s investments including, in each case,

assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S.

government securities and commercial paper

instruments maturing within one year of purchase.

After an Exchange Listing, the base management fee will be calculated at an annual

rate of 1.50% of the fair market value of the Company’s investments.

However, following an Exchange Listing, if borrowed funds

or other forms of leverage utilized to finance the Company’s investments is greater than a debt-to-equity ratio of 1.0x, the base

management fee will be 1.00% of the fair market value of the portion of the Company’s investments financed with borrowed funds

or other forms of leverage above a 1.0x debt-to-equity ratio.

The base management fee will be payable quarterly

in arrears and calculated based on the average of the Company’s fair market value of investments, at the end of the two most recently

completed calendar quarters, including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding

government securities and commercial paper instruments maturing within one year of purchase.

Base management fees for any

partial quarter will be appropriately pro-rated.

For the year ended December 31, 2021, the

Company incurred base management fees of $2,095.

Incentive Fee

The Company will also pay the Advisor an

incentive fee.

The incentive fee will consist of two parts—an incentive fee on income and an incentive fee on capital gains.

in more detail below, these components of the incentive fee will be largely independent of each other with the result that one component

may be payable even if the other is not.

Incentive Fee on Income

The incentive fee based on income (the “income

incentive fee”) is determined and paid quarterly in arrears in cash.

The Company’s quarterly pre-incentive fee net investment

income must exceed a preferred return of 1.50% of the Company’s NAV at the end of the immediately preceding calendar quarter (6.0%

annualized but not compounded) (the “Hurdle Amount”) in order for the Company to receive an income incentive fee.

incentive fee is calculated as follows:

Prior to an Exchange Listing :

100% of our pre-incentive fee net investment income for the immediately preceding calendar quarter in excess of 1.50% of

the Company’s NAV at the end of the immediately preceding calendar quarter until the Advisor has received 10% of the total

pre-incentive fee net income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.6667%,

10% of all remaining pre-incentive fee net investment income for that quarter.

After an Exchange Listing :

100% of the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter in excess

of 1.50% of the Company’s NAV at the end of the immediately preceding calendar quarter until the Advisor has received 15% of

the total pre-incentive fee net income for that calendar quarter and, for pre-incentive fee net investment income

in excess of 1.7647%, 15% of all remaining pre-incentive fee net investment income for that quarter.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

000’s, except share and per share amounts)

Incentive Fee on Capital Gains

The incentive fee on capital gains (the “capital gains incentive

fee”) will be calculated and payable in arrears in cash as follows:

Prior to an Exchange Listing :

10% of the Company’s realized capital gains, if any, on a cumulative basis from formation through (a) the day before

an Exchange Listing, (b) upon consummation of a Liquidity Event or (c) upon the termination of the Investment Advisory

Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis.

For the purpose of computing the capital gain incentive fee, the calculation

methodology will look through derivative financial instruments or swaps as if the Company owned the reference assets directly.

After an Exchange Listing :

15% of the Company’s realized capital gains, if any, on a cumulative basis from formation through the end of a given calendar

year or upon termination of the Investment Advisory Agreement, computed net of all realized capital losses and unrealized capital

depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.

Payment of Incentive Fees

Prior to an Exchange Listing, any incentive fees earned by the Advisor

shall accrue as earned but only become payable in cash to the Advisor upon consummation of an Exchange Listing.

To the extent the Company

does not complete an Exchange Listing, the incentive fees will be payable to the Advisor (a) upon consummation of a sale of the

Company or (b) once substantially all the proceeds from a Company Liquidation payable to the Company’s stockholders have been

distributed to such stockholders.

For the year ended December 31, 2021, the Company incurred incentive

fees on income of $31 and on realized gains $34 (total of $65).

KACALP, an affiliate of the Advisor, made

an equity contribution of $10 to the Company on December 18, 2018.

On February 5, 2021, the Company purchased its initial portfolio

of investments for $103,031 from an affiliate of the Company’s Advisor (the “Warehousing Entity”).

This purchase of

its initial portfolio of investments was funded with a portion of the proceeds from the sale of the Company’s common stock on this

same date (5,666,667 shares of our common stock to investors at a price of $15.00 per share for an aggregate offering amount of $85,000)

to investors and with borrowings under the Company’s credit facility.

The initial portfolio purchased from the Warehouse Entity consisted

of 18 loans, with an average outstanding balance of $5,876, an average purchase price of 97.4% of principal value and an average yield

on that date of 8.8%.

None of these loans in the initial portfolio were in default or non-accrual status.

All of the loans

are senior secured and the borrowers are middle and upper middle market companies.

The purchase of the initial portfolio was completed

before the Company elected to be treated as a business development company under the 1940 Act.

This initial acquisition and all related

transactions are referred to as the “Formation Transactions.”

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

The following table presents the composition of the Company’s

investment portfolio at amortized cost and fair value as of December 31, 2021:

First-lien senior secured debt investments

Equity investments

Short-term investments

Total Investments

As of December 31, 2021, all of the Company’s investments were

qualifying assets as defined by Section 55(a) of the 1940 Act.

The industry composition of long-term investments based on fair value

as of December 31, 2021 was as follows:

Commercial & professional services

Capital goods

Consumer durables & apparel

Telecommunication services

Health care equipment & services

Household & personal products

Automobiles & components

Food & beverage

Software & services

Pharmaceuticals, biotech & life sciences

Diversified financials

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

The Fair Value Measurement Topic of the FASB Accounting Standards

Codification (ASC 820) defines fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would

take place between market participants under current market conditions at the measurement date.

As required by ASC 820, the Company has

performed an analysis of all investments measured at fair value to determine the significance and character of all inputs to their fair

value determination.

Inputs are the assumptions, along with considerations of risk, that a market participant would use to value an asset

or a liability.

In general, observable inputs are based on market data that is readily available, regularly distributed and verifiable

that the Company obtains from independent, third-party sources.

Unobservable inputs are developed by the Company based on its own assumptions

of how market participants would value an asset or a liability.

The fair value hierarchy prioritizes the inputs to valuation techniques

used to measure fair value into the following three broad categories.

Level 1 —

Valuations based

on quoted unadjusted prices for identical instruments in active markets traded on a national exchange to which the Company has access

at the date of measurement.

Level 2 —

Valuations based

on quoted prices for similar instruments in active markets;

quoted prices for identical or similar instruments in markets that are not

and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information

exists or instances where prices vary substantially over time or among brokered market makers.

Level 3 —

Model derived

valuations in which one or more significant inputs or significant value drivers are unobservable.

Unobservable inputs are those inputs

that reflect the Company’s own assumptions that market participants would use to price the asset or liability based on the best

available information.

In certain cases, the inputs used to measure fair value may fall into

different levels of the fair value hierarchy.

In such cases, the determination of which category within the fair value hierarchy is appropriate

for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement.

of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific

to the financial instrument.

The following table presents the fair value hierarchy of investments

as of December 31, 2021.

Note that the valuation levels below are not necessarily an indication of the risk or liquidity associated with

the underlying investment.

Fair Value Hierarchy as of December

First-lien senior secured debt investments

Equity investments

Short-term investments

Total Investments

For the year ended December 31, 2021, the Company did not recognize

any transfers to or from Level 3.

The following table presents changes in the fair value of investments

for which Level 3 inputs were used to determine the fair value as of and for year ended December 31, 2021:

First-lien senior secured debt investments

Equity investments

For the year ended December 31, 2021

Fair value, beginning of period

Purchases of investments

Proceeds from sales of investments and principal repayments

Net change in unrealized gain (loss)

Realized gains

Net accretion of discount on investments

Transfers into (out of) Level 3

Fair value, end of period

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

The increase in unrealized gain (loss) relates to investments that

were held during the period.

The Company includes these unrealized gains and losses on the Statement of Operations –

in Unrealized Gains (Losses).

Valuation Techniques

and Unobservable Inputs

Non-traded debt investments are typically valued using either

a market yield analysis or an enterprise value analysis.

For debt investments that are not determined to be credit impaired, the Company

uses a market yield analysis to determine fair value.

If the debt investment is credit impaired (which is determined by performing an

enterprise value analysis), the Company will use the enterprise value analysis or a liquidation basis analysis to determine fair value.

As of December 31, 2021, none of the Company’s non-traded debt investments were determined to be credit impaired, and the Company

used a market yield analysis to determine fair value on these investments.

To determine the estimated market yield for our debt investments,

the Company analyzes changes in the risk/reward (measured by yields and leverage) of middle market indices as compared to changes in

risk/reward for the underlying investment (the “Market Approach”) and estimates the appropriate credit spread for such debt

In this context, the fair market value of the investment is impacted by the structure and pricing of the security relative

to current market yields and credit spreads for similar investments in similar businesses as well as the financial performance of such

In performing this analysis, the Company considers data sources including, but not limited to:

(i) industry publications,

such as S&P Global’s High-End Middle Market Lending Review;

Thomson Reuter’s Refinitiv Middle Market Monthly

Pitchbook News;

The Lead Left, and other data sources;

(ii) comparable investments reviewed or completed by affiliates

of the Advisor, and (iii) information obtained and provided by the Advisor’s independent valuation managers.

To determine if a debt investment is credit impaired, the Company

estimates the enterprise value of the business and compares such estimate to the outstanding indebtedness of such business.

utilizes the following valuation methodologies to determine the estimated enterprise value of the company:

(i) analysis of valuations

of publicly traded companies in a similar line of business (“public company analysis”), (ii) analysis of valuations of M&A

transaction valuations for companies in a similar line of business (“precedent transaction analysis”), (iii) discounted

cash flows (“DCF analysis”) and (iv) other valuation methodologies.

In determining the non-traded debt investment valuations,

the following factors are considered, where relevant:

the nature and realizable value of any collateral;

the company’s ability

to make interest payments, amortization payments (if any) and other fixed charges;

call features, put features and other relevant terms

of the debt security;

the company’s historical and projected financial results;

the markets in which the company does business;

changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may

and other relevant factors.

Equity investments in private

companies are typically valued using one of or a combination of the following valuation techniques:

(i) public company analysis,

(ii) precedent transaction analysis and (iii) DCF analysis.

Under all of these valuation techniques, the Company estimates operating

results of the companies in which we invest, including earnings before interest expense, income tax expense, depreciation and amortization

(“EBITDA”) and free cash flow.

These estimates utilize unobservable inputs such as historical operating results, which may

be unaudited, and projected operating results, which will be based on operating assumptions for such company.

Investment performance

data utilized will be the most recently available as of the measurement date which in many cases may reflect up to a one quarter lag

in information.

These estimates will be sensitive to changes in assumptions specific to such company as well as general assumptions for

the industry.

Other unobservable inputs utilized in the valuation techniques outlined above include:

discounts for lack of marketability,

selection of publicly traded companies, selection of similar precedent transactions, selected ranges for valuation multiples and expected

required rates of return (discount rates).

Quantitative Table for Valuation Techniques

As of December 31, 2021

First-lien senior secured debt investments

Yield Analysis

5.00% - 8.50%

Equity investments

Precedent Transaction Analysis

Transaction Price

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Loan and Security Agreement

On February 5, 2021, Kayne Anderson BDC Financing, LLC (“KABDCF”),

a newly-formed, wholly-owned, special purposes financing subsidiary, entered into a Loan and Security Agreement (the “LSA”)

with certain lenders party thereto, administrative agent, and the Advisor as collateral manager.

The maximum commitment of the LSA is

up to $200,000.

The Company did not pay an upfront fee for entering into the LSA.

Advances under the facility bear an interest rate of

LIBOR plus 4.25% (subject to a 1.00% LIBOR floor).

The facility has a term of three years maturing on February 5, 2023.

See Note 12 –

Subsequent Events.

For the year ended December 31, 2021, the average amount of borrowings

outstanding under the LSA was $66,755 with a weighted average interest rate of 5.25%.

As of December 31, 2021, the Company had $162,000

outstanding under the LSA at a weighted average interest rate of 5.25%.

Subscription Credit Agreement

As of December 31, 2021, the Company had a $150,000 credit agreement

(the “Subscription Credit Agreement”) with certain lenders party thereto.

The Subscription Credit Agreement permits the Company

to borrow up to $150,000, subject to availability under the borrowing base which is calculated based on the unused capital commitments

of the investors meeting various eligibility requirements.

The interest rate under the Subscription Credit Agreement is equal to SOFR

plus 1.975% (subject to a 0.275% SOFR floor).

The Subscription Credit Agreement will expire on December 31, 2022.

See Note 12 –

Subsequent Events.

For the year ended through December 31, 2021, the average amount of

borrowings outstanding under the Subscription Credit Agreement was $24,600 with a weighted average interest rate of 2.26%.

As of December

31, 2021, the Company had $105,000 outstanding under the Subscription Credit Agreement at a weighted average interest rate of 2.25%.

Debt obligations consisted of the following as of December 31, 2021:

December 31, 2021

Aggregate Principal Committed

Outstanding Principal

Amount Available (1)

Loan and Security Agreement (LSA)

Subscription Credit Agreement

(1) The amount available reflects any limitations related to the credit

facility’s borrowing base as of December 31, 2021.

(2) The carrying value of the LSA and Subscription Credit Agreement are

presented net of deferred financing costs totaling $672.

For the year ended December 31, 2021, the components of interest expense

were as follows:

For the year ended

Interest expense

Amortization of debt issuance costs

Total interest expense

Average interest rate

Average borrowings

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Share Transactions

Common Stock Issuances

The following table summarizes the number of common stock shares issued

and aggregate proceeds received from such issuances related to the Company’s capital drawdown notices pursuant to subscription agreements

with investors for the year ended December 31, 2021.

Common stock issue date

Offering price per share

shares issued

February 5, 2021

April 23, 2021

July 23, 2021

October 28, 2021

December 2, 2021

Total common stock issued

As of December 31, 2021, the Company had subscription agreements with

investors for an aggregate capital commitment of $607,950 to purchase shares of common stock (including a $64,250 capital commitment that

is contingent on the Company meeting certain conditions).

Of this amount, and including the $64,250 contingent capital commitment noted

above, the Company had $308,449 of undrawn commitments at December 31, 2021.

See Note 12 –

Subsequent Events.

Dividends and Dividend Reinvestment

The following table summarizes the dividends

declared and payable by the Company for the year ended December 31, 2021.

See Note 12 –

Subsequent Events.

Dividend declaration date

April 23, 2021

April 20, 2021

July 14, 2021

July 20, 2021

July 27, 2021

October 18, 2021

October 22, 2021

November 2, 2021

December 2, 2021

December 29, 2021

January 18, 2022

Total dividends declared

The following table summarizes the amounts

received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan during the year

ended December 31, 2021.

See Note 12 –

Subsequent Events.

Dividend record date

DRIP shares issued

April 20, 2021

July 20, 2021

July 27, 2021

October 22, 2021

November 2, 2021

For the dividend declared on December 2, 2021 and paid on January 18,

2022, there were 55,590 shares issued with a DRIP value of $902.

These shares are excluded from the table above, as the DRIP shares were

issued after December 31, 2021.

Commitments and Contingencies

The Company had an aggregate of $97,810 of

unfunded commitments to provide debt financing to its portfolio companies as of December 31, 2021.

Such commitments are generally subject

to the satisfaction of certain financial and nonfinancial covenants and certain operational metrics;

involve, to varying degrees, elements

of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities, and are not

reflected in the Company’s consolidated statements of assets and liabilities.

These amounts may remain outstanding until the commitment

period of an applicable loan expires, which may be shorter than its maturity.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

A summary of the composition of the unfunded

commitments as of December 31, 2021 is shown in the table below:

American Equipment Holdings LLC

Arborworks Acquisition LLC

BCI Burke Holding Corp.

Blade (US) Holdings, Inc.

Brightview, LLC

Centerline Communications, LLC

CGI Automated Manufacturing, LLC

Corbett Technology Solutions, Inc.

Curio Brands, LLC

DRS Holdings III, Inc.

Scholl’s)

Eastern Wholesale Fence

EIS Legacy, LLC

Foundation Consumer Brands

Fralock Buyer LLC

Guardian Dentistry Partners

Gusmer Enterprises, Inc.

Home Brands Group Holdings, Inc.

Images Acquisition, LLC

MacNeill Pride Group

PMFC Holding, LLC

Regiment Security Partners LLC

SGA Dental Partners Holdings, LLC

Siegel Egg Co., LLC

Speedstar Holding LLC

Trademark Global LLC

United Safety & Survivability Corporation (USSC)

Vehicle Accessories, Inc.

Total unfunded commitments

From time to time, the Company may become

a party to certain legal proceedings incidental to the normal course of its business.

As of December 31, 2021, management was not aware

of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

Earnings Per Share

In accordance with the provisions of

ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available

to common stockholders by the weighted average number of shares outstanding during the period.

Other potentially dilutive common shares,

and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

As of December 31, 2021, there

were no dilutive shares.

The following table sets forth the computation

of basic and diluted earnings per share of common stock for the year ended December 31, 2021.

The Company commenced investment operations

on February 5, 2021, and basic and diluted earnings per share was not applicable for the year ended December 31, 2020 as the Company had

not issued shares.

For the year ended December 31,

Net increase (decrease) in net assets resulting from operations

Weighted average shares of common stock outstanding - basic and diluted

Earnings (loss) per share of common stock - basic and diluted

The Company has elected to be treated as

a RIC under the Code beginning with the taxable year end December 31, 2021.

As a RIC, the Company is not subject to federal income

tax on the portion of its taxable income and gains distributed currently to its stockholders as dividends.

As a RIC, the Company is also

subject to a federal excise tax based on distributive requirements of its taxable income on a calendar year basis.

Depending on the level

of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions

into the next tax year and pay a 4% excise tax on such income, to the extent required.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

The Company makes certain adjustments to the classification of net

assets as a result of permanent book-to-tax differences, which include differences in the book and tax basis of certain assets and

liabilities, and nondeductible federal taxes or losses among other items.

To the extent these differences are permanent, they are charged

or credited to additional paid in capital, or total distributable earnings (losses), as appropriate.

The permanent differences for tax purposes

from distributable earnings to additional paid in capital were reclassified for tax purposes for the tax year ended December 31,

These reclassifications have no impact on net assets.

For year ended

Increase (decrease) in distributable earnings

Increase (decrease) in additional paid-in capital

Taxable income generally differs from the net increase in net assets

resulting from operations for financial reporting purposes due to (1) unrealized appreciation (depreciation) on investments, as gains

and losses are generally not included in taxable income until these are realized;

(2) income or loss recognition on exited investments;

(3) non-deductible U.S.

federal excise taxes;

and (4) other non-deductible expense.

The following reconciles net increase in net

assets resulting from operations to taxable income for the year ended December 31, 2021:

For the year ended

Net increase (decrease) in net assets resulting from operations

Net change in unrealized losses (gains) from investments

Non-deductible expenses, offering costs disallowed

Other book tax differences

Taxable income before deductions for distributions

For income tax purposes, distributions made to stockholders are reported

as ordinary income, capital gains, non-taxable return of capital, or a combination thereof.

The final determination of tax character will

not be made until the Company files its tax return for each tax year and the tax characteristics of all distributions will be reported

to stockholders on Form 1099 after the end of each calendar year.

The tax character of distributions paid to stockholders during the tax

year ended December 31, 2021 was as follows:

For the year ended

Ordinary income

Return of capital

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

For the year ended December 31, 2021, the

components of accumulated earnings on a tax basis were as follows:

For the year ended

Undistributed net investment income (loss)

Undistributed capital gains

Capital loss carryforward

Other accumulated gain (loss)

Other temporary book / tax differences

Net unrealized appreciation (depreciation)

Capital losses can be carried forward indefinitely

to offset future capital gains.

As of December 31, 2021, the Company had no capital loss carryforwards.

As of December 31, 2021, the Company’s

aggregate unrealized appreciation and depreciation on investments based on cost for U.S.

federal income tax purposes was as follows:

Gross unrealized appreciation

Gross unrealized depreciation

Net unrealized appreciation/(depreciation) on investments

KABDC Corp, LLC, a wholly owned subsidiary that was formed in December

2021, is a Delaware LLC which has elected to be treated as a corporation for U.S.

tax purposes.

As such, KABDC Corp, LLC is subject to

Federal, state and local taxes.

For the Company’s tax year ended December 31, 2021, KABDC Corp, LLC did not have activity that

resulted in any provision for income taxes.

FASB ASC Topic 740, Accounting for Uncertainty

in Income Taxes (“ASC 740”) provides guidance for how uncertain tax positions should be recognized, measured, presented,

and disclosed in the consolidated financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken

in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not”

of being sustained by the applicable tax authority.

The Company recognizes the tax benefits of uncertain tax positions only where the

position is “more likely than not”

to be sustained assuming examination by tax authorities.

As of December 31, 2021,

management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be

recorded related to uncertain tax positions taken in the Company’s current year tax return.

The Company is not aware of any tax

positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12

Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors

including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Financial Highlights

The following per share of common stock data has been derived from

information provided in the audited financial statements.

The following is a schedule of financial highlights for the year ended December

For the year ended

thousands, except

share and per share amounts)

Per Common Share

Operating Performance (1)

Net Asset Value, Beginning of

Results of Operations:

Net Investment Income

Net Realized and Unrealized Gain

(Loss) on Investments (3)

Net Increase (Decrease) in Net

Assets Resulting from Operations

Distributions to Common Stockholders

Distributions

Net Decrease in Net Assets Resulting

from Distributions

Net Asset Value, End of Period

Shares Outstanding, End of Period

Ratio/Supplemental

Net assets, end of period

Weighted-average shares outstanding

Total Return (4)

Portfolio turnover

Ratio of operating expenses

to average net assets (5)

Ratio of net investment

income (loss) to average net assets (5)

per common share data was derived by using weighted average shares outstanding.

initial offering price of $15.00 per share less $0.14 per share of organizational costs.

and unrealized gains and losses per share in this caption are balancing amounts necessary

to reconcile the change in net asset value per share for the period, and may not reconcile

with the aggregate gains and losses in the Consolidated Statement of Operations due to share

transactions during the period.

return is calculated as the change in net asset value (“NAV”) per share during

the period, plus distributions per share (if any), divided by the beginning NAV per share.

The calculation also assumes reinvestment of dividends at actual prices pursuant to the Company’s

dividend reinvestment plan.

Total return is not annualized.

ratios reflect an annualized amount, except in the case of non-recurring expenses (e.g.

organizational expense of $175 for the period February 5, 2021 (commencement of operations)

through December 31, 2021).

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial

000’s, except share and per share amounts)

Subsequent Events

The Company’s management

has evaluated subsequent events through the date of issuance of the financial statements included herein.

There have been no subsequent

events that require recognition or disclosure in these financial statements except for the following described below.

On January 18, 2022, the Company

paid a distribution of $0.24 per share to each common stockholder of record as of December 29, 2021.

The total distribution was $4,615

and $902 was reinvested into the Company through the purchase of 55,590 shares of common stock.

On January 24, 2022, the Company sold 4,191,292 shares of its common

stock at a price of $16.36 per share for an aggregate offering amount of $68,582.

Following this capital close, the Company has subscription

agreements with investors for an aggregate capital commitment of $701,450 (including a $33,250 capital commitment that is contingent on

the Company meeting certain conditions) to purchase shares of common stock ($333,367 of the commitments are undrawn).

On January 31, 2022, the Company increased

its Subscription Credit Agreement commitment amount from $150,000 to $175,000.

All other terms of the Subscription Credit Agreement remain

substantially the same.

On February 18, 2022, the Company and KABDCF,

a wholly-owned, special purpose financing subsidiary, established two new credit facilities (described below) and fully repaid the $150,000

outstanding balance on the Loan and Security Agreement.

As of the same date, the Company had $78,000 and $8,000 borrowed on its Corporate

Credit Facility and Subscription Credit Agreement, and KABDCF had $150,000 borrowed on the Revolving Funding Facility.

Corporate Credit Facility

The Company entered into a senior secured

revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $275,000.

The Corporate Credit

Facility’s commitment termination date and the final maturity date are February 18, 2026 and February 18, 2027, respectively.

Corporate Credit Facility also provides for a feature that allows the Company, under certain circumstances, to increase the overall size

of the Corporate Credit Facility to a maximum of $550,000.

The interest rate on the Corporate Credit Facility is equal to Term SOFR plus

an applicable spread of 2.35% per annum (which includes a SOFR adjustment spread of 0.10%) or an “alternate base rate”

defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.25%.

The Company is also required to

pay a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility.

Under the Corporate Credit Facility, the Company is required to comply

with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without

limitation, covenants related to:

(a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on

certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’

and (e) maintaining a ratio of total assets (less total liabilities not representing indebtedness) to total indebtedness of the Company

and its consolidated subsidiaries of not less than 1.5:1.0.

These covenants are subject to important limitations and exceptions that are

described in the agreements governing the Corporate Credit Facility.

Amounts available to borrow under the Corporate Credit Facility are

subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as

determined pursuant to the Corporate Credit Facility) that are pledged as collateral.

The Corporate Credit Facility is secured by certain

assets in the Company’s portfolio and excludes investments held by KABDCF under the Revolving Funding Facility (as defined below).

Revolving Funding Facility

The Company and KABDCF, entered into a senior

secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $250,000.

The Revolving

Funding Facility is secured by all of the assets held by KABDCF and the Company has agreed that it will not grant or allow a lien on the

membership interest of KABDCF.

The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are

February 18, 2025 and February 18, 2027, respectively.

The interest rate on the Revolving Funding Facility is equal to daily SOFR plus

2.35% per annum.

KABDCF is also required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused

portion of the Revolving Funding Facility.

Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing

base that applies different advance rates to different types of assets held by KABDCF and is subject to limitations with respect to the

loans securing the Revolving Funding Facility, including restrictions on, loan size, payment frequency and status, as well as restrictions

on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow.

and KABDCF are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities.

These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are not and have not been any disagreements

between us and our accountant on any matter of accounting principles, practices or financial statement disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk