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UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


_________________________





FORM
10-Q/A





AMENDMENT
NO. 1





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





For the
quarterly period ended September 30, 2010





or





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





For the
transition period from ____ to ____





Commission
File Number: 814-00678


_________________________





BLACKHAWK
CAPITAL GROUP BDC, INC.


(Exact
Name of Registrant as specified in its charter)





Delaware
              20-1031329(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)





880
      Third Avenue, 12th
      Floor, New York, NY
              10022-4730(Address
      of principal executive offices)
              (Zip
      Code)





(646)
833-1030


(Registrant’s
telephone number, including area code)


_________________________





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





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding twelve (12) month (or for such
shorter period that the registrant was required to submit and post such
files).   Yes  ̈No x





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





Large
accelerated filer  ̈                                                                Accelerated
filer  ̈





Non-accelerated
filerx (Do
not check if a smaller reporting company) Smaller reporting company  ̈





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





Yes            ̈                                           No           x





Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date.





Class
                
                Outstanding on December 10,
      2010Common
      Stock, $0.00001 par value
                
                32,467,484





SEC 1296
(12-05)Potential persons
who are to respond to the collection of information contained in this form are
not required to respond unless the form displays a currently valid OMB control
number.










EXPLANATORY
NOTE





This
Amendment No. 1 to the Form 10-Q for the fiscal quarter ended September 30, 2010
("Form 10-Q")  is being filed by Blackhawk Capital Group BDC Inc.
("Company") to set forth the review of the Form 10-Q by EisnerAmper LLP, the
Company's independent public accountants.










BLACKHAWK
CAPITAL GROUP BDC, INC.


INDEX


PagePART
      I.
                          FINANCIAL
      INFORMATIONItem
      1.
                          Financial
      Statements.Review
      Report of Independent Registered Public Accounting Firm
                          3Condensed
      Statements of Assets and Liabilities as of September 30, 2010 (unaudited)
      and December 31, 2009
                          4Condensed
      Schedule of Investments as of September 30, 2010 (unaudited) and December
      31, 2009
                          5Condensed
      Statements of Operations for the three and nine months ended September 30,
      2010 (unaudited) and September 30, 2009 (unaudited)
                          6Condensed
      Statements of Changes in Net Assets (Liabilities) for the nine months
      ended September 30, 2010 (unaudited) and year ended December 31,
      2009
                          7Condensed
      Statement of Stockholders' Equity (Capital Deficit) for the nine months
      ended September 30, 2010 (unaudited) and year ended December 31,
      2009
                          8Condensed
      Statements of Cash Flows for the nine months ended September 30, 2010
      (unaudited) and September 30, 2009 (unaudited)
                          9Notes
      to Condensed Financial Statements
                          10Item
      2.
                          Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                          19Item
      3.
                          Quantitative
      and Qualitative Disclosures about Market Risk.
                          21Item
      4
                          Controls
      and Procedures.
                          21PART
      II.
                          OTHER
      INFORMATIONItem
      1.
                          Legal
      Proceedings.
                          22Item
      1A.
                          Risk
      Factors.
                          22Item
      2.
                          Unregistered
      Sales of Equity Securities and Use of Proceeds.
                          22Item
      3.
                          Defaults
      upon Senior Securities.
                          22Item
      4.
                          Submission
      of Matters to a Vote of Security Holders.
                          22Item
      5.
                          Other
      Information.
                          23Item
      6.
                          Exhibits.
                          23







REVIEW
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Stockholders
and Board of Directors
 Blackhawk
Capital Group BDC, Inc.
 
 We have
reviewed the accompanying condensed statement of assets and liabilities of
Blackhawk Capital Group BDC, Inc. (the "Company") as of September 30, 2010,
including the schedule of investments, and the related condensed statements of
operations for the three and nine-month periods ended September 30, 2010 and
2009, changes in net assets (liabilities) and stockholders’ equity (capital
deficit) for the nine months ended September 30, 2010, and cash flows for the
nine months ended September 30, 2010 and 2009 and financial highlights for the
nine months ended September 30, 2010 and 2009.  These interim
condensed financial statements are the responsibility of the Company's
management.
 
 We
conducted our reviews in accordance with standards established by the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
 
 Based on
our reviews, we are not aware of any material modifications that should be made
to the accompanying interim condensed consolidated financial statements in order
for them to be in conformity with accounting principles generally accepted in
the United States of America.
 
 As
discussed in Note 1 to the condensed financial statements, the Company has had a
net decrease in assets resulting from operations for the three and nine-month
periods ended September 30, 2010 and as of September 30, 2010 has liabilities in
excess of assets and may not be able to fund operating expenses without
additional capital and/or loans.  These conditions raise substantial
doubt about the Company’s ability to continue as a going
concern.  Management’s plan in regard to this matter is also described
in Note 1.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
 
 We have
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the statement of assets and
liabilities of the Company as of December 31, 2009, including the schedule of
investments, and the related statements of operations, changes in net assets,
stockholders’ equity (capital deficit), and cash flows for the year then ended
(not presented herein), and in our report dated March 30, 2010, we expressed an
unqualified opinion on those financial statements which included an explanatory
paragraph with respect to substantial doubt about the Company’s ability to
continue as a going concern. In our opinion, the information set forth in the
accompanying condensed statement of assets and liabilities as of December 31,
2009, including the schedule of investments, and the condensed statement of
changes in net assets (liabilities) and stockholders’ equity (capital deficit)
for the year ended December 31, 2009, is fairly stated in all material respects
in relation to the financial statements from which it has been
derived.
 
 EisnerAmper
LLP
 New York,
New York
 
 December
10, 2010
  3
 
 BLACKHAWK
CAPITAL GROUP BDC INC.
 
 CONDENSED
      STATEMENTS OF ASSETS AND
LIABILITIES
 
 SEPTEMBER 30,
                    
                    
                    DECEMBER 31,2010
                    
                    
                    2009(Unaudited)ASSETS:Investment
      at fair value (cost $250,000 and $326,350)
                    
                    $
                    250,000
                    
                    
                    $
                    325,123Cash
      and cash equivalents
                    
                    
                    82
                    
                    
                    
                    59,715Prepaid
      expenses
                    
                    
                    -
                    
                    
                    
                    17,278TOTAL
      ASSETS
                    
                    $
                    250,082
                    
                    
                    $
                    402,116LIABILITIESSalaries
      Payable
                    
                    $
                    35,000
                    
                    
                    $
                    -Rent
      payable to affiliate
                    
                    
                    14,000
                    
                    
                    
                    -Due
      to affiliate
                    
                    
                    8,484
                    
                    
                    
                    -Accrued
      expenses
                    
                    
                    734,520
                    
                    
                    
                    536,612TOTAL
      LIABILITIES
                    
                    
                    792,004
                    
                    
                    
                    536,612NET
      LIABILITIESCommon stock, par value $0.00001
      per share 1,000,000,000 shares authorized,32,467,484shares issued and outstanding in
      2010 and 2009
                    
                    
                    325
                    
                    
                    
                    325Additional
      paid-in capital
                    
                    
                    2,106,641
                    
                    
                    
                    2,106,641Accumulated
      net investment loss
                    
                    
                    (2,648,888
                    )
                    
                    
                    (2,240,235
                    )Net
      unrealized loss on investment
                    
                    
                    -
                    
                    
                    
                    (1,227
                    )TOTAL
      NET LIABILITIES
                    
                    
                    (541,922
                    )
                    
                    
                    (134,496
                    )TOTAL
      LIABILITIES AND NET LIABILITIES
                    
                    $
                    250,082
                    
                    
                    $
                    402,116NET
      LIABILITY VALUE PER COMMON SHARE
                    
                    $
                    (0.01669
                    )
                    
                    $
                    (0.00414
                    )
 
 See notes
to condensed financial statements
  4
  BLACKHAWK
CAPITAL GROUP BDC INC.
 CONDENSED
SCHEDULE OF INVESTMENTS
 SEPTEMBER
30, 2010
 (Unaudited)
 COMPANY
                                  
                                  INVESTMENT
                                  
                                  INITIAL
                                    ACQUISITION
                                    DATE
                                  
                                  NUMBER
                                    OF
                                    UNITS
                                  
                                  
                                  COST
                                  
                                  
                                  FAIR
                                    VALUE
                                  
                                  
                                  % OF
                                    TOTAL
                                    ASSETSMacroMarkets,
      LLC
                                  
                                  CapitalInterests
                                  
                                  1/21/09
                                  
                                  
                                  624,432
                                  
                                  
                                  $
                                  250,000
                                  
                                  
                                  $
                                  250,000
                                  
                                  
                                  
                                  99.97
 
 See notes
to condensed financial statements
 
 DECEMBER
31, 2009
 COMPANY
                                  
                                  INVESTMENT
                                  
                                  INITIAL
                                    ACQUISITION
                                    DATE
                                  
                                  PRINCIPLE
                                    AMOUNT /
                                    NUMBER
                                    OF
                                    OF UNITS
                                  
                                  
                                  COST
                                  
                                  
                                  FAIR
                                    VALUE
                                  
                                  
                                  % OF
                                    TOTAL
                                    ASSETSMacroMarkets,
      LLC
                                  
                                  CapitalInterests
                                  
                                  1/21/09
                                  
                                  
                                  624,432
                                  
                                  
                                  $
                                  250,000
                                  
                                  
                                  $
                                  250,000
                                  
                                  
                                  
                                  62.17Caterpillar
      Fin. 4.15%due
      1/15/10
                                  
                                  Notes
                                  
                                  10/13/09
                                  
                                  $
                                  25,000
                                  
                                  
                                  
                                  25,495
                                  
                                  
                                  
                                  25,024
                                  
                                  
                                  
                                  6.22Citigroup
      4.125%due
      2/22/10
                                  
                                  Notes
                                  
                                  10/13/09
                                  
                                  $
                                  25,000
                                  
                                  
                                  
                                  25,421
                                  
                                  
                                  
                                  25,100
                                  
                                  
                                  
                                  6.24Protective
      Life 4.05%due
      1/15/10
                                  
                                  Notes
                                  
                                  10/13/09
                                  
                                  $
                                  25,000
                                  
                                  
                                  
                                  25,434
                                  
                                  
                                  
                                  24,999
                                  
                                  
                                  
                                  6.22$
                                  326,350
                                  
                                  
                                  $
                                  325,123
 
 See notes
to condensed financial statements
  5
 
 BLACKHAWK
CAPITAL GROUP BDC INC.
 
 CONDENSED
STATEMENTS OF OPERATIONS
 (Unaudited)
 
 THREE MONTHS ENDED
                                        SEPTEMBER30
                                      
                                      
                                      NINE MONTHS ENDED
                                        SEPTEMBER30,2010
                                      
                                      
                                      2009
                                      
                                      
                                      2010
                                      
                                      
                                      2009INVESTMENT
      INCOME:Interest
      income
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      131
                                      
                                      
                                      $
                                      192
                                      
                                      
                                      $
                                      6,099TOTAL
      INVESTMENT INCOME
                                      
                                      
                                      -
                                      
                                      
                                      
                                      131
                                      
                                      
                                      
                                      192
                                      
                                      
                                      
                                      6,099EXPENSES:Compensation
                                      
                                      
                                      15,000
                                      
                                      
                                      
                                      31,124
                                      
                                      
                                      
                                      64,969
                                      
                                      
                                      
                                      206,925Professional
      fees
                                      
                                      
                                      48,020
                                      
                                      
                                      
                                      140,317
                                      
                                      
                                      
                                      250,935
                                      
                                      
                                      
                                      499,358Consulting
      fees
                                      
                                      
                                      -
                                      
                                      
                                      
                                      16,250
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      16,250Advisory
      fees
                                      
                                      
                                      2,263
                                      
                                      
                                      
                                      2,188
                                      
                                      
                                      
                                      7,104
                                      
                                      
                                      
                                      12,030Rent-related
      party
                                      
                                      
                                      12,000
                                      
                                      
                                      
                                      12,000
                                      
                                      
                                      
                                      36,000
                                      
                                      
                                      
                                      36,000Filing
      fees
                                      
                                      
                                      3,174
                                      
                                      
                                      
                                      2,236
                                      
                                      
                                      
                                      9,781
                                      
                                      
                                      
                                      21,076Insurance
                                      
                                      
                                      7,960
                                      
                                      
                                      
                                      14,516
                                      
                                      
                                      
                                      24,445
                                      
                                      
                                      
                                      26,476Other
                                      
                                      
                                      262
                                      
                                      
                                      
                                      633
                                      
                                      
                                      
                                      15,611
                                      
                                      
                                      
                                      3,555TOTAL
      EXPENSES
                                      
                                      
                                      88,679
                                      
                                      
                                      
                                      219,264
                                      
                                      
                                      
                                      408,845
                                      
                                      
                                      
                                      821,670NET
      INVESTMENT LOSS
                                      
                                      
                                      (88,679
                                      )
                                      
                                      
                                      (219,133
                                      )
                                      
                                      
                                      (408,653
                                      )
                                      
                                      
                                      (815,571
                                      )NET
      CHANGE IN UNREALIZED GAIN ON INVESTMENTS
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,288
                                      
                                      
                                      
                                      1,227
                                      
                                      
                                      
                                      1,288NET
      DECREASE IN ASSETS RESULTING FROM OPERATIONS
                                      
                                      $
                                      (88,679
                                      )
                                      
                                      $
                                      (217,845
                                      )
                                      
                                      $
                                      (407,426
                                      )
                                      
                                      $
                                      (814,283
                                      )LOSS
      PER COMMON SHARE, BASIC AND DILUTED
                                      
                                      $
                                      (0.00273
                                      )
                                      
                                      $
                                      (0.00671
                                      )
                                      
                                      $
                                      (0.01255
                                      )
                                      
                                      $
                                      (0.02508
                                      )WEIGHTED
      AVERAGE SHARES OUTSTANDING,BASIC
      AND DILUTED
                                      
                                      
                                      32,467,484
                                      
                                      
                                      
                                      32,467,484
                                      
                                      
                                      
                                      32,467,484
                                      
                                      
                                      
                                      32,467,484
 
 See notes
to condensed financial statements
  6
 
 BLACKHAWK
CAPITAL GROUP BDC INC.
 
 CONDENSED
      STATEMENTS OF CHANGES IN NET ASSETS
  (LIABILITIES)
 
 NINE MONTHS
                    ENDED
                    SEPTEMBER 30,
                    2010
                  
                  
                  YEAR ENDED
                    DECEMBER 31, 2009(Unaudited)DECREASE
      IN NET ASSETS FROM OPERATIONSNet
      investment loss
                  
                  $
                  (408,653
                  )
                  
                  $
                  (986,533
                  )Unrealized
      gain on investments
                  
                  
                  1,227
                  
                  
                  
                  61NET
      DECREASE IN ASSETSRESULTING
      FROM OPERATIONS
                  
                  
                  (407,426
                  )
                  
                  
                  (986,472
                  )CAPITAL
      STOCK TRANSACTIONS:Stock-based
      compensation
                  
                  
                  -
                  
                  
                  
                  132,000NET
      INCREASE IN ASSETS FROMCAPITAL
      STOCK TRANSACTIONS
                  
                  
                  -
                  
                  
                  
                  132,000TOTAL
      DECREASE IN NET ASSETS
                  
                  
                  (407,426
                  )
                  
                  
                  (854,472
                  )NET
      (LIABILITIES) ASSETS - BEGINNING OF PERIOD
                  
                  
                  (134,496
                  )
                  
                  
                  719,976NET
      LIABILITIES - END OF PERIOD
                  
                  $
                  (541,922
                  )
                  
                  $
                  (134,496
                  )
 
 See notes
to condensed financial statements
  7
 
 BLACKHAWK
CAPITAL GROUP BDC INC.
 
 CONDENSED
STATEMENT OF STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT)
 COMMON
      STOCK
                                            
                                            
                                            ADDITIONAL
                                              PAID-IN
                                            
                                            
                                            NET
                                              UNREALIZED
                                              APPRECIATION/
                                              (DEPRECIATION)
      ON
                                            
                                            
                                            ACCUMULATED
                                              NET
                                              INVESTMENTTOTAL
                                            
                                            
                                            SHARES
                                            
                                            
                                            AMOUNT
                                            
                                            
                                            CAPITAL
                                            
                                            
                                            INVESTMENT
                                            
                                            
                                            LOSSBalance-December
      31,2008
                                            
                                            $
                                            719,976
                                            
                                            
                                            
                                            32,467,484
                                            
                                            
                                            $
                                            325
                                            
                                            
                                            $
                                            1,974,641
                                            
                                            
                                            $
                                            (1,288
                                            )
                                            
                                            $
                                            (1,253,702
                                            )Net
      decrease in assets resulting from operations
                                            
                                            
                                            (986,472
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            61
                                            
                                            
                                            
                                            (986,533
                                            )Stock-based
      compensation
                                            
                                            
                                            132,000
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            132,000Balance-December
      31, 2009
                                            
                                            
                                            (134,496
                                            )
                                            
                                            
                                            32,467,484
                                            
                                            
                                            
                                            325
                                            
                                            
                                            
                                            2,106,641
                                            
                                            
                                            
                                            (1,227
                                            )
                                            
                                            
                                            (2,240,235
                                            )Net
      decrease in assets resulting from operations
                                            
                                            
                                            (407,426
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            1,227
                                            
                                            
                                            
                                            (408,653
                                            )Balance-September
      30, 2010 (unaudited)
                                            
                                            $
                                            (541,922
                                            )
                                            
                                            
                                            32,467,484
                                            
                                            
                                            $
                                            325
                                            
                                            
                                            $
                                            2,106,641
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (2,648,888
                                            )
 
 See notes
to condensed financial statements
  8
  
 BLACKHAWK
CAPITAL GROUP BDC INC.
 
 CONDENSED
STATEMENTS OF CASH FLOWS
 
 (Unaudited)
 
 NINE MONTHS ENDED SEPTEMBER
    30,2010
                          
                          
                          2009CASH
      FLOWS FROM OPERATING AND INVESTING ACTIVITIES:Net
      investment loss and net decrease in assets resulting from
      operations
                          
                          $
                          (407,426
                          )
                          
                          $
                          (814,283
                          )Adjustments  to
      reconcile net investment loss and net decrease in assets to net cash (used
      in) provided by operating activities:Unrealized
      gain on investments
                          
                          
                          (1,227
                          )
                          
                          
                          (1,288
                          )Stock
      Based Compensation
                          
                          
                          -
                          
                          
                          
                          132,000Expenses
      paid by affiliate
                          
                          
                          8,484
                          
                          
                          
                          -Change
      in operating assets and liabilities:Increase
      in accrued expenses
                          
                          
                          197,908
                          
                          
                          
                          323,119Decrease
      (increase) in prepaid expenses
                          
                          
                          17,278
                          
                          
                          
                          (21,450
                          )Salaries
      payable
                          
                          
                          35,000
                          
                          
                          
                          -Rent
      payable to affiliate
                          
                          
                          14,000
                          
                          
                          
                          --Purchase
      of Investments
                          
                          
                          -
                          
                          
                          
                          (250,000
                          )Proceeds
      from sale and maturity of investments
                          
                          
                          76,350
                          
                          
                          
                          654,024NET
      CASH (USED IN) PROVIDED BY OPERATING AND NET CHANGE IN
CASH
                          
                          
                          (59,633
                          )
                          
                          
                          22,122CASH
      AND EQUIVALENTS – BEGINNING OF PERIOD
                          
                          
                          59,715
                          
                          
                          
                          172,797CASH
      AND EQUIVALENTS – END OF PERIOD
                          
                          $
                          82
                          
                          
                          $
                          194,919SUPPLEMENTARY
      DISCLOSURE OF NON-CASH TRANSACTIONSExpenses
      paid by affiliate
                          
                          $
                          8,484
                          
                          
                          $
                          -
 
 See notes
to condensed financial statements
  9
  BLACKHAWK
CAPITAL GROUP BDC INC.
 
 NOTES TO
CONDENSED FINANCIAL STATEMENTS
 
 SEPTEMBER
30, 2010
 (Unaudited)
 
 1.
SIGNIFICANT ACCOUNTING POLICIES
 
 Business
description
 
 Blackhawk
Capital Group BDC Inc. ("the Company" or “Blackhawk”) was incorporated in the
State of Delaware on April 22, 2004.
 
 On
September 14, 2004, the Company filed a Form N-54A, Notification with the
Securities and Exchange Commission (“SEC”) electing to become a business
development company pursuant to Section 54(a) of the Investment Company Act of
1940.  As a business development company, Blackhawk is able to acquire
interests in small private businesses, as well as non-dividend paying public
companies.
 
 Blackhawk
attempts 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 offers managerial assistance to eligible portfolio
companies in which it invests.
 
 Basis
of presentation
 
 These
interim financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information and pursuant to the requirements for
reporting on Form 10-Q and Regulation S-X.  Accordingly, certain
disclosures accompanying annual financial statements prepared in accordance with
GAAP are omitted.  In the opinion of management, all adjustments,
consisting solely of normal recurring accruals, considered necessary for the
fair presentation of financial statements for the interim periods have been
included.  The results of operations for the current period are not
necessarily indicative of results that ultimately may be achieved for the
year.  The interim unaudited financial statements and notes thereto
were reviewed by an outside auditor and should be read in conjunction with the
December 31, 2009 financial statements and notes thereto included in the
Company’s Form 10-K as filed with the SEC.
 
 The
Company had a net decrease in assets resulting from operations for the three and
nine-month periods ended September 30, 2010 of $88,679 and $407,426,
respectively, and total net liabilities of $541,922 as of September 30,
2010.  Since inception, the Company’s operations have been principally
funded by Regulation E offerings and The Concorde Group, Inc. (“Concorde”), a
corporation controlled by the founder and an affiliate of the
Company.    If the Company is unable to raise additional
equity capital or if Concorde is unable to provide sufficient capital to the
Company to fund its operational expenses, it would have an adverse impact on
liquidity and operations.  Such uncertainty raises substantial doubt
about the Company's ability to continue as a going concern.  The
financial statements do not reflect any adjustment that might result from the
outcome of this uncertainty.  The Company intends to raise capital and
access the equity markets to raise cash to fund investment; however, there can
be no assurance that the Company will be able to raise capital.
  10
  New
Accounting Pronouncements
 
 In
January 2010, the Financial Accounting Standards Board (“FASB”) issued new
accounting guidance which expands disclosure requirements relating to fair value
measurements. The guidance adds requirements for disclosing amounts of and
reasons for significant transfers into and out of Levels 1 and 2 and requires
gross rather than net disclosures about purchases, sales, issuance and
settlements relating to Level 3 measurements. The guidance also provides
clarification that fair value measurement disclosures are required for each
class of assets and liabilities. Disclosures about the valuation techniques and
inputs used to measure fair value for measurements that fall in either Level 2
or Level 3 are also required. The Company adopted the provisions of the guidance
as of March 31, 2010. Disclosures are not required for earlier periods presented
for comparative purposes. The new guidance affects disclosures only and
therefore, the adoption had no impact on the Company’s results of operation or
financial position.
 
 Revenue
recognition
 
 ·
              Unrealized
      gain and losses resulting from the change in the valuation of investments
      are reflected in the condensed statement of
  operations.
 
 ·
              Interest
      income is recorded on the accrual
basis.
 
 ·
              Realized
      gains or losses on investments are recorded on a trade date basis using
      the specific identification method.
 
 Use
of estimates in the preparation of financial statements
 
 The
preparation of financial statements in conformity with generally accepted
principles accepted in the United States ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of net revenue and expenses
during each reporting period.  Actual results could differ from those
estimates.  Significant estimates include the valuation of investments
and the valuation allowance for deferred tax assets.
 
 Investments
 
 The
Company's investments are carried at fair value.
 
 Cash
and cash equivalents
 
 The
Company considers all highly liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents.
 
 Net
loss per common share
 
 Basic
earnings (loss) per share is computed solely on the weighted average number of
common shares outstanding during the period.  Diluted earnings (loss)
per share reflects all potential dilution of common stock as
applicable.
 
 The
following table provides basic and diluted earnings (loss) per share for the
three months ended September 30, 2010 and 2009:
 
 Net Loss
                
                
                Weighted
                  Average Shares
                
                
                Basic
      and Diluted
                  Loss Per ShareThree
      Months Ended
                  September
      30, 2010
                
                $
                (88,679
                )
                
                
                32,467,484
                
                
                $
                (0.00273
                )
  11
  Net Loss
                
                
                Weighted
                  Average Shares
                
                
                Basic
      and Diluted
                  Loss Per ShareThree
      Months Ended
                  September
      30, 2009
                
                $
                (217,845
                )
                
                
                32,467,484
                
                
                $
                (0.00671
                )
 The
following table provides Basic and Diluted earning (loss) per share for the nine
months ended September 30, 2010 and 2009:
 
 Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Basic
      and Diluted
                    Loss Per ShareNine
      Months Ended
                    September
      30, 2010
                  
                  $
                  (407,426
                  )
                  
                  
                  32,467,484
                  
                  
                  $
                  (0.01255
                  )Nine
      Months Ended
                    September
      30, 2009
                  
                  $
                  (814,283
                  )
                  
                  
                  32,467,484
                  
                  
                  $
                  (0.02508
                  )
 
 For the
three and nine months ended September 30, 2010 and 2009, 600,000 shares
attributable to stock options were excluded from the calculation of diluted EPS
because the effect was anti-dilutive.
 
 2.
INCOME TAXES
 
 The
Company recognizes deferred tax assets and liabilities based on the differences
between the financial statement carrying amount and the tax bases of assets and
liabilities.  The Company regularly reviews its deferred tax assets
for recoverability and establishes a valuation allowance based upon historical
losses, projected future taxable income and the expected timing of the reversals
of existing temporary differences.
 
 As of
September 30, 2010, total deferred tax assets aggregated approximately
$1,142,000 and consist principally of net operating loss carry forwards and
capitalized start up costs, which were fully reserved based on the likelihood of
realization.  The net operating loss will expire by 2029.
 
 The
Company may recognize the tax benefit from an uncertain tax position only if it
is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the
position.  The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon ultimate
settlement.  As of September 30, 2010 and December 31, 2009, the
Company has not recorded any unrecognized tax benefits.  The Company's
policy is to recognize interest and penalties in general and administrative
expense.
 
 The tax
years 2006 through 2009 remain open to examination by the major tax
jurisdictions to which the Company is subject.
 
 3.
FAIR VALUE MEASUREMENT
 
 The
Company carries its investments at fair value.  Fair value is an
estimate of the exit price, representing the amount that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between
market participants (i.e., the exit price at the measurement
date).  Fair value measurements are not adjusted for transaction
costs.  A fair value hierarchy consists of three levels that are used
to prioritize inputs to fair value techniques:
 
 ·
                  Level
      1 - inputs to the valuation methodology are quoted prices (unadjusted) for
      identical assets or liabilities in active
  markets.
  12
  ·
                  Level
      2 - inputs to the valuation methodology include quoted prices for similar
      assets and liabilities in active markets, and inputs that are observable
      for the asset or liability, either directly or indirectly, for
      substantially the full term of the financial
  instrument.
 ·
                  Level
      3 - inputs to the valuation methodology are unobservable and significant
      to the fair value
measurement.
 
 Investments
whose values are based on quoted market prices in active markets, and whose
values are therefore classified as Level 1, consist of active listed
equities.
 
 Investments
that trade in markets that are not considered to be active, but whose values are
based on quoted market prices, dealer quotations or valuations provided by
alternative pricing sources supported by observable inputs are classified as
Level 2.  These generally include certain U.S. government obligations
and investment-grade corporate bonds.
 
 Investments
whose values are classified as Level 3 have significant unobservable inputs, as
they may trade infrequently or not at all.  Investments whose values
are classified as Level 3 generally include private investments.  When
observable prices are not available for these securities, the Company uses one
or more valuation techniques (e.g., the market approach or the income approach)
for which sufficient and reliable data is available.
 
 Within
Level 3 of the fair value hierarchy, the use of the market approach generally
consists of using comparable market transactions, while the use of the income
approach generally consists of the net present value of estimated future cash
flows, adjusted as appropriate for liquidity, credit, market and/or other risk
factors.
 
 The
inputs used by the Company in estimating the value of investments classified as
Level 3 may include the original transaction price, quoted prices for similar
securities or assets in active markets, completed or pending third-party
transactions in the underlying investment or comparable issuers, and changes in
financial ratios or cash flows.
 
 The
values assigned to investments are based on available information and do not
necessarily represent amounts that might be realized if a ready market existed
and such differences could be material.  Furthermore, the ultimate
realization of such amounts depends on future events and circumstances and
therefore valuation estimates may differ from the value realized upon
disposition of individual positions.
 
 The
carrying values and estimated fair values of the Company's financial instruments
for the periods presented are as follows:
  13
 
 Total Value
                                  
                                  
                                  Quote
      Prices in
                                    Active
      Markets
                                    (Level 1)
                                  
                                  
                                  Significant
      Other
                                    Observable
      Inputs
                                    (Level 2)
                                  
                                  
                                  Significant
                                    Unobservable
                                    Inputs
                                    (Level 3)September
      30, 2010Financial
      AssetsMembership
      Interestin
      LLC
                                  
                                  $
                                  250,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  250,000Total
      FinancialAssets
                                  
                                  $
                                  250,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  250,000December
      31, 2009:Financial
      AssetsNotes
                                  
                                  $
                                  75,123
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  75,123
                                  
                                  
                                  $
                                  -Membership
      Interest in LLC
                                  
                                  
                                  250,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  250,000Total
      FinancialAssets
                                  
                                  $
                                  325,123
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  75,123
                                  
                                  
                                  $
                                  250,000
 
 The
following table presents additional information about assets measured at fair
value using Level 3 inputs for the three and nine months ended September 30,
2010:
 
 Membership Interest In LLCBalance
      as of January 1, 2010
                              
                              $
                              250,000Purchases
                              
                              
                              -Balance
      as of September 30, 2010
                              
                              $
                              250,000
 
 There was
no change in the unrealized gain/(losses) in earnings of the Company's Level 3
assets still held at September 30, 2010.
 
 In the
normal course of its business, the Company’s investments may be subject to the
following risks:
 
 Market
risk represents the potential loss that can be caused by increases or decreases
in the fair value of investments.
 
 Interest
rate risk is the risk that the fair value or future cash flows of fixed income
or rate sensitive investments will increase or decrease because of changes in
interest rates.  Generally the value of fixed income securities will
change inversely with changes in interest rates.  As interest rates
rise, the fair value of fixed income securities tends to
decrease.  Conversely, as interest rates fall, the fair value of fixed
income securities tends to increase.  This risk is generally greater
for long-term securities than for short-term securities.
 
 Credit
risk represents the potential loss that would occur if counterparties fail to
perform pursuant to the terms of their obligations.  In addition to
its investments, the Company is subject to credit risk to the extent a custodian
or broker with whom it conducts business is unable to fulfill contractual
obligations.
  14


Liquidity risk is the risk that the
Company will not be able to raise funds to fulfill its obligations, including
inability to sell investments quickly or at close to fair value.





4.
RELATED PARTY TRANSACTIONS





The Company shares office space and
other administrative functions with Concorde.  The Board voted to
start paying Concorde monthly rent of $4,000 beginning January 1,
2009.  Rent incurred in each of the three and nine months ended
September 30, 2010 and 2009 amounted to $12,000 and $36,000, respectively. At
September 30, 2010, $14,000 was due to Concorde.





Due to
affiliate of $8,484 at September 30, 2010 represents expenses paid by Concorde
on behalf of the Company.





5.
INVESTMENT ADVISORY AGREEMENTS





Pursuant to an investment advisory
management agreement dated October 31, 2006, Blackhawk engaged Barak Asset
Management, LLC (“Barak”), a Delaware limited liability company who is an
investment adviser registered under the Investment Advisers Act of 1940
(“Advisers Act”), to serve as an investment adviser to Blackhawk and manage its
portfolio of investments.  The agreement is for a one-year term and
extendable for one year periods.  The term of this agreement was
extended to October 31, 2011.  Any one-year extension of the Barak
agreement must be approved by (a) the vote of the Company’s board of directors,
or the vote of a majority of the Company’s outstanding voting securities, and
(b) the vote of the majority of the Company’s independent
directors.





Investment advisory fees are calculated
based upon the average cash value of assets at the end of each quarter including
the value of any withdrawals from the assets made during that quarter ranging
from 0.05% to 0.22% of assets managed.  Fees are billed and payable
quarterly in arrears (or a prorated period when applicable).





For the three and nine months ended
September 30, 2010 and 2009, the Company incurred fees in the amount of $2,263
and $2,188, respectively, and $7,104 and $12,030, respectively.





6.
ACCRUED EXPENSES





Accrued expenses at September 30, 2010
and December 31, 2009 consist principally of legal fees.





7.
STOCKHOLDERS’ EQUITY





During the nine months ended September
30, 2010 and for the year ended December 31, 2009, the Company did not sell or
issue any sharesof
Common Stock.





8.
FINANCIAL HIGHLIGHTS





The following is a schedule of
financial highlights for the nine months ended September 30, 2010 and 2009, and
the year ended December 31, 2009.


15





NINE
      MONTHS ENDED
                      September
      30, 2010
                      (unaudited)
                    
                    
                    NINE
      MONTHS ENDED
                      September
      30, 2009
                      (unaudited)
                    
                    
                    YEAR
      ENDED
                      DECEMBER
      31,
                      2009Per
      Share Data:Net
      asset (liability) value – beginning of period
                    
                    $
                    (0.00414
                    )
                    
                    $
                    0.02218
                    
                    
                    $
                    0.02218Net investment loss1
                    
                    
                    (0.01259
                    )
                    
                    
                    (0.02512
                    )
                    
                    
                    (0.03039
                    )Net change in unrealized gain (loss)1
                    
                    
                    0.00004
                    
                    
                    
                    0.00410
                    
                    
                    
                    0.00407Net
      asset/(liability) value – end of period
                    
                    $
                    (0.01669
                    )
                    
                    $
                    0.00116
                    
                    
                    $
                    (0.00414
                    )Total return based on net asset value 2
                    
                    
                    (303
                    )%
                    
                    
                    (95
                    )%
                    
                    
                    (119
                    )%Common
      shares outstanding – end of period
                    
                    
                    32,467,484
                    
                    
                    
                    32,467,484
                    
                    
                    
                    32,467,484Ratio/Supplemental
      Data:Net
      assets/(liabilities) – end of period
                    
                    $
                    (541,922
                    )
                    
                    $
                    37,693
                    
                    
                    $
                    (134,496
                    )Ratio of net investment loss to average net
      assets3
                    
                    
                    [4
                    ]
                    
                    
                    (294
                    )%
                    
                    
                    (334
                    )%Ratio of operating expenses to average net
      assets3
                    
                    
                    [4
                    ]
                    
                    
                    296
                    %
                    
                    
                    336
                    %





1       
     Calculated based on weighted average shares
outstanding during period.





2
            Total
      returns for periods of less than one year not annualized.  The
      rate of return for each period was calculated by taking the difference
      between the ending and beginning net asset value and dividing this
      difference by the beginning net
  asset  value.





3         
   Annualized for
periods less than one year.





4
            Ratio
      was not presented as it is not considered meaningful because the Company
      had a net liability throughout the reporting
  period.





9.
STOCK OPTION PLAN; STOCK-BASED COMPENSATION





In December 2008, the stockholders
approved the Company's Stock Option Plan ("Stock Option Plan") which provides
for 3,000,000 shares of common stock available for grant, of which 2,500,000 are
reserved for incentive stock options, to the Company's officers, directors and
key employees.  A grant must be approved by the stock option committee
of the Company (“Committee”).





The Committee may grant either
incentive stock options (for purposes of Section 422 of the Internal Revenue
Code of 1986, as amended), or nonqualified stock options.  Except as
described below for incentive stock options, the Committee generally has the
discretion to determine the persons to whom stock options will be granted, the
number of shares subject to such options, the exercise prices of such options,
the vesting schedules with respect to such options, the terms of such options,
as well as the period, if any, following a participant's termination of service
during which such option may be exercised, and the circumstances in which all or
a portion of an option may become immediately exercisable or be
forfeited.


16


All
rights to exercise options shall terminate three (3) months after any optionee
ceases to be an officer, director or a key employee of the Company except as
otherwise provided by the Committee in an option agreement, and no options will
vest after an optionee's termination date.  If any officer or key
employee is terminated by the Company for cause, his or her options shall be
forfeited immediately.  Notwithstanding the foregoing, however, where
an optionee's service as a director, officer or key employee of the Company
terminates as a result of the optionee's death or his total and permanent
disability, the optionee or the executors or administrators or distributees of
the estate, as the case may be, shall have the right, from time to time within
one year after the optionee's total and permanent disability or death and prior
to the expiration of the term of the option, to exercise any portion of the
option not previously exercised, in whole or in part, as provided in the
respective option agreement.





In the
discretion of the Committee the price due upon exercise of an option may be paid
in cash or in shares of our common stock valued at their then current fair
market value, or a combination of both. Shares delivered in payment of such
price may be shares acquired by prior exercises of options or otherwise, in the
Committee's discretion.  Also in the discretion of the Committee, a
participant may exercise an option as to only a part of the shares covered
thereby and then, in an essentially simultaneous transaction, use the shares so
acquired in payment of the exercise price for additional option
shares.





Holders
of options shall have no rights as shareholders unless and until such options
are exercised and shares are delivered to such persons in accordance with the
Stock Option Plan.





Incentive
stock options may be granted only to persons who are employees (including
directors who are also employees but excluding non-employee
directors).  Generally, incentive stock options must be granted within
ten years of the date the Stock Option Plan is adopted, and the term of any
incentive stock option may not exceed ten years.  Furthermore, the
aggregate fair market value of shares of Common Stock with respect to which any
incentive stock options are exercisable for the first time by a participant
during any calendar year may not exceed $100,000.  Furthermore, the
exercise price of incentive stock options must be at least 100% of the fair
market value of the Common Stock at the time the incentive stock option is
granted, except in the case of incentive stock options granted to any individual
who owns more than 10% of the total combined voting power of all classes of our
stock, in which case the exercise price of incentive stock options must be at
least 110% of the fair market value of the Common Stock at the time of
grant.





The Company accounts for stock-based
payments by regarding stock-based compensation expense in the statement of
operations over the vesting period based on the fair value of the award at the
grant date.





The following table summarizes activity
under the Company's stock option plans for the nine months ended September 30,
2010:





Shares Under
                  Options
                
                
                Weighted Average
                  Exercise Price
                
                
                Remaining
                  Contractual Life
                  (In Years)
                
                
                Aggregate
                  Intrinsic ValueOutstanding
      at beginning of period
                
                
                600,000
                
                
                $
                0.40GrantsExercised
                
                
                —
                
                
                
                —Forfeited
                
                
                —
                
                
                
                —Outstanding
      at end of period
                
                
                600,000
                
                
                $
                0.40
                
                
                
                8.33
                
                
                $
                0Exercisable
      at end of period
                
                
                600,000
                
                
                $
                0.40
                
                
                
                8.33
                
                
                $
                0


17


The aggregate intrinsic value is
calculated as the difference between the exercise price of the underlying awards
and the closing price of the Company's common stock.  As of September
30, 2010, there were no options outstanding to purchase shares with an exercise
price below the quoted price of the Company's common stock.





There were no stock options granted
during the three months ended September 30, 2010.  The weighted
average fair value at date of grant for options granted during the three months
ended September 30, 2009 was $.22.  The Company recorded $132,000of compensation expense
for the nine months ended September 30, 2009.  Estimated unrecognized
stock-based compensation relating to stock options as of September 30, 2010 is
$0.





10.  OTHER





Employment
Agreement.  On January 30, 2009, the Company entered into an
Employment Agreement with Craig A. Zabala ("Zabala"), founder, Chairman,
President and Chief Executive Officer, and acting Chief Financial Officer and
Chief Compliance Officer, of the Company.





The term of the Employment Agreement is
three (3) years (“Employment Period”).  The Employment Period will be
automatically renewed for one (1) additional year each year unless ninety (90)
calendar days prior to the end of the term, the Company advises Zabala in
writing that it does not wish to extend the Employment Period for an additional
year.





Pursuant to the Employment Agreement,
Zabala serves as President and Chief Executive Officer of the Company, provided
that if the Company hires and/or enters into an employment agreement with any
executive who serves as President and Chief Operating Officer of the Company,
Zabala shall resign his position as President, but would keep his position as
Chief Executive Officer.  Zabala also agrees to serve as acting Chief
Financial Officer and acting Chief Compliance Officer until the Company retains
employees for such positions.  The Employment Agreement also permits
Zabala to perform work for Concorde and another affiliate, provided that such
work does not compete with the business and business opportunities of the
Company.





Zabala receives a base annual salary of
$60,000 under the Employment Agreement.  Each year, the Board of
Directors may increase the base salary in its discretion.  In the
event that the Company sold a minimum of $3,000,000 of shares of its common
stock in its 2009 private placement offering ("Offering") under Rule 506 under
Regulation D under the Securities Act, the Company would have had to increase
Zabala's annual base salary to $250,000 and pay him a $50,000 bonus (which bonus
could have been increased proportionately if the Company raised more than
$3,000,000 in the Offering but the amount of the bonus would not have been
greater than $100,000).  If the minimum amount is not raised in the
Offering, Zabala's base salary remains at $60,000.  The Offering was
terminated on December 14, 2009 with no shares being sold and consequently Dr.
Zabala was not paid any bonus and did not receive a salary
increase.





The Employment Agreement terminates
upon the earliest to occur of (i) Zabala's death or disability; (ii) cause or
non-cause termination of Zabala by the Company; (iii) a termination by Zabala
for "good reason" or Zabala resigns from the Company without "good reason" or
(iv) Zabala is replaced as President and Chief Executive Officer of the Company
(except if another executive is hired as President and Chief Operating
Officer).





If Zabala is terminated without cause,
or if he resigns for "good reason," he would receive accrued salary and bonuses,
if any, to the end of the employment term.  In addition, if Zabala is
terminated without cause or if he resigns for "good reason," the Company must
pay to Concorde rental payments of $4,000 per month from April 2004 until the
month Zabala is terminated without cause or resigns for "good
reason."  If he is terminated for cause, he is not entitled to any
rights or compensation under the Employment Agreement, provided that the Company
must make the $4,000 monthly rental payment to its affiliate
Concorde.  If Zabala is terminated in the event of death or
disability, or he resigns without "good reason," he shall only be entitled to
receive accrued and unpaid base salary and benefits through the date of his
employment termination.  If the Company hires a replacement for Zabala
who does not serve as President and Chief Operating Officer, but serves as Chief
Executive Officer, Zabala would be entitled to the benefits above for a
non-cause termination.


18


Stock Option
Grant.  Pursuant to the Employment Agreement, Zabala was
granted 600,000 options to purchase shares of Common Stock at an exercise price
of $0.40 per share (above the market value of $0.22 on date of grant) which
expires on February 1, 2019.  The options were fully vested upon
issuance.





Macromarkets
Investment.  On January 12, 2009, Blackhawk entered into a
Voting Capital Interests Purchase Agreement ("Purchase Agreement") with
MacroMarkets LLC, a Delaware limited liability company
("MacroMarkets").  Pursuant to the Purchase Agreement, Blackhawk
purchased a five percent (5%) membership interest in MacroMarkets for $250,000
and Craig A. Zabala, Chairman and Chief Executive Officer of Blackhawk, was
appointed a non-voting board member of MacroMarkets.  The Purchase
Agreement contains standard representations, warranties and indemnification
provisions.  The transaction closed on January 12,
2009.  Blackhawk used funds from working capital to make the equity
investment.





11.
SUBSEQUENT EVENT





On
December 9, 2010 the Company entered into an interim employment agreement
("Interim Agreement") with Walter V. E. Parker ("Executive").  The
term of the Interim Agreement is the first to occur of one year from the
execution of the Interim Agreement or 90 days after final closing of Blackhawk's
$5,000,000 (maximum) common stock offering under Regulation E of the Securities
Act of 1933 ("Offering") when the Company will execute a formal employment
agreement with the Executive ("Formal Agreement").  The purpose of the
Interim Agreement is to have a President in place at the Company while the
Company conducts its Regulation E Offering (as defined herein) who can assist
with selling shares in the Offering and conducting the business and operations
of the Company.  The Board of Directors of the Company approved the
interim agreement on December 6, 2010 by unanimous written consent.




Under the
Interim Agreement, the Executive shall serve as President and will be paid a
base salary of $10,000 for the first six months and $15,000 for the remainder of
the term.  His salary accrues, however, until the Company raises
$1,000,000 in the Offering.  He also receives the following stock
options pursuant to the Company's Stock Option Plan and approval by the
Company's Stock Option Committee: (a) upon $1,000,000 being raised in the
Offering, 250,000 options at an exercise price of $0.40 per share; (b) upon the
next $1,000,000 being raised in the Offering, an additional 250,000 options at
the exercise price of $0.40; (c) upon the next $1,000,000 being raised in the
Offering, an additional 200,000 options at the exercise price of $0.40; and (d)
upon the next $1,000,000 being raised in the Offering, an additional 200,000
options at the exercise price of $0.40 per share. Until the Formal Agreement is
entered into by the Company and the Executive, if the Executive is terminated
for any reason other than cause and the Company has placed at least $1,500,000
of the Offering, he receives the greater of accrued salary to date or $100,000
severance payment and his options granted to date vest.




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





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





The statements contained in this
Quarterly Report on Form 10-Q that are not historical facts may contain
forward-looking statements that involve a number of known and unknown risks and
uncertainties that could cause actual results to differ materially from those
discussed or anticipated by management.  Potential risks and
uncertainties include, among other factors, general business conditions,
government regulations, competitive market conditions, success of Blackhawk's
business strategy, and other risks and uncertainties currently unknown to
management.





Overview





Blackhawk
is a business development company registered under the Investment Company Act of
1940 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.  To date, the Company has made one
investment in a portfolio company, MacroMarkets.


19


Accounting
policies





Basis
of presentation





Interim financial statements of the
Company are prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and
pursuant to the requirements for reporting on Form 10-Q and Regulation
S-X.  Accordingly, certain disclosures accompanying annual
consolidated financial statements prepared in accordance with GAAP are
omitted.  In the opinion of management, all adjustments, consisting
solely of normal recurring accruals, considered necessary for the fair
presentation of financial statements for the interim periods have been
included.  The results of operations for the current period are not
necessarily indicative of results that ultimately may be achieved for the
year.  The interim unaudited financial statements and notes thereto
were reviewed by an outside auditor and should be read in conjunction with
the December 31, 2009 audited financial statements and notes thereto included in
the Company’s Form 10-K as filed with the SEC.




Use
of estimates in the preparation of financial statements





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





We recognize deferred tax assets and
liabilities based on the differences between the financial statement carrying
amounts and the tax bases of assets and liabilities.  We regularly
review our deferred tax assets for recoverability and establish a valuation
allowance based upon historical losses, projected future taxable income and the
expected timing of the reversals of existing temporary
differences.  As of September 30, 2010, total deferred tax assets
aggregated $1,142,000, and consist principally of net operating loss carry
forwards and capitalized start up costs which, were fully reserved based on the
likelihood of realization.  The net operating loss will expire by
2029.





The Company's investments are carried
at fair value.  See Note 3 to our Condensed Financial Statements for
additional information with respect to investments.





Portfolio
and investment activity





Blackhawk
did not make any portfolio investments in 2008 or in prior
years.  However, on January 12, 2009, Blackhawk entered into a Voting
Capital Interests Purchase Agreement ("Purchase Agreement") with MacroMarkets
LLC, a Delaware limited liability company ("MacroMarkets").  Pursuant
to the Purchase Agreement, Blackhawk purchased a five percent (5%) membership
interest in MacroMarkets for $250,000 and Craig A. Zabala, Chairman and
President of Blackhawk, was appointed a non-voting board member of
MacroMarkets.  The Purchase Agreement contains standard
representations, warranties and indemnification provisions.  The
transaction closed on January 12, 2009. Blackhawk used funds from working
capital to make the equity investment.




Results
of operations





Investment
income





For the
three months ended September 30, 2010 and 2009, we had $0 and $131,
respectively, of interest income.





For the
nine months ended September 30, 2010 and 2009, we had $192 and $6,099,
respectively, of interest income.


20


General
and administrative expenses





For the
three months ended September 30, 2010 and 2009, general and administrative
expenses were $88,679 and $219,264, respectively.  The decrease was
due to a reduction in professional fees and compensation.





For the
nine months ended September 30, 2010 and 2009, general and administrative
expenses were $408,845 and $821,670, respectively.  The decrease was
due to a reduction in professional fees and compensation.





Liquidity
and capital resources





From inception (April 22, 2004) through
September 30, 2010, Blackhawk funded its cash operating requirements through the
sale of its common stock and loans from an affiliated company,
Concorde.





The net
cash proceeds from the Regulation E offerings since inception have been
$1,711,731 through September 30, 2010.





Blackhawk had a net decrease in assets
resulting from operations for the three and nine-month periods ended September
30, 2010 of $ 88,679 and $407,426, respectively, for the nine months ended
September 30, 2010, and had total net liabilities of $541,922 at September 30,
2010 and to date has made one investment in an eligible portfolio company,
MacroMarkets, LLC.  Blackhawk intends to raise capital and access the
equity markets to raise cash to fund investments.  The ability of
Blackhawk to raise capital in this current market environment will be very
difficult.  Small business development companies similar to Blackhawk
are encountering trying market conditions in attempts to raise
capital.  There can be no assurance that Blackhawk will be able to
raise capital.  Since inception, Blackhawk's operations have been
principally funded by three Regulation E offerings and by loans from
Concorde.  If the Company is unable to raise capital or if Concorde is
unable to provide sufficient capital to the Company to fund its operational
expenses, it would have an adverse impact on liquidity and
operations.  Such uncertainty raises substantial doubt about the
Company's ability to continue as a going concern.  The financial
statements do not reflect any adjustment that might result from the outcome of
this uncertainty.




As of September 30, 2010, Concorde paid
$8,484 of expenses on behalf of the Company.




Item
3. Quantitative and Qualitative Disclosures about Market Risk.





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





Interest
rate risk





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





Portfolio
valuation





Blackhawk
intends to use the U.S. Private Equity Valuation Guidelines ("Guidelines") to
provide its managers with a framework for valuing investments in portfolio
companies at fair value and to provide greater consistency within the private
equity industry with regard to valuation.  These Guidelines are
intended to assist managers in their estimation of fair value and are intended
to be consistent with generally accepted accounting
principles.  Blackhawk has made one investment to date in
MacroMarkets.





Item
4. Controls and Procedures.





Management Report on Internal
Control Over Financial Reporting.  The management of the
Company is responsible for establishing and maintaining adequate internal
control over financial reporting.  The Company's internal control
system is a process designed to provide reasonable assurance to the Company's
management and board of directors regarding the preparation and fair
presentation of published financial statements.





Our
internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect transactions and dispositions of assets; provide reasonable
assurances that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. generally accepted accounting
principles and that receipts and expenditures are being made only in accordance
with authorizations of management and the directors of the Company; and provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on our consolidated financial statements.


21


All
internal control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.





Management
assessed the effectiveness of the Company's internal control over financial
reporting as of September 30, 2010.  In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
framework.  Based upon this evaluation, management (consisting of one
individual, Dr. Craig A. Zabala) concluded that the Company's disclosure
controls and procedures were not effective to ensure that material information
is recorded, processed, summarized and reported by management of the Company on
a timely basis in order to comply with the Company's disclosure obligations
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.  This conclusion regarding the
Company's disclosure controls and procedures is based solely on management's
conclusion that the Company's internal control over financial reporting are
ineffective as identified in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2009 and continues to be ineffective as of September 30,
2010.  In connection with our Annual Report on Form 10-K for the
fiscal year ended December 31, 2009, our management assessed the effectiveness
of the Company's internal control over financial reporting was not effective
based on management's identification of the material weaknesses as
follows:  (1) Blackhawk has a material weakness in its internal
controls due to a lack of segregation of duties, and (2) Blackhawk lacks the
resources to hire additional personnel to perform this function until it raises
additional capital.





Changes in Internal
Controlsover Financial
Reporting.  During the quarter ended September 30, 2010, there
have been no significant changes in our internal controls or in other factors
that could significantly affect those controls subsequent to our evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.





PART
II.  OTHER INFORMATION





Item
1.  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
1A. Risk Factors





This Section is not
applicable.





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





This
Section is not applicable.





Item
3.  Defaults upon Senior Securities.





This
Section is not applicable.




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





There
were no matters submitted to a vote of security holders during the third quarter
ended September 30, 2010.


22


Item
5.  Other Information.





This Section is not
applicable.




Item
6.  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


23


SIGNATURE





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





BLACKHAWK
      CAPITAL GROUP BDC, INC.Date:  December
      13, 2010
              By:
              /s/ Craig A. ZabalaCraig
      A. Zabala, Chief Executive OfficerDate:  December
      13, 2010
              By:
              /s/ Craig A. ZabalaCraig
      A. Zabala, Acting Chief Financial
Officer


24