Kayne Anderson BDC, Inc. 10-K

ITEM 7A. QUANTITATIVE 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, 2022 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 Increase (Decrease) in Interest Income Increase (Decrease) in Interest Expense Net Increase (Decrease) in Net Investment Income Down 200 basis points $ (23.2 ) $ (11.5 ) $ (11.7 ) Down 100 basis points $ (11.6 ) $ (5.8 ) $ (5.8 ) Up 100 basis points $ 11.6 $ 5.8 $ 5.8 Up 200 basis points $ 23.2 $ 11.5 $ 11.7 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. 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. 64 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F-2 Consolidated Statements of Assets and Liabilities as of December 31, 2022 and 2021 F-3 Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 F-4 Consolidated Statements of Changes in Net Assets for the years ended December 31, 2022 and 2021 F-5 Consolidated Statement of Cash Flows for the years ended December 31, 2022 and 2021 F-6 Consolidated Schedules of Investments as of December 31, 2022 and 2021 F-7 Notes to Consolidated Financial Statements F-15 F- 1 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 statements of assets and liabilities, including the consolidated schedules of investments, of Kayne Anderson BDC Inc. (the “Company”) as of December 31, 2022, and December 31, 2021, and 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, 2022, including the related notes (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, 2022, and December 31, 2021, 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, 2022, 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 risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. 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, 2022, and December 31, 2021, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Los Angeles, California March 10, 2023 We have served as the auditor of one or more investment companies in Kayne Anderson Funds Family since 2004. F- 2 Kayne Anderson BDC, Inc. Consolidated Statements of Assets and Liabilities (amounts in 000’s, except share and per share amounts) December 31, 2022 December 31, 2021 Assets: Investments, at fair value: Long-term investments (amortized cost of $ 1,147,788 and $ 566,616 ) $ 1,165,119 $ 578,445 Short-term investments (amortized cost of $ 9,847 and $ 3,674 ) 9,847 3,674 Cash and cash equivalents 8,526 2,035 Deferred offering costs - 29 Receivable for principal payments on investments 111 - Interest receivable 10,444 2,133 Prepaid expenses and other assets 347 148 Total Assets $ 1,194,394 $ 586,464 Liabilities: Corporate Credit Facility (Note 6) $ 269,000 $ - Unamortized Corporate Credit Facility issuance costs ( 2,517 ) - Loan and Security Agreement (Note 6) - 162,000 Unamortized Loan and Security Agreement issuance costs - ( 247 ) Revolving Funding Facility (Note 6) 200,000 - Unamortized Revolving Funding Facility issuance costs ( 2,827 ) - Subscription Credit Agreement (Note 6) 108,000 105,000 Unamortized Subscription Credit Facility issuance costs ( 65 ) ( 425 ) Accrued organizational and offering costs - 6 Payable for investments purchased 956 - Distributions payable 15,428 4,615 Management fee payable 2,415 952 Incentive fee payable 4,762 65 Accrued expenses and other liabilities 7,201 2,529 Total Liabilities $ 602,353 $ 274,495 Commitments and contingencies (Note 8) Net Assets: Common Shares, $ 0.001 par value; 100,000,000 shares authorized; 35,879,291 and 19,227,902 as of December 31, 2022 and December 31, 2021, respectively, issued and outstanding $ 36 $ 19 Additional paid-in capital 574,540 300,726 Total distributable earnings (deficit) 17,465 11,224 Total Net Assets $ 592,041 $ 311,969 Total Liabilities and Net Assets $ 1,194,394 $ 586,464 Net Asset Value Per Common Share $ 16.50 $ 16.22 See accompanying notes to consolidated financial statements. F- 3 Kayne Anderson BDC, Inc. Consolidated Statements of Operations (amounts in 000’s, except share and per share amounts) For the years ended December 31, 2022 2021 Income: Investment income from investments: Interest income $ 74,829 $ 18,755 Total Investment Income 74,829 18,755 Expenses: Management fees 7,147 2,095 Incentive fees 4,698 65 Interest expense 20,292 4,455 Professional fees 645 597 Directors fees 460 307 Offering costs 29 257 Initial organization costs - 175 Other general and administrative expenses 1,379 677 Total Expenses 34,650 8,628 Net Investment Income (Loss) 40,179 10,127 Realized and unrealized gains (losses) on investments Net realized gains (losses): Investments 84 332 Total net realized gains (losses) 84 332 Net change in unrealized gains (losses): Investments 5,502 11,829 Total net change in unrealized gains (losses) 5,502 11,829 Total realized and unrealized gains (losses) 5,586 12,161 Net Increase (Decrease) in Net Assets Resulting from Operations $ 45,765 $ 22,288 Per Common Share Data: Basic and diluted net investment income per common share $ 1.48 $ 0.94 Basic and diluted net increase in net assets resulting from operations $ 1.68 $ 2.08 Weighted Average Common Shares Outstanding - Basic and Diluted 27,184,302 10,718,083 See accompanying notes to consolidated financial statements. F- 4 Kayne Anderson BDC, Inc. Consolidated Statements of Changes in Net Assets (amounts in 000’s) For the years ended December 31, 2022 2021 Increase (Decrease) in Net Assets Resulting from Operations: Net investment income (loss) $ 40,179 $ 10,127 Net realized gains (losses) on investments 84 332 Net change in unrealized gains (losses) on investments 5,502 11,829 Net Increase (Decrease) in Net Assets Resulting from Operations 45,765 22,288 Decrease in Net Assets Resulting from Stockholder Distributions Dividends and distributions to stockholders ( 39,553 ) ( 10,514 ) Net Decrease in Net Assets Resulting from Stockholder Distributions ( 39,553 ) ( 10,514 ) Increase in Net Assets Resulting from Capital Share Transactions Issuance of common shares 268,218 299,501 Reinvestment of distributions 5,642 1,492 Net Increase in Net Assets Resulting from Capital Share Transactions 273,860 300,993 Total Increase (Decrease) in Net Assets 280,072 312,767 Net Assets, Beginning of Period 311,969 ( 798 ) Net Assets, End of Period $ 592,041 $ 311,969 See accompanying notes to consolidated financial statements. F- 5 Kayne Anderson BDC, Inc. Consolidated Statements of Cash Flows (amounts in 000’s) For the years ended December 31, 2022 2021 Cash Flows from Operating Activities: Net increase (decrease) in net assets resulting from operations $ 45,765 $ 22,288 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 ( 84 ) ( 332 ) Net change in unrealized (gains)/losses on investments ( 5,502 ) ( 11,829 ) Net accretion of discount on investments ( 4,819 ) ( 1,175 ) Purchases of short-term investments, net ( 6,173 ) ( 3,674 ) Purchases of portfolio investments ( 718,236 ) ( 647,460 ) Proceeds from sales of investments and principal repayments 142,118 82,524 Paid-in-kind interest from portfolio investments ( 151 ) ( 173 ) Amortization of deferred financing cost 2,122 260 Increase/(decrease) in operating assets and liabilities: (Increase)/decrease in interest and dividends receivable ( 8,311 ) ( 2,133 ) (Increase)/decrease in deferred offering costs 29 202 (Increase)/decrease in receivable for principal payments on investments ( 111 ) - (Increase)/decrease in prepaid expenses and other assets ( 199 ) 29 Increase/(decrease) in payable for investments purchased 956 - Increase/(decrease) in management fees payable 1,463 952 Increase/(decrease) in incentive fee payable 4,697 65 Increase/(decrease) in payable to affiliate - ( 1,075 ) Increase/(decrease) in accrued organizational and offering costs, net ( 6 ) ( 135 ) Increase/(decrease) in accrued other general and administrative expenses 4,672 2,529 Net cash used in operating activities ( 541,770 ) ( 559,137 ) Cash Flows from Financing Activities: Borrowings on Corporate Credit Facility, net 269,000 - Borrowings on Revolving Funding Facility, net 200,000 - (Payments)/Borrowings on Loan and Security Agreement, net ( 162,000 ) 162,000 (Payments)/Borrowings on Subscription and Credit Agreement, net 3,000 105,000 Payments of debt issuance costs ( 6,859 ) ( 932 ) Distributions paid in cash ( 23,098 ) ( 4,407 ) Proceeds from issuance of common shares 268,218 299,501 Net cash provided by financing activities 548,261 561,162 Net increase in cash and cash equivalents 6,491 2,025 Cash and cash equivalents, beginning of period 2,035 10 Cash and cash equivalents, end of period $ 8,526 $ 2,035 Supplemental and Non-Cash Information: Interest paid during the period $ 14,211 $ 2,346 Non-cash financing activities not included herein consisted of reinvestment of dividends $ 5,642 $ 1,492 See accompanying notes to consolidated financial statements. F- 6 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2022 (amounts in 000’s) Maturity Principal / Amortized Fair Percentage Portfolio Company (1) Investment Interest Rate Date Par Cost (2)(3) Value of Net Assets Debt and Equity Investments Private Credit Investments (4) Aerospace & defense Basel U.S. Acquisition Co., Inc. (IAC) (5) First lien senior secured revolving loan 11.10 % (S + 6.50 %) 12/5/2028 $ - $ - $ - 0.0 % First lien senior secured loan 11.10 % (S + 6.50 %) 12/5/2028 18,681 18,180 18,681 3.1 % Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 11.73 % (S + 7.00 %) 4/1/2024 2,362 2,293 2,362 0.4 % First lien senior secured loan 11.73 % (S + 7.00 %) 4/1/2024 20,701 20,347 20,701 3.5 % Precinmac (US) Holdings, Inc. First lien senior secured delayed draw loan 10.42 % (S + 6.00 %) 8/31/2027 1,113 1,094 1,096 0.2 % First lien senior secured loan 10.42 % (S + 6.00 %) 8/31/2027 5,408 5,315 5,326 0.9 % 48,265 47,229 48,166 8.1 % Asset management & custody banks Atria Wealth Solutions, Inc. First lien senior secured delayed draw loan 10.84 % (S + 6.00 %) 2/29/2024 232 202 228 0.0 % First lien senior secured loan 10.84 % (S + 6.00 %) 2/29/2024 5,139 5,101 5,036 0.9 % 5,371 5,303 5,264 0.9 % Auto components Speedstar Holding LLC First lien senior secured loan 11.73 % (L + 7.00 %) 1/22/2027 4,908 4,828 4,908 0.8 % Vehicle Accessories, Inc. First lien senior secured revolving loan 12.00 % (P + 4.50 %) 11/30/2026 - - - 0.0 % First lien senior secured loan 10.34 % (S + 5.50 %) 11/30/2026 21,225 20,898 21,066 3.6 % 26,133 25,726 25,974 4.4 % Biotechnology Alcami Corporation (Alcami) First lien senior secured delayed draw loan 11.42 % (S + 7.00 %) 6/30/2024 - - - 0.0 % First lien senior secured revolving loan 11.42 % (S + 7.00 %) 12/21/2028 - - - 0.0 % First lien senior secured loan 11.42 % (S + 7.00 %) 12/21/2028 11,735 11,237 11,618 2.0 % 11,735 11,237 11,618 2.0 % Building products BCI Burke Holding Corp. First lien senior secured delayed draw loan 9.70 % (L + 5.50 %) 12/14/2023 639 615 642 0.1 % First lien senior secured loan 10.23 % (L + 5.50 %) 12/14/2027 16,489 16,256 16,572 2.8 % First lien senior secured revolving loan 10.23 % (L + 5.50 %) 6/14/2027 - - - 0.0 % Eastern Wholesale Fence First lien senior secured revolving loan 11.73 % (L + 7.00 %) 10/30/2025 1,275 1,252 1,275 0.2 % First lien senior secured loan 11.73 % (L + 7.00 %) 10/30/2025 21,239 20,778 21,239 3.6 % 39,642 38,901 39,728 6.7 % Chemicals Cyalume Technologies Holdings, Inc. First lien senior secured loan 9.73 % (L + 5.00 %) 8/30/2024 1,274 1,266 1,274 0.2 % Fralock Buyer LLC First lien senior secured revolving loan 10.23 % (L + 5.50 %) 4/17/2024 - - - 0.0 % First lien senior secured loan 10.23 % (L + 5.50 %) 4/17/2024 11,679 11,560 11,621 2.0 % Schrieve Chemical Company, LLC First lien senior secured loan 10.33 % (L + 6.00 %) 12/2/2024 609 597 609 0.1 % USALCO, LLC First lien senior secured revolving loan 10.38 % (L + 6.00 %) 10/19/2026 1,081 1,042 1,070 0.2 % First lien senior secured loan 10.73 % (L + 6.00 %) 10/19/2027 19,181 18,792 18,989 3.2 % 33,824 33,257 33,563 5.7 % Commercial services & supplies Advanced Environmental Monitoring (6) First lien senior secured loan 11.68 % (S + 7.00 %) 1/29/2026 10,158 9,918 10,158 1.7 % Allentown, LLC First lien senior secured delayed draw loan 10.42 % (S + 6.00 %) 10/22/2023 - - - 0.0 % First lien senior secured revolving loan 12.50 % (P + 5.00 %) 4/22/2027 357 348 347 0.1 % First lien senior secured loan 10.42 % (S + 6.00 %) 4/22/2027 7,663 7,588 7,452 1.3 % American Equipment Holdings LLC First lien senior secured delayed draw loan 10.88 % (S + 6.00 %) 11/5/2026 6,303 6,202 6,303 1.1 % First lien senior secured revolving loan 10.45 % (S + 6.00 %) 11/5/2026 1,610 1,559 1,610 0.3 % First lien senior secured delayed draw loan 9.33 % (S + 6.00 %) 11/5/2026 3,670 3,594 3,670 0.6 % First lien senior secured loan 10.51 % (S + 6.00 %) 11/5/2026 2,107 2,072 2,107 0.3 % First lien senior secured loan 10.88 % (S + 6.00 %) 11/5/2026 18,142 17,853 18,142 3.1 % Arborworks Acquisition LLC First lien senior secured revolving loan 11.41 % (L + 7.00 %) 11/9/2026 3,125 3,053 2,750 0.5 % First lien senior secured loan 11.56 % (L + 7.00 %) 11/9/2026 19,855 19,533 17,473 2.9 % BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured revolving loan 10.67 % (S + 6.25 %) 2/1/2027 604 577 596 0.1 % First lien senior secured loan 10.21 % (S + 6.50 %) 2/1/2027 6,176 6,027 6,099 1.0 % First lien senior secured loan 10.49 % (S + 6.25 %) 2/1/2027 16,372 16,097 16,168 2.7 % Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 11.44 % (S + 7.00 %) 5/7/2027 8,032 7,891 8,032 1.4 % First lien senior secured revolving loan 11.43 % (S + 7.00 %) 5/7/2027 - - - 0.0 % First lien senior secured loan 11.43 % (S + 7.00 %) 5/7/2027 4,795 4,647 4,795 0.8 % PMFC Holding, LLC First lien senior secured delayed draw loan 10.88 % (L + 6.50 %) 7/31/2023 2,818 2,811 2,818 0.5 % First lien senior secured loan 10.88 % (L + 6.50 %) 7/31/2023 5,619 5,604 5,619 0.9 % First lien senior secured revolving loan 11.18 % (L + 6.50 %) 7/31/2023 342 342 342 0.1 % Regiment Security Partners LLC First lien senior secured delayed draw loan 12.66 % (S + 8.00 %) 9/15/2023 2,635 2,593 2,635 0.4 % First lien senior secured loan 12.66 % (S + 8.00 %) 9/15/2026 6,461 6,358 6,461 1.1 % First lien senior secured revolving loan 12.66 % (S + 8.00 %) 9/15/2026 1,345 1,320 1,345 0.2 % The Kleinfelder Group, Inc. First lien senior secured loan 9.98 % (L + 5.25 %) 11/30/2024 12,760 12,678 12,697 2.1 % 140,949 138,665 137,619 23.2 % See accompanying notes to consolidated financial statements. F- 7 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2022 (amounts in 000’s) Maturity Principal / Amortized Fair Percentage Portfolio Company (1) Investment Interest Rate Date Par Cost (2)(3) Value of Net Assets Containers & packaging Drew Foam Companies, Inc. First lien senior secured loan 11.48 % (S + 6.75 %) 11/5/2025 7,375 7,288 7,375 1.2 % First lien senior secured loan 10.89 % (S + 6.75 %) 11/5/2025 20,964 20,564 20,964 3.6 % FCA, LLC (FCA Packaging) First lien senior secured revolving loan 9.46 % (S + 6.50 %) 7/18/2028 - - - 0.0 % First lien senior secured loan 9.46 % (S + 6.50 %) 7/18/2028 23,382 23,004 23,616 4.0 % 51,721 50,856 51,955 8.8 % Diversified telecommunication services Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 9.48 % (S + 4.75 %) 11/30/2024 5,249 5,187 5,249 0.9 % Pavion Corp., f/k/a Corbett Technology Solutions, Inc. First lien senior secured revolving loan 9.14 % (S + 5.00 %) 10/29/2027 572 442 563 0.1 % First lien senior secured delayed draw loan 9.66 % (S + 5.00 %) 10/29/2027 9,434 9,354 9,293 1.6 % First lien senior secured loan 9.58 % (S + 5.00 %) 10/29/2027 1,742 1,727 1,716 0.3 % First lien senior secured loan 9.24 % (S + 5.00 %) 10/29/2027 13,429 13,188 13,227 2.2 % 30,426 29,898 30,048 5.1 % Electronic equipment, instruments & components Process Insights, Inc. First lien senior secured loan 10.49 % (S + 6.00 %) 10/30/2025 3,044 2,993 3,021 0.5 % 3,044 2,993 3,021 0.5 % Food products BC CS 2, L.P. (Cuisine Solutions) (5) First lien senior secured loan 12.18 % (S + 8.00 %) 7/8/2028 25,000 24,283 25,000 4.2 % BR PJK Produce, LLC (Keany) First lien senior secured loan 10.47 % (S + 6.25 %) 11/14/2027 29,863 29,095 29,863 5.0 % First lien senior secured delayed draw loan 10.47 % (S + 6.25 %) 5/14/2024 - - - 0.0 % Gulf Pacific Holdings, LLC First lien senior secured delayed draw loan 10.73 % (S + 6.00 %) 9/30/2024 - - - 0.0 % First lien senior secured revolving loan 10.42 % (S + 6.00 %) 9/30/2028 1,498 1,384 1,498 0.3 % First lien senior secured loan 10.73 % (S + 6.00 %) 9/30/2028 20,384 19,905 20,384 3.5 % IF&P Foods, LLC (FreshEdge) (6) First lien senior secured delayed draw loan 8.91 % (S + 5.25 %) 10/3/2024 - - - 0.0 % First lien senior secured revolving loan 8.91 % (S + 5.25 %) 10/3/2028 1,366 1,187 1,366 0.2 % First lien senior secured loan 8.91 % (S + 5.25 %) 10/3/2028 27,520 26,853 27,520 4.7 % Siegel Egg Co., LLC First lien senior secured revolving loan 9.25 % (L + 5.50 %) 12/29/2026 1,923 1,873 1,913 0.3 % First lien senior secured loan 9.25 % (L + 5.50 %) 12/29/2026 15,624 15,383 15,546 2.6 % 123,178 119,963 123,090 20.8 % Health care providers & services Brightview, LLC First lien senior secured delayed draw loan 10.14 % (L + 5.75 %) 12/14/2026 1,736 1,714 1,719 0.3 % First lien senior secured revolving loan 10.13 % (L + 5.75 %) 12/14/2026 - - - 0.0 % First lien senior secured loan 10.13 % (L + 5.75 %) 12/14/2026 13,002 12,923 12,872 2.2 % Guardian Dentistry Partners First lien senior secured delayed draw loan 10.94 % (S + 6.50 %) 8/20/2026 21,708 21,402 21,708 3.7 % First lien senior secured loan 10.94 % (S + 6.50 %) 8/20/2026 8,139 7,961 8,139 1.4 % Light Wave Dental Management LLC First lien senior secured delayed draw loan 11.32 % (S + 6.50 %) 12/31/2023 9,559 9,437 9,559 1.6 % First lien senior secured loan (7) 30.00 % 9/30/2023 6,254 6,254 6,254 1.0 % First lien senior secured revolving loan 11.32 % (S + 6.50 %) 12/31/2023 558 555 558 0.1 % First lien senior secured loan 11.32 % (S + 6.50 %) 12/31/2023 12,941 12,851 12,941 2.1 % OMH-HealthEdge Holdings, LLC First lien senior secured loan 10.03 % (L + 5.25 %) 10/24/2025 17,572 17,271 17,572 3.0 % SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 9.93 % (S + 6.00 %) 12/30/2026 11,136 10,941 11,136 1.9 % First lien senior secured loan 9.93 % (S + 6.00 %) 12/30/2026 11,948 11,725 11,948 2.0 % First lien senior secured revolving loan 9.93 % (S + 6.00 %) 12/30/2026 - - - 0.0 % 114,553 113,034 114,406 19.3 % See accompanying notes to consolidated financial statements. F- 8 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2022 (amounts in 000’s) Maturity Principal / Amortized Fair Percentage Portfolio Company (1) Investment Interest Rate Date Par Cost (2)(3) Value of Net Assets Healthcare equipment & supplies LSL Industries, LLC (LSL Healthcare) First lien senior secured delayed draw loan 10.90 % (S + 6.50 %) 11/3/2024 - - - 0.0 % First lien senior secured revolving loan 10.90 % (S + 6.50 %) 11/3/2027 - - - 0.0 % First lien senior secured loan 10.90 % (S + 6.50 %) 11/3/2027 19,727 19,001 19,727 3.3 % 19,727 19,001 19,727 3.3 % Household durables Curio Brands, LLC First lien senior secured delayed draw loan 10.23 % (L + 5.50 %) 12/21/2027 3,296 3,296 3,230 0.5 % First lien senior secured revolving loan 10.23 % (L + 5.50 %) 12/21/2027 - - - 0.0 % First lien senior secured loan 10.23 % (L + 5.50 %) 12/21/2027 18,009 17,596 17,648 3.0 % 21,305 20,892 20,878 3.5 % Household products Home Brands Group Holdings, Inc. (ReBath) First lien senior secured revolving loan 9.16 % (L + 4.75 %) 11/8/2026 - - - 0.0 % First lien senior secured loan 9.16 % (L + 4.75 %) 11/8/2026 19,046 18,706 18,951 3.2 % 19,046 18,706 18,951 3.2 % Insurance Allcat Claims Service, LLC First lien senior secured delayed draw loan 10.24 % (S + 6.00 %) 7/7/2027 5,396 5,127 5,396 0.9 % First lien senior secured revolving loan 10.33 % (S + 6.00 %) 7/7/2027 1,651 1,591 1,651 0.3 % First lien senior secured loan 10.41 % (S + 6.00 %) 7/7/2027 7,795 7,641 7,795 1.3 % 14,842 14,359 14,842 2.5 % IT services Domain Information Services Inc. (Integris) First lien senior secured loan 10.63 % (S + 6.25 %) 9/30/2025 20,632 20,133 20,632 3.5 % Improving Acquisition LLC First lien senior secured revolving loan 10.24 % (S + 6.00 %) 7/26/2027 - - - 0.0 % First lien senior secured loan 10.24 % (S + 6.00 %) 7/26/2027 24,260 23,754 24,260 4.1 % 44,892 43,887 44,892 7.6 % Leisure products MacNeill Pride Group First lien senior secured delayed draw loan 11.09 % (S + 6.25 %) 4/22/2026 4,119 4,061 4,017 0.7 % First lien senior secured loan 11.09 % (S + 6.25 %) 4/22/2026 8,619 8,533 8,403 1.4 % First lien senior secured revolving loan 11.09 % (S + 6.25 %) 4/22/2026 899 874 877 0.1 % Trademark Global LLC First lien senior secured revolving loan 11.88 % (L + 7.50%), 4.50% is PIK 7/30/2024 2,760 2,744 2,574 0.4 % First lien senior secured revolving loan 11.88 % (L + 7.50%), 4.50% is PIK 7/30/2024 29 21 27 0.1 % First lien senior secured loan 11.88 % (L + 7.50%), 4.50% is PIK 7/30/2024 11,516 11,451 10,739 1.8 % 27,942 27,684 26,637 4.5 % Machinery Pennsylvania Machine Works, LLC First lien senior secured loan 11.09 % (S + 6.25 %) 3/6/2027 2,009 1,991 2,009 0.3 % PVI Holdings, Inc First lien senior secured loan 10.12 % (S + 6.38 %) 7/18/2027 24,124 23,763 24,124 4.1 % 26,133 25,754 26,133 4.4 % Personal products DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured revolving loan 10.48 % (L + 5.75 %) 11/1/2025 - - - 0.0 % First lien senior secured loan 10.48 % (L + 5.75 %) 11/1/2025 11,377 11,295 11,149 1.9 % PH Beauty Holdings III, Inc. First lien senior secured loan 9.73 % (L + 5.00 %) 9/28/2025 9,542 9,277 9,113 1.5 % 20,919 20,572 20,262 3.4 % Pharmaceuticals Foundation Consumer Brands First lien senior secured revolving loan 10.15 % (L + 5.50 %) 2/12/2027 - - - 0.0 % First lien senior secured loan 10.15 % (L + 5.50 %) 2/12/2027 7,331 7,276 7,331 1.2 % 7,331 7,276 7,331 1.2 % See accompanying notes to consolidated financial statements. F- 9 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2022 (amounts in 000’s) Maturity Principal / Amortized Fair Percentage Portfolio Company (1) Investment Interest Rate Date Par Cost (2)(3) Value of Net Assets Professional services 4 Over International, LLC First lien senior secured loan 10.73 % (L + 6.00 %) 12/7/2023 24,326 24,013 24,205 4.1 % DISA Holdings Corp. (DISA) First lien senior secured delayed draw loan 9.73 % (S + 5.50 %) 9/9/2028 2,443 2,283 2,430 0.4 % First lien senior secured revolving loan 9.82 % (S + 5.50 %) 9/9/2028 56 1 56 0.0 % First lien senior secured loan 9.72 % (S + 5.50 %) 9/9/2028 22,401 21,741 22,289 3.8 % Universal Marine Medical Supply International, LLC (Unimed) First lien senior secured revolving loan 12.14 % (S + 7.50 %) 12/5/2027 509 446 509 0.1 % First lien senior secured loan 12.10 % (S + 7.50 %) 12/5/2027 14,756 14,395 14,756 2.5 % 64,491 62,879 64,245 10.9 % Software AIDC Intermediate Co 2, LLC (Peak Technologies) First lien senior secured loan 10.44 % (S + 6.25 %) 7/22/2027 35,000 33,835 35,000 5.9 % 35,000 33,835 35,000 5.9 % Specialty retail Sundance Holdings Group, LLC (6) First lien senior secured loan 10.73 % (L + 6.00 %) 5/1/2024 8,743 8,548 8,656 1.5 % 8,743 8,548 8,656 1.5 % Textiles, apparel & luxury goods American Soccer Company, Incorporated (SCORE) First lien senior secured revolving loan 11.91 % (S + 7.25 %) 7/20/2027 1,892 1,795 1,892 0.3 % First lien senior secured loan 11.98 % (S + 7.25 %) 7/20/2027 30,119 29,478 30,119 5.1 % BEL USA, LLC First lien senior secured loan 10.43 % (S + 6.00 %) 2/2/2025 7,006 6,937 6,936 1.2 % YS Garments, LLC First lien senior secured loan 9.51 % (L + 5.50 %) 8/9/2024 7,706 7,608 7,706 1.3 % 46,723 45,818 46,653 7.9 % Trading companies & distributors BCDI Meteor Acquisition, LLC (Meteor) First lien senior secured loan 11.66 % (S + 7.00 %) 6/29/2028 16,420 16,010 16,420 2.8 % Broder Bros., Co. First lien senior secured loan 10.73 % (L + 6.00 %) 12/4/2025 4,763 4,456 4,763 0.8 % CGI Automated Manufacturing, LLC First lien senior secured delayed draw loan 11.34 % (S + 6.50 %) 12/17/2026 3,710 3,566 3,710 0.6 % First lien senior secured loan 11.34 % (S + 6.50 %) 12/17/2026 27,896 26,809 27,896 4.7 % First lien senior secured revolving loan 11.34 % (S + 6.50 %) 12/17/2026 - - - 0.0 % EIS Legacy, LLC First lien senior secured delayed draw loan 9.73 % (L + 5.00 %) 5/1/2023 - - - 0.0 % First lien senior secured revolving loan 9.73 % (L + 5.00 %) 11/1/2027 - - - 0.0 % First lien senior secured loan 9.73 % (L + 5.00 %) 11/1/2027 18,277 17,885 18,140 3.1 % Genuine Cable Group, LLC First lien senior secured loan 10.17 % (S + 5.75 %) 11/1/2026 34,912 33,732 34,476 5.8 % I.D. Images Acquisition, LLC First lien senior secured loan 10.98 % (S + 6.25 %) 7/30/2026 15,415 15,236 15,415 2.6 % First lien senior secured loan 10.67 % (S + 6.25 %) 7/30/2026 4,743 4,651 4,743 0.8 % First lien senior secured delayed draw loan 10.98 % (S + 6.25 %) 7/30/2026 2,608 2,587 2,608 0.4 % First lien senior secured revolving loan 10.67 % (S + 6.25 %) 7/30/2026 596 567 596 0.1 % Refrigeration Sales Corp. First lien senior secured loan 11.26 % (L + 6.50 %) 6/22/2026 6,876 6,789 6,876 1.2 % United Safety & Survivability Corporation (USSC) First lien senior secured delayed draw loan 11.41 % (S + 6.75 %) 9/30/2027 670 628 670 0.1 % First lien senior secured revolving loan 10.88 % (S + 6.25 %) 9/30/2027 1,075 1,051 1,075 0.2 % First lien senior secured loan 11.48 % (S + 6.75 %) 9/30/2027 12,563 12,332 12,563 2.1 % 150,524 146,299 149,951 25.3 % Wireless telecommunication services Centerline Communications, LLC First lien senior secured loan 9.93 % (S + 5.50 %) 8/10/2027 1,031 1,000 1,026 0.2 % First lien senior secured delayed draw loan 10.06 % (S + 5.50 %) 8/10/2027 7,116 6,999 7,080 1.2 % First lien senior secured delayed draw loan 9.93 % (S + 5.50 %) 8/10/2027 6,265 6,148 6,233 1.1 % First lien senior secured revolving loan 10.06 % (S + 5.50 %) 8/10/2027 - - - 0.0 % First lien senior secured loan 10.06 % (S + 5.50 %) 8/10/2027 15,098 14,819 15,022 2.5 % 29,510 28,966 29,361 5.0 % Total Private Credit Debt Investments 1,165,969 1,141,538 1,157,971 195.6 % See accompanying notes to consolidated financial statements. F- 10 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2022 (amounts in 000’s) Number of Fair Percentage Units Cost Value of Net Assets Equity Investments Auto components Vehicle Accessories, Inc. - Class A common (8) 128.250 - 80 0.0 % Vehicle Accessories, Inc. - preferred (8) 250.000 250 268 0.1 % 378.250 250 348 0.1 % Commercial services & supplies American Equipment Holdings LLC (9) 250.000 250 248 0.0 % BLP Buyer, Inc. (Bishop Lifting Products) - Class A common (10) 500.000 500 560 0.1 % 750.000 750 808 0.1 % Food products BC CS 2, L.P. (Cuisine Solutions) (5) 2,000.000 2,000 2,220 0.4 % IF&P Foods, LLC (FreshEdge) – Class A common (9) 0.750 750 745 0.1 % IF&P Foods, LLC (FreshEdge) – Class B common (9) 0.750 - - 0.0 % Gulf Pacific Holdings, LLC - Class A common (9) 0.250 250 278 0.0 % Gulf Pacific Holdings, LLC - Class C common (9) 0.250 - - 0.0 % Siegel Parent, LLC (11) 0.250 250 496 0.1 % 2,002.250 3,250 3,739 0.6 % Healthcare equipment & supplies LSL Industries, LLC (LSL Healthcare) (9) 7.500 750 745 0.1 % 7.500 750 745 0.1 % IT services Domain Information Services Inc. (Integris) 250.000 250 250 0.0 % 250.000 250 250 0.0 % Textiles, apparel & luxury goods American Soccer Company, Incorporated (SCORE) (11) 1,000.000 1,000 1,258 0.2 % 1,000.000 1,000 1,258 0.2 % Total Private Equity Investments 4,388.000 6,250 7,148 1.1 % Total Private Investments 1,147,788 1,165,119 196.7 % Number of Fair Percentage Shares Cost Value of Net Assets Short-Term Investments First American Treasury Obligations Fund - Institutional Class Z, 4.16% (12) 9,847 9,847 9,847 1.7 % Total Short-Term Investments 9,847 9,847 9,847 1.7 % Total Investments $ 1,157,635 $ 1,174,966 198.4 % Liabilities in Excess of Other Assets ( 582,925 ) ( 98.4 )% Net Assets $ 592,041 100.0 % (1) As of December 31, 2022, 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, 2022, 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), the Secured Overnight Funding Rate (“SOFR” or “S”) (which can include one-, three- or six-month SOFR), or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate or “P”). (5) Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2022, 3.8% of the Company’s total assets were in non-qualifying investments. (6) 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. (7) On December 5, 2022, the Company funded a $6,254 first lien senior secured loan in Light Wave Dental Management LLC. The loan has an annual interest rate of 30% with a minimum of 1.3x MOIC (multiple on invested capital) if the loan is repaid prior to June 6, 2023 with further increases above 1.3x thereafter. The interest and the prepayment premium are payable to the Company upon a triggering event or maturity in September 2023. (8) The Company owns 0.19% of the common equity and 0.43% of the preferred equity of Vehicle Accessories, Inc. (9) The Company owns 71% of a pass-through, taxable limited liability company, KSCF IV Equity Aggregator Blocker, LLC (the “Aggregator Blocker”), which holds the Company’s equity investments in American Equipment Holdings LLC, Gulf Pacific Holdings, LLC, IF&P Foods, LLC (FreshEdge) and LSL Industries, LLC (LSL Healthcare). Through the Company’s ownership of the Aggregator Blocker, the Company owns the respective units of each company listed above in the Schedule of Investments. (10) The Company owns 0.53% of the common equity BLP Buyer, Inc. (Bishop Lifting Products). (11) The Company owns 40% of a pass-through limited liability company, KSCF IV Equity Aggregator, LLC (the “Aggregator”), which holds the Company’s equity investments in Siegel Parent, LLC and American Soccer Company, Incorporated (SCORE). The Aggregator’s ownership of Siegel Parent, LLC is 1.1442%. Through the Company’s ownership of the Aggregator, the Company owns the respective units of each company listed above in the Schedule of Investments. (12) The indicated rate is the yield as of December 31, 2022. See accompanying notes to consolidated financial statements. F- 11 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2021 (amounts in 000’s) Maturity Principal / Amortized Fair Percentage Portfolio Company (1) Investment Interest Rate Date Par Cost (2)(3) Value of Net Assets Debt and Equity Investments Private Credit Investments (4) Automobiles & components Speedstar Holding LLC First lien senior secured loan 8.00 % (L + 7.00 %) 1/22/2027 $ 5,005 $ 4,906 $ 5,055 1.6 % First lien senior secured delayed draw loan 8.00 % (L + 7.00 %) 1/22/2027 - - - 0.0 % Vehicle Accessories, Inc. First lien senior secured loan 6.50 % (L + 5.50 %) 11/30/2026 18,382 18,034 18,382 5.9 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 11/30/2026 - - - 0.0 % 23,387 22,940 23,437 7.5 % Capital goods Blade (US) Holdings, Inc. First lien senior secured loan 7.00 % (L + 6.00 %) 8/31/2027 4,866 4,763 4,866 1.6 % First lien senior secured delayed draw loan 7.00 % (L + 6.00 %) 3/3/2023 - - - 0.0 % Broder Bros., Co. First lien senior secured loan 8.00 % (L + 7.00 %) 12/2/2022 5,369 5,044 5,369 1.7 % CGI Automated Manufacturing, LLC First lien senior secured loan 6.50 % (L + 5.50 %) 12/17/2026 18,478 18,020 18,478 5.9 % First lien senior secured delayed draw loan 6.50 % (L + 5.50 %) 12/17/2026 - - - 0.0 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 12/17/2026 - - - 0.0 % Eastern Wholesale Fence First lien senior secured revolving loan 8.00 % (L + 7.00 %) 10/30/2025 1,035 1,002 1,035 0.3 % First lien senior secured loan 8.00 % (L + 7.00 %) 10/30/2025 3,317 3,210 3,317 1.1 % First lien senior secured loan 8.00 % (L + 7.00 %) 10/30/2025 18,384 17,873 18,384 5.9 % EIS Legacy, LLC First lien senior secured loan 6.50 % (L + 5.50 %) 11/1/2027 18,462 17,998 18,462 5.9 % First lien senior secured delayed draw loan 6.50 % (L + 5.50 %) 11/1/2027 - - - 0.0 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 11/1/2027 - - - 0.0 % Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 8.00 % (L + 7.00 %) 4/1/2022 2,205 2,194 2,205 0.7 % First lien senior secured loan 8.00 % (L + 7.00 %) 4/1/2022 1,942 1,939 1,942 0.6 % I.D. Images Acquisition, LLC First lien senior secured delayed draw loan 7.25 % (L + 6.25 %) 1/30/2023 2,634 2,609 2,634 0.9 % First lien senior secured revolving loan 7.25 % (L + 6.25 %) 7/30/2026 450 420 450 0.2 % First lien senior secured loan 7.25 % (L + 6.25 %) 7/30/2026 15,570 15,353 15,570 5.0 % Refrigeration Sales Corp. First lien senior secured loan 7.50 % (L + 6.50 %) 6/22/2026 6,945 6,835 6,945 2.2 % United Safety & Survivability Corporation (USSC) First lien senior secured loan 7.00 % (L + 6.00 %) 9/30/2027 12,690 12,439 12,690 4.1 % First lien senior secured revolving loan 7.00 % (L + 6.00 %) 9/30/2027 402 379 402 0.1 % First lien senior secured delayed draw loan 7.00 % (L + 6.00 %) 9/30/2023 - - - 0.0 % 112,749 110,078 112,749 36.2 % Commercial & professional services 4 Over International, LLC First lien senior secured loan 7.50 % (L + 6.50 %) 10/29/2027 24,875 24,249 24,875 8.0 % Advanced Environmental Monitoring (5) First lien senior secured loan 8.00 % (L + 7.00 %) 1/29/2026 7,372 7,159 7,372 2.4 % American Equipment Holdings LLC First lien senior secured delayed draw loan 7.00 % (L + 6.00 %) 11/3/2026 6,367 6,242 6,367 2.1 % First lien senior secured revolving loan 7.00 % (L + 6.00 %) 11/3/2026 425 383 425 0.1 % First lien senior secured loan 7.00 % (L + 6.00 %) 11/3/2026 16,511 16,188 16,511 5.3 % Arborworks Acquisition LLC First lien senior secured revolving loan 7.00 % (L + 6.00 %) 11/9/2026 1,469 1,378 1,469 0.5 % First lien senior secured loan 8.00 % (L + 7.00 %) 11/9/2026 20,312 19,914 20,312 6.5 % Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 7.00 % (L + 6.00 %) 5/7/2027 4,737 4,641 4,737 1.5 % First lien senior secured revolving loan 7.00 % (L + 6.00 %) 5/7/2027 - - - 0.0 % First lien senior secured loan 7.00 % (L + 6.00 %) 5/7/2027 3,500 3,388 3,500 1.1 % PMFC Holding, LLC First lien senior secured delayed draw loan 7.50 % (L + 6.50 %) 7/31/2023 2,847 2,829 2,847 0.9 % First lien senior secured loan 7.50 % (L + 6.50 %) 7/31/2023 5,676 5,639 5,676 1.8 % First lien senior secured revolving loan 7.50 % (L + 6.50 %) 7/31/2023 - - - 0.0 % Regiment Security Partners LLC First lien senior secured loan 8.00 % (L + 7.00 %) 9/15/2026 6,539 6,389 6,539 2.1 % First lien senior secured delayed draw loan 8.00 % (L + 7.00 %) 9/15/2023 - - - 0.0 % First lien senior secured revolving loan 8.00 % (L + 7.00 %) 9/15/2026 - - - 0.0 % The Kleinfelder Group, Inc. First lien senior secured loan 6.25 % (L + 5.25 %) 11/15/2027 12,889 12,766 12,889 4.1 % 113,519 111,165 113,519 36.4 % Consumer durables & apparel BCI Burke Holding Corp. First lien senior secured loan 6.75 % (L + 5.75 %) 12/14/2027 17,303 16,997 17,303 5.5 % First lien senior secured revolving loan 6.75 % (L + 5.75 %) 6/14/2027 389 360 389 0.1 % First lien senior secured delayed draw loan 6.75 % (L + 5.75 %) 12/14/2023 - - - 0.0 % BEL USA, LLC First lien senior secured loan 9.50 % (L + 8.00 %) 11/2/2023 148 147 146 0.0 % First lien senior secured loan 8.50 % (L + 7.00%, includes 1.275% PIK) 11/2/2023 8,988 8,835 8,853 2.8 % Curio Brands, LLC First lien senior secured loan 6.50 % (L + 5.50 %) 12/21/2027 18,054 17,575 18,054 5.8 % First lien senior secured delayed draw loan 6.50 % (L + 5.50 %) 12/21/2023 - - - 0.0 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 12/21/2027 - - - 0.0 % MacNeill Pride Group First lien senior secured revolving loan 7.50 % (L + 6.50 %) 4/22/2026 1,429 1,407 1,429 0.5 % First lien senior secured delayed draw loan 7.50 % (L + 6.50 %) 4/22/2026 1,961 1,937 1,961 0.6 % First lien senior secured loan 7.50 % (L + 6.50 %) 4/22/2026 8,706 8,598 8,706 2.8 % New Era Cap Company, Inc. First lien senior secured loan 7.50 % (L + 6.50 %) 9/10/2023 12,724 12,624 12,724 4.1 % Trademark Global LLC First lien senior secured loan 7.00 % (L + 6.00 %) 7/30/2024 11,510 11,404 11,510 3.7 % First lien senior secured revolving loan 7.00 % (L + 6.00 %) 7/30/2024 2,280 2,254 2,280 0.7 % First lien senior secured delayed draw loan 7.00 % (L + 6.00 %) 7/30/2023 - - - 0.0 % YS Garments, LLC First lien senior secured loan 7.00 % (L + 6.00 %) 8/9/2024 7,936 7,779 7,936 2.6 % 91,428 89,917 91,291 29.2 % Diversified financials Atria Wealth Solutions, Inc. First lien senior secured loan 7.00 % (L + 6.00 %) 11/30/2022 5,191 5,156 5,191 1.7 % 5,191 5,156 5,191 1.7 % See accompanying notes to financial statements. F- 12 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2021 (amounts in 000’s) Maturity Principal / Amortized Fair Percentage Portfolio Company (1) Investment Interest Rate Date Par Cost (2)(3) Value of Net Assets Debt and Equity Investments Private Credit Investments (4) Automobiles & components Food & beverage Siegel Egg Co., LLC First lien senior secured loan 7.00 % (L + 6.00 %) 12/29/2026 15,742 15,450 15,742 5.1 % First lien senior secured revolving loan 7.00 % (L + 6.00 %) 12/29/2026 1,029 966 1,029 0.3 % 16,771 16,416 16,771 5.4 % Health care equipment & services Brightview, LLC First lien senior secured loan 6.75 % (L + 5.75 %) 4/12/2024 13,133 12,956 13,133 4.2 % First lien senior secured delayed draw loan 6.75 % (L + 5.75 %) 4/12/2024 - - - 0.0 % First lien senior secured revolving loan 6.75 % (L + 5.75 %) 4/12/2024 - - - 0.0 % Dermatologists of Southwestern Ohio, LLC First lien senior secured loan 9.50 % (L + 8.50 %) 4/20/2022 1,282 1,270 1,282 0.4 % Guardian Dentistry Partners First lien senior secured loan 6.75 % (L + 5.75 %) 8/20/2026 8,222 7,860 8,222 2.6 % First lien senior secured delayed draw loan 6.75 % (L + 5.75 %) 8/20/2026 - - - 0.0 % OMH-HealthEdge Holdings, LLC First lien senior secured loan 6.50 % (L + 5.25 %) 10/24/2025 12,375 12,138 12,375 4.0 % SGA Dental Partners Holdings, LLC First lien senior secured loan 6.50 % (L + 5.50 %) 12/30/2026 12,069 11,681 12,069 3.9 % First lien senior secured delayed draw loan 6.50 % (L + 5.50 %) 12/30/2026 - - - 0.0 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 12/30/2026 - - - 0.0 % West Dermatology Management Holdings, LLC First lien senior secured loan 7.00 % (L + 6.00 %) 2/11/2025 1,975 1,957 1,975 0.6 % 49,056 47,862 49,056 15.7 % Household & personal products DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured loan 6.75 % (L + 5.75 %) 11/1/2025 12,129 12,014 12,129 3.9 % First lien senior secured revolving loan 6.75 % (L + 5.75 %) 11/1/2025 - - - 0.0 % Home Brands Group Holdings, Inc. (ReBath) First lien senior secured loan 6.00 % (L + 5.00 %) 11/8/2026 20,988 20,537 20,988 6.7 % First lien senior secured revolving loan 6.00 % (L + 5.00 %) 11/8/2026 - - - 0.0 % PH Beauty Holdings III, Inc. First lien senior secured loan 5.18 % (L + 5.00 %) 9/28/2025 9,642 9,287 9,642 3.1 % 42,759 41,838 42,759 13.7 % Materials Cyalume Technologies Holdings, Inc. First lien senior secured loan 6.50 % (L + 5.50 %) 8/30/2024 1,657 1,644 1,657 0.5 % Drew Foam Companies, Inc. First lien senior secured loan 7.00 % (L + 6.00 %) 11/5/2025 7,450 7,360 7,450 2.4 % Fralock Buyer LLC First lien senior secured loan 6.50 % (L + 5.50 %) 4/17/2024 9,251 9,091 9,251 3.0 % First lien senior secured loan 6.50 % (L + 5.50 %) 4/17/2024 2,453 2,413 2,453 0.8 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 4/17/2024 - - - 0.0 % USALCO, LLC First lien senior secured revolving loan 7.00 % (L + 6.00 %) 10/19/2026 191 142 191 0.1 % First lien senior secured loan 7.00 % (L + 6.00 %) 10/19/2027 19,375 18,918 19,375 6.2 % 40,377 39,568 40,377 13.0 % Pharmaceuticals, biotech & life sciences Foundation Consumer Brands First lien senior secured loan 7.38 % (L + 6.38 %) 2/12/2027 8,485 8,407 8,485 2.7 % First lien senior secured revolving loan 7.38 % (L + 6.38 %) 2/12/2027 - - - 0.0 % 8,485 8,407 8,485 2.7 % Retailing Sundance Holdings Group, LLC (5) First lien senior secured loan 7.00 % (L + 6.00 %) 5/1/2024 9,522 9,164 9,522 3.1 % 9,522 9,164 9,522 3.1 % Software & services Improving Acquisition LLC First lien senior secured loan 7.50 % (L + 6.50 %) 7/26/2024 603 598 603 0.2 % Peak Technologies First lien senior secured loan 8.09 % (L + 7.09 %) 4/1/2026 12,800 12,678 12,800 4.1 % First lien senior secured loan 7.50 % (L + 6.50 %) 4/1/2026 662 649 662 0.2 % 14,065 13,925 14,065 4.5 % Telecommunication services Centerline Communications, LLC First lien senior secured loan 6.50 % (L + 5.50 %) 8/10/2027 9,265 9,082 9,265 3.0 % First lien senior secured delayed draw loan 6.50 % (L + 5.50 %) 8/10/2023 5,746 5,622 5,746 1.9 % First lien senior secured revolving loan 6.50 % (L + 5.50 %) 8/10/2027 1,200 1,166 1,200 0.4 % First lien senior secured loan 6.50 % (L + 5.50 %) 8/10/2027 5,985 5,870 5,985 1.9 % Corbett Technology Solutions, Inc. First lien senior secured revolving loan 6.00 % (L + 5.00 %) 10/29/2027 381 248 381 0.1 % First lien senior secured delayed draw loan 6.00 % (L + 5.00 %) 4/29/2023 9,530 9,435 9,530 3.1 % First lien senior secured loan 6.00 % (L + 5.00 %) 10/27/2027 13,564 13,298 13,564 4.3 % Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 6.00 % (L + 5.00 %) 4/5/2026 5,302 5,209 5,302 1.7 % 50,973 49,930 50,973 16.4 % Total Private Credit Debt Investments 578,282 566,366 578,195 185.5 % See accompanying notes to financial statements. F- 13 Kayne Anderson BDC, Inc. Consolidated Schedule of Investments As of December 31, 2021 (amounts in 000’s) Number of Units Cost Fair Value Percentage of Net Assets Equity Investments Food & beverage Siegel Parent, LLC (6) 0.250 250 250 0.1 % Total Private Equity Investments 0.250 250 250 0.1 % Total Private Investments $ 566,616 $ 578,445 185.6 % Number of Fair Percentage Shares Cost Value of Net Assets Short-Term Investments First American Treasury Obligations Fund - Institutional Class Z, 0.01% (7) 3,674 3,674 3,674 1.2 % Total Short-Term Investments 3,674 3,674 3,674 1.2 % Total Investments $ 570,290 $ 582,119 186.8 % Liabilities in Excess of Other Assets ( 270,150 ) ( 86.8 )% Net Assets $ 311,969 100.0 % (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 Prime Rate). (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. (6) The 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. F- 14 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 1. Organization Organization 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 corporation to make investments in middle-market companies and commenced operations on February 5, 2021. As of December 31, 2022, the Company has entered into subscription agreements with investors for an aggregate capital commitment of $ 808,212 to purchase shares of the Company’s common stock. 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”). The Advisor is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under the Investment Advisory Act of 1940, as amended. 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, determining the value of the investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of seven directors, four of whom are independent. See Note 12 – Subsequent Events. 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 the Company. 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. F- 15 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 2. Significant Accounting Policies A. 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 — Investment 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. B. 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. C. 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. D. 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. E. 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”). In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, establishing requirements to determine fair value in good faith for purposes of the 1940 Act. Pursuant to Rule 2a-5 and effective September 1, 2022, the Board of Directors designated the Advisor as the “valuation designee” to perform fair value determinations of the Company’s portfolio holdings, subject to oversight by and periodic reporting to the Board. The valuation designee will perform fair valuation of the Company’s portfolio holdings in accordance with the Company’s Valuation Program, as approved by the Board. The Advisor’s internal valuation process did not materially change as a result of Rule 2a-5. 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 bid prices. F- 16 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 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 Advisor, the following valuation process is used for the Company’s Level 3 investments: ● Valuation Designee . The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time such investment was made. The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio company or investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs to determine a preliminary value. The Advisor will specify the titles of the persons responsible for determining the fair value of Company investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments. ● Valuation Firm. Quarterly, third-party valuation firms engaged by the Advisor review the valuation methodologies and calculations employed for each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25 % of the Company’s remaining investments. The third-party valuation firms will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The quarterly report issued by these third-party valuation firms will provide positive assurance on the fair values of the investments reviewed. ● Oversight. The Board has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to review the fair value determinations, processes and written reports of the Advisor and third-party valuation firms as part of the Board’s oversight responsibilities. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to the Company’s 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. F. 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 principal. 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. F- 17 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 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 current. 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. G. 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. H. 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. I. 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. J. 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. K. 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. The 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. 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. To 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 of such year, payable to stockholders of record on a date during such months and paid by the Company no later than January of the following year. Any such 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. F- 18 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) 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” to be 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. L. LIBOR Transition — The U.K. Financial Conduct Authority (“FCA”) announced that certain London Interbank Offered Rate (“LIBOR”) tenors in certain currencies ceased 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. The LIBOR transition has become increasingly well-defined in advance of its anticipated discontinuation, but uncertainty remains related to the liquidity impact of the change in rates, and how to appropriately adjust these rates at the time of transition. At this time, it is not possible to predict fully the ultimate outcome of these changes. M. Commitments and Contingencies —in the normal course of business, the Company may enter into contracts that provide a variety of general indemnifications. Any exposure 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. Note 3. Agreements and Related Party Transactions A. 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. B. 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. F- 19 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) 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 cash, U.S. 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 years ended December 31, 2022 and 2021, the Company incurred base management fees of $ 7,147 and $2,095, respectively 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. Described 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 (subject to the limitations described in “Payment of Incentive Fees” below). 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. The income 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. F- 20 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 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, 2022, the Company incurred incentive fees on income of $ 4,698 and no incentive fees on capital gains. For the year ended December 31, 2021, the Company incurred incentive fees on income of $ 31 and on realized gains $ 34 (total of $ 65 ). C. Other— KACALP, an affiliate of the Advisor, made an equity contribution of $ 10 to the Company on December 18, 2018. Note 4. Investments The following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Amortized Fair Amortized Fair Cost Value Cost Value First-lien senior secured debt investments $ 1,141,538 $ 1,157,971 $ 566,366 $ 578,195 Equity investments 6,250 7,148 250 250 Short-term investments 9,847 9,847 3,674 3,674 Total Investments $ 1,157,635 $ 1,174,966 $ 570,290 $ 582,119 F- 21 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) As of December 31, 2022, $ 45,901 of the Company’s total assets were non-qualifying assets as defined by Section 55(a) of the 1940 Act. As of December 31, 2021, all of the Company’s investments were qualifying assets as defined by Section 55(a) of the 1940 Act. Beginning with the three months ended March 31, 2022, the Company uses Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of its portfolio companies. As of December 31, 2021, the Company used GICS, Level 2 – Industry Group. The industry composition of long-term investments based on fair value as of December 31, 2022 and 2021 was as follows: December 31, 2022 Trading companies & distributors 12.9 % Commercial services & supplies 11.9 % Food products 10.9 % Health care providers & services 9.8 % Professional services 5.5 % Containers & packaging 4.5 % Aerospace & defense 4.1 % Textiles, apparel & luxury goods 4.1 % IT services 3.9 % Building products 3.4 % Software 3.0 % Chemicals 2.9 % Diversified telecommunication services 2.6 % Wireless telecommunication services 2.5 % Leisure products 2.3 % Auto components 2.3 % Machinery 2.2 % Household durables 1.8 % Healthcare equipment & supplies 1.8 % Personal products 1.7 % Household products 1.6 % Insurance 1.3 % Biotechnology 1.0 % Specialty retail 0.7 % Pharmaceuticals 0.6 % Asset management & custody banks 0.4 % Electronic equipment, instruments & components 0.3 % Total 100.0 % December 31, 2021 Commercial & professional services 19.6 % Capital goods 19.5 % Consumer durables & apparel 15.8 % Telecommunication services 8.8 % Health care equipment & services 8.5 % Household & personal products 7.4 % Materials 7.0 % Automobiles & components 4.1 % Food & beverage 2.9 % Software & services 2.4 % Retailing 1.6 % Pharmaceuticals, biotech & life sciences 1.5 % Diversified financials 0.9 % Total 100.0 % F- 22 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 5. Fair Value 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 active; 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. Assessment 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, 2022 and 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 31, 2022 Investments: Level 1 Level 2 Level 3 Total First-lien senior secured debt investments $ - $ - $ 1,157,971 $ 1,157,971 Equity investments - - 7,148 7,148 Short-term investments 9,847 - - 9,847 Total Investments $ 9,847 $ - $ 1,165,119 $ 1,174,966 Fair Value Hierarchy as of December 31, 2021 Investments: Level 1 Level 2 Level 3 Total First-lien senior secured debt investments $ - $ - $ 578,195 $ 578,195 Equity investments - - 250 250 Short-term investments 3,674 - - 3,674 Total Investments $ 3,674 $ - $ 578,445 $ 582,119 For the years ended December 31, 2022 and 2021, the Company did not recognize any transfers to or from Level 3. The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for years ended December 31, 2022 and 2021: First-lien Private senior secured equity For the year ended December 31, 2022 debt investments investments Total Fair value, beginning of period $ 578,195 $ 250 $ 578,445 Purchases of investments 712,387 6,000 718,387 Proceeds from sales of investments and principal repayments ( 142,118 ) - ( 142,118 ) Net change in unrealized gain (loss) 4,604 898 5,502 Net realized gain (loss) 84 - 84 Net accretion of discount on investments 4,819 - 4,819 Transfers into (out of) Level 3 - - - Fair value, end of period $ 1,157,971 $ 7,148 $ 1,165,119 F- 23 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) First-lien Private senior secured equity For the year ended December 31, 2021 debt investments investments Total Fair value, beginning of period $ - $ - $ - Purchases of investments 626,555 250 626,805 Proceeds from sales of investments and principal repayments ( 61,520 ) - ( 61,520 ) Net change in unrealized gain (loss) 11,829 - 11,829 Net realized gain (loss) 156 - 156 Net accretion of discount on investments 1,175 - 1,175 Transfers into (out of) Level 3 - - - Fair value, end of period $ 578,195 $ 250 $ 578,445 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 – Net Change 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 considered to be credit impaired, the Company uses a market yield analysis to determine fair value. If the debt investment is considered to be 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. To determine fair value using a market yield analysis, the Company discounts the contractual cash flows of each investment at an appropriate discount rate (the market yield). To determine the estimated market yield for its 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 and estimates the appropriate discount rate for such debt investment. In this context, the discount rate and fair market value of the investment is impacted by the structure and pricing of the security relative to current market yields for similar investments in similar businesses as well as the financial performance of such business. 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 Stats; CapitalIQ; 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. The Company 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 comparable 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 be valued; and other relevant factors. F- 24 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Equity investments in private companies are typically valued using one of or a combination of the following valuation techniques: (i) public company comparable analysis, (ii) precedent transaction analysis and (iii) DCF analysis. Under all of these valuation techniques, the Advisor estimates operating results of the companies in which it invests, 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 The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of December 31, 2022 and 2021. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Advisor’s determination of fair value. As of December 31, 2022 Valuation Unobservable Weighted Fair Value Technique Input Range Average First-lien senior secured debt investments $ 1,157,971 Discounted cash flow analysis Discount rate 8.4 % - 15.0 % 10.1 % Equity investments $ 1,988 Precedent Transaction Analysis Original Cost 1.0 1.0 5,160 Comparable Multiples EV / EBITDA 6.6 – 17.2 12.7 $ 1,165,119 As of December 31, 2021 Valuation Unobservable Weighted Fair Value Technique Input Range Average First-lien senior secured debt investments $ 578,195 Market Approach - Yield Analysis Credit Spreads 5.00 % - 8.50 % 6.00 % Equity investments $ 250 Precedent Transaction Analysis Transaction Price 1.0 1.0 $ 578,445 F- 25 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 6. Debt Subscription Credit Agreement As of December 31, 2022, the Company had a $ 125,000 credit agreement (the “Subscription Credit Agreement”) with certain lenders party thereto. The Subscription Credit Agreement permits the Company to elect the commitment amount each quarter to borrow up to $ 125,000 , 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 the Secured Overnight Funding Rate (“SOFR”) plus 1.975 % (subject to a 0.275 % SOFR floor). The Company is also required to pay a commitment fee of 0.25 % per annum on any unused portion of the Subscription Credit Agreement. The Company also pays an extension fee of 0.05 % per quarter on the elected commitment amount on the first day of each calendar quarter. The Subscription Credit Agreement will expire on December 31, 2023. For the years ended December 31, 2022 and 2021, the average amount of borrowings outstanding under the Subscription Credit Agreement were $ 65,751 and $ 24,600 , respectively, with a weighted average interest rate of 3.70 % and 2.26 %, respectively. As of December 31, 2022 and 2021, the Company had $ 108,000 and $ 105,000 , respectively, outstanding under the Subscription Credit Agreement at a weighted average interest rate of 6.32 % and 2.25 %, respectively. Corporate Credit Facility As of December 31, 2022, the Company had a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $ 400,000 . The Company entered into the Corporate Credit Facility on February 18, 2022. The Corporate Credit Facility’s commitment termination date and the final maturity date are February 18, 2026 and February 18, 2027, respectively. The 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 (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.35% per annum or an “alternate base rate” (as 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’ equity, 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 Kayne Anderson BDC Financing LLC (“KABDCF”) under the Revolving Funding Facility (as defined below). For the year ended December 31, 2022, the average amount of borrowings outstanding under the Corporate Credit Facility was $ 134,239 with a weighted average interest rate of 4.26 %. As of December 31, 2022, the Company had $ 269,000 outstanding under the Corporate Credit Facility at a weighted average interest rate of 6.63 %. Revolving Funding Facility As of December 31, 2022, the Company had a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $ 350,000 . The Company and KABDCF entered into the Revolving Funding Facility on February 18, 2022. 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 2.75 % 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. The Company 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 Facility. For the year ended December 31, 2022, the average amount of borrowings outstanding under the Revolving Funding Facility was $ 147,808 with a weighted average interest rate of 4.20 %. As of December 31, 2022, the Company had $ 200,000 outstanding under the Revolving Funding Facility at a weighted average interest rate of 7.05 %. F- 26 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Loan and Security Agreement On February 18, 2022, the Company and KABDCF established two new credit facilities (described above) and fully repaid the $ 150,000 outstanding balance on the Loan and Security Agreement (the “LSA”), which was entered into by KABDCF on February 5, 2021. Advances under the LSA had an interest rate of LIBOR plus 4.25% (subject to a 1.00% LIBOR floor). For the years ended December 31, 2022 and 2021, the average amount of borrowings outstanding under the LSA were $ 20,384 and $ 66,755 , respectively, with a weighted average interest rate of 5.25 % and 5.25 %, respectively. As of December 31, 2021, the Company had $ 162,000 outstanding under the LSA at a weighted average interest rate of 5.25 %. Debt obligations consisted of the following as of December 31, 2022 and 2021: December 31, 2022 Aggregate Principal Committed Outstanding Principal Amount Available (1) Net Carrying Value (2) Corporate Credit Facility $ 400,000 $ 269,000 $ 131,000 $ 266,483 Revolving Funding Facility 350,000 200,000 21,793 197,173 Subscription Credit Agreement 125,000 108,000 17,000 107,935 Total debt $ 875,000 $ 577,000 $ 169,793 $ 571,591 (1) The amount available reflects any limitations related to the Credit Facility’s borrowing base as of December 31, 2022. (2) The carrying value of the Corporate Credit Facility, Revolving Funding Facility, and Subscription Credit Agreement are presented net of deferred financing costs totaling $ 5,409 . December 31, 2021 Aggregate Principal Committed Outstanding Principal Amount Available (1) Net Carrying Value (2) Loan and Security Agreement (LSA) $ 200,000 $ 162,000 $ 13,685 $ 161,753 Subscription Credit Agreement 150,000 105,000 45,000 104,575 Total debt $ 350,000 $ 267,000 $ 58,685 $ 266,328 (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 years ended December 31, 2022 and 2021, the components of interest expense were as follows: For the years ended December 31, 2022 December 31, 2021 Interest expense $ 18,170 $ 4,195 Amortization of debt issuance costs 2,122 260 Total interest expense $ 20,292 $ 4,455 Average interest rate 5.5 % 5.4 % Average borrowings $ 368,182 $ 91,355 F- 27 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 7. 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 call notices pursuant to subscription agreements with investors for the years ended December 31, 2022 and 2021. For the year ended December 31, 2022 Offering Aggregate price per Common stock offering Common stock issue date share shares issued amount January 24, 2022 $ 16.36 4,191,292 $ 68,582 July 22, 2022 $ 16.30 7,666,830 $ 125,000 October 31, 2022 $ 16.58 1,485,844 $ 24,636 December 9, 2022 $ 16.89 2,961,068 $ 50,000 Total common stock issued 16,305,034 $ 268,218 For the year ended December 31, 2021 Offering Aggregate price per Common stock offering Common stock issue date share shares issued amount February 5, 2021 $ 15.00 5,666,667 $ 85,000 April 23, 2021 $ 15.57 3,532,434 $ 55,000 July 23, 2021 $ 15.72 2,862,595 $ 45,000 October 28, 2021 $ 15.98 2,502,612 $ 40,000 December 2, 2021 $ 16.31 4,568,314 $ 74,501 Total common stock issued 19,132,622 $ 299,501 As of December 31, 2022, the Company had subscription agreements with investors for an aggregate capital commitment of $ 808,212 to purchase shares of common stock. Of this amount, the Company had $ 240,492 of undrawn commitments at December 31, 2022. 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, 2022. See Note 12 - Subsequent Events. Dividend declaration date Dividend record date Dividend payment date Dividend per share April 19, 2022 April 20, 2022 April 26, 2022 $ 0.26 July 19, 2022 July 20, 2022 July 27, 2022 $ 0.30 October 18, 2022 October 13, 2022 October 25, 2022 $ 0.35 December 16, 2022 December 29, 2022 January 13, 2023 $ 0.43 Total dividends declared $ 1.34 The following table summarizes the dividends declared and payable by the Company for the year ended December 31, 2021. Dividend Dividend declaration date Dividend record date Dividend payment date per share April 23, 2021 April 20, 2021 May 14, 2021 $ 0.15 July 19, 2021 July 20, 2021 July 27, 2021 $ 0.22 October 18, 2021 October 22, 2021 November 2, 2021 $ 0.25 December 2, 2021 December 29, 2021 January 18, 2022 $ 0.24 Total dividends declared $ 0.86 F- 28 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) The following table summarizes the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan (“DRIP”) for the year ended December 31, 2022. See Note 12 - Subsequent Events. Dividend record date Dividend payment date DRIP shares issued DRIP value December 29, 2021 January 18, 2022 55,590 $ 902 April 20, 2022 April 26, 2022 75,270 $ 1,222 July 20, 2022 July 27, 2022 88,081 $ 1,431 October 13, 2022 October 25, 2022 127,414 $ 2,087 346,355 $ 5,642 For the dividend declared on December 16, 2022 and paid on January 13, 2023, there were 57,860 shares issued with a DRIP value of $ 955 . These shares are excluded from the table above, as the DRIP shares were issued after December 31, 2022. The following table summarizes the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan for the year ended December 31, 2021. Dividend record date Dividend payment date DRIP shares issued DRIP value April 20, 2021 May 14, 2021 1,361 $ 21 July 20, 2021 July 27, 2021 37,460 $ 585 October 22, 2021 November 2, 2021 55,792 $ 886 94,613 $ 1,492 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. Note 8. Commitments and Contingencies The Company had an aggregate of $ 149,338 and $ 97,810 , respectively, of unfunded commitments to provide debt financing to its portfolio companies as of December 31, 2022 and 2021. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and certain operational metrics. The commitment period for these amounts may be shorter than the maturity date if drawn or funded. These commitments are not reflected in the Company’s consolidated statement of assets and liabilities. Consequently, such commitments result in an element of credit risk in excess of the amount recognized in the Company’s consolidated statement of assets and liabilities. F- 29 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) A summary of the composition of the unfunded commitments as of December 31, 2022 and 2021 is shown in the table below: As of As of December 31, 2022 December 31, 2021 Alcami Corporation (Alcami) $ 2,543 $ - Allcat Claims Service, LLC 20,106 - Allentown, LLC 2,040 - American Equipment Holdings LLC 2,956 1,698 American Soccer Company, Incorporated (SCORE) 2,838 - Arborworks Acquisition LLC 1,563 3,219 Atria Wealth Solutions, Inc. 2,996 - Basel U.S. Acquisition Co., Inc. (IAC) 1,622 - BCI Burke Holding Corp. 4,659 4,935 Blade (US) Holdings, Inc. - 1,121 BLP Buyer, Inc. (Bishop Lifting Products) 1,047 - BR PJK Produce, LLC (Keany) 1,429 - Brightview, LLC 2,904 4,647 Centerline Communications, LLC 1,800 2,040 CGI Automated Manufacturing, LLC 2,717 6,522 Pavion Corp., f/k/a Corbett Technology Solutions, Inc. 1,334 1,525 Curio Brands, LLC 2,722 6,018 DISA Holdings Corp. (DISA) 7,769 - DRS Holdings III, Inc. (Dr. Scholl’s) 310 310 Eastern Wholesale Fence 425 666 EIS Legacy, LLC 6,539 6,538 Fastener Distribution Holdings, LLC 6,810 - FCA, LLC (FCA Packaging) 2,670 - Foundation Consumer Brands 577 577 Fralock Buyer LLC 749 749 Guardian Dentistry Partners - 15,898 Gulf Pacific Holdings, LLC 13,066 - Gusmer Enterprises, Inc. 3,676 4,220 Home Brands Group Holdings, Inc. (ReBath) 2,099 2,099 I.D. Images Acquisition, LLC 1,424 1,570 IF&P Foods, LLC (FreshEdge) 6,114 - Improving Acquisition LLC 2,028 - Light Wave Dental Management LLC 6,774 - LSL Industries, LLC (LSL Healthcare) 15,224 - MacNeill Pride Group 2,978 357 PMFC Holding, LLC 342 684 Regiment Security Partners LLC 3,207 7,200 SGA Dental Partners Holdings, LLC 1,724 12,931 Siegel Egg Co., LLC 1,207 2,102 Speedstar Holding LLC - 694 Trademark Global LLC 240 1,182 United Safety & Survivability Corporation (USSC) 2,942 4,285 Universal Marine Medical Supply International, LLC (Unimed) 2,035 - USALCO, LLC 1,462 2,352 Vehicle Accessories, Inc. 1,671 1,671 Total unfunded commitments $ 149,338 $ 97,810 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, 2022 and 2021, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure. Note 9. 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, 2022 and 2021, there were no dilutive shares. F- 30 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) The following table sets forth the computation of basic and diluted earnings per share of common stock for the years ended December 31, 2022 and 2021: For the years ended December 31, 2022 December 31, 2021 Net increase (decrease) in net assets resulting from operations $ 45,765 $ 22,288 Weighted average shares of common stock outstanding - basic and diluted 27,184,302 10,718,083 Earnings (loss) per share of common stock - basic and diluted $ 1.68 $ 2.08 Note 10. Income Taxes 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 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. 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 years ended December 31, 2022 and 2021. These reclassifications have no impact on net assets. For the years ended December 31, 2022 December 31, 2021 Increase (decrease) in distributable earnings $ 29 $ 257 Increase (decrease) in additional paid-in capital $ ( 29 ) $ ( 257 ) 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 years ended December 31, 2022 and 2021: For the years ended December 31, 2022 December 31, 2021 Net increase (decrease) in net assets resulting from operations $ 45,765 $ 22,288 Net change in unrealized losses (gains) from investments ( 5,502 ) ( 11,829 ) Non-deductible expenses, offering costs disallowed 29 257 Other book tax differences ( 67 ) 117 Taxable income before deductions for distributions $ 40,225 $ 10,833 For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. F- 31 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) 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 years ended December 31, 2022 and 2021 were as follows: For the years ended December 31, 2022 December 31, 2021 Ordinary income $ 39,553 $ 10,514 Capital gains - - Return of capital - - Total $ 39,553 $ 10,514 For the years ended December 31, 2022 and 2021, the components of accumulated earnings on a tax basis were as follows: For the years ended December 31, 2022 December 31, 2021 Undistributed net investment income (loss) $ 991 $ 319 Undistributed capital gains - - Capital loss carryforward - - Other accumulated gain (loss) - - Other temporary book / tax differences ( 857 ) ( 924 ) Net unrealized appreciation (depreciation) 17,331 11,829 Total $ 17,465 $ 11,224 Capital losses can be carried forward indefinitely to offset future capital gains. As of December 31, 2022 and 2021, the Company had no capital loss carryforwards. As of December 31, 2022 and 2021, the Company’s aggregate unrealized appreciation and depreciation on investments based on cost for U.S. federal income tax purposes was as follows: For the years ended December 31, 2022 December 31, 2021 Tax cost 1,157,635 570,290 Gross unrealized appreciation 21,476 11,829 Gross unrealized depreciation ( 4,145 ) - Net unrealized appreciation/(depreciation) on investments $ 17,331 $ 11,829 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 U.S. Federal, state and local taxes. For the Company’s tax years ended December 31, 2022 and 2021, KABDC Corp, LLC did not have activity resulting 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, 2022 and 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 months. 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. F- 32 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 11. 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 years ended December 31, 2022 and 2021: For the years ended December 31, Per Common Share Operating Performance (1) 2022 (amounts in thousands, except share and per share amounts) 2021 (amounts in thousands, except share and per share amounts) Net Asset Value, Beginning of Period (2) $ 16.22 $ 14.86 Results of Operations: Net Investment Income 1.48 0.94 Net Realized and Unrealized Gain (Loss) on Investments (3) 0.14 1.28 Net Increase (Decrease) in Net Assets Resulting from Operations 1.62 2.22 Distributions to Common Stockholders Distributions ( 1.34 ) ( 0.86 ) Net Decrease in Net Assets Resulting from Distributions ( 1.34 ) ( 0.86 ) Net Asset Value, End of Period $ 16.50 $ 16.22 Shares Outstanding, End of Period 35,879,291 19,227,902 Ratio/Supplemental Data Net assets, end of period $ 592,041 $ 311,969 Weighted-average shares outstanding 27,184,302 10,718,083 Total Return (4) 10.3 % 14.2 % Portfolio turnover 17.6 % 31.3 % Ratio of operating expenses to average net assets (5) 7.9 % 5.8 % Ratio of net investment income (loss) to average net assets (5) 9.1 % 6.8 % (1) The per common share data was derived by using weighted average shares outstanding. (2) On February 5, 2021, the initial offering price of $ 15.00 per share less $ 0.14 per share of organizational costs. (3) Realized 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. For the years ended December 31, 2022 and 2021, such share transactions include the effect of share issuances of $ 0.04 and $ 0.19 per share, respectively. During the period, shares were issued at prices that reflect the aggregate amount of the Company's initial organizational and offering expenses. As a result, investors subscribing after the initial capital call are allocated organizational expenses consistently with all stockholders. (4) Total 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. (5) The ratios reflect an annualized amount, except in the case of non-recurring expenses (e.g. initial organizational expense of $ 175 for the period February 5, 2021 (commencement of operations) through December 31, 2021). F- 33 Kayne Anderson BDC, Inc. Notes to Consolidated Financial Statements (amounts in 000’s, except share and per share amounts) Note 12. 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 13, 2023, the Company paid a distribution of $ 0.43 per share to each common stockholder of record as of December 29, 2022. The total distribution was $ 15,428 and $ 955 was reinvested into the Company through the purchase of 57,860 shares of common stock. On January 24, 2023, the Board of Directors (the “Board”) of the Company elected James (“Jim”) Robo as the Chairman of the Board. Mr. Robo will serve as an interested director of the Company until he stands for re-election at the 2025 Annual Meeting of Stockholders of the Company. With the addition of Mr. Robo, the Company’s Board is comprised of seven individuals, four of which are independent. The independent board members include Mariel Joliet (Lead Independent Director), George Marucci, Jr., Susan Schnabel and Rhonda Smith. On March 7, 2023, the Board declared a distribution of $ 0.47 per share to each common stockholder of record as of March 31, 2023. The distribution will be paid on April 14, 2023. As of March 9, 2023, the Company has subscription agreements with investors for an aggregate capital commitment of $ 832,342 to purchase shares of common stock ($ 264,612 of the commitments are undrawn). F- 34 ITEM 9. 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.