SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 
 Annual
Report Pursuant to Section 13 or 15(d) of
 the
Securities Exchange Act of 1934
 
 For the
Fiscal Year Ended December 31, 2004
 Commission
File Number: 814-00678
 
 BLACKHAWK
      CAPITAL GROUP BDC, INC.(Name
      of Small Business Issuer in its charter)Delaware
    20-1031329(State
      or other jurisdiction of
      incorporation
      or organization)
    (I.R.S.
      Employer
      Identification
      No.)
 
 
 14
      Wall Street, 11thFloor, New York, New York
    10005(Address
      of principal executive offices)
    (Zip
      Code)
 
 
 Registrant's
telephone number, including area code (212) 566-8300
 
 Securities
registered pursuant to Section 12(g) of the Act:
 Common
      Stock $.0001 Par Value(Title
      of Class)
 Indicate
by check mark whether the issuer: (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 Blackhawk was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
____.
 
 Indicate
by check mark if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-K contained in this form, and no disclosure will 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 X
 
 Indicate
by check mark where Blackhawk is an accelerated filer (as defined in Exchange
Act Rule 12b-2) Yes ___ No X .
 
 The
aggregate market value of the voting stock held by non-affiliates of Blackhawk
was approximately $118,482.94 on March 15, 2005 based on offering price of $.01
in the offering circular filed along with a Form 1-E with the Securities and
Exchange Commission on September 20, 2004. For the purposes of the foregoing
sentence, the term "affiliate" includes each director and officer of
Blackhawk.
 
 The
number of shares outstanding of Blackhawk's common stock on March 29, 2005 was
14,923,563.
  
  TABLE OF
CONTENTS
 
 Page**GENERAL
      NOTE****PART
      I**Item
      1.
    BusinessItem
      2.
    PropertiesItem
      3.
    Legal
      ProceedingsItem
      4.
    Submission
      of Matters to a Vote of Security Holders**PART
      II**Item
      5.
    Market
      for Common Equity, Related Stockholder Matters and and Issuer Purchase of
      Equity SecuritiesItem
      6.
    Selected
      Financial DataItem
      7.
    Management's
      Discussion and Analysis or Plan of OperationsItem
      7A.
    Quantitative
      and Qualitative Disclosures about Market RiskItem
      8.
    Financial
      Statements and Supplementary DataItem
      9.
    Changes
      in and Disagreements with Accountants on Accounting and Financial
      DisclosureItem
      9A.
    Controls
      and ProceduresItem
      9B.
    Other
      Information**PART
      III**Item
      10.
    Directors
      and Executive Officers of the RegistrantItem
      11.
    Executive
      CompensationItem
      12.
    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder MattersItem
      13.
    Certain
      Relationships And Related TransactionsItem
      14.
    Principal
      Accountant Fees and Services**PART
      IV**Item
      15.
    Exhibits
      and Financial Statement Schedules
 
 
 
  
 
  **GENERAL
NOTE**
 
 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's 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.
 
 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.
 
 
 **PART
I**
 
 Item
1. Business
 
 On
September 20, 2004, Blackhawk Capital Group BDC Inc. ("Blackhawk" or the
“Company” or “we”) 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 of 1940.
 
 Blackhawk
was incorporated on April 26, 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 issuing 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 shareholders 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.
 
 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 of 1940.
 
 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 consults 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.
 
 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.
 
 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.
 
 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;
 
 §
    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.
 
 As a
business development company, Blackhawk is subject to the provisions of Sections
55 through 65 of the Investment Company Act of 1940, as amended, 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 15, 2005, 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.
 
 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.
 
 *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.
 
 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.
 
 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.
 
 *Regulation
- Business Development Companies*
 
 The
following is a summary description of the Investment Company Act of 1940, as
amended, 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 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 of 1940, as amended,
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 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 of 1940, 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 of 1940, as amended, 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 of 1940, as amended, 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 of 1940, as
amended, 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 29, 2005,
Blackhawk has not yet made any investments.
 
 Blackhawk
is permitted by the Investment Company Act of 1940, as amended, under specified
conditions, to issue multiple classes of senior debt and preferred stock, if its
asset coverage, as defined in the Investment Company Act of 1940, as amended, 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 of 1940, as amended, 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 of 1940,
as amended.
 
 In
accordance with the Investment Company Act of 1940, as amended, 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 of 1940, as
amended. 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.
 
 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 of 1940, as amended, 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
E mployees,
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 of 1940, as amended, a majority of
the members of Blackhawk's Board of Directors are not interested persons as
defined in the Act of 1940, as amended. 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 of
1940, as amended, 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 of 1933, as amended. 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.
 
 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 of 1933, as
amended, 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 of 1933, as amended, 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.
 
 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 30, 2005, no distribution has 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 of 1940, as amended, 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 of 1940, as amended, to make significant managerial assistance available at
least with respect to investee companies that Blackhawk treated 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.
 
 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 29, 2005 Blackhawk had three employees.
 
 
 Item
2. Properties
 
 Blackhawk
subleases office space at 14 Wall Street, 11 th Floor,
New York, New York from The Concorde Group at no cost to Blackhawk. The lease is
on a month-to-month basis. The Concorde Group intends to increase 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.
 
 
 Item
4. Submission of Matters to a Vote of Security Holders
 
 No
matters were submitted to a vote of security holders during the year ended
December 31, 2004.
 
 **PART
II**
 
 
 Item
5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases 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 140 shareholders 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 Rule 1-E under
the Investment Company Act of 1940. 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 March 29, 2005, Blackhawk has sold
3,923,563 shares for a total of $39,235.63.
 
 
 Item
6. Selected Financial Data
 
 Not
applicable
 
 Item
7. Management's Discussion and Analysis or Plan 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
Capital Group BDC, Inc. (the "Company" or “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.
 
 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.
 
 RESULTS
OF OPERATIONS
 
 *Sales
Revenues*
 
 From
inception (April 26, 2004) through December 31, 2004, we had no revenues. We had
a net loss of $12,515 for that same period.
 
 *General
and Administrative Expenses*
 
 From
inception (April 26, 2004) through December 31, 2004, general and administrative
expenses were $12,530.
 
 *Other
Income (Expenses)*
 
 For the
period inception (April 26, 2004) through December 31, 2004, the Company
achieved other income of $15. Blackhawk received $20,919 from the sale of
stock.
 
 *Liquidity
and Capital Resources*
 
 Blackhawk
has funded its requirements for working capital primarily through the sale of
its common stock and a loan from an affiliated company. As of December 31, 2004,
the Company had working capital deficit of $12,515.
 
 At
December 31, 2004, Blackhawk owed approximately $96,908 to The Concorde Group, a
company controlled by Dr. Craig A. Zabala, the Chairman, President and Chief
Executive Officer of Blackhawk.
 
 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 17, 2004 and December 31, 2004, Blackhawk sold
2,091,901 shares of its common stock to 20 people at $.01 per share for a total
of $20,919. Between January 1, 2005 and March 29, 2005, Blackhawk sold an
additional 1,831,662 shares for a total of $18,316.62. These shares were sold
pursuant to an offering under Rule 1-E of the Investment Company Act of
1940.
 
 
 Item
7A. Quantitative and Qualitative Disclosures about Market Risk
 
 *Risk
Factors*
 
 We are
subject to various risks that may materially harm our business, financial
condition and results of operations. You should carefully consider the risks and
uncertainties described below and the other information in this filing before
deciding to purchase our common stock. If any of these risks or uncertainties
actually occurs, our business, financial condition or operating results could be
materially harmed. In that case, the trading price of our common stock could
decline and you could lose all or part of your investment.
 
 *Risks
Related To Our Business*
 
 September
20, 2004, Blackhawk filed an offering circulation and Form 1-E with the
Securities and Exchange Commission. Pursuant to this offering, Blackhawk is
offering a minimum of 750,000 shares and a maximum of 45,000,000 shares of
common stock at $.01 per share. As of March 29, 2005, Blackhawk has sold
3,923,563 shares for a total of $39,235.63.
 
 1.
    Blackhawk
      has no operating history or revenue and minimal assets and operates at a
      loss.
 
 Blackhawk
has had no operating history nor any revenues or earnings from operations.
Blackhawk has no significant assets or financial resources. Blackhawk has
sustained losses to date and will, in all likelihood, continue to sustain
expenses without corresponding revenues, at least until the consummation of one
or more investments in operating companies. There is no assurance that Blackhawk
will ever be profitable.
 
 2.
    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.
 
 3.
    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.
 
 4.
    There
      is competition in the securities industry.
 
 Blackhawk
is and will continue to be an insignificant participant in the business of
acquiring minority interests in operating companies. A large number of
established and well-financed entities, including venture capital firms and
other business development companies, are actively investing in small companies.
Nearly all such entities have significantly greater financial resources,
technical expertise and managerial capabilities than Blackhawk and,
consequently, Blackhawk will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing investments.
 
 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.
 
 6.
    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.
 
 7.
    We
      have not conducted any market research on acquisition possibilities.
 
 Blackhawk
has neither conducted, nor have others made available to it, market research
indicating that demand exists for the transactions contemplated by Blackhawk.
Even in the event demand exists for a transaction of the type contemplated by
Blackhawk, there is no assurance Blackhawk will be successful in completing any
such acquisition.
 
 8.
    Blackhawk
      is subject to regulation under Investment Company
Act.
 
 On
September 20, 2004, Blackhawk filed Form N-54A with the Securities and Exchange
Commission, electing to become a Business Development Company, as defined in the
Investment Act of 1940. As a business development company, Blackhawk is subject
to certain rules and regulations under the 40 Act, which govern, among other
things, the application of its assets. Any violation of the 40 Act could subject
Blackhawk to material adverse consequences.
 
 9.
    Blackhawk
      will use a portion of the proceeds of the offering to repay corporate
      debt.
 
 Currently,
Blackhawk has debt of approximately $96,000, all of which is owed to The
Concorde Group, Inc., a controlling shareholder of Blackhawk, of which Dr. Craig
A. Zabala and Mr. Brad Silver, are principals. Dr. Zabala and Mr. Silver, are
officers, directors and shareholders of Blackhawk. After the minimum offering is
raised, Blackhawk intends to apply 30% of all gross offering proceeds toward the
repayment of this debt to The Concorde Group, Inc., until the entire debt of
approximately $96,000 is repaid. As a result, after the Rule 1-E Offering is
raised, only 70% of each dollar received will be applied toward investments in
eligible portfolio companies.
 
 10.
    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.
 
 11.
    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.
 
 
 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
 
 
 Item
9A. Controls and Procedures
 
 Disclosure
Controls and Procedures. Blackhawk's principal executive officer and 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 the issuer 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;
 
 §
    evaluated
      the effectiveness of the Company'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:
 
 §
    any
      significant deficiencies in the design or operation of internal controls
      which could adversely affect the Company'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 the Company'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 the Company's
      auditors and the audit committee of the board of directors (or persons
      fulfilling the equivalent function).
 
 In
addition, the Company'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.
 
 *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) 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
 
 Not
applicable.
 
 
 **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(2)
    53
    President,
      CEO, ChairmanP.O.
      Box 360Greene
      Street StationNew
      York, New York 10012Christopher
      Provan(1)
    2828
      Tonneson driveP.O.
      Box 472Fort
      Montgomery, New York 10922Brad
      D. Silver(2)
    50
    Executive
      Vice-President,12
      Horseshoe Drive
    
    Secretary,
      DirectorP.O.
      Box 484Perrineville,
      New Jersey 08535The
      Concorde Group(2)
    N/A14
      Wall Street, 11thFloorNew
      York, New York 10005Robert
      M. Fujii
    55
    Chief
      Financial Officer1624
      Acton StreetBerkeley,
      California 94702David
      W. Atchison(3)
    59
    Director13547
      West 62ndStreetOskaloosa,
      Kansas 66066Janet
      Buxman Kurihara(3)
    46
    Director11007
      North Cottontail LaneParker,
      Colorado 80138Mick
      Woodwards(3)
    46
    Director4849
      Woodruff AvenueLakewood,
      California 90713Randy
      Tejral
    49
    Director6529
      Pine Ridge RoadElkhorn,
      Nebraska 68022Robert
      J. Francis
    34
    Director5416
      South 161stOmaha,
      Nebraska 68022
 
 (1)  Resigned
as Executive Vice-President June 24, 2004.
 (2)  Control
person as defined in Section 2(a)(1) of the Investment Company Act of
1940.
 (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 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.
 
 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 to1982) 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 the
Chief Financial Officer for 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.
 
 **Brad
D. Silver** is the
Executive Vice President of Blackhawk Capital Group BDC Inc. He is also
Secretary and on its Board of Directors. He is the Executive Vice President of
The Concorde Group, Inc. and also serves as President of Concorde Financial
Advisors, LLC, and President of Concorde Casualty Group, LLC. since 2002. Prior
to that, he served as a Registered Investment Advisor at Allmerica Financial
(NYSE trading symbol: AFC), the parent company of Hanover Insurance Company. Mr.
Silver has been in the securities industry since 1982.
 
 Mr.
Silver has consulted with Concorde since the beginning of 2000. From 2000 to
2001, he was Senior Account Executive at Minolta Business Solutions, Inc., a
wholly owned subsidiary of Minolta Corporation. From 1998 to 2000, Mr. Silver
was the founder, President, and Chief Executive Officer of the Morganville
Group, Morganville, NJ, and management consultancy. From 1996 to 1998, he was
Senior Vice President at Commonwealth Associates, Inc., a NASD registered Broker
Dealer in New York City that specializes in venture capital in the private and
public equity markets. Mr. Silver has **** participated
in debt offerings in private and public markets.
 
 From 1995
to 1996, Mr. Silver was Senior Vice President at Prime Charter, Ltd., New York,
New York. From 1990 to 1995, he served on the Board of Directors for
the  Montauk
Credit Union, New York City. In 1994, Mr. Silver was co founder and Managing
Partner of RS Coleman & Company, an independent subsidiary of RAS
Securities, Inc., a NASD registered Broker Dealer in New York City. As Managing
Partner, he managed mergers and acquisitions resulting in two public offerings.
 
 From 1991
to 1994, Mr. Silver co-founded and managed the New York City Branch Office for
Thomas James Associates, Inc. Under Mr. Silver’s management, the branch was the
top producer out of 16 nationwide branches. The New York City office employed an
average of 125 brokers and support personnel.
 
 From 1988
to 1991, he served as Managing Director at Ladenburg, Thalmann & Company,
New York, New York, a middle-market investment bank and NASD registered broker
dealer. Mr. Silver was a founder and Chairman of the Board of Ladenburg,
Thalmann Assurance Corporation (“LTAC”). He also developed the LTAC sales
organization. Prior to this, from 1987 to 1988, Mr. Silver was Senior Vice
President at Prescott, Ball and Turben, a wholly owned subsidiary of Kemper
Securities.
 
 Mr.
Silver received his BBA degree in 1982 from the School of Business, Hofstra
University, Hempstead, New York. Mr. Silver is a General Securities Principal.
 
 **David
W. Atchison** has been
a director of Blackhawk since August 2004. From 1996 to 2001, he served as
District Business Manager of Kiewit Industrial, Co., a construction business
located in Lenexa, Kansas. Since 2001, Mr. Atchison has been Senior Business
Manager at Lenexa, a Kiewit subsidiary.
 
 **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
Quest.
 
 **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.
 
 **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.
 
 **Robert
J. Francis** has been
a director of Blackhawk since December 2004. Since 2000, Mr. Francis has been
Vice President of Omaha Telecom, Inc., a tower and radio maintenance
company.
 
 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 of
1940, as amended.
 
 There are
no family relationships among any of our directors or executive
officers.
 
 *Board
Composition*
 
 The
Company's board of directors consists of seven 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, the Company'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 26, 2004) to December 31,
2004, the Board of Directors held two regular meetings. No director attended
fewer than 100% of the total meetings of the Board either in person or via
teleconference during 2004.
 
 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*
 
 The
Company has adopted a code of ethics 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 the issuer 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.
 
 The
Company 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 board
of directors at the address of the issuer.
 
 
 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 26, 2004) through December 31, 2004, for services
of our executive officers and directors.
 
 **SUMMARY
COMPENSATION TABLE**
 
 
 Name
      and
      Principal
      Position
    Year
    Annual
      Compensation
    Long
      Term Compensation
    All
      Other Compen-sation
      ($)Salary
      ($)
    Bonus
      ($)
    Other
      Annual Compen-sation
      ($)
    Awards
    PayoutsRestricted
      Stock
      Award(s)
      ($)
    Securities
      Underlying
      Options/
      SARs
      (#)
    LTIP
      Payouts ($)Craig
      A. Zabala
      President,
      CEO, Chairman
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilBrad
      D. Silver
      Executive
      Vice-President, Secretary, Director,
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilRobert
      M. Fujii CFO
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilDavid
      W. Atchison Director
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilJanet
      Buxman Kurihara Director
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilMick
      Woodwards Director
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilRandy
      Tejral
      Director
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilRobert
      J. Francis
      Director
    2004
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
 
 
 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 Addressof
      Beneficial Owner
    Amount
      of Beneficial Ownership
    Percentageof
      ClassDr.
      Craig A. Zabala
      P.O.
      Box 360
      Greene
      Street Station
      New
      York, New York 10012
    732,500(1)(2)
    4.91%Christopher
      Provan
      28
      Tonneson Drive
      P.O.
      Box 472
      Fort
      Montgomery, New York 10922
    200,000
    1.34%Brad
      D. Silver
      12
      Horseshoe Drive
      P.O.
      Box 484
      Perrineville,
      New Jersey 08535
    632,500(1)(2)
    4.24%The
      Concorde Group
      14
      Wall Street, 11thFloor
      New
      York, New York 10005
    300,000(2)(3)
    2.01%Robert
      M. Fujii
      1624
      Acton Street
      Berkeley,
      California 94702
    200,000
    1.34%David
      W. Atchison
      13547
      West 62ndStreet
      Oskaloosa,
      Kansas 66066
    0
    0%Janet
      Buxman Kurihara
      11007
      North Cottontail Lane
      Parker,
      Colorado 80138
    0
    0%Mick
      Woodwards
      4849
      Woodruff Avenue
      Lakewood,
      California 90713
    1,010,269
    6.77%Randy
      Tejral
      6529
      Pine Ridge Road
      Elkhorn,
      Nebraska 68022
    0
    0%Robert
      J. Francis
      5416
      South 161st
      Omaha,
      Nebraska 68022
    0
    0%Doreen McCarthy
      426 Broome Street
      New York, New York 10013
    1,000,000
    6.7%All
      Executive Officers and
      Directors
      as a Group (9 Persons)
    3,075,269
    19.27%
 (1)
    Excludes
      300,000 shares of common stock and 8,5000,000 shares of preferred stock
      held by The Concorde Group of which Dr. Zabala is the control person and
      Mr. Silver is a principal.
 (2)
    Excludes
      8,500,000 shares of preferred stock held by The Concorde Group. Each of
      these preferred shares has 100 votes per
share.
 (3)
    The
      control person of these shares is Dr. Craig A.
Zabala.
 
 
 Item
13. Certain Relationships and Related Transactions
 
 Dr. Craig
A. Zabala, President, Chief Executive Officer and Chairman of Blackhawk, and
Brad D. Silver, Executive Vice President, Secretary and Director of Blackhawk,
are control persons of The Concorde Group. The Concorde Group purchased
8,500,000 shares of Blackhawk’s preferred shares and 300,000 common shares of
Concorde, as a founder of Blackhawk.
 
 
 Item
14. Principal Accountant Fees and Services
 
 1.
    AUDIT
      FEES
 
 The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of Blackhawk's
annual financial statements and review of financial statements included in the
Company's Form 10-Q (17 CFR 249.308a) or 10-QSB (17 CFR 249.308b) or services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years was $5,000.00 for the
period from inception (April 26, 2004) to December 31, 2004.
 
 2.
    AUDIT-RELATED
      FEES
 
 The
aggregate fees billed during the period of December 31, 2004 for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit or review of Blackhawk's financial statements was
$-0-.
 
 3.
    TAX
      FEES
 
 The
aggregate fees billed the period from inception (April 26, 2004) to December 31,
2004 for professional services rendered by the principal accountant 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 the principal accountant, other than the services reported
above was $-0- for the period from inception (April 26, 2004) to December 31,
2004
 
 5.
    PRE-APPROVAL
      POLICIES AND PROCEDURES
 
 Before
the accountant is engaged by the issuer 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
 
  
  **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 8,
2005
 
 
 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/
      Brad D. SilverCraig
      A. Zabala
    
    Brad
      D. SilverChairman,
      President and Chief Executive Officer
    
    Vice
      President, Secretary, DirectorDated:
    April
      8, 2005
    Dated:
    April
      8, 2005/s/
      David W. Atchison
    
    /s/
      Robert M. FujiiDavid
      W. Atchison
    
    Robert
      M. FujiiDirector
    
    Chief
      Financial Officer, Principal Accounting OfficerDated:
    April
      8, 2005
    Dated:
    April
      8, 2005/s/
      Janet Buxman Kurihara
    
    /s/Mick
      WoodwardsJanet
      Buxman Kurihara
    
    Mick
      WoodwardsDirector
    
    DirectorDated:
    April
      8, 2005
    Dated:
    April
      8, 2005/s/
      Randy Tejral
    
    /s/
      Robert J. FrancisRandy
      Tejral
    
    Robert
      J. FrancisDirector
    
    DirectorDated:
    April
      8, 2005
    Dated:
    April
      8, 2005
 
 
 
 
  
 ***Paritz
& Company, P.A.***
 
 
 
 
 
 **BLACKHAWK
CAPITAL GROUP BDC INC.**
 **(A
Development Stage Company)**
 
 *FINANCIAL
STATEMENTS*
 *WITH*
 *INDEPENDENT
AUDITORS* *'* *REPORT*
 **
 *FROM
INCEPTION (APRIL 26, 2004) TO DECEMBER 31, 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
 
 
  **INDEPENDENT
AUDITORS' REPORT**
 
 
 
 
 Board of
Directors
 **Blackhawk
Capital Group BDC Inc.**
 **(A
Development Stage Company)**
 New York,
New York
 
  We have
audited the accompanying balance sheet of **Blackhawk
Capital Group BDC Inc. (A Development Stage Company)** as of
December 31, 2004 and the accompanying statements of operations,
stockholders ' equity
and cash flows for the period from inception (April 26, 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 auditing standards generally accepted in
the United States of America. 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 statement referred to above presents fairly, in all
material respects, the financial position of **Blackhawk
Capital Group BDC Inc.**  **(A
Development Stage Company)** as of
December 31, 2004 and the results of its operations and its cash flows for the
period from inception (April 26, 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
 February
27, 2005 (Except as to
 Note 6
which is as of March 29, 2005)
 F-1


**BLACKHAWK
CAPITAL GROUP BDC INC.**
 **(A
Development Stage Company)**
 
 BALANCE
SHEET
 
 DECEMBER
31, 2004
 
 
 **ASSETS****CURRENT
      ASSETS:****Cash
      and cash equivalents**
    $
      13,600**TOTAL
      CURRENT ASSETS**
    **13,600****OTHER
      ASSETS:****Deferred
      offering costs**
    **87,635****TOTAL
      ASSETS**
    **$101,235****LIABILITIES
      AND STOCKHOLDERS****'****EQUITY****CURRENT
      LIABILITIES:**Due
      to affiliated company
    $
      96,908**TOTAL
      CURRENT LIABILITIES**
    **96,908****STOCKHOLDERS’
      EQUITY**
    **4,327****TOTAL
      LIABILITIES AND STOCKHOLDERS****'****EQUITY**
    **$101,235**
 
 See notes
to financial statements
  F-2
 
 **BLACKHAWK
CAPITAL GROUP BDC INC.**
 **(A
Development Stage Company)**
 
 STATEMENT
OF OPERATIONS
 
 FROM
INCEPTION (APRIL 26, 2004) TO DECEMBER 31, 2004
 **REVENUES:**Interest
      income
    $
      15**EXPENSES:**Professional
      fees
    12,530**NET
      LOSS**
    $(12,515)
 
 See notes
to financial statements
 
  
 F-3
 **BLACKHAWK
CAPITAL GROUP BDC INC.**
 **(A
Development Stage Company)**
 
 STATEMENT
OF STOCKHOLDERS ' EQUITY
 
 FROM
INCEPTION (APRIL 26, 2004) TO DECEMBER 31, 2004
 TOTAL
    --COMMON
      STOCK---
    ----PREFERRED
      STOCK---
    ADDITIONAL
      PAID-IN
      CAPITAL
    DEFICIT
      ACCUMULATED
      DURING
      DEVELOPMENT
      STAGESHARES
    AMOUNT
    SHARES
    AMOUNT
 
 Sale
      of formation stock
    $
      195
    
    11,000,000
    
    $110
    
    8,500,000
    
    $
      85
    
    $ -
    
    $
      -Sale
      of stock pursuant to offering plan
    20,91919
    
    2,091,901
    
    21
    
    -
    
    -
    
    20,898
    
    -Offering
      costs
    (4,272)
    
    -
    
    -
    
    -
    
    -
    
    (4,272)
    
    -Net
      loss
    (12,515)
    
    -
    
    -
    
    -
    
    -
    
    -
    
    (12,515)Balance
      - December 31, 2004
    $4,327
    
    13,091,901
    
    $131
    
    8,500,000
    
    $
      85
    
    $16,626
    
    $(12,515)
 See notes
to financial statements
 
 
 
 
 F-4
  
 **BLACKHAWK
CAPITAL GROUP BDC INC.**
 **(A
Development Stage Company)**
 
 STATEMENT
OF CASH FLOWS
 
 FROM
INCEPTION (APRIL 26, 2004) TO DECEMBER 31, 2004
 **OPERATING
      ACTIVITIES:******Net
      loss
    $(12,515)****Changes
      in operating assets and liabilities:****Due
      to affiliated company
    96,908****Deferred
      offering costs
    (87,635)**NET
      CASH USED IN OPERATING ACTIVITIES**
    **(3,242)****FINANCING
      ACTIVITIES:******Net
      proceeds from the issuance of stock
    16,842**NET
      CASH PROVIDED BY FINANCING ACTIVITIES**
    **16,842****INCREASE
      IN CASH AND CASH - END OF PERIOD**
    **$
      13,600**
 
 
 See notes
to financial statements
 
  
 F-5
 **BLACKHAWK
CAPITAL GROUP BDC INC.**
 **(A
Development Stage Company)**
 
 NOTES TO
FINANCIAL STATEMENTS
 
 DECEMBER
31, 2004
 
 
 
 **1**
    **SIGNIFICANT
      ACCOUNTING POLICIES**
 
 ***Business
description***
 
 Blackhawk
Capital Group BDC Inc. ( A the
Company @ or
“Blackhawk”) was incorporated in the State of Delaware on April 26,
2004.
 
 On
September 14, 2004 the Company filed a Form N-S4A, Notification with the
Securities and Exchange Commission electing to become a Business Development
Company pursuant to Section 54 of the Investment Company Act of
1940.
 
 Blackhawk
has been in the developmental stage since inception and its operations to date
have been limited to issuing shares and other organizational
matters.
 
 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 will be able to raise money to acquire
interests in small private business, as well as larger companies.
 
 ***Uses
of estimates in the preparation of financial
statements***
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles 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.
 
 ***Deferred
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
 
 **2**  **STOCKHOLDERS’
EQUITY**
 The
Company is authorized to issue 1,000,000,000 shares of common stock and
15,000,000 shares of preferred stock, both with a par value of $.00001 per
share. Shortly after formation, the Company sold 11,000,000 shares of common
stock and 85 shares of preferred stock to its founders for an aggregate of
$195.
 
 Pursuant
to an offering circular dated September 15, 2004, the Company is attempting to
sell a minimum of 750,000 and a maximum of 45,000,000 shares of common stock at
$.01 per share. As of December 31, 2004 the Company has sold 2,091,091 shares
for aggregate proceeds of $20,919.
 
 
 
 
 F-6
  
 
 
 
 **2**  **STOCKHOLDERS’
EQUITY**
 
 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. In the event of liquidation, dissolution or winding up
of the Company, the holders of common stock are entitled to share pro rata all
assets remaining after payment in full of all liabilities, All of the
outstanding shares of common stock are fully paid and
non-assessable.
 
 The Board
of Directors is 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.
 
 **3**  **INCOME
TAXES**
 
 Blackhawk
has available net operating loss carryforwards for income tax purposes of
approximately $12,500 which expire in 2024.
 
 The
Company has a deferred tax asset of approximately $2,500. Since Blackhawk is a
development stage company with 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 according to the
terms of the offering plan.
 
 **5**  **RELATED
PARTY TRANSACTIONS**
 
 The
Company shares office space and other administrative functions with affiliated
companies, at no charge to the Company.
 
 
 **6**  **SUBSEQUENT
EVENTS**
 
 From
January 1, 2005 to March 29, 2005, the Company sold 1,831,662 shares of common
stock for an aggregate consideration of $18,317.
 
 
  F-7