Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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 ~~elect to be treated~~qualify as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company was formed as a Delaware limited liability company in May 2018. Prior to February 5, 2021, the Company was devoting substantially all of its efforts to establishing the business and conducted organizational and marketing efforts, which the Company incurred in the third quarter of 2020. The Company was formed to make investments in middle-market companies and commenced operations on February 5, 2021. On this same date, prior to the Company’s election to be regulated as a BDC under the 1940 Act, the Company completed a conversion from a Delaware limited liability company into a Delaware corporation and Kayne Anderson BDC, Inc. succeeded to the business of Kayne Anderson BDC, LLC. ~~On January 25, 2021,~~

As of March 31, 2022, the Company has entered into subscription agreements with investors for an aggregate capital commitment of ~~$154,305,000~~$701,450 to purchase shares of the Company’s common ~~stock. On February 5, 2021,~~stock (including a $33,250 capital commitment that is contingent on the Company ~~sold 5,666,667 shares of its common stock to these investors at a price of $15.00 per share for an aggregate offering price of $85,000,000.~~meeting certain conditions). See Note 11 – 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. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of five directors, three of whom are independent (including the Board’s chairperson).

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies.

The Company conducts private offerings of its Common Stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any private offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of its Common Stock (“Shares”) pursuant to a subscription agreement entered into with 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 ~~one or more~~ additional closings of the private offering. A “Liquidity Event” is defined as (a) an initial public offering of Shares (the “Initial Public Offering”) or the listing of Shares on an exchange (together with the Initial Public Offering, an “Exchange Listing”), (b) the sale of the Company or (c) a disposition of the Company’s investments and distribution of the net proceeds (after repayment of borrowed funds or other forms of leverage) to the Company’s investors.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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 ~~subsidiary,~~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”).

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.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Non-Traded Investments (Level 3)

Investments that are privately issued or otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment of the Company’s Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of the Company’s Advisor is stale or does not represent fair value, shall each be valued in a manner that most fairly reflects fair value of the security on the valuation date. The Company expects that a significant majority of its investments will be Level 3 investments. Unless otherwise determined by the Board, the following valuation process is used for the Company’s Level 3 investments:

●

Investment Team Valuation. The applicable investments are valued by senior professionals of Kayne Anderson who are responsible for the portfolio investments. The value of each portfolio company or investment will be initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments), a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs will be used to determine a preliminary value. The investments will be valued no less frequently than quarterly, with new investments valued at the time such investment was made.

~~Kayne Anderson BDC, Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

●

Investment Team Valuation Documentation. Preliminary valuation conclusions will be determined by the Company’s executive officers. Such valuation and supporting documentation is submitted to the Audit Committee (a committee of the Board) and the Board on a quarterly basis.

●

Audit Committee. The Audit Committee meets to consider the valuations submitted by our executive officers at the end of each quarter. Between meetings of the Audit Committee, the executive officers of the Company are authorized to make valuation determinations. All valuation determinations of the Audit Committee are subject to ratification by the Board at its next regular meeting.

●

Valuation ~~Firm~~Firm. . Quarterly, a third-party valuation ~~firm~~firms engaged by the Board ~~reviews~~review the valuation methodologies and calculations employed for each of the Company’s investments that the Company has placed on the “watch list” and approximately 25% of its remaining investments. ~~The~~These third-party valuation ~~firm~~firms will review all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The Company expects the quarterly report issued by ~~the~~these third-party valuation ~~firm~~firms will assist the Board in determining the fair values of the investments reviewed.

●

Board ~~Determination~~Determination. . The Company’s Board meets quarterly to consider the valuations provided by the Company’s executive officers and the Audit Committee and ratify valuations for the applicable investments. The Company’s Board considers the report provided by the third-party valuation ~~firm~~firms in reviewing and determining in good faith the fair value of the applicable portfolio investments.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

The Board of Directors will be ultimately responsible for the determination, in good faith, of the fair value of our portfolio investments. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

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.

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.

~~Kayne Anderson BDC, Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

I. Organizational Costs—organizational expenses include costs and expenses relating to the formation and organization of the Company. The Company has ~~agreed to reimburse~~reimbursed 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~~were capitalized as deferred offering expenses and included in prepaid expenses and other assets on the Statement of Assets and Liabilities. These costs ~~are~~were 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~~reimbursed 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 ~~(September~~(October 15th).

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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

The Company does not currently qualify as a “publicly offered regulated investment company,” as defined in the Code. A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market, or (iii) held by at least 500 persons at all times during the taxable year. The Company cannot determine when it will qualify as a publicly offered RIC. If the Company does not qualify as a publicly offered RIC during the tax year, a non-corporate shareholder’s allocable portion of the Company’s affected expenses, including its management fees, ~~will~~may be treated as an additional distribution to shareholders. A non-corporate shareholder’s allocable portion of these expenses ~~are~~may be treated as miscellaneous itemized deductions that are not currently deductible by such shareholders.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” 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”) ~~has~~ announced that certain London Interbank Offered Rate (“LIBOR”) tenors in certain currencies ~~will cease~~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 ~~slowly~~ developing in response to these new reference rates. Uncertainty exists related to the liquidity impact of the change in rates, and how to appropriately adjust these rates at the time of transition. AtAlthough SOFR appears to be the preferred replacement rate for LIBOR, at this time, it is not possible to predict the full ~~impact~~effect of ~~the elimination of LIBOR and the~~any such changes or any establishment of an alternative reference ~~rate on the Company or its investments.~~rates.

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.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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.

The Company has agreed to reimburse the Advisor and its affiliates for the third-party costs incurred on its behalf in connection with the formation and the offering of shares of the Company’s common stock. Amounts shown as payables to affiliates on the Statement of Assets and Liabilities represent organizational expenses and offering costs of the Company that were paid by the Advisor and its affiliates on behalf of the Company.

Base Management Fee

Prior to an Exchange Listing, the base management fee will be calculated at an annual rate of 0.90% of the fair market value of the Company’s investments including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase. After an Exchange Listing, the base management fee will be calculated at an annual rate of 1.50% of the fair market value of the Company’s investments. However, following an Exchange Listing, if borrowed funds or other forms of leverage utilized to finance the Company’s investments is greater than a debt-to-equity ratio of 1.0x, the base management fee will be 1.00% of the fair market value of the portion of the Company’s investments financed with borrowed funds or other forms of leverage above a 1.0x debt-to-equity ratio.

The base management fee will be payable quarterly in arrears and calculated based on the average of the Company’s fair market value of investments, at the end of the two most recently completed calendar quarters, including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding 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 ~~quarter~~three months ended March 31, 2022 and 2021, the Company incurred base management fees of ~~$176,043.~~$1,326 and $176, 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.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Incentive Fee on Income

The incentive fee based on income (the “income incentive fee”) is determined and paid quarterly in arrears in cash. The Company’s quarterly pre-incentive fee net investment income must exceed a preferred return of 1.50% of the Company’s NAV at the end of the immediately preceding calendar quarter (6.0% annualized but not compounded) (the “Hurdle Amount”) in order for the Company to receive an income incentive fee. The income incentive fee is calculated as follows:

~~Kayne Anderson BDC, Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

●

Prior to an Exchange ~~Listing:~~ 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:~~ 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.

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: ~~10.0%~~ 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, less the aggregate amount of any previously paid capital gain incentive fees.~~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:~~ Listing~~15.0%~~ : 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 ~~quarter~~three months ended March 31, 2022, the Company incurred incentive fees on income of $953 and on realized gains $2 (total of $955).

For the three months ended March 31, 2021, the Company did not incur any incentive fee on income or capital gains.

~~Kayne Anderson BDC, Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

C. Other—KACALP, an affiliate of the Advisor, made an equity contribution of ~~$10,000~~$10 to the Company on December 18, 2018.

On February 5, 2021, the Company purchased its initial portfolio of investments for ~~$103,030,517~~$103,031 from an affiliate of the Company’s Advisor (the “Warehousing Entity”). This purchase of its initial portfolio of investments was funded with a portion of the proceeds from the sale of the Company’s common stock on this same date (5,666,667 shares of our common stock to investors at a price of $15.00 per share for an aggregate offering ~~price~~amount of ~~$85,000,000)~~$85,000) to investors and with borrowings under the Company’s credit facility.

The initial portfolio purchased from the Warehouse Entity consisted of 18 loans, with an average outstanding balance of ~~$5,876,266,~~$5,876, an average purchase price of 97.4% of principal value and an average yield on that date of 8.8%. None of these loans in the initial portfolio were in default or non-accrual status. All of the loans are senior secured and the borrowers are middle and upper middle market companies. The purchase of the initial portfolio was completed before the Company elected to be treated as a business development company under the 1940 Act. This initial acquisition and all related transactions are referred to as the “Formation Transactions.”

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 4. Investments

The following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of March 31, 2022 and December 31, 2021:

	March 31, 2021				March 31, 2022				December 31, 2021
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
First-lien senior secured debt investments	$	153,232,958	$	156,031,005	$	604,750	$	616,067	$	566,366	$	578,195
Equity investments						1,000		1,000		250		250
Short-term investments		17,377,178		17,377,178		3,004		3,004		3,674		3,674
Total Investments	$	170,610,136	$	173,408,183	$	608,754	$	620,071	$	570,290	$	582,119

As of March 31, 2022 and December 31, 2021, ~~none~~all of the Company’s ~~total assets~~investments were ~~in non-qualifying~~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 March 31, 2022 and December 31, 2021 was as follows:

	March 31, ~~2021~~ 2022
Commercial services & supplies		18.0	%
~~Consumer durables and apparel~~Trading companies & distributors		~~19.5~~14.3	%
~~Materials~~Health care providers & services		~~16.7~~10.2	%
~~Capital~~Building products		6.7	%
Chemicals		5.4	%
Diversified telecommunication services		5.0	%
Auto components		4.4	%
Leisure products		4.2	%
Professional services		4.0	%
Wireless telecommunication services		3.6	%
Personal products		3.5	%
Household products		3.3	%
Food products		3.0	%
Household durables		2.9	%
Textiles, apparel & luxury goods		~~10.8~~2.4	%
Software		2.2	%
Specialty retail		1.5	%
Aerospace & defense		1.5	%
Pharmaceuticals		1.4	%
Containers & packaging		1.2	%
Asset management & custody banks		0.9	%
Machinery		0.3	%
IT services		0.1	%
Total		100.0	%

	December 31, 2021
Commercial & professional services		~~10.2~~19.6	%
Capital goods		19.5	%
Consumer durables & apparel		15.8	%
Telecommunication services		8.8	%
Health care equipment & services		~~9.5~~8.5	%
Household & personal products		7.4	%
Materials		7.0	%
Automobiles & components		4.1	%
Food ~~beverage~~ & ~~tobacco~~beverage		~~7.2~~2.9	%
Software & services		2.4	%
Retailing		1.6	%
Pharmaceuticals, biotech & life sciences		~~6.0~~	%
~~Retailing~~		~~6.0~~	%
~~Household & personal products~~		~~6.0~~	%
~~Automobiles & components~~		~~3.5~~1.5	%
Diversified financials		~~3.4~~0.9	%
~~Software & services~~		~~0.7~~	%
~~Transportation~~		~~0.3~~	%
~~Technology hardware & equipment~~		~~0.1~~	%
~~Chemicals~~		~~0.1~~	%
Total		100.0	%

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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.

Level1 — 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 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.~~

Level2 — 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.

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.

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.

~~Kayne Anderson BDC, Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The following ~~table~~tables presents the fair value hierarchy of investments as of March 31, ~~2021~~2022 and December 31, 2021. Note that the valuation levels below are not necessarily an indication of the risk or liquidity associated with the underlying investment.

	Fair Value Hierarchy as of March 31, 2021								Fair Value Hierarchy as of March 31, 2022
Investments:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
First-lien senior secured debt investments	$	-	$	4,073,750	$	151,957,255	$	156,031,005	$	-	$	-	$	616,067	$	616,067
Equity investments										-		-		1,000		1,000
Short-term investments		17,377,178		-		-		17,377,178		3,004		-		-		3,004
Total Investments	$	17,377,178	$	4,073,750	$	151,957,255	$	173,408,183	$	3,004	$	-	$	617,067	$	620,071

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 quarter ended March 31, 2021, the Company did not recognize any transfers~~

Kayne Anderson BDC, Inc.
Notes to ~~or from Level 3.~~Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

The following table presents changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the ~~quarter~~three months ended March 31, 2022 and 2021:

For the quarter ended March 31, 2021 First-lien
senior secured Equity
For the three months ended March 31, 2022 debt investments investments Total
Fair value, beginning of period $ - $ 578,195 $ 250 $ 578,445
Purchases of investments 149,311,308 65,773 750 66,523
Proceeds from principal payments and sales of investments (304,036 )
Proceeds from sales of investments and principal repayments (28,167 ) - (28,167 )
Net change in unrealized gain (loss) 2,781,758 (512 ) - (512 )
Net realized gain (loss) 28 - 28
Net accretion of discount on investments 168,225 750 - 750
Transfers into (out of) Level 3 - - - -
Fair value, end of period $ 151,957,255 $ 616,067 $ 1,000 $ 617,067
First-lien
senior secured Equity
For the three months ended March 31, 2021 debt investments investments Total
Fair value, beginning of period $    - $            - $ -
Purchases of investments 149,311 - 149,311
Proceeds from sales of investments and principal repayments (304 ) - (304 )
Net change in unrealized gain (loss) 2,782 - 2,782
Net realized gain (loss) - - -
Net accretion of discount on investments 168 - 168
Transfers into (out of) Level 3 - - -
Fair value, end of period $ 151,957 $ - $ 151,957

For the three months ended March 31, 2022 and 2021, the Company did not recognize any transfers to or from Level 3. 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).

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

Valuation Techniques and Unobservable Inputs

Non-traded debt investments are typically valued using either a market yield analysis or an enterprise value ~~analysis and/or a market interest rate yield~~ analysis. The enterprise value analysis is performed to determine if a debt investment is credit impaired. If the debt investment is credit impaired, we will use the enterprise value analysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, the Company uses a market yield analysis to determine fair value. If the debt investment is credit impaired (which is determined by performing an enterprise value analysis), the Company will use the enterprise value analysis or a liquidation basis analysis to determine fair value. As of March 31, ~~2021,~~2022, none of the Company’s non-traded debt investments were determined to be credit impaired, and the Company used a market yield analysis to determine fair ~~value.~~value on these investments.

To determine the estimated market yield for our debt investments, the Company analyzes changes in the risk/reward (measured by yields and leverage) of middle market indices as compared to changes in risk/reward for the underlying investment (the “Market Approach”) and estimates the appropriate credit spread for such debt investment. In this context, the fair market value of the investment is impacted by the structure and pricing of the security relative to current market yields and credit spreads for similar investments in similar businesses as well as the financial performance of such 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 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.
To determine the estimated market yield for our debt investments, the Company analyzes changes in the risk/reward (measured by yields and leverage) of middle market indices as compared to changes in risk/reward for the underlying investment (the “Market Approach”). In this context, the fair market value of the investment is impacted by the structure and pricing of the security relative to current market yields and credit spreads for similar investments in similar businesses. In doing this, 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.

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.
Equity investments in private companies are typically valued using one of or a combination of the following valuation techniques: (i) public company analysis, (ii) precedent transaction analysis and (iii) DCF analysis.

Under all of these valuation techniques, the Company estimates operating results of the companies in which we invest, including earnings before interest expense, income tax expense, depreciation and amortization (“EBITDA”) and free cash flow. These estimates utilize unobservable inputs such as historical operating results, which may be unaudited, and projected operating results, which will be based on operating assumptions for such company. Investment performance data utilized will be the most recently available as of the measurement date which in many cases may reflect up to a one quarter lag in information. These estimates will be sensitive to changes in assumptions specific to such company as well as general assumptions for the industry. Other unobservable inputs utilized in the valuation techniques outlined above include: discounts for lack of marketability, selection of publicly traded companies, selection of similar precedent transactions, selected ranges for valuation multiples and expected required rates of return (discount rates).
~~Quantitative Table for Valuation Techniques~~
As of March 31, 2021
Fair Value Valuation
Technique Unobservable
Input Range Weighted Average
First-lien senior secured debt investments $ 151,957,255 Market Approach – Yield Analysis Credit Spreads 5.00% – 8.50% 6.34 %

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)
Quantitative Table for Valuation Techniques
The following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of March 31, 2022 and December 31, 2021. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to the Company’s determination of fair value.
As of March 31, 2022
Fair Value Valuation
Technique Unobservable
Input Range Weighted
Average
First-lien senior secured debt investments $ 616,067 Market Approach - Yield Analysis Credit Spreads 5.00% - 8.50% 5.96 %

Equity investments $ 1,000 Precedent Transaction Analysis Transaction Price 1.0 1.0
$ 617,067
As of December 31, 2021
Fair Value Valuation
Technique Unobservable
Input Range Weighted
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

Note 6. Debt
Subscription Credit Agreement
As of March 31, 2022, the Company had a $175,000 credit agreement (the “Subscription Credit Agreement”) with certain lenders party thereto. The Subscription Credit Agreement permits the Company to borrow up to $175,000, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate under the Subscription Credit Agreement is equal to SOFR plus 1.975% (subject to a 0.275% SOFR floor). The Subscription Credit Agreement will expire on December 31, 2022.
For the three months ended March 31, 2022 and 2021, the average amount of borrowings outstanding under the Subscription Credit Agreement was $52,567 and $15,091, respectively, with a weighted average interest rate of 2.25% and 2.28%, respectively. As of March 31, 2022, the Company had $14,000 outstanding under the Subscription Credit Agreement at a weighted average interest rate of 2.30%.

Loan and Security Agreement

On February ~~5, 2021,~~18, 2022, the Company and Kayne Anderson BDC Financing LLC (“KABDCF”)~~, a newly-formed, wholly-owned, special purposes financing subsidiary, entered into a~~ established two new credit facilities (described below) and fully repaid the $150,000 outstanding balance on the Loan and Security Agreement (the “LSA”) with certain lenders party thereto, administrative agent, and the Advisor as collateral manager. The maximum commitment of the LSA is up to $150,000,000, and, subject to certain conditions, may be increased, which was entered into by ~~$50,000,000 up to two times not to exceed $250,000,000.~~KABDCF in February 2021. Advances under ~~the facility bear~~LSA had an interest rate of LIBOR plus 4.25% (subject to a 1.00% LIBOR floor). ~~The facility has a term of three years.~~

For the ~~quarter~~three months ended March 31, 2022 and 2021, the average amount of borrowings outstanding under the LSA ~~was $38,236,364~~were $82,667 and $38,236, respectively, with a weighted average interest rate of 5.25%~~. As of March 31, 2021, the Company had $50,000,000 outstanding under the LSA at a weighted average interest rate of 5.25%.~~ for both periods.

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

Corporate Credit ~~Agreement~~Facility

On February ~~5, 2021,~~18, 2022, the Company entered into a ~~$75,000,000~~senior secured revolving credit ~~agreement (the “Credit Agreement”) with certain lenders party thereto. The Credit Agreement is comprised of two sub-facilities: (i) a capital call~~ facility (the ~~“Subscription~~“Corporate Credit Facility”), that has a total commitment of $275,000. The Corporate Credit Facility’s commitment termination date and ~~(ii)~~the final maturity date are February 18, 2026 and February 18, 2027, respectively. The Corporate Credit Facility also provides for a ~~treasury facility (the “Treasury Facility”).~~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 ~~under~~on the ~~Subscription~~Corporate Credit Facility is equal to ~~LIBOR~~Term SOFR plus ~~1.90% (subject~~an applicable spread of 2.35% per annum (which includes a SOFR adjustment spread of 0.10%) 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 ~~0.35% LIBOR floor)~~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 ~~interest rate~~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 ~~Treasury~~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 ~~equal to LIBOR plus 0.20% (with no LIBOR floor). The Subscription Facility will expire on December 31, 2022,~~secured by certain assets in the Company’s portfolio and ~~the Treasury Facility will expire on September 30, 2021.~~
~~The Credit Agreement allows the Company to transfer the commitment amount~~excludes investments held by KABDCF under the ~~Treasury~~Revolving Funding Facility to the Subscription Facility. On March 2, 2021, $15,000,000 was transferred from the Treasury Facility to the Subscription Facility. As of March 31, 2021, the Subscription Facility and Treasury Facility had commitments of $40,000,000 and $35,000,000, respectively.(as defined below).

For the ~~quarter~~three months ended March 31, ~~2021,~~2022, the average amount of borrowings outstanding under the Corporate Credit ~~Agreement~~Facility was ~~$15,090,909~~$36,400 with a weighted average interest rate of ~~2.28%~~2.48%. As of March 31, ~~2021,~~2022, the Company had ~~$40,000,000~~$78,000 outstanding under the Corporate Credit ~~Agreement~~Facility at a weighted average interest rate of ~~2.25%~~2.58%.
Revolving Funding Facility
On February 18, 2022, the Company and KABDCF entered into a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $250,000. The Revolving Funding Facility is secured by all of the assets held by KABDCF and the Company has agreed that it will not grant or allow a lien on the membership interest of KABDCF. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are February 18, 2025 and February 18, 2027, respectively. The interest rate on the Revolving Funding Facility is equal to daily SOFR plus 2.35% per annum. KABDCF is also required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility. Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by KABDCF and is subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on, loan size, payment frequency and status, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. 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 three months ended March 31, 2022, the average amount of borrowings outstanding under the Revolving Funding Facility was $70,000 with a weighted average interest rate of 2.45%. As of March 31, 2022, the Company had $150,000 outstanding under the Revolving Funding Facility at a weighted average interest rate of 2.62%.

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

Debt obligations consisted of the following as of March 31, 2022 and December 31, 2021:

Aggregate
Principal
Committed Outstanding
Principal Amount
Available⁽¹⁾ Net
Carrying
Value⁽²⁾ March 31, 2022
Aggregate
Principal
Committed Outstanding
Principal Amount
Available⁽¹⁾ Net
Carrying
Value⁽²⁾
Corporate Credit Facility $ 275,000 $ 78,000 $ 180,462 $ 75,796
Loan and Security Agreement (LSA) $ 150,000,000 $ 50,000,000 $ 100,000,000 $ 49,674,062 - - - -
Credit Agreement 75,000,000 40,000,000 35,000,000 39,812,532
Revolving Funding Facility 250,000 150,000 31,290 147,454
Subscription Credit Agreement 175,000 14,000 161,000 13,660
Total debt $ 225,000,000 $ 90,000,000 $ 135,000,000 $ 89,486,594 $ 700,000 $ 242,000 $ 372,752 $ 236,910

(1) The amount available ~~does not reflect~~reflects any limitations ~~if any,~~ related to the ~~Credit Facility’s~~credit facility’s borrowing ~~base.~~base as of March 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 $5,090.
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 each 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 ~~$513,406.~~$672.

For the ~~quarter~~three months ended March 31, 2022 and 2021, the components of interest expense were as follows:

For the quarter ended For the three months ended
March 31,
March 31, 2021 2022 2021

Interest expense $ 426,423 $ 2,289 $ 426
Amortization of debt issuance costs(1) 35,046 519 35
Total interest expense $ 461,469 $ 2,808 $ 461
Average interest rate 5.7 % 4.7 % 5.7 %
Average borrowings $ 53,327,273 $ 241,633 $ 53,327
(1) Includes write-offs of $244 of debt issue costs related to the termination of the LSA on February 18, 2022.

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

Note 7. Share Transactions
Common Stock Issuances
~~On January 25, 2021,~~
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 three months ended March 31, 2022 and 2021.
For the three months ended March 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
Total common stock issued 4,191,292 $ 68,582
For the three months ended March 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
Total common stock issued 5,666,667 $ 85,000
As of March 31, 2022, the Company ~~entered into~~had subscription agreements with investors for an aggregate capital commitment of ~~$154,305,000~~$701,450 to purchase shares of common stock (including a $33,250 capital commitment that is contingent on the Company meeting certain conditions). Of this amount, the Company had $333,367 of undrawn commitments at March 31, 2022. See Note 11 – Subsequent Events.
Dividends and Dividend Reinvestment
For the three months ended March 31, 2022 and 2021, no dividends were declared and payable by the Company. See Note 11 – Subsequent Events.
The following table summarizes the amounts received and shares of common stock issued to shareholders pursuant to the Company’s ~~common stock. On February 5, 2021,~~dividend reinvestment plan for the ~~Company sold 5,666,667~~three months ended March 31, 2022. See Note 11 – Subsequent Events.
Dividend record date Dividend
payment date DRIP shares issued DRIP value
December 29, 2021 January 18, 2022 55,590 $ 902
There were no amounts received and shares of ~~its~~ common stock issued to ~~these investors at a price of $15.00 per share~~shareholders pursuant to the Company’s dividend reinvestment plan for ~~an aggregate offering price of $85,000,000.~~the three months ended March 31, 2021.

Note 8. Commitments and Contingencies

The Company had an aggregate of ~~$3,092,391~~$81,840 and $97,810, respectively, of unfunded commitments to provide debt financing to its portfolio companies as of March 31, ~~2021. As of March~~2022 and December 31, ~~2021, there were no capital calls or draw requests made by the portfolio companies to fund these commitments.~~2021. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial ~~covenants;~~covenants and certain operational metrics; involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities, and are not reflected in the Company’s consolidated statements of assets and liabilities. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

A summary of the composition of the unfunded commitments as of March 31, 2022 and December 31, 2021 is shown in the table below:

As of As of As of
March 31, 2021 March 31,
2022 December 31,
2021
Foundation Consumer Brands, LLC $ 576,923
American Equipment Holdings LLC $ 1,082 $ 1,698
Arborworks Acquisition LLC 4,688 3,219
BCI Burke Holding Corp. 4,895 4,935
Blade (US) Holdings, Inc. 1,121 1,121
BLP Buyer, Inc. (Bishop Lifting Products) 1,047 -
Brightview, LLC 4,647 4,647
Centerline Communications, LLC 1,800 2,040
CGI Automated Manufacturing, LLC 2,717 6,522
Corbett Technology Solutions, Inc. 1,016 1,525
Curio Brands, LLC 6,018 6,018
DRS Holdings III, Inc. (Dr. Scholl's) 310 310
Eastern Wholesale Fence - 666
EIS Legacy, LLC 6,539 6,538
Foundation Consumer Brands 577 577
Fralock Buyer LLC 563,487 749 749
GEON Performance Solutions 517,241
Guardian Dentistry Partners 13,795 15,898
Gusmer Enterprises, Inc. 840 4,220
Home Brands Group Holdings, Inc. (ReBath) 2,099 2,099
I.D. Images Acquisition, LLC 822 1,570
MacNeill Pride Group 4,829 357
PMFC Holding, LLC 684,360 240 684
Smile Doctors, LLC 56,438
Regiment Security Partners LLC 6,269 7,200
SGA Dental Partners Holdings, LLC 6,198 12,931
Siegel Egg Co., LLC 760 2,102
Speedstar Holding LLC 693,942 694 694
Trademark Global LLC 582 1,182
United Safety & Survivability Corporation (USSC) 4,285 4,285
USALCO, LLC 1,717 2,352
Vehicle Accessories, Inc. 1,504 1,671
Total unfunded commitments $ 3,092,391 $ 81,840 $ 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 March 31, 2022 and December 31, 2021, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)

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 March 31, 2022 and 2021, there were no dilutive shares.

The following table sets forth the computation of basic and diluted earnings per share of common stock for the ~~quarter~~three months ended March 31, 2022 and 2021:

For the quarter ended
March 31,
2021

Net increase (decrease) in net assets resulting from operations $ 3,445,057
Weighted average shares of common stock outstanding - basic and diluted 5,667,333
Earnings (loss) per share of common stock - basic and diluted $ 0.61

~~Kayne Anderson BDC, Inc.~~
~~Notes to Consolidated Financial Statements (Unaudited)~~

For the three months
ended
March 31,

2022 2021
Net increase (decrease) in net assets resulting from operations $ 5,729 $ 3,445
Weighted average shares of common stock outstanding - basic and diluted 22,393,176 5,667,333
Earnings (loss) per share of common stock - basic and diluted $ 0.26 $ 0.61

Note 10. Financial Highlights

The following per share of common stock data has been derived from information provided in the unaudited financial statements. The following is a schedule of financial highlights for the ~~quarter~~three months ended March 31, 2022 and 2021:

For the quarter ended
March 31,
2021
Per Common Share Operating Performance⁽¹⁾
Net Asset Value, Beginning of Period ⁽²⁾ $ 14.86

Results of Operations:
Net Investment Income 0.11
Net Realized and Unrealized Gain (Loss) on Investments ⁽³⁾ 0.50
Net Increase (Decrease) in Net Assets Resulting from Operations 0.61

Net Asset Value, End of Period $ 15.47

Shares Outstanding, End of Period 5,667,333

Ratio/Supplemental Data
Net assets, end of period $ 87,646,907
Weighted-average shares outstanding 5,667,333
Total Return⁽⁴⁾ 3.1 %
Portfolio turnover 3.8 %
Ratio of operating expenses to average net assets⁽⁵⁾ 7.5 %
Ratio of net investment income (loss) to average net assets⁽⁵⁾ 5.9 %
For the three months ended
March 31,
2022
(amounts in
thousands,
except
share and
per share
amounts) 2021
(amounts in
thousands,
except
share and
per share
amounts)
Per Common Share Operating Performance ⁽¹⁾
Net Asset Value, Beginning of Period⁽²⁾ $ 16.22 $ 14.86
Results of Operations:
Net Investment Income 0.28 0.11
Net Realized and Unrealized Gain (Loss) on Investments⁽³⁾ (0.01 ) 0.50
Net Increase (Decrease) in Net Assets Resulting from Operations 0.27 0.61
Net Asset Value, End of Period $ 16.49 $ 15.47
Shares Outstanding, End of Period 23,474,784 5,667,333

Kayne Anderson BDC, Inc.
Notes to Consolidated Financial Statements
(amounts in 000’s, except share and per share amounts)
(Unaudited)
Ratio/Supplemental Data
Net assets, end of period $ 387,182 $ 87,647
Weighted-average shares outstanding 22,393,176 5,667,333
Total Return⁽⁴⁾ 1.7 % 3.1 %
Portfolio turnover 4.7 % 3.8 %
Ratio of operating expenses to average net assets⁽⁵⁾ 6.6 % 7.5 %
Ratio of net investment income (loss) to average net assets⁽⁵⁾ 7.2 % 5.9 %

(1) The per common share data was derived by using weighted average shares outstanding.
(2) ~~The~~On February 5, 2021, the initial offering price ofwas $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.
(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 ~~$175,465~~$175 for the ~~quarter ended~~period February 5, 2021 (commencement of operations) through March 31, 2021).

Note 11. 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:

On April ~~23, 2021,~~18, 2022, the Company ~~sold 3,532,434 shares of~~completed its ~~common stock at a price of $15.57 per share for an aggregate offering price of $55,000,000. The~~sixth capital close totaling $80,244. Following this capital close, the Company has subscription agreements with investors for an aggregate capital commitment of ~~$285,355,000~~$761,694 (including a $13,250 capital commitment that is contingent on the Company meeting certain conditions) to purchase shares of common stock ($~~145,355,000~~393,611 of the commitments are undrawn). The sale of common stock was made pursuant to subscription agreements entered into by the Company and its stockholders. Under the terms of the subscription agreements, stockholders are required to fund drawdowns to purchase shares of common stock up to the amount of their respective capital commitments on an as-needed basis with a minimum of ten days’ prior notice to stockholders.

On ~~May 14, 2021,~~April 26, 2022, the Company paid ~~its first~~a distribution of ~~$0.15~~$0.26 per share to each common stockholder of record as of April 20, ~~2021.~~2022. The total distribution was $6,103 and $1,222 was reinvested into the Company through the purchase of 74,084 shares of common stock.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company” refer to Kayne Anderson BDC, Inc.

Overview and Investment Framework
Kayne Anderson BDC, LLC was formed ~~in May 2018~~ as a Delaware limited liability ~~company. We were formed~~company to make investments in middle-market companies and commenced operations on February 5, 2021. On this same date, prior to our election to be regulated as a BDC under the 1940 Act, we completed a conversion from a Delaware limited liability company into a Delaware corporation and Kayne Anderson BDC, Inc. succeeded to the business of Kayne Anderson BDC, LLC. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act. In addition, for U.S. federal income tax purposes, we intend to qualify, annually, as a RIC under Subchapter M of the Code.

We are managed by KA Credit Advisors, LLC (the “Advisor”) which 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. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of five directors, three of whom are independent.

~~On February 5, 2021, we completed our initial private offering of 5.7 million shares of common stock with our initial investors for an aggregate offering price of $85 million.~~
Our investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies. We define “middle-market companies” as U.S.-based companies that, in general, generate between $10 million and $150 million of annual earnings before interest, taxes, depreciation and amortization, or EBITDA. We refer to companies that generate between $10 million and $50 million of annual EBITDA as “core middle-market companies” and companies that generate between $50 million and $150 million of annual EBITDA as “upper middle-market companies.”

We intend to achieve our investment objective by investing primarily in first lien senior secured, unitranche and split-lien loans (collectively, “secured middle market loans”) to privately held middle-market companies. Similar to first lien senior secured loans, unitranche loans typically have a first lien on all assets of the borrower, but provide leverage at levels similar to a combination of first lien and second lien and/or subordinated loans. Split-lien loans are ~~generally~~ loans that otherwise satisfy the criteria of a first lien loan but which have been structured with a credit facility that is senior in right of payment with respect to working capital assets of the borrower and a term loan that is collateralized by all other assets of the borrower. Depending on market conditions, we expect that ~~between 80% and~~at least 90% of our portfolio (including investments purchased with proceeds from borrowings) will be invested in ~~first lien senior~~ secured ~~unitranche and split-lien term~~middle market loans. ~~We expect~~It is anticipated that most of these investments will be in core middle market companies, with the remainder in upper middle market companies. The remaining 10% ~~to 20%~~ of our portfolio ~~will~~may be invested in ~~higher-yielding~~higher-returning investments, including, but not limited to, second lien loans, last-out or subordinated loans, non-investment grade broadly syndicated first and second lien loans (commonly referred to as “leveraged loans”), high-yield bonds, structured products (including CLO liabilities), real estate related debt securities, equity securities purchased in conjunction with ~~debt investments~~secured middle market loans and other opportunistic investments (collectively “Opportunistic ~~Middle Market~~ Investments”)., including junior debt, real estate debt and infrastructure credit investments. We expect that the ~~debt~~secured middle market loans we invest in will generally have ~~state terms~~stated maturities of ~~five to~~no more than six years.

We intend to implement our investment objective by (1) accessing the established loan sourcing channels developed by Kayne ~~Anderson,~~Anderson’s middle market private credit team, which includes an extensive network of private equity firms, other middle-market lenders, financial advisors and intermediaries, and ~~experienced~~ management teams, (2) selecting investments within our middle-market company focus, (3) implementing Kayne Anderson’s middle market private credit team’s ~~disciplined~~proven underwriting process, and (4) drawing upon the experience and resources of our Advisor’s investment team and the broader Kayne Anderson network.

We believe our Advisor’s disciplined approach to origination, credit analysis, portfolio construction and risk management should allow us to achieve attractive risk-adjusted returns while preserving investor capital. We anticipate the portfolio will be comprised of a broad mix of loans, with diversity among investment size, industry focus and geography. The Advisor’s team of professionals will conduct in-depth due diligence on prospective investments during the underwriting process and will be heavily involved in structuring the ~~loan’s terms.~~credit terms of each investment. Once an investment has been made, our Advisor will closely monitor portfolio investments and take a proactive approach identifying and addressing sector or company specific risks. The Advisor maintains a regular dialogue with portfolio company management teams (as well as their financial ~~sponsors)~~sponsors, where applicable), reviews detailed operating and financial results on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio management activities. ~~We believe~~
Recent Developments
On April 18, 2022, we completed our sixth capital close totaling $80.2 million. Following this ~~approach will help~~capital close, we have subscription agreements with investors for an aggregate capital commitment of $761.7 million (including a $13.2 million capital commitment that is contingent on us ~~generate more consistent results.~~ meeting certain conditions) to purchase shares of common stock ($393.6 million of the commitments are undrawn).
On April 26, 2022, we paid a distribution of $0.26 per share to each common stockholder of record as of April 20, 2022. The total distribution was $6.1 million and $1.2 million was reinvested into the Company through the purchase of 74,084 shares of common stock.

Portfolio and Investment Activity
~~Prior to our election to be regulated as a BDC, we acquired our initial portfolio of middle market loans from an affiliate of our Advisor (the “Warehousing Entity”).~~
Our initial portfolio purchased from the Warehouse Entity consisted of 18 loans, with an average outstanding balance of $5.9 million, an average purchase price of 97.4% of principal value and an average yield on that date of 8.8%. None of these loans in the initial portfolio were in default or non-accrual status. Information about the initial portfolio is not intended to indicate our expected investment return on the initial portfolio or the investment performance of our shares of common stock. All of the loans are senior secured and the borrowers are middle and upper middle market companies.
As of March 31, ~~2021,~~2022, we had 48104 debt investments and 4 equity investments in 3550 portfolio companies with an aggregate fair value of approximately ~~$156~~$617.1 million and an amortized cost of ~~$153.2~~$605.8 million consisting of ~~100%~~ first lien senior secured debt ($616.1 million fair value) and equity ($1.0 million fair value) investments.

As of March 31, ~~2021,~~2022, our weighted average total yield to maturity of debt and income producing securities at fair value was ~~8.0%~~7.4%, and our weighted average total yield to maturity of debt and income producing securities at amortized cost was ~~8.0%~~7.6%.

Our investment activity for the ~~quarter~~three months ended March 31, 2022 and 2021 is presented below (information presented herein is at par value unless otherwise indicated).

For the quarter ended
March 31,
2021
($ in millions)

New investments:
Gross investments $ 164.8
Less: sold investments (5.0 )
Total new investments 159.8

Principal amount of investments funded:
Private credit investments $ 153.0
Liquid credit investments 8.7
Total principal amount of investments funded 161.7

Principal amount of investments sold:
Private credit investments (0.4 )
Liquid credit investments (4.6 )
Total principal amount of investments sold or repaid (5.0 )

Number of new investment commitments 48
Average new investment commitment amount 3.3
Weighted average maturity for new investment commitments 3.5 years
Percentage of new debt investment commitments at floating rates 99.5 %
Percentage of new debt investment commitments at fixed rates 0.5 %
Weighted average interest rate of new investment commitments 7.3 %
Weighted average spread over LIBOR of new floating rate investment commitments⁽¹⁾ 6.3 %
Weighted average interest rate on investment sold or paid down 4.4 %
For the three months ended
March 31,
2022
($ in
millions) 2021
($ in
millions)

New investments:
Gross investments $ 40.0 $ 164.8
Less: sold investments (28.5 ) (5.0 )
Total new investments 11.5 159.8

Principal amount of investments funded:
Private credit investments $ 66.9 $ 153.0
Liquid credit investments - 8.7
Preferred equity investments⁽¹⁾ 0.3 -
Common equity investments⁽¹⁾ 0.5 -
Total principal amount of investments funded 67.7 161.7

Principal amount of investments sold:
Private credit investments (28.5 ) (0.4 )
Liquid credit investments - (4.6 )
Total principal amount of investments sold or repaid (28.5 ) (5.0 )

Number of new investment commitments 11 48
Average new investment commitment amount $ 3.6 3.3
Weighted average maturity for new investment commitments 4.7 years 3.5 years
Percentage of new debt investment commitments at floating rates 100.0 % 99.5 %
Percentage of new debt investment commitments at fixed rates 0.0 % 0.5 %
Weighted average interest rate of new investment commitments 7.0 % 7.3 %
Weighted average spread over LIBOR of new floating rate investment commitments 6.0 % 6.3 %
Weighted average interest rate on investment sold or paid down 7.3 % 4.4 %

~~(1)~~ ~~Assumes floating rate commitment is subject to the greater~~⁽¹⁾ As of ~~the interest rate floor (if applicable) or 3-month LIBOR which was 0.2% at~~ March 31, ~~2021.~~2022, preferred equity investments and common equity investments were reported in aggregate as equity investments.
Beginning with the three months ended March 31, 2022, we use Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of its portfolio companies. As of December 31, 2021, we used GICS, Level 2 – Industry Group.

The ~~table~~tables below ~~describes~~describe long-term investments by industry composition based on fair value as of March 31, 2022 and December 31, 2021:

March 31,
~~2021~~2022

~~Consumer durables and apparel~~Commercial services & supplies ~~19.5~~18.0 %
~~Materials~~Trading companies & distributors ~~16.7~~14.3 %
~~Capital goods~~ ~~10.8~~ %
~~Commercial~~Health care providers & ~~professional~~ services 10.2 %
~~Health care equipment &~~Building products 6.7 %
Chemicals 5.4 %
Diversified telecommunication services ~~9.5~~5.0 %
~~Food, beverage & tobacco~~Auto components ~~7.2~~4.4 %
~~Pharmaceuticals, biotech & life sciences~~ ~~6.0~~ %
~~Retailing~~ ~~6.0~~ %
~~Household & personal~~Leisure products ~~6.0~~4.2 %
~~Automobiles & components~~Professional services 4.0 %
Wireless telecommunication services 3.6 %
Personal products 3.5 %
~~Diversified financials~~Household products ~~3.4~~3.3 %
Food products 3.0 %
Household durables 2.9 %
Textiles, apparel & luxury goods 2.4 %
Software ~~& services~~ ~~0.7~~2.2 %
~~Transportation~~Specialty retail 1.5 %
Aerospace & defense 1.5 %
Pharmaceuticals 1.4 %
Containers & packaging 1.2 %
Asset management & custody banks 0.9 %
Machinery 0.3 %
~~Technology hardware & equipment~~ ~~0.1~~ %
~~Chemicals~~IT services 0.1 %
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 %
Results of Operations
~~Comparative financial statement tables are not presented as we commenced operations on February 5, 2021.~~ For the ~~period~~three months ended March 31, 2022 and 2021, our total investment income was derived from our ~~initial~~ portfolio of ~~investments during the quarter ended March 31, 2021.~~investments. All investments were income producing, and there were no loans on non-accrual status as of March 31, 2022 or 2021.

The following table represents the operating results for the ~~quarter~~three months ended March 31, 2022 and 2021:

For the three months ended
March 31,
For the quarter ended 2022 2021
March 31,
2021
($ in millions) ($ in
millions) ($ in
millions)
Total investment income $ 1.74 $ 11.9 $ 1.7
Less: Net expenses 1.12 5.7 1.1
Net investment income 0.62 6.2 0.6
Net realized gains (losses) on investments 0.03 0.0 0.1
Net change in unrealized gains (losses) on investments 2.80 (0.5 ) 2.8
Net increase (decrease) in net assets resulting from operations
$ 3.45 $ 5.7 $ 3.5

Investment Income
Investment income for the ~~quarter~~three months ended March 31, 2022 and 2021 totaled $11.9 million and $1.7 million, respectively, and consisted primarily of interest income on our debt investments.

Expenses
Operating expenses for the ~~quarter~~three months ended March 31, 2022 and 2021 ~~was~~were as follows:
For the quarter ended

March 31,
2021
($ in millions)

Interest and debt financing expenses $ 0.46
Management fees 0.18
Other operating expenses 0.20
Initial organization 0.18
Deferred offering costs 0.04
Directors fees 0.06
Total expenses $ 1.12
For the three months ended
March 31,
2022 2021
($ in
millions) ($ in
millions)
Interest and debt financing expenses $ 2.8 $ 0.4
Management fees 1.3 0.2
Incentive fees 1.0 -
Directors fees 0.1 0.1
Initial organization - 0.2
Deferred offering costs - -
Other operating expenses 0.5 0.2
Total expenses $ 5.7 $ 1.1

Total expenses for the three months ended March 31, 2022 and 2021 included ~~$0.18~~$0.03 million ~~of initial organization expenses~~ and $0.04 million of deferred offering ~~costs.~~ costs, respectively.

Net Unrealized Gains (Losses) on Investments
We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the ~~quarter~~three months ended March 31, 2022 and 2021, net unrealized gains (losses) on our investment portfolio were comprised of the following:

For the quarter ended For the three months ended
March 31,

March 31,
2021
($ in millions)
2022 2021
�� ($ in
millions) ($ in
millions)
Unrealized gains on investments $ 2.81 $ 1.1 $ 2.8
Unrealized (losses) on investments (0.01 ) (1.6 ) -
Net change in unrealized gains (losses) on investments $ 2.80 $ (0.5 ) $ 2.8

The change in unrealized appreciation for the three months ended March 31, 2022 and 2021 totaled $1.1 million and $2.8 million, which primarily related to our investments in the following tables:
For the three
months ended
March 31,
2022
($ in millions)
Portfolio Company
BLP Buyer, Inc. (Bishop Lifting Products)       0.4
CGI Automated Manufacturing, LLC 0.2
OMH-HealthEdge Holdings, LLC 0.1
BEL USA, LLC 0.1
Other portfolio companies 0.3
Total Unrealized Appreciation $ 1.1
The change in unrealized depreciation for the three months ended March 31, 2022 totaled $1.6 million related to our investments in the following table:
For the three
months ended
March 31,
2022
($ in millions)
Portfolio Company
Arborworks Acquisition LLC (0.5 )
Trademark Global LLC (0.3 )
Other portfolio accretion (0.8 )
Total Unrealized Depreciation $ (1.6 )

The change in unrealized appreciation for the ~~quarter~~three months ended March 31, 2021 totaled $2.8 million, which primarily related to our investments in the following table:
Unrealized
Appreciation
for the
quarter ended

March 31,
2021
($ in millions)

Portfolio Company
Sundance Holdings Group, LLC $ 0.31
OMH-HealthEdge Holdings, LLC 0.28
Broder Bros., Co. 0.26
New Era Cap Company, Inc. 0.25
Advanced Environmental Monitoring 0.25
WhiteBridge Pet Brands, LLC 0.19
YS Garments, LLC 0.16
Fralock Buyer LLC 0.12
Speedstar Holding LLC 0.11
Foundation Consumer Brands 0.09
Other portfolio companies 0.79
Total Unrealized Appreciation $ 2.81

~~The change in unrealized depreciation for the quarter ended March 31, 2021 totaled $0.10, which was primarily attributable to a reduction in the fair value of Clarios Global LP and RealPage, Inc.~~
For the three
months ended
March 31,
2021
($ in millions)
Portfolio Company
Sundance Holdings Group, LLC $         0.3
OMH-HealthEdge Holdings, LLC 0.3
Broder Bros., Co. 0.3
New Era Cap Company, Inc. 0.2
Advanced Environmental Monitoring 0.2
WhiteBridge Pet Brands, LLC 0.2
YS Garments, LLC 0.2
Fralock Buyer LLC 0.1
Speedstar Holding LLC 0.1
Foundation Consumer Brands 0.1
Other portfolio companies 0.8
Total Unrealized Appreciation $ 2.8

Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from the net proceeds of any offering of our Shares, proceeds from borrowing on our credit facilities and from cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. Our primary use of cash will be investments in portfolio companies, payments of our expenses, repayments of borrowed amounts and payment of cash distributions to our stockholders.

In accordance with the 1940 Act, we are required to meet a coverage ratio of total assets (less total liabilities other than indebtedness) to total borrowings and other senior securities (and any preferred stock that we may issue in the future) of at least 150%. If this ratio declines below 150%, we cannot incur additional leverage and could be required to sell a portion of our investments to repay some leverage when it is disadvantageous to do so. As of March 31, 2022 and December 31, 2021, our asset coverage ~~ratio was 197%~~ratios were 260% and 217%. We currently intend to target asset coverage of 200% to 180% (which equates to a debt-to-equity ratio of 1.0x to 1.25x) but may alter this target based on market conditions.

Over the next twelve months, we expect that cash and cash equivalents, taken together with our undrawn capital commitments and available capacity under our credit facilities, will be sufficient for our investing activities to conduct our operations. In the long term beyond twelve months, we expect that our cash and liquidity needs will continue to be met by cash generated from our ongoing operations as well as financing activities.
As of March 31, ~~2021,~~2022, we had ~~$90~~$242.0 million borrowed under our credit facilities ~~(the LSA and the Credit Agreement)~~ and cash and cash equivalents of ~~$23.2~~$8.8 million (including short-term investments).
As of May ~~14, 2021,~~11, 2022, we had ~~$50~~$296 million borrowed under our ~~LSA; no borrowings outstanding under our Credit Agreement,~~credit facilities and cash and cash equivalents of ~~$8.0~~$3.8 million (including short-term investments).

Capital Contributions
During the ~~quarter~~three months ended March 31, 2022 and 2021, ~~the Company~~we issued and sold ~~5,667,333~~4,191,292 and 5,666,667 shares, respectively, related to capital called at an aggregate purchase price of ~~$85 million.~~$68.6 million and $85.0 million, respectively. As of May ~~14, 2021,~~11, 2022, we had aggregate capital commitments of ~~$285.4~~$761.7 million (including a $13.2 million capital commitment that is contingent on us meeting certain conditions) and undrawn capital commitments from investors of ~~$145.4~~$393.6 million ($~~140~~368.1 million or ~~49.1%~~48.3% funded).

Credit Facilities
OnFrom February 5, 2021 to February 17, 2022, Kayne Anderson BDC Financing, LLC, (“KABDCF”), our wholly owned, special ~~purposes~~purpose financing subsidiary, ~~entered into~~had a ~~Loan~~senior secured credit facility (the “Loan and Security ~~Agreement (the~~Agreement” or “LSA”) with a maximum commitment amount of up to $200 million. On February 18, 2022, we and KABDCF refinanced the LSA with two new credit facilities described below (the Corporate Credit Facility and the Revolving Funding Facility).
Corporate Credit Facility: We are party to a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $275 million. The 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 us, under certain ~~lenders party thereto, administrative agent,~~circumstances, to increase the overall size of the Corporate Credit Facility to a maximum of $550 million. The interest rate on the Corporate Credit Facility is equal to Term SOFR plus an applicable spread of 2.35% per annum (which includes a SOFR adjustment spread of 0.10%) or an “alternate base rate” (as defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.25%. We are also required to pay a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility.

Revolving Funding Facility: We and our ~~Advisor as collateral manager. The maximum~~wholly owned, special purpose financing subsidiary, KABDCF, are party to a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of ~~the LSA is up to $150 million, and, subject to certain conditions, may be increased by $50 million up to two times not to exceed~~ $250 million. ~~Advances under~~The Revolving Funding Facility is secured by all of the ~~facility bear an~~assets held by, and the membership interest in, KABDCF. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are February 18, 2025 and February 18, 2027, respectively. The interest rate on the Revolving Funding Facility is equal to daily SOFR plus 2.35% per annum. KABDCF is also required to pay a commitment fee of ~~LIBOR plus 4.25% (subject to a 1.00% LIBOR floor). The facility has a term~~between 0.50% and 1.50% per annum depending on the size of ~~three years.~~the unused portion of the Revolving Funding Facility.

~~In addition, on February 5, 2021, we entered into~~Subscription Credit Agreement: We are party to a ~~$75 million~~senior secured revolving credit agreement ~~(the “Credit Agreement”) with certain lenders party thereto. The Credit Agreement is comprised of two sub-facilities: (i)~~that includes a capital call facility (the “Subscription ~~Facility”) and (ii) a treasury facility (the “Treasury Facility”~~Credit Agreement”). The ~~interest rate~~Subscription Credit Agreement permits us to borrow up to $175 million, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The Subscription ~~Facility will be equal to LIBOR plus 1.90% (subject to~~Credit Agreement has a ~~0.35% LIBOR floor)~~maximum commitment of $175 million and the interest rate under the ~~Treasury Facility will be~~facility is equal to ~~LIBOR~~Term SOFR plus ~~0.20% (with no LIBOR~~1.975% (subject to a 0.275% floor). We are also required to pay a commitment fee of 0.25% per annum on the unused portion of the Subscription Credit Agreement. The Subscription ~~Facility~~Credit Agreement will expire on December 31, ~~2022, and the Treasury Facility will expire on September 30, 2021.~~2022.

~~The Credit Agreement allows us to transfer the commitment amount under the Treasury Facility~~Contractual Obligations
A summary of our significant contractual principal payment obligations related to the ~~Subscription Facility. On~~repayment of our outstanding indebtedness at March ~~2, 2021, $15 million was transferred from the Treasury Facility to the Subscription Facility.~~ 31, 2022 is as follows:
Payments Due by Period ($ in millions)
Total Less than 1
year 1-3 years 3-5 years After 5
years
Corporate Credit Facility $ 78.0 $ - $     - $ 78.0 $     -
Revolving Funding Facility 150.0 - - 150.0 -
Subscription Credit Agreement 14.0 14.0 - - - -
Total contractual obligations $ 242.0 $ 14.0 $ - $ 228.0 $ -
Off-Balance Sheet Arrangements
As of March 31, 2022 and December 31, 2021, ~~the Subscription Facility and Treasury Facility~~we had ~~commitments of $40~~an aggregate $81.8 million and ~~$35~~$97.8 million, ~~respectively.~~respectively, of unfunded commitments to provide debt financing to our portfolio companies. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in our financial statements. Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any other off-balance sheet financings or liabilities.

25
Critical Accounting ~~Policies~~Estimates

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in conjunction with our risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and in this Quarterly Report. See Note 2 to our consolidated financial statements for the three months ended March 31, ~~2021,~~2022, for more information on our critical accounting policies.

Investment Valuation
We conduct the valuation of our investments consistent with GAAP and the 1940 Act. Our investments are 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”).~~
ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value. 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.

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 our Advisor, fair market value will be determined using our valuation process for investments that are privately issued or otherwise restricted as to resale.

We may also invest, to a lesser extent, in equity securities purchased in conjunction with debt investments. While we anticipate these equity securities to be issued by privately held companies, we 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.

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 our Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of our 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. We expect that a significant majority of our investments will be Level 3 investments. Unless otherwise determined by the Board, the following valuation process is used for our Level 3 investments:

● Investment Team Valuation. The applicable investments are valued by senior professionals of Kayne Anderson who are responsible for the portfolio investments. The value of each portfolio company or investment will be initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments), a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs will be used to determine a preliminary value. The investments will be valued no less frequently than quarterly, with new investments valued at the time such investment was made.

● Investment Team Valuation Documentation. Preliminary valuation conclusions will be determined by our executive officers. Such valuation and supporting documentation is submitted to the Audit Committee (a committee of our Board) and our Board on a quarterly basis.

● Audit Committee. The Audit Committee meets to consider the valuations submitted by our executive officers at the end of each quarter. Between meetings of the Audit Committee, our executive officers are authorized to make valuation determinations. All valuation determinations of the Audit Committee are subject to ratification by our Board at its next regular meeting.

● Valuation Firm. Quarterly, a third-party valuation ~~firm~~firms engaged by our Board ~~reviews~~review the valuation methodologies and calculations employed for each of our investments that we have placed on the “watch list” and approximately 25% of our remaining investments. ~~The~~These third-party valuation ~~firm~~firms will review all of the Level 3 investments at least once per year, on a rolling twelve-month basis. We expect the quarterly report issued by ~~the~~these third-party valuation ~~firm~~firms will assist the Board in determining the fair values of the investments reviewed.

● Board Determination. Our Board meets quarterly to consider the valuations provided by our executive officers and the Audit Committee and ratify valuations for the applicable investments. Our Board considers the report provided by the third-party valuation ~~firm~~firms in reviewing and determining in good faith the fair value of the applicable portfolio investments.

The Board of Directors is ultimately responsible for the determination, in good faith, of the fair value of our portfolio investments.

Refer to Note 5 – Fair Value – for more information on the Company’s valuation process.

Revenue Recognition

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, which represents contractual interest accrued and added to the principal balance, we generally will not accrue PIK interest for accounting purposes if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities for accounting purposes if we have reason to doubt our ability to collect such interest. OIDs, market discounts or premiums are accreted or amortized using the effective interest method as interest income. We record prepayment premiums on loans and debt securities as interest income.

~~Contractual Obligations~~
~~A summary of our significant contractual principal payment obligations related to the repayment of our outstanding indebtedness at March 31, 2021 is as follows:~~
Payments Due by Period ($ in millions)
Total Less than 1 year 1-3 years 3-5 years After 5 years
Loan and Security Agreement (LSA) $ 50 $          $ 50 $           $
Credit Agreement $ 40 $ - $ 40 $ - $ -
Total contractual obligations $ 90 $ - $ 90 $ - $ -
~~Off-Balance Sheet Arrangements~~
~~Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any off-balance sheet financings or liabilities.~~

Related Party Transactions
Investment Advisory Agreement. On February 5, 2021, we entered into the Investment Advisory Agreement with our Advisor. Our Advisor will agree to serve as our investment advisor in accordance with the terms of our Investment Advisory Agreement. Payments under our Investment Advisory Agreement in each reporting period will consist of the base management fee equal to a percentage of the fair market value of 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 as well as an incentive fee based on our performance.

For services rendered under the Investment Advisory Agreement, we will pay a base management fee quarterly in arrears to our Advisor based on the of the fair market value of our 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. We will also pay an incentive fee on income and an incentive fee on capital gains to our Advisor.

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 proceeds from a Company Liquidation payable to the Company’s common stockholders have been distributed to such stockholders.

Administration ~~Agreement~~Agreement.. On February 5, 2021, we entered into an Administration Agreement with ~~the~~our Advisor, which serves as our Administrator pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. The Administrator will be reimbursed for administrative expenses it incurs on our behalf in performing its obligations. Such reimbursement may be made for our allocable portion (subject to the review and approval of our independent directors) of office facilities, overhead, and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and their respective staff who provide services to us. As we reimburse the Administrator for its expenses, we will indirectly bear such cost. The Administrator engaged U.S. Bank Global Fund Services under a sub-administration agreement to assist the Administrator in performing certain of its administrative duties. The Administrator may enter into additional sub-administration agreements with third-parties to perform other administrative and professional services on behalf of the Administrator.
On February 5, 2021, we purchased our initial portfolio of investments for $103 million from an affiliate of our Advisor (the “Warehousing Entity”) with a portion of the proceeds from the sale of common stock together with borrowings under our credit facility.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including changes in interest ~~rates and the valuations of our investment portfolio. Uncertainty with respect~~rates. Interest rate sensitivity refers to the ~~economic effects of the COVID-19 pandemic introduced significant volatility~~change in our earnings that may result from changes in the ~~financial markets, and the effects~~level of ~~this volatility has materially impacted and could continue to materially impact our market risks, including those listed below.~~
~~Valuation Risk.~~ The majority of our portfolio investments take the form of securities for which no market quotations are readily available. The fair value of securities and other investments that are not publicly traded may not be readily determinable, andinterest rates. Because we ~~value these securities at fair value as determined in good faith by our Board of Directors, including to reflect significant events affecting the value of our securities. Most~~fund a portion of our investments ~~are classified as Level 3 under ASC Topic 820 which means that~~with borrowings, our portfolio valuations are based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. Inputs into the determination of fair value of our portfolio investments require significant management judgment or estimation. Because such valuations are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a liquid trading market for these instruments existed. Our net asset value (“NAV”) could be adversely affected if the determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such investments.
~~Interest Rate Risk.~~ Weinvestment income will be ~~subject to financial market risks, including changes in interest rates.~~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. 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.

Assuming that the consolidated statement of assets and liabilities as of March 31, ~~2021~~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 Increase
(Decrease) in
Interest
Income Increase
(Decrease) in
Interest
Expense Net Increase
(Decrease) in
Net
Investment
Income
Down 25 basis points $ - $ - $ - $ - $ (0.6 ) $ 0.6
Up 75 basis points $ 4.4 $ 1.8 $ 2.6
Up 100 basis points 0.4 0.4 $ 0.0 $ 6.0 $ 2.4 $ 3.6
Up 200 basis points 1.9 1.3 $ 0.6 $ 12.1 $ 4.8 $ 7.3
Up 300 basis points 3.4 2.2 $ 1.2 $ 18.3 $ 7.3 $ 11.0

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.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures
As of March 31, ~~2021~~2022 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic United States Securities and Exchange Commission filings is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Neither we nor our Advisor is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Advisor.

From time to time, we, or our Advisor, may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors described below and in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, including risk factors related to the COVID-19 pandemic, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.
The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.
For example, the COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets.
In addition, the rising conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial condition, cash flows and results of operations. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict. In addition, sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting private companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~For~~As set forth in the ~~period February 5, 2021 (Commencement of Operations) through~~table below (dollars in thousands, except per share amounts), during the three months ended March 31, ~~2021, the Company~~2022, we issued and sold ~~5,667,333~~4,191,292 shares of ~~its~~ common stock at an aggregate ~~purchase price~~offering amount of ~~$85~~approximately $68.6 million. The issuance of the shares of common stock was exempt from the registration requirements of the Securities Act, ~~of 1933, as amended (the “Securities Act”),~~ pursuant to Section ~~4 (a)~~4(a)(2) and Rule 506(b) of Regulation D ~~thereof.~~thereof and previously reported by us on our current reports on Form 8-K. The Company relied, in part, upon representations from the investors in the subscription agreements that each investor was an accredited investor as defined in Regulation D under the Securities Act. We did not engage in general solicitation or advertising, and did not offer securities to the public, in connection with such issuances and sales.
Common stock issue date Offering
price per
share Common stock
shares issued Aggregate
offering
amount
January 24, 2022 $ 16.36 4,191,292 $ 68,582

Item 3. Default Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this Report.

~~Exhibit Index~~
Exhibit Index
3.1 Certificate of Formation (3)
3.2 Initial Limited Liability Company Agreement (1)
3.3 Certificate of Conversion (2)
3.4 Certificate of Incorporation (2)
3.5 Bylaws (2)
4.1 Description of Securities (3)
10.1 Investment Advisory Agreement (1)
10.2 Administration Agreement (1)
10.3 License Agreement (1)
10.4 Indemnification Agreement (1)
10.5 Custody Agreement (1)
10.6 Subscription Agreement (1)
~~10.7~~ Loan and Security Agreement, dated as of February 5, 2021, by and between KA Credit Advisors, LLC, as collateral manager, Kayne Anderson BDC Financing, LLC, as borrower, certain lenders thereto, administrative agent for the lenders, and collateral agent for the lenders (2)
10.8 Credit Agreement, dated February 5, 2021, by and between Kayne Anderson BDC, Inc., as borrower, lenders signatories thereto, and agent and the lead arranger (2)
10.9 Senior Secured Revolving Credit Agreement, dated February 18, 2022 (4)
10.10 Loan and Security Agreement, dated February 18, 2022 (4)
21.1 Subsidiaries of Kayne Anderson BDC, Inc. (3)
31.1* Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Code of Ethics (1)
(1) Incorporated by reference from the Company’s Amendment No. 2 to Form 10, as filed with the Securities and Exchange Commission on November 9, 2020.
(2) Incorporated by reference from the Company’s Form 8-K, as filed with the Securities and Exchange Commission on February 9, 2021.
(3) Incorporated by reference from the Company’s Form 10-K, as filed with the Securities and Exchange Commission on February 26, 2021.
*
(4)
~~Filed herewith.~~
Incorporated by reference from the Company’s Form 8-K, as filed with the Securities and Exchange Commission on February 25, 2022.

32

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Kayne Anderson BDC, Inc.
Date: May 16, 2022

~~Date: May 17, 2021~~
/s/ ~~Michael J. Levitt~~James C. Baker, Jr.
Name: ~~Michael J. Levitt~~
James C. Baker, Jr.

Title:
Chief Executive Officer
~~(Principal Executive Officer)~~
(Principal Executive Officer)
Date: May ~~17, 2021~~16, 2022
/s/ Terry A. Hart
Name: Terry A. Hart
Title: Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

33
45

Delaware		83-0531326
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

811 Main Street, 14^th Floor, Houston, TX		77002
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

	March 31, 2022			December 31, 2021
Assets:	(Unaudited)
Investments, at fair value:
Long-term investments (amortized cost of $605,750 and $566,616)	$	617,067		$	578,445
Short-term investments (amortized cost of $3,004 and $3,674)		3,004			3,674
Cash and cash equivalents		5,817			2,035
Deferred offering costs		-			29
Interest receivable		3,179			2,133
Prepaid expenses and other assets		186			148
Total Assets	$	629,253		$	586,464

Liabilities:
Corporate Credit Facility (Note 6)	$	78,000		$	-
Unamortized Corporate Credit Facility issuance costs		(2,204	)		-
Loan and Security Agreement (Note 6)		-			162,000
Unamortized Loan and Security Agreement issuance costs		-			(247	)
Revolving Funding Facility (Note 6)		150,000			-
Unamortized Revolving Funding Facility issuance costs		(2,546	)		-
Subscription Credit Agreement (Note 6)		14,000			105,000
Unamortized Subscription Credit Facility issuance costs		(340	)		(425	)
Accrued organizational and offering costs		-			6
Distributions payable		-			4,615
Management fee payable		1,137			952
Incentive fee payable		1,020			65
Accrued expenses and other liabilities		3,004			2,529
Total Liabilities	$	242,071		$	274,495

Commitments and contingencies (Note 8)

Net Assets:
Common Shares, $0.001 par value; 100,000,000 shares authorized; 23,474,784 and 19,227,902 as of March 31, 2022 and December 31, 2021, respectively, issued and outstanding	$	23		$	19
Additional paid-in capital		370,206			300,726
Total distributable earnings (deficit)		16,953			11,224
Total Net Assets	$	387,182		$	311,969
Total Liabilities and Net Assets	$	629,253		$	586,464
Net Asset Value Per Common Share	$	16.49		$	16.22

	March 31, 2021 (Unaudited)			December 31, 2020
Assets:
Investments, at fair value:
Long-term investments (amortized cost of $153,232,958)	$	156,031,005		$	-
Short-term investments (amortized cost of $17,377,178)		17,377,178			-
Cash and cash equivalents		5,806,600			10,000
Deferred offering costs		219,547			230,534
Receivable for sales of investments		3,953,182			-
Receivable for principal payments on investments		68,037			-
Interest receivable		713,787			-
Prepaid expenses and other assets		170,945			177,075
Total Assets	$	184,340,281		$	417,609

Liabilities:
Loan and Security Agreement (Note 6)	$	50,000,000		$	-
Unamortized Loan and Security Agreement issuance costs		(325,938	)		-
Subscription Credit Facility (Note 6)		40,000,000			-
Unamortized Subscription Credit Facility issuance costs		(187,468	)		-
Accrued organizational and offering costs		101,596			141,360
Payable for investments purchased		5,120,113			-
Payables to affiliates (Note 3)		1,215,005			1,074,399
Management fee payable		176,043			-
Accrued expenses and other liabilities		361,660			-
Accrued other general and administrative expenses		232,363			-
Total Liabilities	$	96,693,374		$	1,215,759

Commitments and contingencies (Note 8)

Net Assets:
Common Shares, $0.001 par value; 100,000,000 shares authorized; 5,667,333 as of March 31, 2021 issued and outstanding		5,667			-
Additional paid-in capital		85,004,333			-
Total distributable earnings (deficit)		2,636,907			-
Total member’s capital (deficit)		-			(798,150	)
Total Net Assets	$	87,646,907		$	(798,150	)
Total Liabilities and Net Assets	$	184,340,281		$	417,609
Net Asset Value Per Common Share	$	15.47			n/a

	For the quarter ended
	March 31, 2021
Income:
Investment income from investments:
Interest income	$	1,736,558
Total Investment Income		1,736,558

Expenses:
Interest expense		461,469
Management fees		176,043
Professional fees		107,617
Directors fees		65,000
Offering costs		38,952
Initial organization costs		175,465
Other general and administrative expenses		97,327
Total Expenses		1,121,873
Net Investment Income (Loss)		614,685

Realized and unrealized gains (losses) on investments
Net realized gains (losses):
Investments		32,324
Total net realized gains (losses)		32,324
Net change in unrealized gains (losses):
Investments		2,798,048
Total net change in unrealized gains (losses)		2,798,048
Total realized and unrealized gains (losses)		2,830,372

Net Increase (Decrease) in Net Assets Resulting from Operations	$	3,445,057

Per Common Share Data:
Basic and diluted net investment income per common share	$	0.11
Basic and diluted net increase in net assets resulting from operations	$	0.61
Weighted Average Common Shares Outstanding - Basic and Diluted		5,667,333

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

			Page
PART I.	FINANCIAL INFORMATION		1
Item 1.	Consolidated Financial Statements ~~(Unaudited)~~		1
	Consolidated Statements of Assets and Liabilities as of March 31, ~~2021~~2022 (Unaudited) and December 31, ~~2020~~2021		1
	Consolidated ~~Statement~~Statements of Operations for the ~~quarter~~three months ended March 31, 2022 and 2021 (Unaudited)		2
	Consolidated Statement of Changes in Net Assets for the ~~quarter~~three months ended March 31, 2022 and 2021 (Unaudited)		3
	Consolidated Statement of Cash Flows for the ~~quarter~~three months ended March 31, 2022 and 2021 (Unaudited)		4
	Consolidated Schedule of Investments as of March 31, 2022 (Unaudited) and December 31, 2021 ~~(Unaudited)~~		5
	Notes to Consolidated Financial Statements (Unaudited)	7	15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29	42
Item 4.	Controls and Procedures	29	42

PART II.	OTHER INFORMATION	30	43
Item 1.	Legal Proceedings	30	43
Item 1A.	Risk Factors	30	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31	43
Item 3.	Defaults Upon Senior Securities	31	43
Item 4.	Mine Safety Disclosures	31	43
Item 5.	Other Information	31	43
Item 6.	Exhibits	32	44

Signatures		33	45

	For the three months ended March 31,
	2022			2021
Income:
Investment income from investments:
Interest income	$	11,897		$	1,737
Total Investment Income		11,897			1,737

Expenses:
Management fees		1,326			176
Incentive fees		955			-
Interest expense		2,808			461
Professional fees		145			108
Directors fees		107			65
Offering costs		29			39
Initial organization costs		-			175
Other general and administrative expenses		314			98
Total Expenses		5,684			1,122
Net Investment Income (Loss)		6,213			615

Realized and unrealized gains (losses) on investments
Net realized gains (losses):
Investments		28			32
Total net realized gains (losses)		28			32
Net change in unrealized gains (losses):
Investments		(512	)		2,798
Total net change in unrealized gains (losses)		(512	)		2,798
Total realized and unrealized gains (losses)		(484	)		2,830

Net Increase (Decrease) in Net Assets Resulting from Operations	$	5,729		$	3,445

Per Common Share Data:
Basic and diluted net investment income per common share	$	0.28		$	0.11
Basic and diluted net increase in net assets resulting from operations	$	0.26		$	0.61
Weighted Average Common Shares Outstanding - Basic and Diluted		22,393,176			5,667,333

	For the quarter ended
	March 31, 2021
Increase (Decrease) in Net Assets Resulting from Operations:
Net investment income (loss)	$	614,685
Net realized gains (losses) on investments		32,324
Net change in unrealized gains (losses) on investments		2,798,048
Net Increase (Decrease) in Net Assets Resulting from Operations		3,445,057

Increase in Net Assets Resulting from Capital Share Transactions
Issuance of common shares		85,000,000
Net Increase in Net Assets Resulting from Capital Share Transactions		85,000,000
Total Increase (Decrease) in Net Assets		88,445,057
Net Assets, Beginning of Period		(798,150	)
Net Assets, End of Period	$	87,646,907

Portfolio Company⁽¹⁾	Investment	Interest Rate	Maturity Date	Principal / Par		Amortized Cost⁽²⁾⁽³⁾		Fair Value		Percentage of Net Assets
Debt and Equity Investments
Private Credit Investments⁽⁴⁾
Aerospace & defense
Blade (US) Holdings, Inc.	First lien senior secured loan	7.00% (L + 6.00%)	8/31/2027	$	4,854	$	4,756	$	4,854		1.2	%
	First lien senior secured delayed draw loan	7.00% (L + 6.00%)	3/3/2023		-		-		-		0.0	%
Fastener Distribution Holdings, LLC	First lien senior secured delayed draw loan	8.01% (L + 7.00%)	4/1/2022		2,199		2,199		2,199		0.6	%
	First lien senior secured loan	8.00% (L + 7.00%)	4/1/2022		1,937		1,917		1,937		0.5	%
					8,990		8,872		8,990		2.3	%
Asset management & custody banks
Atria Wealth Solutions, Inc.	First lien senior secured loan	7.01% (L + 6.00%)	11/30/2022		5,178		5,153		5,178		1.3	%
					5,178		5,153		5,178		1.3	%
Auto components
Speedstar Holding LLC	First lien senior secured loan	8.00% (L + 7.00%)	1/22/2027		4,993		4,899		5,043		1.3	%
	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% (S + 5.50%)	11/30/2026		21,386		21,033		21,386		5.5	%
	First lien senior secured revolving loan	6.50% (S + 5.50%)	11/30/2026		167		140		167		0.1	%
					26,546		26,072		26,596		6.9	%
Building products
BCI Burke Holding Corp.	First lien senior secured loan	6.75% (L + 5.75%)	12/14/2027		17,260		16,972		17,260		4.5	%
	First lien senior secured delayed draw loan	6.75% (L + 5.75%)	12/14/2023		-		-		-		0.0	%
	First lien senior secured revolving loan	6.75% (L + 5.75%)	6/14/2027		429		403		429		0.1	%
Eastern Wholesale Fence	First lien senior secured loan	8.00% (L + 7.00%)	10/30/2025		3,308		3,208		3,308		0.9	%
	First lien senior secured loan	8.00% (L + 7.00%)	10/30/2025		18,338		17,861		18,338		4.7	%
	First lien senior secured revolving loan	8.00% (L + 7.00%)	10/30/2025		1,701		1,671		1,701		0.4	%
					41,036		40,115		41,036		10.6	%
Chemicals
Cyalume Technologies Holdings, Inc.	First lien senior secured loan	6.51% (L + 5.50%)	10/25/2024		1,652		1,641		1,652		0.5	%
Fralock Buyer LLC	First lien senior secured loan	6.50% (L + 5.50%)	4/17/2024		9,251		9,113		9,251		2.4	%
	First lien senior secured loan	6.50% (L + 5.50%)	4/17/2024		2,446		2,408		2,446		0.6	%
	First lien senior secured revolving loan	6.50% (L + 5.50%)	4/17/2024		-		-		-		0.0	%
USALCO, LLC	First lien senior secured loan	7.01% (L + 6.00%)	10/19/2027		19,327		18,891		19,327		5.0	%
	First lien senior secured revolving loan	7.00% (L + 6.00%)	10/19/2026		827		780		827		0.2	%
					33,503		32,833		33,503		8.7	%
Commercial services & supplies
Advanced Environmental Monitoring (5)	First lien senior secured loan	8.50% (L + 7.50%)	1/29/2026		7,372		7,171		7,372		1.9	%
American Equipment Holdings LLC	First lien senior secured delayed draw loan	7.00% (L + 6.00%)	11/5/2023		6,367		6,248		6,367		1.6	%

	For the quarter ended
	March 31, 2021
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	3,445,057
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		(32,324	)
Net change in unrealized (gains)/losses on investments		(2,798,048	)
Net accretion of discount on investments		(168,177	)
Purchases of short-term investments		(17,377,178	)
Purchases of portfolio investments		(157,975,978	)
Proceeds from sale of portfolio investments		5,018,061
Paid-in-kind interest from portfolio investments		(74,540	)
Amortization of deferred financing cost		35,047
Increase/(decrease) in operating assets and liabilities:
(Increase)/decrease in receivable for sales of investments		(3,953,182	)
(Increase)/decrease in interest and dividends receivable		(713,787	)
(Increase)/decrease in deferred offering costs		10,987
(Increase)/decrease in receivable for principal payments on investments		(68,037	)
(Increase)/decrease in prepaid expenses and other assets		6,130
Increase/(decrease) in payable for investments purchased		5,120,113
Increase/(decrease) in management fees payable		176,043
Increase/(decrease) in payable to affiliate		140,606
Increase/(decrease) in accrued organizational and offering costs		(39,764	)
Increase/(decrease) in accrued expenses and other liabilities		361,660
Increase/(decrease) in accrued other general and administrative expenses		232,363
Net cash used in operating activities		(168,654,948	)
Cash Flows from Financing Activities:
Borrowings on Loan and Security Agreement, net		50,000,000
Borrowings on Subscription Credit Facility, net		40,000,000
Payments of debt issuance costs		(548,452	)
Proceeds from issuance of common shares		85,000,000
Net cash provided by financing activities		174,451,548
Net increase in cash and cash equivalents		5,796,600
Cash and cash equivalents, beginning of period		10,000
Cash and cash equivalents, end of period	$	5,806,600

Supplemental and Non-Cash Information:
Interest paid during the period	$	11,396

	Number of Units / Shares		Cost		Fair Value		Percentage of Net Assets
Equity Investments
Auto components
Vehicle Accessories, Inc. – Class A common (6)		128.250		-		-		0.0	%
Vehicle Accessories, Inc. – preferred (6)		250.000		250		250		0.1	%
		378.250		250		250		0.1	%
Commercial services & supplies
BLP Buyer, Inc. (Bishop Lifting Products) – Class A common (7)		500.000		500		500		0.1	%

Food products
Siegel Parent, LLC (8)		0.250		250		250		0.1	%
Total Private Equity Investments		878.500		1,000		1,000		0.3	%

Total Private Investments				605,750		617,067		159.4	%

	Number of Shares		Cost		Fair Value			Percentage of Net Assets
Short-Term Investments
First American Treasury Obligations Fund - Institutional Class Z, 0.19% (9)		3,004		3,004		3,004			0.8	%
Total Short-Term Investments		3,004		3,004		3,004			0.8	%

Total Investments			$	608,754	$	620,071			160.2	%

Liabilities in Excess of Other Assets						(232,889	)		(60.2	)%
Net Assets					$	387,182			100.0	%

(1)	As of March 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 March 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 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).

(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 0.19% of the common equity and 0.43% of the preferred equity of Vehicle Accessories, Inc.
(7)	The Company owns 0.53% of the common equity BLP Buyer, Inc. (Bishop Lifting Products).

(8)	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 1.14%. Through the Company’s ownership of the Aggregator, the Company owns 250 Class A units of Siegel Parent, LLC.

Portfolio Company⁽¹⁾	Investment	Interest Rate	Maturity Date	Principal / Par		Amortized Cost⁽²⁾⁽³⁾		Fair Value		Percentage of Net Assets
Debt Investments
Private Credit Investments⁽⁴⁾
Automobiles & components
Speedstar Holding LLC	First lien senior secured loan	8.00% (L + 7.00%)	1/22/2027	$	5,043,224	$	4,932,963	$	5,043,224		5.8	%
	First lien senior secured delayed draw term loan	8.00% (L + 7.00%)	1/22/2027		-		-		-		0.0	%
					5,043,224		4,932,963		5,043,224		5.8	%
Capital goods
Broder Bros., Co.	First lien senior secured loan	9.75% (L + 8.50%)	12/2/2022		5,461,140		4,985,667		5,242,695		6.0	%
Fastener Distribution Holdings, LLC	First lien senior secured delayed draw term loan	8.00% (L + 7.00%)	4/1/2022		2,220,231		2,201,059		2,220,231		2.5	%
	First lien senior secured loan	8.00% (L + 7.00%)	4/1/2022		1,954,628		1,937,747		1,954,628		2.2	%
Friedrich Air Conditioning Co., LTD	First lien senior secured loan	7.00% (L + 6.00%)	2/7/2023		1,496,769		1,483,353		1,496,769		1.7	%
GEON Performance Solutions	First lien senior secured loan	7.88% (L + 6.25%)	10/25/2024		4,426,724		4,384,865		4,426,724		5.1	%
	First lien senior secured revolving loan	7.88% (L + 6.25%)	10/25/2024		-		-		-		0.0	%
					15,559,492		14,992,691		15,341,047		17.5	%
Commercial & professional services
Advanced Environmental Monitoring	First lien senior secured loan	7.50% (L + 6.50%)	1/29/2026		7,371,545		7,124,922		7,371,545		8.4	%
PMFC Holding, LLC	First lien senior secured delayed draw term loan	8.50% (L + 7.50%)	7/31/2023		2,868,984		2,842,716		2,868,984		3.3	%
	First lien senior secured loan	8.50% (L + 7.50%)	7/31/2023		5,718,855		5,666,642		5,718,855		6.5	%
	First lien senior secured revolving loan	8.50% (L + 7.50%)	7/31/2023		-		-		-		0.0	%
					15,959,384		15,634,280		15,959,384		18.2	%
Consumer durables and apparel
BEL USA, LLC	First lien senior secured loan	9.50% (L + 8.00%), incl. 1.20% PIK	11/2/2023		149,823		148,451		147,575		0.2	%
	First lien senior secured loan	8.00% (L + 6.50%)	11/2/2023		9,003,046		8,793,062		8,868,001		10.1	%
New Era Cap Company, Inc.	First lien senior secured loan	7.50% (L + 6.50%)	9/10/2023		12,822,254		12,702,812		12,950,477		14.8	%
YS Garments, LLC	First lien senior secured loan	7.00% (L + 6.00%)	8/9/2024		8,526,896		8,325,213		8,484,261		9.7	%
					30,502,019		29,969,538		30,450,314		34.8	%
Diversified financials
Atria Wealth Solutions, Inc.	First lien senior secured loan	7.00% (L + 6.00%)	11/30/2022		5,231,057		5,158,971		5,231,057		6.0	%
					5,231,057		5,158,971		5,231,057		6.0	%
Food, beverage & tobacco
Pretzels, LLC	First lien senior secured loan	7.00% (L + 6.00%)	10/22/2024		3,238,013		3,207,706		3,270,393		3.7	%
WhiteBridge Pet Brands, LLC	First lien senior secured loan	6.25% (L + 5.25%)	1/24/2025		7,924,558		7,732,115		7,924,558		9.0	%
					11,162,571		10,939,821		11,194,951		12.7	%
Health care equipment & services
OMH-HealthEdge Holdings, LLC	First lien senior secured loan	6.25% (L + 5.25%)	10/24/2025		12,468,750		12,191,705		12,468,750		14.2	%
Smile Doctors, LLC	First lien senior secured loan	7.00% (L + 6.00%)	10/6/2022		2,171,400		2,151,997		2,171,400		2.5	%
Smile Doctors, LLC	First lien senior secured revolving loan	7.00% (L + 6.00%)	10/6/2022		-		-		-		0.0	%
					14,640,150		14,343,702		14,640,150		16.7	%
Household & personal products
PH Beauty Holdings III, Inc.	First lien senior secured loan	5.19% (L + 5.00%)	9/28/2025		9,716,284		9,295,425		9,376,214		10.7	%
					9,716,284		9,295,425		9,376,214		10.7	%
Materials
Cyalume Technologies Holdings, Inc.	First lien senior secured loan	7.50% (L + 6.00%)	10/25/2024		1,897,752		1,879,812		1,897,752		2.2	%
Deflecto, LLC	First lien senior secured loan	8.50% (L + 7.50%)	9/22/2022		962,676		954,114		962,676		1.1	%
Drew Foam Companies, Inc.	First lien senior secured loan	7.50% (L + 6.50%)	11/5/2025		3,684,298		3,630,231		3,684,298		4.2	%
	First lien senior secured loan	7.50% (L + 6.50%)	11/15/2025		792,178		780,672		792,178		0.9	%
	First lien senior secured loan	7.50% (L + 6.50%)	11/5/2025		3,029,073		2,984,621		3,029,073		3.5	%
Fralock Buyer LLC	First lien senior secured loan	7.00% (L + 6.00%)	4/17/2024		5,522,176		5,403,220		5,522,176		6.3	%
	First lien senior secured revolving loan	7.00% (L + 6.00%)	4/17/2024		-		-		-		0.0	%
Meridian Adhesives Group, Inc.	First lien senior secured loan	6.50% (L + 5.50%)	9/25/2023		5,726,424		5,673,201		5,726,424		6.5	%
	First lien senior secured loan	7.25% (L + 6.25%)	9/25/2023		4,304,444		4,211,378		4,304,444		4.9	%
					25,919,021		25,517,249		25,919,021		29.6	%
Pharmaceuticals, biotech & life sciences
Foundation Consumer Brands	First lien senior secured loan	7.38% (L + 6.38%)	10/1/2026		9,423,077		9,327,157		9,423,077		10.8	%
	First lien senior secured revolving loan	7.38% (L + 6.38%)	10/1/2026		-		-		-		0.0	%
					9,423,077		9,327,157		9,423,077		10.8	%
Retailing
Sundance Holdings Group, LLC	First lien senior secured loan	9.00% (L + 8.00%), incl 2.00% PIK	5/1/2024		9,521,641		9,063,700		9,378,816		10.7	%
					9,521,641		9,063,700		9,378,816		10.7	%
Total Private Credit Investments					152,677,920		149,175,497		151,957,255		173.5	%

Portfolio Company⁽¹⁾	Investment		Interest Rate	Maturity Date	Principal / Par		Amortized Cost⁽²⁾⁽³⁾		Fair Value		Percentage 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	%

	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	%

	For the quarter ended March 31, 2021			First-lien
				senior secured			Equity
For the three months ended March 31, 2022				debt investments			investments		Total
Fair value, beginning of period	$	-		$	578,195		$	250	$	578,445
Purchases of investments		149,311,308			65,773			750		66,523
Proceeds from principal payments and sales of investments		(304,036	)
Proceeds from sales of investments and principal repayments					(28,167	)		-		(28,167	)
Net change in unrealized gain (loss)		2,781,758			(512	)		-		(512	)
Net realized gain (loss)					28			-		28
Net accretion of discount on investments		168,225			750			-		750
Transfers into (out of) Level 3		-			-			-		-
Fair value, end of period	$	151,957,255		$	616,067		$	1,000	$	617,067

	As of March 31, 2022
	Fair Value		Valuation Technique	Unobservable Input	Range	Weighted Average
First-lien senior secured debt investments	$	616,067	Market Approach - Yield Analysis	Credit Spreads	5.00% - 8.50%		5.96	%

Equity investments	$	1,000	Precedent Transaction Analysis	Transaction Price	1.0		1.0
	$	617,067

	As of December 31, 2021
	Fair Value		Valuation Technique	Unobservable Input	Range	Weighted 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

	Aggregate Principal Committed		Outstanding Principal		Amount Available⁽¹⁾		Net Carrying Value⁽²⁾		March 31, 2022
									Aggregate Principal Committed			Outstanding Principal			Amount Available⁽¹⁾			Net Carrying Value⁽²⁾
Corporate Credit Facility									$	275,000		$	78,000		$	180,462		$	75,796
Loan and Security Agreement (LSA)	$	150,000,000	$	50,000,000	$	100,000,000	$	49,674,062			-			-			-			-
Credit Agreement		75,000,000		40,000,000		35,000,000		39,812,532
Revolving Funding Facility										250,000			150,000			31,290			147,454
Subscription Credit Agreement										175,000			14,000			161,000			13,660
Total debt	$	225,000,000	$	90,000,000	$	135,000,000	$	89,486,594	$	700,000		$	242,000		$	372,752		$	236,910

	For the quarter ended			For the three months ended March 31,
	March 31, 2021			2022			2021

Interest expense	$	426,423		$	2,289		$	426
Amortization of debt issuance costs(1)		35,046			519			35
Total interest expense	$	461,469		$	2,808		$	461
Average interest rate		5.7	%		4.7	%		5.7	%
Average borrowings	$	53,327,273		$	241,633		$	53,327

For the three months ended March 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
Total common stock issued				4,191,292	$	68,582

Dividend record date		Dividend payment date		DRIP shares issued				DRIP value
December 29, 2021		January 18, 2022			55,590			$	902

	As of		As of		As of
	March 31, 2021		March 31, 2022		December 31, 2021
Foundation Consumer Brands, LLC	$	576,923
American Equipment Holdings LLC			$	1,082	$	1,698
Arborworks Acquisition LLC				4,688		3,219
BCI Burke Holding Corp.				4,895		4,935
Blade (US) Holdings, Inc.				1,121		1,121
BLP Buyer, Inc. (Bishop Lifting Products)				1,047		-
Brightview, LLC				4,647		4,647
Centerline Communications, LLC				1,800		2,040
CGI Automated Manufacturing, LLC				2,717		6,522
Corbett Technology Solutions, Inc.				1,016		1,525
Curio Brands, LLC				6,018		6,018
DRS Holdings III, Inc. (Dr. Scholl's)				310		310
Eastern Wholesale Fence				-		666
EIS Legacy, LLC				6,539		6,538
Foundation Consumer Brands				577		577
Fralock Buyer LLC		563,487		749		749
GEON Performance Solutions		517,241
Guardian Dentistry Partners				13,795		15,898
Gusmer Enterprises, Inc.				840		4,220
Home Brands Group Holdings, Inc. (ReBath)				2,099		2,099
I.D. Images Acquisition, LLC				822		1,570
MacNeill Pride Group				4,829		357
PMFC Holding, LLC		684,360		240		684
Smile Doctors, LLC		56,438
Regiment Security Partners LLC				6,269		7,200
SGA Dental Partners Holdings, LLC				6,198		12,931
Siegel Egg Co., LLC				760		2,102
Speedstar Holding LLC		693,942		694		694
Trademark Global LLC				582		1,182
United Safety & Survivability Corporation (USSC)				4,285		4,285
USALCO, LLC				1,717		2,352
Vehicle Accessories, Inc.				1,504		1,671
Total unfunded commitments	$	3,092,391	$	81,840	$	97,810

	For the three months ended March 31,
	2022		2021
Net increase (decrease) in net assets resulting from operations	$	5,729	$	3,445
Weighted average shares of common stock outstanding - basic and diluted		22,393,176		5,667,333
Earnings (loss) per share of common stock - basic and diluted	$	0.26	$	0.61

	For the quarter ended
	March 31, 2021
Per Common Share Operating Performance⁽¹⁾
Net Asset Value, Beginning of Period ⁽²⁾	$	14.86

Results of Operations:
Net Investment Income		0.11
Net Realized and Unrealized Gain (Loss) on Investments ⁽³⁾		0.50
Net Increase (Decrease) in Net Assets Resulting from Operations		0.61

Net Asset Value, End of Period	$	15.47

Shares Outstanding, End of Period		5,667,333

Ratio/Supplemental Data
Net assets, end of period	$	87,646,907
Weighted-average shares outstanding		5,667,333
Total Return⁽⁴⁾		3.1	%
Portfolio turnover		3.8	%
Ratio of operating expenses to average net assets⁽⁵⁾		7.5	%
Ratio of net investment income (loss) to average net assets⁽⁵⁾		5.9	%

	For the three months ended March 31,
	2022 (amounts in thousands, except share and per share amounts)			2021 (amounts in thousands, except share and per share amounts)
Per Common Share Operating Performance ⁽¹⁾
Net Asset Value, Beginning of Period⁽²⁾	$	16.22		$	14.86
Results of Operations:
Net Investment Income		0.28			0.11
Net Realized and Unrealized Gain (Loss) on Investments⁽³⁾		(0.01	)		0.50
Net Increase (Decrease) in Net Assets Resulting from Operations		0.27			0.61
Net Asset Value, End of Period	$	16.49		$	15.47
Shares Outstanding, End of Period		23,474,784			5,667,333

	For the quarter ended
	March 31, 2021 ($ in millions)

New investments:
Gross investments	$	164.8
Less: sold investments		(5.0	)
Total new investments		159.8

Principal amount of investments funded:
Private credit investments	$	153.0
Liquid credit investments		8.7
Total principal amount of investments funded		161.7

Principal amount of investments sold:
Private credit investments		(0.4	)
Liquid credit investments		(4.6	)
Total principal amount of investments sold or repaid		(5.0	)

Number of new investment commitments		48
Average new investment commitment amount		3.3
Weighted average maturity for new investment commitments		3.5 years
Percentage of new debt investment commitments at floating rates		99.5	%
Percentage of new debt investment commitments at fixed rates		0.5	%
Weighted average interest rate of new investment commitments		7.3	%
Weighted average spread over LIBOR of new floating rate investment commitments⁽¹⁾		6.3	%
Weighted average interest rate on investment sold or paid down		4.4	%

	For the three months ended March 31,
	2022 ($ in millions)			2021 ($ in millions)

New investments:
Gross investments	$	40.0		$	164.8
Less: sold investments		(28.5	)		(5.0	)
Total new investments		11.5			159.8

Principal amount of investments funded:
Private credit investments	$	66.9		$	153.0
Liquid credit investments		-			8.7
Preferred equity investments⁽¹⁾		0.3			-
Common equity investments⁽¹⁾		0.5			-
Total principal amount of investments funded		67.7			161.7

Principal amount of investments sold:
Private credit investments		(28.5	)		(0.4	)
Liquid credit investments		-			(4.6	)
Total principal amount of investments sold or repaid		(28.5	)		(5.0	)

Number of new investment commitments		11			48
Average new investment commitment amount	$	3.6			3.3
Weighted average maturity for new investment commitments		4.7 years			3.5 years
Percentage of new debt investment commitments at floating rates		100.0	%		99.5	%
Percentage of new debt investment commitments at fixed rates		0.0	%		0.5	%
Weighted average interest rate of new investment commitments		7.0	%		7.3	%
Weighted average spread over LIBOR of new floating rate investment commitments		6.0	%		6.3	%
Weighted average interest rate on investment sold or paid down		7.3	%		4.4	%

	March 31, ~~2021~~2022

~~Consumer durables and apparel~~Commercial services & supplies		~~19.5~~18.0	%
~~Materials~~Trading companies & distributors		~~16.7~~14.3	%
~~Capital goods~~		~~10.8~~	%
~~Commercial~~Health care providers & ~~professional~~ services		10.2	%
~~Health care equipment &~~Building products		6.7	%
Chemicals		5.4	%
Diversified telecommunication services		~~9.5~~5.0	%
~~Food, beverage & tobacco~~Auto components		~~7.2~~4.4	%
~~Pharmaceuticals, biotech & life sciences~~		~~6.0~~	%
~~Retailing~~		~~6.0~~	%
~~Household & personal~~Leisure products		~~6.0~~4.2	%
~~Automobiles & components~~Professional services		4.0	%
Wireless telecommunication services		3.6	%
Personal products		3.5	%
~~Diversified financials~~Household products		~~3.4~~3.3	%
Food products		3.0	%
Household durables		2.9	%
Textiles, apparel & luxury goods		2.4	%
Software ~~& services~~		~~0.7~~2.2	%
~~Transportation~~Specialty retail		1.5	%
Aerospace & defense		1.5	%
Pharmaceuticals		1.4	%
Containers & packaging		1.2	%
Asset management & custody banks		0.9	%
Machinery		0.3	%
~~Technology hardware & equipment~~		~~0.1~~	%
~~Chemicals~~IT services		0.1	%
Total		100.0	%