**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549


_______________________





FORM
      10-K





**x**
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      Fiscal Year Ended December 31, 2005








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





For
      the
      transition period from to











Commission
      File Number: 814-00678


_______________________





**BLACKHAWK
                CAPITAL GROUP BDC, INC.**(Exact
                Name of Registrant as specified in its
                charter)




Delaware
            
            20-1031329(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                Number)





**14
      Wall Street, 11** **th** **Floor, New York, New York 10005**


(Address
      of principal executive offices) (Zip Code)






**(212)
      566-8300**


(Registrant's
      telephone number, including area code)


_______________________





Securities
      registered pursuant to Section 12(b) of the Act: None





Securities
      registered pursuant to Section 12(g) of the Act: Common Stock, par value
      $0.00001 per share








Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes **o** No **x**





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes **o** No **x**





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





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. **o**





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of "accelerated
      filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
      one):





Large accelerated filer **o**
            Accelerated filer **o**
            Non-accelerated filer **x**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act).




Yes **x**   No **o**





The
      number of shares outstanding of Blackhawk's common stock on April 13, 2006
      was
      23,626,781.







**TABLE
      OF CONTENTS**




Page***GENERAL
                  NOTE******PART
                  I***Item
                  1.
              Business
              2Item
                  1A.
              Risk
                  Factors
              3Item
                  1B.
              Unresolved
                  Staff Comments
              15Item
                  2.
              Properties
              15Item
                  3.
              Legal
                  Proceedings
              15Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              16***PART
                  II***Item
                  5.
              Market
                  for Registrant's Common Equity, Related Stockholder Matters and
                  Issuer
                  Purchase of Equity Securities
              16Item
                  6.
              Selected
                  Financial Data
              17Item
                  7.
              Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operation
              18Item
                  7A.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              20Item
                  8.
              Financial
                  Statements and Supplementary Data
              20Item
                  9.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              20Item
                  9A.
              Controls
                  and Procedures
              21Item
                  9B.
              Other
                  Information
              22***PART
                  III***Item
                  10.
              Directors
                  and Executive Officers of the Registrant
              22Item
                  11.
              Executive
                  Compensation
              27Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              28Item
                  13.
              Certain
                  Relationships And Related Transactions
              29Item
                  14.
              Principal
                  Accountant Fees and Services
              29**PART
                  IV**Item
                  15.
              Exhibits
                  and Financial Statement Schedules
              30








**PART
      I**


Forward
      Looking Statements





The
      matters discussed in this section and in certain other sections of this Form
      10-K contain forward-looking statements within the meaning of Section 21D of
      the
      Securities Exchange Act of 1934, as amended, and Section 27A of the Securities
      Act of 1933, as amended, that involve risks and uncertainties. All statements
      other than statements of historical information provided herein may be deemed
      to
      be forward-looking statements. Without limiting the foregoing, the words "may",
      "will", "could", "should", "intends", "thinks", "believes", "anticipates",
      "estimates", "plans", "expects", or the negative of such terms and similar
      expressions are intended to identify assumptions and uncertainties which could
      cause actual results to differ materially from those expressed in them. Any
      forward-looking statements are qualified in their entirety by reference to
      the
      factors discussed throughout this report. The following cautionary statements
      identify important factors that could cause Blackhawk Capital Group BDC, Inc.
      ("Blackhawk," "we" or "Company") actual results to differ materially from those
      projected in the forward-looking statements made in this Report. Among the
      key
      factors that have a direct bearing on Blackhawk's results of operations
      include:





§
            General
                economic and business conditions; the existence or absence of adverse
                publicity; changes in, or failure to comply with, government regulations;
                changes in marketing and technology; changes in political, social
                and
                economic conditions;





§
            Success
                of operating initiatives; changes in business strategy or development
                plans; management of growth;





§
            Availability,
                terms and deployment of capital;





§
            Costs
                and other effects of legal and administrative
                proceedings;





§
            Dependence
                on senior management; business abilities and judgment of personnel;
                availability of qualified personnel; labor and employee benefit
                costs;





§
            Development
                risks; risks relating to the availability of financing,
                and





§
            Other
                factors referenced in this Report.





Because
      the risks factors referred to above could cause actual results or outcome to
      differ materially from those expressed in any forward-looking statements made
      by
      Blackhawk, you should not place undue reliance on any such forward-looking
      statements. Other factors may be described from time to time in Blackhawk's
      other filings with the Securities and Exchange Commission, news releases and
      other communications. Further, any forward-looking statement speaks only as
      of
      the date on which it is made and Blackhawk undertakes no obligation to update
      any forward-looking statement or statements to reflect events or circumstances
      after the date on which such statement is made or to reflect the occurrence
      of
      unanticipated events. New factors emerge from time to time, and it is not
      possible for Blackhawk to predict which will arise. In addition, Blackhawk
      cannot assess the impact of each factor on Blackhawk's business or the extent
      to
      which any factor, or combination of factors, may cause actual results to differ
      materially from those contained in any forward-looking statements.





1


Subsequent
      written and oral forward-looking statements attributable to Blackhawk or persons
      acting on its behalf are expressly qualified in their entirety by the cautionary
      statements set forth above and contained elsewhere in this Annual Report on
      Form
      10-K.





Blackhawk
      has been and is currently subject to the informational requirements of the
      Securities Exchange Act of 1934, as amended. In accordance with those
      requirements, we file reports and other information with the Securities and
      Exchange Commission. Such reports and other information can be inspected and
      copied at the public reference facilities maintained by the SEC. Please call
      the
      SEC at 1-800-SEC-0330 for more information on the operation of its public
      reference rooms. The SEC also maintains a Web site that contains reports, proxy
      and information statements and other materials that are filed through the SEC's
      Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. This Web
      Site
      can be accessed at http://www.sec.gov. Our reports, registration statements,
      proxy and information statements and other information that we file
      electronically with the SEC are available on this site.





Item
      1. Business





On
      September 20, 2004, Blackhawk filed a Form N-54A Notification with the
      Securities and Exchange Commission, electing to become a Business Development
      Company pursuant to Section 54 of the Investment Company Act.





Blackhawk
      was incorporated on April 22, 2004 under the laws of the State of Delaware
      to
      engage in any lawful corporate undertaking. Blackhawk has been in the
      developmental stage since inception and its operations to date have been limited
      to offering and selling shares to its original shareholders and sales pursuant
      to an offering under Rule 1-E.





Blackhawk
      will attempt to locate and negotiate with eligible portfolio companies for
      Blackhawk to invest in, lend funds to, acquire an interest in and/or possibly
      manage. Blackhawk intends to offer managerial assistance to eligible portfolio
      companies in which it invests.





As
      a
      business development company, Blackhawk is able to raise money to acquire
      interests in small private business, as well as larger private companies. We
      intend to seek equity positions and on going relationships with companies
      offering sustainable and profitable growth. We do not intend to limit our
      acquisitions to a single line of business or industry.





All
      acquisitions will be designed to enhance shareholder value through capital
      appreciation and dividend payments.





Our
      business objectives may not be changed without a vote of the holders of the
      majority of the voting securities.





2


Blackhawk
      may invest in a variety of securities, including bonds, convertible debentures,
      preferred stock and common stock. We have not set a policy as to what proportion
      of our assets may be invested in any type of security, nor have we set a policy
      regarding a potential concentration in any particular industry or group of
      industries.





Blackhawk
      will seek to render significant managerial assistance to and/or control of
      eligible companies. While we do not currently intend to invest as part of a
      group, we have not set any policy to that effect, and may determine to so invest
      in the future without seeking shareholder approval. We have not yet set a policy
      with respect to any assets that are not required to be invested in eligible
      portfolio companies or other companies qualifying under Section 55 of the
      Investment Company Act.





Blackhawk
      may not withdraw its election as a business development company without approval
      by the majority of the outstanding voting securities.





Consistent
      with its objective of long-term capital appreciation, Blackhawk will consult
      with its investees with respect to obtaining capital and offers managerial
      assistance to selected businesses that, in the opinion of our management, have
      a
      significant potential for growth.





In
      addition to acquiring investment positions in new and developing companies,
      Blackhawk may also occasionally invest in more mature privately and
      publicly-held companies, some of which may be experiencing financial
      difficulties, but which, Blackhawk believes, have potential for further
      development or revitalization, and which, in the long-term, could experience
      growth and achieve profitability.





Should
      its working capital position allow it to do so, Blackhawk plans to take
      advantage of other opportunities to maintain and create independent companies
      with a significant potential for growth. Our priorities for the future will
      be
      to attempt to (1) maximize the value and liquidity of our present investees,
      (2)
      increase cash flow and intermediate term value through the acquisition of
      securities or assets of established companies, and (3) make investments in
      new
      and developing companies.





Blackhawk
      has not made any investments since its inception. It is in the process of
      interviewing and hiring a third party investment manager and adviser to serve
      as
      Blackhawk's investment manager and adviser.




Item
      1A. Risk Factors





*No
      Fixed Investment Policy; No Investments to Date*





We
      have
      no fixed policy as to the business or industry group in which we may invest
      or
      as to the amount or type of securities or assets that we may acquire. To date,
      we have not made any investments. We seek to assist our investee companies
      and
      their management teams in devising realistic business strategies and obtaining
      necessary financing.





3


A
      failure
      on our part to maintain our status as a business development company ("BDC")
      would significantly reduce our operating flexibility





If
      we do
      not continue to qualify as a BDC, we might be regulated as a closed-end
      investment company under the Investment Company Act, which would significantly
      decrease our operating flexibility.





*Our
      Ability to Grow Will Depend on Our Ability to Raise Capital*





Blackhawk
      has raised $171,333 in capital since its inception. We will need to periodically
      access the equity markets to raise cash to fund new investments. An inability
      to
      successful access the equity markets could limit our ability to grow our
      business and fully execute our business strategy. We cannot assure you that
      we
      will be able to raise adequate capital in the future.





*Reliance
      on Strong Management Teams of Investee Companies*





Blackhawk
      believes that it will be most likely to succeed in its investment strategies
      if
      its investee companies have strong management teams. Generally, Blackhawk
      intends to focus as much or more on finding and supporting business executives
      who have the ability, entrepreneurial motivation and experience required to
      build independent companies with a significant potential for growth, as it
      will
      on identifying, selecting and financing investment opportunities based on
      promising ideas, products or marketing strategies. Consistent with this belief,
      Blackhawk believes it will be able to provide investee companies with managerial
      assistance. For example, we intend to encourage our investee companies to afford
      their management teams opportunities for meaningful equity participation and
      assist them in planning means to accomplish this result.





*Start-up
      Operations; No Cash Dividend Payments to Date; Possibility of Substantial
      Losses*





Blackhawk
      has never paid cash dividends nor does it have any present intent to do so.





Business
      development is by nature a high-risk activity that often results in substantial
      losses. The companies in which Blackhawk intends to invest often lack effective
      management, face operating problems and have incurred substantial losses.
      Potential investees include established businesses which may be experiencing
      severe financial or operating difficulties or may, in the opinion of their
      management, be managed ineffectively and yet have the potential for substantial
      growth or for reorganization into separate independent companies.





Blackhawk
      will attempt to reduce the level of its investment risks through one or more
      of
      the following factors:





§
            carefully
                investigating potential investees;





§
            financing
                only what it believes to be practical business opportunities, as
                contrasted to research projects;





4


§
            selecting
                effective, entrepreneurial management for its
                investees;





§
            providing
                managerial assistance and support to investees in areas, where the
                need is
                apparent;





§
            obtaining,
                alone or with others, actual or working control of its
                investees;





§
            supporting
                the investees in obtaining necessary financing, and, where feasible,
                arranging major contracts, joint ventures or mergers and acquisitions;
                and





§
            where
                possible, maintaining sufficient capital resources to make follow-on
                investments where necessary, appropriate and
                feasible.





*The
      proposed operations of Blackhawk are speculative*





The
      success of the proposed business plan of Blackhawk will depend to a great extent
      on the operations, financial condition and management of the identified target
      companies. While investments in entities having established operating histories
      are preferred, there can be no assurance that Blackhawk will be successful
      in
      locating candidates meeting such criteria. The decision to invest in a company
      will likely be made without detailed feasibility studies, independent analysis,
      market surveys or similar information which, if Blackhawk had more funds
      available to it, would be desirable. In the event Blackhawk completes one or
      more stock acquisitions, the success of its operations will be dependent upon
      management of those target companies and numerous other factors beyond the
      control of Blackhawk. There is no assurance that Blackhawk can identify a target
      company to invest in, or that such investments will be successful.





*Purchase
      of penny stocks can be risky*





In
      the
      event that a public market develops for the securities of Blackhawk, such
      securities may be classified as a penny stock depending upon their market price
      and the manner in which they are traded. The Securities and Exchange Commission
      has adopted Rule 15g-9 which establishes the definition of a "penny stock",
      for
      purposes relevant to Blackhawk, as any equity security that has a market price
      of less than $5.00 per share or with an exercise price of less than $5.00 per
      share whose securities are admitted to quotation but do not trade on the Nasdaq
      Small Cap Market or on a national securities exchange. For any transaction
      involving a penny stock, unless exempt, the rules require delivery by the broker
      of a document to investors stating the risks of investment in penny stocks,
      the
      possible lack of liquidity, commissions to be paid, current quotation and
      investors' rights and remedies, a special suitability inquiry, regular reporting
      to the investor and other requirements. Prices for penny stocks are often not
      available and investors are often unable to sell such stock.





5


*There
      is no agreement for any stock acquisitions and no minimum requirements for
      any
      stock acquisitions*





As
      of the
      original filing date of this registration statement, Blackhawk has no current
      arrangement, agreement or understanding with respect to engaging in an
      investment in a specific entity. There can be no assurance that Blackhawk will
      be successful in identifying and evaluating suitable business opportunities
      or
      in concluding an investment. No particular industry or specific business within
      an industry has been selected for a target company. Blackhawk has not
      established a specific length of operating history or a specified level of
      earnings, assets, net worth or other criteria, which it will require a target
      company to have achieved, or without which Blackhawk would not consider an
      investment. Accordingly, Blackhawk may invest in a company which has no
      significant operating history, losses, limited or no potential for immediate
      earnings, limited assets, negative net worth or other negative characteristics.
      There is no assurance that Blackhawk will be able to negotiate an investment
      on
      terms favorable to Blackhawk.





*Reporting
      requirements may delay or preclude investments*





Pursuant
      to the requirements of Section 13 of the Exchange Act, Blackhawk is required
      to
      provide certain information about significant acquisitions including audited
      financial statements of the acquired company. These audited financial statements
      normally must be furnished within 75 days following the effective date of a
      stock acquisition. Obtaining audited financial statements are the economic
      responsibility of the target company. The additional time and costs that may
      be
      incurred by some potential target companies to prepare such financial statements
      may significantly delay or essentially preclude consummation of an otherwise
      desirable investment by Blackhawk. Acquisition prospects that do not have or
      are
      unable to obtain the required audited statements may not be appropriate for
      investment so long as the reporting requirements of the Exchange Act are
      applicable. Notwithstanding a target company's agreement to obtain audited
      financial statements within the required time frame, such audited financial
      statements may not be available to Blackhawk at the time of effecting an
      investment in such target company. In cases where audited financial statements
      are unavailable, Blackhawk will have to rely upon information that has not
      been
      verified by outside auditors in making its decision to engage in a transaction
      with the business entity. This risk increases the prospect that an investment
      with such a target company might prove to be an unfavorable one for
      Blackhawk.





*We
      May Change Our Investment Policies Without Further Shareholder
      Approval*





Although
      we are limited by the Investment Company Act of 1940 with respect to the
      percentage of our assets that must be invested in qualified investment
      companies, we are not limited with respect to the minimum standard that any
      investment company must meet, nor the industries in which those investment
      companies must operate. We may make investments without shareholder approval
      and
      such investments may deviate significantly from our historic operations. Any
      change in our investment policy or selection of investments could adversely
      affect our stock price, liquidity, and the ability of our shareholders to sell
      their stock.





*Our
      Investments May Not Generate Sufficient Income to Cover Our
      Operations*





We
      intend
      to make investments into qualified companies that will provide the greatest
      overall return on our investment. However, certain of those investments may
      fail, in which case we will not receive any return on our investment. In
      addition, our investments may not generate income, either in the immediate
      future, or at all. As a result, we may have to sell additional stock, or borrow
      money, to cover our operating expenses. The effect of such actions could cause
      our stock price to decline or, if we are not successful in raising additional
      capital, we could cease to continue as a going concern.





6


*Regulatory
      Oversight; Compliance Requirements*





As
      a
      business development company, Blackhawk is subject to the provisions of Sections
      55 through 65 of the Investment Company Act, and certain additional provisions
      of that Act made applicable to business development companies by Section 59
      of
      that Act. Under these regulations, Blackhawk's investment policies are defined
      and subject to certain limitations. Furthermore, under Section 58 of that Act,
      Blackhawk may not withdraw its election to be so regulated without the consent
      of a majority of its issued and outstanding voting securities.





Blackhawk
      has no fixed policy as to any particular business or industry group in which
      it
      may invest or as to the amount or type of securities or assets that it may
      acquire. Blackhawk may in the future invest in assets that are not qualifying
      assets as defined by Section 55 of the Investment Company Act; however, no
      such
      additional assets have been identified as of March 31, 2006, and Blackhawk
      does
      not intend to fall below the 70% requirement as set forth in Section 55 of
      that
      Act.





Blackhawk
      seeks to achieve its objectives in accordance with the following general
      policies:





(1)
            Blackhawk
                intends to acquire securities through negotiated private placement
                transactions directly from the investee company, its affiliates,
                or third
                parties, or through open market
                transactions.





(2)
            Blackhawk
                will attempt to acquire, if possible and consistent with Blackhawk's
                capital resources, a large or controlling interest in its investees
                through purchases of equity securities, including warrants, options,
                and
                other rights to acquire such securities combined, if appropriate,
                with
                debt securities, including demand notes, term loans and guarantees,
                or
                debt instruments or preferred stock, convertible into, or with warrants
                to
                purchase additional equity
                securities.





(3)
            Blackhawk
                may make additional or "follow-on" investments in its investees,
                when
                appropriate to sustain the investees or to enhance or protect Blackhawk’s
                existing investment.





(4)
            Blackhawk
                will determine the length of time it will retain its investment by
                evaluating the facts and circumstances of each investee and Blackhawk’s
                relationship with such investee. Blackhawk may retain its investments
                for
                a relatively long period, sometimes as long as many years, with the
                result
                that its rate of portfolio turnover may be low. Investments may be
                retained until, in the sole opinion of Blackhawk, the investee company
                has
                a demonstrated record of successful operations and there is a meaningful
                public market for its securities which reflects the investment value
                Blackhawk sought (or such a market can be readily established) or
                until
                Blackhawk, in its sole discretion, decides that its investment is
                not
                likely to result in future long-term capital
                appreciation.





7


*Market
      Illiquidity*





At
      the
      time of sale of Blackhawk’s portfolio securities, there may not be a market of
      sufficient stability to allow Blackhawk to sell its entire position, potentially
      resulting in Blackhawk not being able to sell such securities at prevailing
      market prices or at the prices at which Blackhawk may have valued its position
      in the investee's securities.





*Difficulty
      in Valuing Investments and Portfolio Performance*





*Valuation-Policy
      Guidelines*





Blackhawk's
      Board of Directors is responsible for the valuation of Blackhawk’s assets in
      accordance with its approved guidelines. Blackhawk's Board of Directors is
      responsible for (1) recommending overall valuation guidelines and (2) the
      valuation of the specific investments.





There
      is
      a range of values which are reasonable for an investment at any particular
      time.
      Fair value is generally defined as the price at which the investment in question
      could change hands, assuming that both parties to the transaction are under
      no
      unusual pressure to buy or sell and both have reasonable knowledge of all the
      relevant facts. To increase objectivity in valuing the securities, Blackhawk
      intends to use external measures of value such as public markets or significant
      third-party transactions whenever possible. Neither a long-term workout value
      nor an immediate liquidation value will be used, and no increment of value
      will
      be included for changes which may take place in the future. Certain members
      of
      Blackhawk's Board of Directors may hold positions in some of Blackhawk's
      investee companies and certain members of the Board of Directors may hold
      officer or director positions with some of Blackhawk's investee
      companies.





Valuations
      assume that, in the ordinary course of its business, Blackhawk will eventually
      sell its position in the private or public market or may distribute its larger
      positions to its stockholders. Accordingly, no premiums will be placed on
      investments to reflect the ability of Blackhawk to sell block positions or
      control of companies, either by itself or in conjunction with other
      investors.





In
      fact,
      in certain circumstances, Blackhawk may have to sell the securities it owns
      of
      its investees in the open market at discounts to market prices at the time
      of
      sale, due to the large position it may hold relative to the average daily
      trading volume.





Blackhawk
      intends to use four basic methods of valuation for its investments and there
      are
      variations within each of these methods. Blackhawk's board of directors, in
      its
      sole discretion, has determined that Blackhawk's four basic valuation methods
      constitute fair value. As an investee evolves, its progress may sometime require
      changes in Blackhawk's method of valuing the investee's securities. Blackhawk's
      investment will be separated into its component parts (such as debt, preferred
      stock, common stock or warrants), and each component will be valued separately
      to arrive at a total value. Blackhawk believes that a mixture of valuation
      methods is often essential to represent a fair value of Blackhawk's investment
      position in any particular investee. For example, one method may be appropriate
      for the equity securities of a company while another method may be appropriate
      for the senior securities of the same company. In various instances of
      valuation, the board of directors of Blackhawk may modify the valuation methods
      mentioned below based on the board of directors best judgment in any particular
      situation.





8


The
      cost
      method values an investment based on its original cost to Blackhawk, adjusted
      for the amortization of original issue discount, accrued interest and certain
      capitalized expenditures of Blackhawk. While the cost method is the simplest
      method of valuation, it is often the most unreliable because it is applied
      in
      the early stages of an investee's development and is often not directly tied
      to
      objective measurements. All investments are carried at cost until significant
      positive or adverse events subsequent to the date of the original investment
      warrant a change to another method. Some examples of such events are: (1) a
      major recapitalization; (2) a major refinancing; (3) a significant third-party
      transaction; (4) the development of a meaningful public market for the
      investee's common stock; and (5) material positive or adverse changes in the
      investee's business.





The
      appraisal method is used to value an investment position based upon a careful
      analysis of the best available outside information when there is no established
      public or private market in the investee company's securities and it is no
      longer appropriate to use the cost method. Comparisons are made using factors
      (such as earnings, sales or net worth) that influence the market value of
      similar public companies or that are used in the pricing of private transactions
      of comparable companies. Major discounts, usually 50%, are taken when private
      companies are appraised by comparing private company to similar public
      companies. Liquidation value may be used when an investee company is performing
      substantially below plan and its continuation as an operating entity is in
      doubt. Under the appraisal method, the differences among companies in terms
      of
      the source and type of revenues, quality of earnings, and capital structure
      are
      carefully considered.





An
      appraisal method value can be defined as the price at which the investment
      in
      question could change hands, assuming that both parties to the transaction
      are
      under no unusual pressure to buy or to sell, and both have reasonable knowledge
      of all the relevant facts. In the case of start-up companies where the entire
      assets may consist of only one or more of the following: (1) a marketing plan,
      (2) management or (3) a pilot operation, an evaluation may be established by
      capitalizing the amount of the investment that could reasonably be obtained
      for
      a predetermined percentage of the ownership in the particular company.
      Valuations under the appraisal method are considered to be more subjective
      than
      the cost, public market or private market methods.





The
      private market method uses third-party transactions (actual or proposed) in
      the
      investee's securities as the basis for valuation. This method is considered
      to
      be an objective measure of value since it depends upon the judgment of a
      sophisticated, independent investor. Actual firm offers are used as well as
      historical transactions, provided that any offer used was seriously considered
      and well documented.





9


The
      public market method is the preferred method of valuation when there is an
      established public market for the investee's securities, since that market
      provides the most objective basis for valuation. In determining whether the
      public market is sufficiently established for valuation purposes, we intend
      to
      examine the trading volumes, the number of stockholders and the number of market
      makers. Under the public market method, as well as under the other valuation
      methods, we may discount investment positions that are subject to significant
      legal, contractual or practical restrictions. When an investee's securities
      are
      valued under the public market method, common stock equivalents such as
      presently exercisable warrants or options are valued based on the difference
      between the exercise price and the market value, subject to management and
      board
      discretion, of the underlying common stock.





*Changes
      in Regulatory Environment for Business Development Companies Under the
      Investment Act*





*Regulation
      - Business Development Companies*





The
      following is a summary description of the Investment Company Act, as applied
      to
      business development companies. This description is qualified in its entirety
      by
      reference to the full text of the Act and the rules promulgated thereunder
      by
      the United States Securities and Exchange Commission (the "SEC").





The
      Small
      Business Investment Incentive Act of 1980 became law on October 21, 1980. This
      law modified the provisions of the Investment Company Act, that are applicable
      to a company, such as Blackhawk, which elects to be treated as a "business
      development company." Blackhawk elected to be treated as a business development
      company on September 20, 2004. Blackhawk may not withdraw its election without
      first obtaining the approval of a majority of its outstanding voting
      securities.





A
      business development company must be operated for the purpose of investing
      in
      the securities of certain present and former "eligible portfolio companies"
      and
      certain bankrupt or insolvent companies and must make available significant
      managerial assistance to its investee companies. An eligible portfolio company
      generally is a United States company that is not an investment company (except
      for wholly-owned SBIC's licensed by the U.S. Small Business Administration)
      and
      (1) does not have a class of securities included in the Federal Reserve Board's
      over-the-counter margin list, (2) is actively controlled by the business
      development company and has an affiliate of the business development company
      on
      its board of directors, or (3) meets such other criteria as may be established
      by the SEC. Control, under the Investment Company Act, as amended, is presumed
      to exist where the business development company, and its affiliates or related
      parties, own 25% or more of the issued and outstanding voting securities of
      the
      investee.





The
      Investment Company Act prohibits or restricts a registrant from investing in
      certain types of companies, such as brokerage firms, insurance companies,
      investment banking firms and investment companies. Moreover, the Investment
      Company Act limits the type of assets that Blackhawk may acquire to "qualifying
      assets" and certain other assets necessary for its operations (such as office
      furniture, equipment and facilities) if, at the time of the acquisition, less
      than 70% of the value of Blackhawk's assets consists of qualifying assets.
      The
      effect of this regulation is to require that at least 70% of a business
      development company's assets be maintained in qualifying assets. Qualifying
      assets include: (1) securities of companies that were eligible portfolio
      companies at the time Blackhawk acquired their securities; (2) securities of
      bankrupt or insolvent companies that are not otherwise eligible portfolio
      companies; (3) securities acquired as follow-on investments in companies that
      were eligible at the time of Blackhawk's initial acquisition of their securities
      but are no longer eligible, provided that Blackhawk has maintained a substantial
      portion of its initial investment in those companies; (4) securities received
      in
      exchange for or distributed on or with respect to any of the foregoing; and
      (5)
      cash items, government securities and high-quality, short-term debt. The
      Investment Company Act also places restrictions on the nature of the
      transactions in which, and the persons from whom, securities can be purchased
      in
      order for the securities to be considered to be qualifying assets. As of March
      31, 2006, Blackhawk has not yet made any investments.





10


Blackhawk
      is permitted by the Investment Company Act, under specified conditions, to
      issue
      multiple classes of senior debt and preferred stock, if its asset coverage,
      as
      defined in the Investment Company Act, is at least 200% after the issuance
      of
      the debt or the preferred stock. Blackhawk currently has no policy regarding
      issuing of multiple classes of senior debt.





Blackhawk
      may issue, in limited amounts, warrants, options and rights to purchase its
      securities to its directors, officers and employees (and provide loans to such
      persons for the exercise thereof) in connection with an executive compensation
      plan, if certain conditions are met. These conditions include the authorization
      of such issuance by a majority of Blackhawk's voting securities (as defined
      below) and the approval by a majority of the independent members of the board
      of
      directors and by a majority of the directors who have no financial interest
      in
      the transaction. The issuance of options, warrants or rights to directors who
      are not also Officers requires the prior approval of the SEC.





As
      defined in the Investment Company Act, the term "majority of a registrant 's
      issued and outstanding voting securities" means the vote of (a) 67% or more
      of a
      registrant 's issued and outstanding common stock present at a meeting, if
      the
      holders of more than 50% of the issued and outstanding common stock are present
      or represented by proxy, or (b) more than 50% of a registrant's outstanding
      common stock, whichever is less.





Blackhawk
      may sell its securities at a price that is below the prevailing net asset value
      per share only upon the approval of the policy by the holders of a majority
      of
      its issued and outstanding voting securities, including a majority of the voting
      securities held by non-affiliated persons, at its last annual meeting or within
      one year prior to the transaction. In addition, Blackhawk may repurchase its
      common stock, subject to the restrictions of the Investment Company
      Act.





In
      accordance with the Investment Company Act, a majority of the members of
      Blackhawk's Board of Directors must not be "interested persons" of Blackhawk,
      as
      that term is defined in the Investment Company Act. Generally, "interested
      persons" of Blackhawk include all affiliated persons of Blackhawk and members
      of
      their immediate families, any "interested person" of an underwriter or of an
      "investment advisor" to Blackhawk, any person who has acted as legal counsel
      to
      Blackhawk within the last two fiscal years, or any broker or dealer, or
      affiliate of a broker or dealer.





11


Most
      of
      the transactions involving Blackhawk and its affiliates (as well as affiliates
      of those affiliates) which were prohibited without the prior approval of the
      SEC
      under the Investment Company Act, prior to its amendment by the Small Business
      Investment Incentive Act now require the prior approval of a majority of
      Blackhawk's independent directors and a majority of the directors having no
      financial interest in the transactions. The effect of this amendment is that
      Blackhawk may engage in certain affiliated transactions that would be
      prohibited, absent prior SEC approval in the case of investment companies,
      which
      are not business development companies. However, transactions involving certain
      closely affiliated persons of Blackhawk, including its directors, officers
      and
      employees, still require the prior approval of the SEC. In general, "affiliated
      persons" of a person include: (a) any person who owns, controls or holds with
      power to vote, more than five percent of Blackhawk's issued and outstanding
      common stock, (b) any director, executive officer or general partner of that
      person, (c) any person who directly or indirectly controls, is controlled by,
      or
      is under common control with that person, and (d) any person five percent or
      more of whose outstanding voting securities are directly or indirectly owned,
      controlled or held with power to vote, by such other person. Such persons
      generally must obtain the prior approval of a majority of Blackhawk's
      independent directors and, in some situations, the prior approval of the SEC,
      before engaging in certain transactions involving Blackhawk or any company
      controlled by Blackhawk. In accordance with the Investment Company Act, a
      majority of the members of Blackhawk's board of directors are not interested
      persons as defined in the Act. The Investment Company Act generally does not
      restrict transactions between Blackhawk and its investee companies.





Finally,
      notwithstanding restrictions imposed under federal securities laws, it is
      anticipated that Blackhawk will acquire securities of investee companies
      pursuant to stock purchase agreements or other agreements that may further
      limit
      Blackhawk's ability to distribute, sell or transfer such securities. And as
      a
      practical matter, even if such transfers are legally or contractually
      permissible, there may be no market, or a very limited market, for such
      securities. Economic conditions may also make the price and terms of a sale
      or
      transfer transactions unattractive.





*Other
      Securities Law Considerations*





In
      addition to the above-described provisions of the Investment Company Act, there
      are a number of other provisions of the federal securities laws that affect
      Blackhawk's operations. For example, restrictions imposed by the federal
      securities laws, in addition to possible contractual provisions, may adversely
      affect the ability of Blackhawk to sell or otherwise to distribute or dispose
      of
      its portfolio securities.





Most
      if
      not all securities which Blackhawk acquires as venture capital investments
      will
      be "restricted securities" within the meaning of the Securities Act of 1933
      ("Securities Act") and will not be permitted to be resold without compliance
      with the Securities Act. Thus, Blackhawk will not be permitted to resell
      portfolio securities unless a registration statement has been declared effective
      by the SEC with respect to such securities or Blackhawk is able to rely on
      an
      available exemption from such registration requirements. In most cases Blackhawk
      will endeavor to obtain from its investee companies "registration rights,"
      pursuant to which Blackhawk will be able to demand that an investee company
      register the securities owned by Blackhawk at the expense of the investee
      company. Even if the investee company bears this expense, however, the
      registration of any securities owned by Blackhawk is likely to be a
      time-consuming process, and Blackhawk always bears the risk, because of these
      delays, that it will be unable to resell such securities, or that it will not
      be
      able to obtain an attractive price for such securities.





12


At
      times
      Blackhawk will not register portfolio securities for sale but will seek to
      sell
      and sometimes seek an exemption from registration. The most likely exemption
      available to Blackhawk is section 4(1) of the Securities Act, which, in effect,
      exempts sales of securities not involving a public distribution of the
      securities. This exemption will likely be available to permit a private sale
      of
      portfolio securities and in some cases a public sale, if the provisions of
      Rule
      144 under the Securities Act, are complied with. Among other things, Rule 144
      generally requires that securities be sold in "broker transactions," and imposes
      a one- year holding period prior to any resale of restricted
      securities.





Blackhawk
      may elect to distribute in-kind securities of investee companies to its
      stockholders. Prior to any such distribution, Blackhawk expects that it will
      need to file, or cause the issuers of such distributed securities, to file,
      a
      registration statement or, in the alternative, an information statement, which
      when declared effective by the SEC, will permit the distribution of such
      securities and also permit distributee stockholders of Blackhawk to sell such
      distributed securities.





*Federal
      Income Tax Matters*





For
      federal and state income tax purposes, Blackhawk is taxed at regular corporate
      rates on ordinary income and realized gain. It is not entitled to the special
      tax treatment available to more regulated investment companies, although
      Blackhawk plans to conduct its affairs, if possible, to minimize or eliminate
      federal and state income taxes. Distributions of cash or property by Blackhawk
      to its stockholders will be taxable as ordinary income only to the extent that
      Blackhawk has current or accumulated earnings and profits.





The
      "alternative tax" rate at which corporations are taxed on long-term capital
      gains is up to 35% pursuant to the Tax Reform Act of 1986 (the "Tax Reform
      Act"). A corporation generally may offset capital loss only against capital
      gain. Generally, if Blackhawk realizes a net capital loss for any taxable year,
      it can carry back such net capital loss only against capital gain. Such a net
      capital loss for any taxable year can generally be carried back to each of
      the
      three preceding taxable years, and then any unused portion thereof may be
      carried over into the subsequent taxable years for a period of five
      years.





*Future
      Distributions*





Blackhawk
      does not currently intend to pay cash dividends. Blackhawk's current dividend
      policy is to make in-kind distributions of its larger investment positions
      to
      its stockholders when Blackhawk's board of directors deems such distributions
      appropriate. Because Blackhawk does not intend to make cash distributions,
      stockholders would need to sell securities distributed in-kind, when and if
      distributed, in order to realize a return on their investment.





13


An
      in-kind distribution will be made only when, in the judgment of Blackhawk’s
      board of directors, it is in the best interest of Blackhawk's stockholders
      to do
      so. The board of directors will review, among other things, the investment
      quality and marketability of the securities considered for distribution; the
      impact of a distribution of the investee's securities on the investee's
      customers, joint venture associates, other investors, financial institutions
      and
      management; tax consequences and the market effects of an initial or broader
      distribution of such securities. Securities of Blackhawk's larger investment
      positions in more mature investee companies with established public markets
      are
      most likely to be considered for distribution. It is possible that Blackhawk
      may
      make an in-kind distribution of securities that are substantially liquid
      irrespective of the distributee's stockholder rights to sell such securities.
      Any such in-kind distribution would require stockholder approval only if the
      distribution represents substantially all of Blackhawk's assets. It is possible
      that Blackhawk may make an in-kind distribution of securities that have
      appreciated or depreciated from the time of purchase depending upon the
      particular distribution. Blackhawk has not established a policy as to the
      frequency or size of distributions and indeed there can be no assurance that
      any
      distributions will be made. As of March 31, 2006, no investments or
      distributions have been made.





*Managerial
      Assistance*





Blackhawk
      believes that providing managerial assistance to its investees is critical
      to
      its business development activities. "Making available significant managerial
      assistance" as defined in the Investment Company Act, with respect to a business
      development company such as Blackhawk means (a) any arrangement whereby a
      business development company, through its directors, officers, employees or
      general partners, offers to provide, and, if accepted, does so provide,
      significant guidance and counsel concerning the management, operations, or
      business objectives and policies of a portfolio company; or (b) the exercise
      by
      a business development company of a controlling influence over the management
      or
      policies of a portfolio company by the business development company acting
      individually or as a part of a group acting together which controls such
      portfolio company. Blackhawk is required by the Investment Company Act to make
      significant managerial assistance available at least with respect to investee
      companies that Blackhawk will treat as qualifying assets for purposes of the
      70%
      test. The nature, timing and amount of managerial assistance provided by
      Blackhawk varies depending upon the particular requirements of each investee
      company.





Blackhawk
      may be involved with its investees in recruiting management, product planning,
      marketing and advertising and the development of financial plans, operating
      strategies and corporate goals. In this connection, Blackhawk may assist clients
      in developing and utilizing accounting procedures to record efficiently and
      accurately, transactions in books of account which will facilitate asset and
      cost control and the ready determination of results of operations. Blackhawk
      may
      also seek capital for its investees from other potential investors and
      occasionally subordinates its own investment to those of other investors. Where
      possible, Blackhawk may introduce its investees to potential suppliers,
      customers and joint venture partners and assists its investees in establishing
      relationships with commercial and investment bankers and other professionals,
      including management consultants, recruiters, legal counsel and independent
      accountants. Blackhawk also assists with joint ventures, acquisitions and
      mergers.





14


In
      connection with its managerial assistance, Blackhawk may be represented by
      one
      or more of its officers or directors who are members of the board of directors
      of an investee. As an investment matures and the investee develops management
      depth and experience, Blackhawk's role will become progressively less active.
      However, when Blackhawk owns or, on a pro forma basis, could acquire a
      substantial proportion of a more mature investee company's equity, Blackhawk
      may
      remain active in, and may frequently be involved in, the planning of major
      transactions by the investee. Blackhawk's goal is to assist each investee
      company in establishing its own independent and effective board of directors
      and
      management.





*Competition*





Blackhawk
      is subject to substantial competition from business development companies,
      venture capital firms, new product development companies, marketing companies
      and diversified manufacturers, most of whom are larger than Blackhawk and have
      significantly larger net worth, financial and personnel resources than does
      Blackhawk. In addition, Blackhawk competes with companies and individuals
      engaged in the business of providing management consulting
      services.





*Employees*





As
      of
      March 31, 2006, Blackhawk had two employees.








Item
      1B. Unresolved Staff Comments





This
      Section is not applicable.







Item
      2. Properties





Blackhawk
      subleases office space at 14 Wall Street, 11 th Floor,
      New York, New York from The Concorde Group, Inc., an affiliate of Blackhawk,
      at
      no cost to Blackhawk. The lease is on a month-to-month basis. The Concorde
      Group, Inc. intends to set the lease cost to market rates once Blackhawk’s stock
      is cleared by the NASD for over-the-counter trading.








Item
      3. Legal Proceedings





Blackhawk
      is not a party in any legal proceedings. Blackhawk knows of no material legal
      proceedings pending or threatened, or judgments entered against any of its
      directors or officers in their capacity as such.





15





Item
      4. Submission of Matters to a Vote of Security Holders





During
      Blackhawk's fourth quarter ended December 31, 2005, the following matters were
      submitted to the Security Holders: Pursuant to Section 228 of Delaware General
      Corporation Law, the stockholders of Blackhawk Capital Group BDC Inc., a
      Delaware corporation (“Corporation”), by written consent signed by stockholders
      holding more than a majority of shares of the Corporation entitled to vote,
      approved a Certificate of Amendment (“Amendment”) to the Corporation’s
      Certificate of Incorporation. The purpose and effect of the Amendment was to
      eliminate the Corporation’s Preferred Stock. The date of the written consent was
      November 10, 2005. Stockholders holding 15,110,257 shares signed the written
      consent, representing 63.95% of Blackhawk's outstanding shares. There were
      no
      votes against the Amendment.










**PART
      II**





Item
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchase of Equity Securities





The
      common stock of Blackhawk is not listed on any exchanges and is not yet
      traded.





*Holders*





At
      the
      date of this filing, there are approximately 107 holders of the Company's common
      stock.





*Dividends*





Blackhawk
      has paid no cash dividends on its common stock and for the foreseeable future
      has no plans to pay cash dividends.





*Sale
      of Unregistered Securities*





On
      September 27, 2004, Blackhawk commenced an offering pursuant to Regulation
      E
      under the Securities Act. Pursuant to this offering, Blackhawk is offering
      for
      sale a minimum of 750,000 shares and a maximum of 45,000,000 shares at $.01
      per
      share. In December 2004, this offering was amended to extend the offering period
      to June 15, 2005. As of December 31, 2005, Blackhawk has sold 17,126,781 shares
      for a total of $171,268. Including 6,500,000 shares issued to founders of
      Blackhawk for $65, Blackhawk has issued a total of 23,626,781 shares of Common
      Stock for a total of $171,333.





*Blackhawk
      Repurchase of Securities*





In
      November 2005, (a) Blackhawk rescinded a prior issuance of its preferred stock
      to its affiliate, The Concorde Group, Inc. and repurchased all shares (8,500,000
      shares) of its preferred stock from The Concorde Group, Inc. for $85, the
      original purchase price for the shares, and (b) Blackhawk rescinded a prior
      issuance of its common stock to several investors, and repurchased 4,500,000
      shares of common stock from the investors for $45, representing the original
      purchase price of the shares.





16


Item
      6. Selected Consolidated
      Financial Data





The
      following selected financial and other data for the year ended December 31,
      2005
      and for the period from inception (April 22, 2004) to December 31, 2004 are
      derived from our consolidated financial statements which have been audited
      by
      Paritz & Company, P.A. an independent registered public accounting firm
      whose report thereon is included within this Annual Report. The data should
      be
      read in conjunction with our consolidated financial statements and notes thereto
      and “Management’s Discussion and Analysis of Financial Condition and Results of
      Operations,” which are included elsewhere in this Annual Report.





**BLACKHAWK
      CAPITAL GROUP BDC, INC.**


**SELECTED
      FINANCIAL DATA**


**Year
      Ended December 31, 2005 and**


**Period
      from Inception (April 22, 2004) through December 31, 2004**





Year
                Ended
              December
                31, 2005
            
            For
                the Period
              Inception
              (April
                22, 2004)
              Through
              December
                31, 2004Total
                Investment Income
            
            
            1,139
            
            
            15Total
                Expenses
            
            
            (46,074
            )
            
            (12,530
            )NetInvestment
                (Loss) and Net Decrease
              in
                Assets Resulting from Operations
            
            
            (44,935
            )
            
            (12,515
            )Per
                Share Data:Loss
                Per Common Share,
              Basic
                and Diluted:*
            
            
            (0.00220
            )
            
            (0.00179
            )Cash
                Dividend Declared
            
            
            0
            
            
            0Total
                Assets
            
            
            83,399
            
            
            101,235Total
                Liabilities
            
            
            61,423
            
            
            96,953Total
                Net Assets
            
            
            21,976
            
            
            4,282Other
                Data:Total
                Return Per Share Based on Net
              Asset
                Value**
            
            
            (440
            %)
            
            (17,900
            %)


________________________





*
      Calculated based on weighted average shares outstanding.


**
      Total
      returns for periods of less than one year are not annualized.





17





Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations





The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with the Company's financial statements
      and the notes thereto.





*Overview*





Blackhawk
      is a business development company formed to engage in the business of investing
      primarily in small to mid-sized companies. The Company also intends to provide
      managerial assistance to developing companies.





*Accounting
      Policies*





*Basis
      of Presentation*





The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States, and include
      the
      accounts of the Company. The financial statements reflect all adjustments and
      reclassifications which, in the opinion of management, are necessary for the
      fair presentation of the results of the operations and financial condition
      for
      the periods presented.




*Use
      of Estimates in the Preparation of Financial Statements*





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of actual and contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of income or loss and expenses during the reporting period. Actual results
      could
      differ from those estimates. Significant estimates include the valuation of
      investments.





*Portfolio
      and Investment Activity*





Blackhawk
      has not made an investment since its inception.





*Investment
      Strategy*





Blackhawk
      intends to make short-term and long-term debt and equity investments in
      companies with perceived growth potential. The Investment Committee intends
      to
      adopt a charter wherein these two criteria are weighed against other criteria
      including strategic fit, investment amount, management ability, etc. In
      principle, Blackhawk will prefer to make investments in companies where it
      can
      acquire at least a majority ownership interest in the outstanding capital of
      the
      portfolio company.





18


*Results
      of Operations*





*Sales
      Revenues*





From
      inception (April 22, 2004) through December 31, 2004, we had $0 revenues. We
      had
      a net loss of $12,515 for that same period.





From
      January 1, 2005 through December 31, 2005, we had $0 revenues. We had a net
      loss
      of $44,935 for that same period.





*General
      and Administrative Expenses*





From
      inception (April 22, 2004) through December 31, 2004, general and administrative
      expenses were $12,530.





From
      January 1, 2005 through December 31, 2005, general and administrative expenses
      were $46,074.





*Other
      Income (Expenses)*





For
      the
      period inception (April 22, 2004) through December 31, 2004, the Company
      achieved other income of $15. Blackhawk received $65 from the founders and
      $20,919 from the sale of stock under its Regulation E offering.





For
      the
      period January 1, 2005 through December 31, 2005, the Company achieved other
      income of $1,139. Blackhawk received $88,917 from the sale of stock under its
      Regulation E offering.





*Liquidity
      and Capital Resources*





From
      inception (April 22, 2004) through December 31, 2005, Blackhawk funded its
      cash
      operating requirements through the sale of its common stock and loans from
      an
      affiliated company, The Concorde Group, Inc.





At
      December 31, 2005, Blackhawk owed approximately $43,757 to The Concorde Group,
      Inc., a company controlled by Dr. Craig A. Zabala, the Chairman, President
      and
      Chief Executive Officer of Blackhawk. The amount due is non-interest bearing
      and
      is due on demand. This amount reflects expenses paid by The Concorde Group,
      Inc
      in connection with the formation of the corporation, offering costs for the
      offering plan and operating expenses. The Concorde Group, Inc. elected to
      convert a portion of Blackhawk debt totalling $61,432 into 6,143,200 shares
      of
      Common Stock at the offering price of $.01 per share in 2005.





On
      April
      23, 2004, the Company issued 8,500,000 shares of Series A preferred stock and
      11,000,000 shares of common stock to its founders at $.00001 per share for
      a
      total of $195. Between September 27, 2004 and December 31, 2005, Blackhawk
      sold
      17,126,781 shares of its common stock at $.01 per share for a total of
      $171,267.81. These shares were sold pursuant to an offering under Regulation
      E
      under the Securities Act. On November 9, 2005, the board of directors rescinded
      the issuance of shares of preferred stock to The Concorde Group, Inc. The
      Company refunded to The Concorde Group, Inc. the $85 that The Concorde Group,
      Inc. paid for the shares, which was added to the debt due to The Concorde Group,
      Inc. The Concorde Group, Inc. waived any rights it may have against Blackhawk
      in
      connection with the issuance and stated that it will not assert any claim
      against the Company. On November 12, 2005, certain investors returned 4,500,000
      shares of common stock and was refunded $45 on March 22, 2006. Each investor
      waived any rights he or she may have against Blackhawk in connection with the
      issuance and stated that he or she will not assert any claim against the
      Company. On November 29, 2005, Blackhawk amended its Certificate of
      Incorporation in the State of Delaware to eliminate the right to issue preferred
      shares. As of November 29, 2005, all outstanding shares are common
      shares.





19





Item
      7A. Quantitative and Qualitative Disclosures about Market Risk





We
      are
      subject to financial market risks, including changes in interest rates and
      the
      valuation of investments.





*Interest
      Rate Risk*





This
      Section is not applicable. Blackhawk does not have any interest-bearing
      liabilities at this time.





*Portfolio
      Valuation*





Blackhawk
      intends to use the U.S. Private Equity Valuation Guidelines (“Guidelines”) to
      provide its managers with a framework for valuing investments in portfolio
      companies at fair value and to provide greater consistency within the private
      equity industry with regard to valuation. There are currently few authoritative
      guidelines under U.S. generally accepted accounting principles (GAAP) that
      require specific procedures for estimating fair value of investments in
      portfolio companies. These Guidelines are intended to assist managers in their
      estimation of fair value and are intended to be consistent with GAAP. Blackhawk
      has made no investments to date.








Item
      8. Financial Statements and Supplementary Data





The
      response to this is enclosed in a separate section of this report, see page
      F-1.








Item
      9. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure





None.





20





Item
      9A. Controls and Procedures





On
      February 23, 2006, The Concorde Group, Inc., a founder and shareholder of
      Blackhawk and a control person of Blackhawk, as defined in Section 2(a)(1)
      of
      the Investment Company Act, retained SEC3 Compliance Consultants (“SEC3”),
      compliance consultants for companies operating under the Investment Company
      Act,
      to assist and to review Blackhawk’s current compliance program, recommend
      improvements to the program, and implement a new compliance program. The
      Concorde Group, Inc. is liable for payments for services rendered under
      Blackhawk's consulting agreement with SEC3.


.


On
      March
      24, 2006, the board of directors unanimously agreed to reimburse The Concorde
      Group, Inc. for expenses incurred with SEC3, related to the business of
      Blackhawk for the fiscal year ending December 31, 2006, to assist Blackhawk
      in
      complying with the regulations under the Investment Company Act. Furthermore,
      the board agreed to retain SEC3, compliance consultants for Blackhawk for the
      fiscal year ending December 31, 2006, to assist Blackhawk's acting chief
      compliance officer in complying with the regulations under the Investment
      Company Act.





*Disclosure
      Controls and Procedures*





Blackhawk's
      principal executive officer and acting principal financial officer are
      responsible for establishing and maintaining disclosure controls and procedures
      (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
      over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
      15d-15(f)) for Blackhawk and have:





§
            designed
                such disclosure controls and procedures, or caused such disclosure
                controls and procedures to be designed under their supervision, to
                ensure
                that material information relating to Blackhawk is made known to
                them by
                others within those entities, particularly during the period in which
                the
                periodic reports are being
                prepared;





§
            designed
                such internal control over financial reporting, or caused such internal
                control over financial reporting to be designed under their supervision,
                to provide reasonable assurance regarding the reliability of financial
                reporting and the preparation of financial statements for external
                purposes in accordance with generally accepted accounting principles;
                and





§
            evaluated
                the effectiveness of Blackhawk's disclosure controls and procedures
                as of
                the end of the fiscal year (the "Evaluation
                Date").





Based
      on
      their evaluation as of the Evaluation Date, their conclusion about the
      effectiveness of the disclosure controls and procedures were that nothing
      indicated:





21


§
            any
                significant deficiencies in the design or operation of internal controls
                which could adversely affect Blackhawk's ability to record, process,
                summarize and report financial
                data;





§
            any
                fraud, whether or not material, that involves management or other
                employees who have a significant role in Blackhawk's internal controls;
                or





§
            any
                material weaknesses in internal controls that have been or should
                be
                identified for the Company's auditors and disclosed to Blackhawk's
                auditors and the audit committee of the board of directors (or persons
                fulfilling the equivalent
                function).





In
      addition, Blackhawk's disclosure controls and procedures are effective in
      recording, processing, summarizing and reporting, on a timely basis, information
      required to be disclosed by the Company in the reports that it files or submits
      under the Exchange Act.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





*Internal
      Control Over Financial Reporting*





There
      have not been any changes in Blackhawk's internal control over financial
      reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
      Exchange Act) during Blackhawk's fourth fiscal quarter that have materially
      affected, or are reasonably likely to materially affect, Blackhawk's internal
      control over financial reporting.




Item
      9B. Other Information





This
      Section is not applicable.








22


**PART
      III**





Item
      10. Directors and Executive Officers of the Registrant





The
      following table sets forth information concerning our directors and executive
      officers:





Name
                and Address
            
            Age
            
            Position
                Held with CompanyDr.
                Craig A. Zabala(1)
            
            54
            
            President,
                Chief ExecutiveP.O.
                Box 360
            
            
            
            Officer,
                Acting ChiefGreene
                Street Station
            
            
            
            Financial
                Officer, ActingNew
                York, New York 10012
            
            
            
            Chief
                Compliance Officer,Secretary,
                ChairmanRobert
                M. Fujii(2)(3)
            
            56
            
            Vice
                President1624
                Acton StreetBerkeley,
                California 94702Robert
                J. Francis(3)
            
            35
            
            Director5416
                South 161stStreet
              Omaha,
                NE 68135Janet
                Buxman Kurihara(3)
            
            47
            
            Director11007
                North Cottontail LaneParker,
                Colorado 80138Randy
                Tejral(3)
            
            50
            
            Director6529
                Pine Ridge RoadElkhorn,
                Nebraska 68022Mick
                Woodwards(1)(3)
            
            47
            
            Director4849
                Woodruff AvenueLakewood,
                California 90713







(1)  Control
      person as defined in Section 2(a)(1) of the Investment Company Act.


(2)  Resigned
      as Chief Financial Officer on March 17, 2006; assumed the position of Vice
      President on March 24, 2006.


(3)  Minority
      shareholder of The Concorde Group, Inc.








The
      following is a brief summary of the background of each executive officer and
      director:





**Dr.
      Craig A. Zabala** is the
      founder, Chairman, President, and Chief Executive Officer and acting Chief
      Financial Officer and acting Chief Compliance Officer of Blackhawk. He is the
      founder, Chairman, President and Chief Executive Office of The Concorde Group,
      Inc. He was also the founder and Chief Executive Officer of DBL Holdings, LLC
      (dba Drexel Burnham Lambert). He was a Scholar in Residence and Visiting
      Lecturer at The Zicklin School of Business and the Department of Finance,
      Graduate School, Baruch College, City University of New York, where he taught
      an
      MBA course on Entrepreneurial Strategy and an M.S. degree in Finance course
      on
      Special Topics in Investment Banking.





23


Additionally,
      Dr. Zabala was on the editorial board of *Global
      Focus* ,
      an
      academic journal on international business, economics, and social policy. From
      1999 to 2001, Dr. Zabala was Senior Vice President of Merchant Banking,
      Trautman, Wasserman & Company, a merchant bank and broker dealer in New York
      City. Prior to this, from 1997 to 1998, Dr. Zabala was Vice President and
      Investment Advisor, Private Client Group, Merrill Lynch & Co., New York
      City. Previously, Dr. Zabala was Vice Chairman of the Board of Directors of
      Golf
      Reservations of America, Inc. from November 1992 through April 1996; his areas
      of responsibility included developing the business plan, joint-venture marketing
      relationships, capital raising and financial strategies, and commercial banking
      strategies.





From
      1991
      to 1993, Dr. Zabala was a Visiting Scholar and Visiting Lecturer, teaching
      the
      following courses, Entrepreneurship, Venture Capital, and Applied Finance,
      at
      the Walter A. Haas School of Business, University of California at Berkeley.





From
      1990
      to 1991, he was a Visiting Fellow at the School of Industrial and Business
      Studies, University of Warwick, Coventry, England. From 1989 to 1990, he was
      Vice President of Corporate Finance at D.H. Blair and Company. From 1986 to
      1990, he served as Assistant Professor of Management at the School of
      Management, Rensselaer Polytechnic Institute, in Troy, New York. Dr. Zabala
      was
      an Economist at the U.S. Department of Labor (1979 to 1982) and the U.S.
      Department of Commerce (1982 to 1986) in Washington, D.C. During his career
      in
      Washington, he was also employed full-time as an autoworker from 1976 to 1983
      at
      the General Motors Assembly Division, General Motors Corporation, Van Nuys,
      California, where he worked and also carried out research on production
      relations for his doctoral research on the U.S. automobile
      industry.





Dr.
      Zabala received his A.B., Magna cum laude and Phi Beta Kappa, in 1974, M.A.
      in
      1977, Ph.D. in 1983 all from the University of California, Los Angeles, and
      was
      also a Postdoctoral Scholar in 1986 at the University of California, Los
      Angeles. He also pursued advanced post-graduate studies in production theory
      and
      econometrics in the Department of Economics, The George Washington University,
      Washington, D.C., from 1980 to 1984. Additionally, Dr. Zabala founded Craig
      A.
      Zabala & Company, a business consulting company in New York City. Dr. Zabala
      was also a founder, principal, and/or investor in a number of emerging growth
      firms.





**Robert
      M. Fujii** is a
      Vice President at Blackhawk Capital Group BDC, Inc. He also holds positions
      as
      Chief Financial Analyst of The Concorde Group, Inc. and Acting Chief Financial
      Officer of Concorde Atlas Capital LLC. Mr. Fujii was previously a financial
      consultant for Craig A. Zabala & Company, a business consulting company in
      New York City. From 1992 to 1993, Mr. Fujii worked as a financial analyst for
      Nichirei Foods America sales office in San Francisco. From 1979 to 1992, Mr.
      Fujii worked as the Supervisor of Budgets and General Accounting for Varian
      Associates, Inc., a manufacturer of scientific measuring instruments, located
      in
      Walnut Creek, California. He received his BA in Biochemistry in 1971 from the
      University of California at Berkeley and an MBA in International Business and
      Finance from the Haas School of Business, University of California at Berkeley
      in 1993.





24


**Robert
      J. Francis** has been
      a director of Blackhawk since December 2004. Since 2000, Mr. Francis has been
      founder and Vice President of Omaha Telecom, Inc., a tower and radio maintenance
      company.





**Janet
      Buxman Kurihara** has been
      a director of Blackhawk since August 2004. Ms. Kurihara was regional director
      at
      Telenisus Corp., a network security and data storage company from 2000-2001.
      From January 2001 to October 2001, she was regional director at Riptechi Inc.,
      a
      network security company. From October 2001 to March 2003, she owned Definitive
      Market Consultants, a consulting company. Since March 2003, Ms. Kurihara has
      been a senior manager of new product development and product strategy at
      Qwest.





**Randy
      Tejral** has been
      a director of Blackhawk since December 2004. Since 1990, he has been President
      of Special T. Masonry, Inc., a masonry work and construction business located
      in
      Elkhorn, Nebraska.





**Mick
      Woodwards** has been
      a director of Blackhawk since August 2004. Since November 1993, Mr. Woodwards
      is
      the Founder and President of Lakewood Rent-All, a party rental firm in Lakewood,
      California.





Except
      as
      indicated above, none of our directors holds any directorships in companies
      with
      a class of securities registered pursuant to Section 12 of the Securities
      Exchange Act or subject to the requirements of Section 15(d) of such Act or
      any
      company registered as an investment company under the Investment Company
      Act.





There
      are
      no family relationships among any of our directors or executive
      officers.





*Board
      Composition*





Blackhawk's
      board of directors consists of five directors. At each annual meeting of its
      stockholders, all of its directors are elected to serve from the time of
      election and qualification until the next annual meeting following election.
      In
      addition, Blackhawk's bylaws provide that the maximum authorized number of
      directors may be changed by resolution of the stockholders or by resolution
      of
      the board of directors.





*Meetings
      and Committees of the Board of Directors*





Our
      Board
      of Directors conducts its business through meetings of the Board and through
      activities of its committees. From inception (April 22, 2004) to December 31,
      2005, the Board of Directors held four meetings. No director attended fewer
      than
      100% of the total meetings of the Board either in person or via teleconference
      from inception (April 22, 2004) to December 31, 2005. During 2005, the board
      of
      directors acted by written consent two times.





25


Blackhawk
      has one board committee, the audit committee.





Blackhawk’s
      board of directors has determined that Dr. Craig A. Zabala is an audit committee
      financial expert serving on its audit committee. Dr. Zabala is also an officer
      and shareholder of Blackhawk. He is not an independent director.





*Limitations
      of Liability and Indemnification of Directors and Officers*





Our
      bylaws limit the liability of directors and officers to the maximum extent
      permitted by Delaware law. We will indemnify any person who was or is a party,
      or is threatened to be made a party to, an action, suit or proceeding, whether
      civil, criminal, administrative or investigative, if that person is or was
      a
      director, officer, employee or agent of ours or serves or served any other
      enterprise at our request.





We
      have
      been advised that it is the position of the Commission that insofar as the
      indemnification provisions referenced above may be invoked to disclaim liability
      for damages arising under the Securities Act, these provisions are against
      public policy as expressed in the Securities Act and are, therefore,
      unenforceable.





*Code
      of Ethics*





Blackhawk
      has adopted a Code of Ethics under Rule 17j-1 under the rules and regulations
      of
      the Investment Company Act that applies to its principal executive officer,
      principal financial officer, principal accounting officer or controller, or
      persons performing similar functions. For purposes of this item, the term code
      of ethics means written standards that are reasonably designed to deter
      wrongdoing and to promote:





§
            honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships;





§
            full,
                fair, accurate, timely, and understandable disclosure in reports
                and
                documents that Blackhawk files with, or submits to, the Commission
                and in
                other public communications made by the
                issuer;





§
            compliance
                with applicable governmental laws, rules and
                regulations;





§
            the
                prompt internal reporting of violations of the code to the board
                of
                directors or another appropriate person or persons;
                and





§
            accountability
                for adherence to the code.





Blackhawk
      hereby undertakes to provide to any person without charge, upon request, a
      copy
      of such code of ethics. Such request may be made in writing to the Chairman
      of
      the Board of Directors at Blackhawk Capital Group BDC, Inc., 14 Wall Street,
      11 th Floor,
      New York, New York 10005.





26





Item
      11. Executive Compensation





*Summary
      Compensation Table*





The
      following table sets forth information with respect to compensation we paid
      for
      the period of inception (April 22, 2004) through December 31, 2005, for services
      of our executive officers and directors.








**SUMMARY
      COMPENSATION TABLE**





Name
              and
              Principal
              Position
            Year
            Annual
                Compensation
            Long
                Term Compensation
            All
                Other Compensation
              ($)Salary
                ($)
            Bonus
                ($)
            Other
                Annual Compensation
              ($)
            Awards
            PayoutsRestricted
                Stock
              Award(s)
              ($)
            Securities
                Underlying
              Options/
              SARs
              (#)
            LTIP
                Payouts ($)Craig
                A. Zabala
              President,
                CEO, Chairman
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilBrad
                D. Silver
              Executive
                Vice-President, Secretary, Director(1)
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              $12,000
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilRobert
                M. Fujii Vice President
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilDavid
                W. Atchison Director(2)
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilRobert
                J. Francis
              Director
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilJanet
                Buxman Kurihara Director
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilRandy
                Tejral
              Director
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              NilMick
                Woodwards Director
            2004
              2005
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil
            Nil
              Nil




(1)  Brad
      Silver was paid $12,000 in consulting fees to assist the Corporation in
      extraordinary administrative duties during the calendar year 2005. No
      compensation was paid to any other manager during the calendar year. Mr.
      Silver resigned
      as Executive Vice President, Secretary, and Director on December 8,
      2005.


(2)
      David
      Atchison resigned as Director on January 25, 2006.





27





Blackhawk
      has no option plans, pension plans or any other compensation plans.





Item
      12. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters





The
      following table sets forth each person known by Blackhawk to be the beneficial
      owner of five percent or more of the common stock of Blackhawk, all directors
      individually and all directors and officers of Blackhawk as a group. Except
      as
      noted, each person has sole voting and investment power with respect to the
      shares shown.





Name
                and Address
            
            Amount
                of Beneficial
            
            Percentageof
                Beneficial Owner
            
            Ownership
            
            of
                ClassDr.
                Craig A. Zabala
            
            1,832,500(1)(2)
            
            7.76%P.O.
                Box 360Greene
                Street StationNew
                York, New York 10012The
                Concorde Group, Inc.(3)
            
            3,300,000(2)
            
            13.97%14
                Wall Street, 11thFloorNew
                York, New York 10005Robert
                M. Fujii
            
            500,000
            
            2.12%1624
                Acton StreetBerkeley,
                California 94702Robert
                J. Francis
            
            0
            
            0%5416 South
              161stStreetOmaha,
                Nebraska 68135Janet
                Buxman Kurihara
            
            0
            
            0%11007
                North Cottontail LaneParker,
                Colorado 80138Randy
                Tejral
            
            0
            
            0%6529 Pine
              Ridge
              RoadElkhorn,
                Nebraska 68022Mick
                Woodwards
            
            1,320,269
            
            5.59%4849
                Woodruff AvenueLakewood,
                California 90713Doreen
                McCarthy(3)
            
            2,345,000
            
            9.93%426 Broome
              StreetNew York,
              NY
              10013All
                Executive Officers and
            
            3,652,769
            
            15.46%Directors
                as a Group (6 Persons)(1)







(1)
            Excludes
                3,300,000 shares of common stock held by The Concorde Group, Inc.
                of which
                Dr. Zabala is the control person.


(2)
            The
                control person of these shares is Dr. Craig A.
                Zabala.


(3)
            The
                beneficial owner of five percent or more of the common stock of Blackhawk,
                who is not a director or officer of
                Blackhawk.





28





Item
      13. Certain Relationships and Related Transactions





Dr.
      Craig
      A. Zabala, President, Chief Executive Officer and Chairman of Blackhawk is
      a
      control person of The Concorde Group, Inc.. The Concorde Group, Inc. owns
      3,300,000 common shares of Blackhawk. Blackhawk is indebted to The Concorde
      Group, Inc. in the amount of $44,757. The Concorde Group, Inc. is also paying
      for the services of SEC3, which is providing consulting and compliance work
      to
      Blackhawk. Blackhawk will reimburse The Concorde Group, Inc. for these
      expenses.








Item
      14. Principal Accountant Fees and Services





1.
            AUDIT
                FEES





The
      aggregate fees billed by Paritz & Company, P.A. for professional services
      rendered for the audit of our financial statements for fiscal year 2005 were
      $3,915.





The
      aggregate fees billed by Paritz & Company, P.A. for professional services
      rendered for the audit of our financial statements for fiscal year 2004
      (starting with April 22, 2004) were $5,000.





2.
            AUDIT-RELATED
                FEES





The
      aggregate fees billed during the period of December 31, 2005 for assurance
      and
      related services by Paritz & Company, P.A. that are reasonably related to
      the performance of the audit or review of Blackhawk's financial statements
      was
      $0.





The
      aggregate fees billed during the period of December 31, 2004 (starting with
      April 22, 2004) for assurance and related services by Paritz & Company, P.A.
      that are reasonably related to the performance of the audit or review of
      Blackhawk's financial statements was $0.





29


3.
            TAX
                FEES





The
      aggregate fees billed the period from inception (starting with April 22, 2004)
      to December 31, 2006 for professional services rendered by Paritz & Company,
      P.A. for tax compliance, tax advice, and tax planning was $0.





4.
            ALL
                OTHER FEES





The
      aggregate fees billed in each of the last two fiscal years for products and
      services provided by Paritz & Company, P.A., other than the services
      reported above was $0 for the period from inception (April 22, 2004) to December
      31, 2005.





5.
            PRE-APPROVAL
                POLICIES AND PROCEDURES





Before
      the accountant is engaged by Blackhawk to render audit or non-audit services,
      the engagement is nominated by the members of the Audit Committee and approved
      by Blackhawk's board of directors.




Item
      15. Exhibits and Financial Statement Schedules





(a)  Exhibits





31.1
            Certification
                by Chief Executive Officer Pursuant to Section 302 of the Sarbanes
                Oxley
                Act of 200231.2
            Certification
                by Chief Financial Officer Pursuant to Section 302 of the Sarbanes
                Oxley
                Act of 200232.1
            Certification
                by Chief Executive Officer Pursuant to Section 906 of the Sarbanes
                Oxley
                Act of 200232.2
            Certification
                by Chief Financial Officer Pursuant to Section 906 of the Sarbanes
                Oxley
                Act of 2002





30


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant had duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





BLACKHAWK
                CAPITAL GROUP BDC, INC. (Registrant)BY:
            /s/
                Craig A. ZabalaCraig
                A. ZabalaChairman,
                President and Chief Executive OfficerDated:April
                13, 2006





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Registrant and in the capacities and on
      the
      dates indicated.





/s/
                Craig A. Zabala
            
            /s/
                Robert M. FujiiCraig
                A. Zabala
            
            Robert
                M. FujiiChairman,
                President and
              Chief
                Executive Officer
            
            Vice
                PresidentDated:April
                13, 2006
            
            Dated:April
                13, 2006/s/
                Craig A. Zabala
            
            /s/
                Robert J. FrancisCraig
                A. Zabala
            
            Robert
                J. FrancisActing
                Chief Financial Officer
              Principal
                Accounting Officer
            
            DirectorDated:April
                13, 2006
            
            Dated:April
                13, 2006/s/
                Janet Buxman Kurihara
            
            /s/
                Randy TejralJanet
                Buxman Kurihara
            
            Randy
                TejralDirector
            
            DirectorDated:April
                13, 2006
            
            Dated:April
                13, 2006/s/
                Mick WoodwardsMick
                WoodwardsDirectorDated:April
                13, 2006





31


***Paritz
      & Company, P.A.***











**BLACKHAWK
      CAPITAL GROUP BDC INC.**





*FINANCIAL
      STATEMENTS*


*WITH*


*REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM*





*YEARS
      ENDED DECEMBER 31, 2005 AND 2004*











**Paritz
                & Company, P.A.**
            15
                Warren Street, Suite 25
              Hackensack,
                New Jersey 07601
              (201)342-7753
              Fax:
                (201) 342-7598
              E-Mail:
                paritz @paritz.comCertified
                Public Accountants










**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**














Board
      of
      Directors


**Blackhawk
      Capital Group BDC Inc.**


New
      York,
      New York

















We
      have
      audited the accompanying statements of assets and liabilities of **Blackhawk
      Capital Group BDC Inc.** as
      of
      December 31, 2005 and 2004 and the related statements of operations, changes
      in
      net assets, stockholders‘ equity and cash flows for the year ended December 31,
      2005 and the period from inception (April 22, 2004) to December 31, 2004. These
      financial statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of **Blackhawk
      Capital Group BDC Inc.** as of
      December 31, 2005 and 2004 and the results of its operations and its cash flows
      and the changes in its net assets for the year ended December 31, 2005 and
      the
      period from inception (April 22, 2004) to December 31, 2004 in conformity with
      accounting principles generally accepted in the United States of
      America.








***Paritz
      & Company, P.A.***





Hackensack,
      New Jersey


March
      27,
      2006





F-1








**BLACKHAWK
      CAPITAL GROUP BDC INC.**





STATEMENTS
      OF ASSETS AND LIABILITIES





DECEMBER
                31,2005
            
            2004**ASSETS:**Cash
            
            $
            77,877
            
            $
            13,600Prepaid
                insurance
            
            
            5,522
            
            
            -Deferred
                offering costs
            
            
            -
            
            
            87,635**TOTAL
                ASSETS**
            
            
            **83,399**
            
            **$**
            **101,235****LIABILITIES**Due
                to affiliated company
            
            $
            43,842
            
            $
            91,908Accrued
                expenses
            
            
            17,536
            
            
            5,000Due
                to former stockholder in connection with stock rescission
            
            
            45
            
            
            45**TOTAL
                LIABILITIES**
            
            
            **61,423**
            
            
            **96,953****NET
                ASSETS**Preferred
                stock, par value $.00001 per share15,000,000
                shares authorized at December 31, 2004,8,500,000
                shares issued and outstanding in 2004
            
            
            -
            
            
            85Common
                stock, par value $.00001 per share1,000,000,000
                shares authorized,23,626,781
                and 8,591,901 shares issuedand
                outstanding in 2005 and 2004, respectively
            
            
            236
            
            
            86Additional
                paid-in capital
            
            
            79,190
            
            
            16,626Accumulated
                net investment loss
            
            
            (57,450
            )
            
            (12,515
            )**TOTAL
                NET ASSETS**
            
            
            **21,976**
            
            
            **4,282****TOTAL
                LIABILITIES AND NET ASSETS**
            
            **$**
            **83,399**
            
            **$**
            **101,235****NET
                ASSET VALUE PER COMMON SHARE**
            
            **$**
            **.00093**
            
            **$**
            **.00050**





See
      notes
      to financial statements





F-2











**BLACKHAWK
      CAPITAL GROUP BDC INC.**





STATEMENTS
      OF OPERATIONS




YEAR
                ENDED
              DECEMBER
                31, 2005
            
            FROM
                INCEPTION
              (APRIL
                22, 2004)
              TO
              DECEMBER
                31, 2004**INVESTMENT
                INCOME:**Interest
                income
            
            $
            1,139
            
            $
            15**TOTAL
                INVESTMENT INCOME**
            
            
            **1,139**
            
            
            **15****EXPENSES:**Professional
                fees
            
            
            19,171
            
            
            10,560Consulting
                fees
            
            
            12,000
            
            
            -Filing
                fees
            
            
            8,848
            
            
            1,970Insurance
            
            
            5,145
            
            
            **-**Other
            
            
            910
            
            
            -**TOTAL
                EXPENSES**
            
            
            **46,074**
            
            
            **12,530****NET
                INVESTMENT (LOSS) AND NET DECREASE****IN
                ASSETS RESULTING FROM OPERATIONS**
            
            **$**
            **(44,935**
            **)**
            **$**
            **(12,515**
            **)****LOSS
                PER COMMON SHARE,****BASIC
                AND DILUTED**
            
            **$**
            **(.00220**
            **)**
            **$**
            **(.00179**
            **)****WEIGHTED
                AVERAGE SHARES OUTSTANDING,**
              **BASIC
                AND DILUTED****20,436,775**
            
            
            **6,978,491**





See
      notes
      to financial statements





F-3








**BLACKHAWK
      CAPITAL GROUP BDC INC.**





STATEMENTS
      OF CHANGES IN NET ASSETS







YEAR
                ENDED
              DECEMBER
                31, 2005
            
            FROM
                INCEPTION
              (APRIL
                22, 2004)
              TO
              DECEMBER
                31, 2004**DECREASE
                IN NET ASSETS FROM OPERATIONS**Net
                investment loss
            
            $
            (44,935
            )
            $
            (12,515
            )**NET
                DECREASE IN NET ASSETS****RESULTING
                FROM OPERATIONS**
            
            
            **(44,935**
            **)**
            
            **(12,515**
            **)****CAPITAL
                STOCK TRANSACTIONS:**Proceeds
                from common stock sold
            
            
            88,917
            
            
            21,069Conversion
                of a portion of amounts owedto
                affiliate into common stock
            
            
            61,432
            
            
            -Offering
                costs
            
            
            (87,635
            )
            
            (4,272
            )Rescission
                of preferred stock - founder
            
            
            (85
            )
            
            -**NET
                INCREASE IN NET ASSETS FROM****CAPITAL
                STOCK TRANSACTIONS**
            
            
            **62,629**
            
            
            **16,797****TOTAL
                INCREASE IN NET ASSETS**
            
            
            **17,694**
            
            
            **4,282****NET
                ASSETS - BEGINNING OF YEAR**
            
            
            **4,282**
            
            
            **-****NET
                ASSETS - END OF YEAR**
            
            **$**
            **21,976**
            
            **$**
            **4,282**








See
      notes
      to financial statements





F-4








**BLACKHAWK
      CAPITAL GROUP BDC INC.**





STATEMENT
      OF STOCKHOLDERS‘ EQUITY





FOR
      THE
      PERIOD FROM INCEPTION (APRIL 22, 2004) TO DECEMBER 31, 2005





ACCUMULATEDADDITIONAL
            
            
            NETCOMMON
                STOCK
            
            
            PREFERRED
                STOCK
            
            
            PAID-IN
            
            
            INVESTMENTTOTAL
            
            
            SHARES
            
            
            AMOUNT
            
            
            SHARES
            
            
            AMOUNT
            
            
            CAPITAL
            
            
            LOSSSale
                of formation stock to
              founders
                (at $.00001 per
              share)
            
            
            150
            
            
            6,500,000
            
            $
            65
            
            
            8,500,000
            
            $
            85
            
            $
            -
            
            $
            -Sale
                of stock pursuant to offering plan (at $.01 per
              share)
            
            
            20,919
            
            
            2,091,901
            
            
            21
            
            
            -
            
            
            -
            
            
            20,898
            
            
            -Offering
                costs
            
            
            (4,272
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,272
            )
            
            -Net
                loss
            
            
            (12,515
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (12,515
            )Balance
                - December 31, 2004
            
            
            4,282
            
            
            8,591,901
            
            
            86
            
            
            8,500,000
            
            
            85
            
            
            16,626
            
            
            (12,515
            )Sale
                of stock pursuant to
              offering
                plan (at $.01 per
              share)
            
            
            88,917
            
            
            8,891,680
            
            
            89
            
            
            -
            
            
            -
            
            
            88,828
            
            
            -Conversion
                of a portion
              of
                amount owed to affiliate
              (at
                $.01 per share)
            
            
            61,432
            
            
            6,143,200
            
            
            61
            
            
            -
            
            
            -
            
            
            61,371
            
            
            -Rescinded
                preferred stockfrom
                founder (at $.00001
              per
                share)
            
            
            (85
            )
            
            -
            
            
            -
            
            
            (8,500,000
            )
            
            (85
            )
            
            -
            
            
            -Offering
                costs
            
            
            (87,635
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (87,635
            )
            
            -Net
                loss
            
            
            (44,935
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (44,935
            )Balance
                - December 31, 2005
            
            $
            21,976
            
            
            23,626,781
            
            $
            236
            
            
            -
            
            $
            -
            
            $
            79,190
            
            $
            (57,450
            )





See
      notes
      to financial statements


F-5


**BLACKHAWK
      CAPITAL GROUP BDC INC.**





STATEMENTS
      OF CASH FLOWS





YEAR
                ENDED
              DECEMBER
                31. 2005
            
            FROM
                INCEPTION
              (APRIL
                22, 2004)
              TO
              DECEMBER
                31, 2004**CASH
                FLOWS FROM OPERATING**
              **AND
                INVESTING ACTIVITIES:******Net
                investment loss and decrease in****net assets resulting from operations
            
            $
            (44,935
            )
            $
            (12,515
            )****Adjustments
                to reconcile net decrease:****Increase
                in accrued expenses
            
            
            12,536
            
            
            5,000****Increase
                in prepaid expenses
            
            
            (5,522
            )
            
            -**NET
                CASH USED IN OPERATING****AND
                INVESTING ACTIVITIES**
            
            
            **(37,921**
            **)**
            
            **(7,515**
            **)****CASH
                FLOWS FROM FINANCING ACTIVITIES:******Net
                proceeds from the issuance of stock
            
            
            88,917
            
            
            21,069Offering
                costs
            
            
            -
            
            
            (4,272
            )Loan
                from affiliated company
            
            
            13,281
            
            
            91,908Deferred
                offering costs
            
            
            -
            
            
            (87,635
            )Due
                to former stockholder in connection withcommon
                stock rescission
            
            
            -
            
            
            45**NET
                CASH PROVIDED BY FINANCING ACTIVITIES**
            
            
            **102,198**
            
            
            **21,115****NET
                INCREASE IN CASH**
            
            
            **64,277**
            
            
            **13,600****CASH
                - BEGINNING OF YEAR**
            
            
            **13,600**
            
            
            **-****CASH
                - END OF YEAR**
            
            **$**
            **77,877**
            
            **$**
            **13,600****Non-cash
                financing activities:**Conversion
                of amount due affiliated companyinto
                common stock
            
            $
            61,432
            
            $
            -Rescinded
                preferred stock
            
            $
            85
            
            $
            -Deferred
                offering costs charged toadditional
                paid-in capital
            
            $
            87,635
            
            $
            -





See
      notes
      to financial statements




F-6


**BLACKHAWK
      CAPITAL GROUP BDC INC.**





NOTES
      TO
      FINANCIAL STATEMENTS





DECEMBER
      31, 2005





**1**
            **SIGNIFICANT
                ACCOUNTING POLICIES**





***Business
      description***





Blackhawk
      Capital Group BDC Inc. (“the Company“ or “Blackhawk”) was incorporated in the
      State of Delaware on April 22, 2004.





On
      September 14, 2004 the Company filed a Form N-54A, Notification with the
      Securities and Exchange Commission (“SEC”) electing to become a Business
      Development Company pursuant to Section 54(a) of the Investment Company Act
      of
      1940. As a business development company, Blackhawk will be able to acquire
      interests in small private businesses, as well as non-dividend paying public
      companies.





Blackhawk
      will attempt to locate and negotiate with eligible portfolio companies for
      Blackhawk to invest in, lend funds to, acquire an interest in and/or possibly
      manage. Blackhawk will offer managerial assistance to eligible portfolio
      companies in which it invests.





***Basis
      of presentation***





The
      financial statements have been prepared in accordance with the presentation
      requirements of the AICPA Audit and Accounting Guide for Investment
      Companies.





***Uses
      of estimates in the preparation of financial
      statements***





The
      preparation of financial statements in conformity with generally accepted
      accounting principles accepted in the United States of America (“GAAP”) requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of net revenue
      and
      expenses during each reporting period. Actual results could differ from those
      estimates.





***Income
      taxes***





The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards No. 109 (SFAS 109) which requires that deferred tax assets
      and liabilities be recognized for future tax consequences attributable to
      differences between financial statement carrying amounts of existing assets
      and
      liabilities and their respective tax bases. In addition, SFAS 109 requires
      recognition of future tax benefits, such as carryforwards, to the extent that
      realization of such benefits is more likely than not and that a valuation
      allowance be provided when it is more likely than not that some portion of
      the
      deferred tax asset will not be realized.





***Deferred
      offering costs***





These
      costs represent expenses incurred in connection with the preparation of the
      offer circular dated September 15, 2004. The costs are for legal fees ($85,000),
      accounting fees ($5,000) and filing fees ($1,907). These costs were charged
      to
      additional paid-in capital proportionately as shares were sold and the remaining
      balance was written off in September 2005.





F-7


***Restated
      financial statements***





These
      financial statements are being revised to include a schedule of financial
      highlights.




***Net
      loss per common share***





Basic
      and
      diluted loss per common share is calculated by dividing net loss by the weighted
      average number of outstanding common shares during the period. The Company
      has
      no potential shares that could dilute earnings per share in the
      future.





**2**
            **STOCKHOLDERS’
                EQUITY**





The
      Company is authorized to issue 1,000,000,000 shares of common stock and, at
      December 31, 2004, was authorized to issue 15,000,000 shares of preferred stock,
      both with a par value of $.00001 per share. Shortly after formation, the Company
      sold 6,500,000 shares of common stock and 8,500,000 shares of preferred stock,
      net of 4,500,000 shares of common stock issued and subsequently rescinded,
      as
      discussed below, to its founders for an aggregate of $150.





Pursuant
      to an offering circular dated September 15, 2004, the Company commenced an
      offering to sell a minimum of 750,000 and a maximum of 45,000,000 shares of
      common stock at $.01 per share. During 2005 and 2004, the Company sold 8,891,680
      and 2,091,091 shares, respectively, for aggregate gross proceeds of $88,917
      and
      $20,919, respectively.





Holders
      of shares of common stock are entitled to one vote for each share on all matters
      to be voted on by the stockholders. Holders of common stock do not have
      cumulative voting rights.





The
      Board
      of Directors was authorized to provide for the issuance of shares of preferred
      stock in series and to establish the number of shares to be included in each
      such series, and to fix the designation, powers, preferences and rights of
      the
      shares of each such series and the qualifications, limitations or restrictions
      thereof without any further vote or action by the stockholders. Any shares
      of
      preferred stock so issued would have priority over the common stock with respect
      to dividend or liquidation rights. The preferred stock had super voting rights
      entitling each share to 100 votes and had priority over the common stock with
      respect to dividend or liquidation rights.





On
      November 9, 2005 the Board of Directors rescinded the issuance of shares of
      preferred formation stock to The Concorde Group Inc. The Company refunded to
      Concorde the $85 that Concorde paid for the shares. Concorde waived any rights
      it may have against Blackhawk in connection with the issuance and stated that
      it
      will not assert any claim against the Company. On November 12, 2005 certain
      investors returned 4,500,000 shares of common stock and will be refunded $45.
      Each investor waived any rights he or she may have against Blackhawk in
      connection with the issuance and stated that he or she will not assert any
      claim
      against the Company. On November 29, 2005, Blackhawk amended the Certificate
      of
      Incorporation in the State of Delaware to eliminate the right to issue preferred
      shares. As of November 29, 2005 all shares are to be common shares.





During
      2005 amount due to affiliates of $61,432 was converted into 6,143,200 shares
      of
      common stock (at $.01 per share).





F-8


**3**
            **INCOME
                TAXES**





Blackhawk
      has available net operating loss carryforwards for income tax purposes of
      approximately $57,500 which expire in 2024 and 2025.





The
      Company has a deferred tax asset of approximately $11,500 resulting from
      available net operating loss carryforwards. Since Blackhawk has no operating
      history, a 100% valuation allowance has been provided.





**4**
            **DUE
                TO AFFILIATED COMPANY**





Amount
      due to affiliated company is non-interest bearing and is due on demand. This
      amount reflects expenses paid directly by a corporation controlled by the
      founder of Blackhawk in connection with formation of the corporation, offering
      costs for the offering plan and operating expenses.




**5**
            **RELATED
                PARTY TRANSACTIONS**





The
      Company shares office space and other administrative functions with the
      affiliated company referred to in Note 4 above at no charge to the Company.
      The
      Company expects to pay fair market value for such services following the close
      of its next offering.




**6**
            **FINANCIAL
                HIGHLIGHTS**





The
      following is a schedule of financial highlights for the year ended December
      31,
      2005 and the period from inception (April 22, 2004) to December 31,
      2004:





YEAR
                ENDED
              DECEMBER
                31. 2005
            
            FROM
                INCEPTION
              (APRIL
                22, 2004)
              TO
              DECEMBER
                30, 2004**Per
                Share Data:**Net
                asset value - beginning of period
            
            $
            0.00050
            
            $
            0.00001Net
                investment loss *
            
            
            (0.00220
            )
            
            (0.00179
            )Issuance
                of common stock
            
            
            0.00417
            
            
            0.00796Dilutive
                effect of share issuance
            
            
            (0.00154
            )
            
            (0.00568
            )Net
                asset value - end of period
            
            
            0.00093
            
            
            0.00050**Total
                return based on net asset value ****
            
            
            (440
            %)
            
            (17,900
            %)Common
                shares outstanding - end of period***
            
            
            23,626,781
            
            
            8,591,901**Ratio/Supplemental
                Data**:Net
                assets - end of period
            
            $
            21,976
            
            $
            4,282Ratio
                of net investment loss to average net assets****
            
            
            (91
            %)
            
            (1,212
            %)Ratio
                of operating expenses to average net assets****
            
            
            94
            %
            
            1,213
            %


*  Calculated
      based on average shares outstanding during period


**  Total
      returns for periods of less than one year are not annualized


***  Common
      shares outstanding are reduced by rescinded shares


****  Annualized
      for periods less than one year





F-9