|   |   |  OMB                APPROVAL                           OMB                Number: 3235-0070Expires:                January 31, 2008Estimated                average burden hours                per response...192.00 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

----

**FORM      10-Q**

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

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

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**BLACKHAWK      CAPITAL GROUP BDC, INC.**

| Delaware                                                                                    | 20-1031329                                                        |
|---------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (I.R.S.                EmployerIdentification                No.) |

| **14                Wall Street, 11****th****Floor, New York, NY** | **10005**                 |
|--------------------------------------------------------------------|---------------------------|
| (Address                of principal executive offices)            | (Zip                Code) |

**(212)      566-8300**

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|  Class                                     | Outstanding                on November 10, 2006 |
|-------------------------------------------------|-------------------------------------------------|
| Common                Stock, $0.00001 par value | 30,511,481                                      |

| 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.** |
|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**BLACKHAWK      CAPITAL GROUP BDC, INC.**

**INDEX**

|                              |   |                                                                                                                                                                                                                                                                                                                      |   |  **Page** |
|-----------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
| **PART                I. **  |   | ** FINANCIAL                INFORMATION**                                                                                                                                                                                                                                                                            |   |                |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                1.      |   | Financial                Statements.                                                                                                                                                                                                                                                                                      |   | 3              |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|                              |        | Condensed                Statements of Assets and Liabilities as of September 30, 2006 (unaudited)                and December 31, 2005                                                                                                                                                                                   |   | 5              |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|                              |   | Condensed                Statements of Operations for the nine months ended September 30,                2006                (unaudited) and September 30, 2005 (unaudited) and for the three                months                ended September 30, 2006 (unaudited) and September 30, 2005                (unaudited) |   |  6        |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|                              |   | Condensed                Statements of Changes in Net Assets (Liabilities) for the nine months                ended September 30, 2006 (unaudited) and Year Ended December 31,                2005                                                                                                                        |   |  7        |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|                              |   | Condensed                Statement of Stockholders' Equity (Capital Deficit) for the nine                months                ended September 30, 2006 (unaudited) and Year Ended December 31,                2005                                                                                                       |   | 8              |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|                              |   | Condensed                Statements of Cash Flows for the nine months ended September 30,                2006                (unaudited) and September 30, 2005 (unaudited)                                                                                                                                               |   | 9              |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|                              |   | Notes                to Condensed Financial Statements                                                                                                                                                                                                                                                                    |   | 10             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                2.      |   | Management’s                Discussion and Analysis of Financial Condition and Results of Operations.                                                                                                                                                                                                               |   | 14             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                3.      |   | Quantitative                and Qualitative Disclosures about Market Risk.                                                                                                                                                                                                                                                |   | 17             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                4.      |   | Controls                and Procedures.                                                                                                                                                                                                                                                                                   |   | 17             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
| ** PART                II.** |   | **OTHER                INFORMATION**                                                                                                                                                                                                                                                                                      |   |           |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                1.      |   | Legal                Proceedings.                                                                                                                                                                                                                                                                                         |   | 17             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
| Item                1A.           |        | Risk                Factors                                                                                                                                                                                                                                                                                               |   | 18             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                2.      |   | Unregistered                Sales of Equity Securities and Use of Proceeds.                                                                                                                                                                                                                                               |   | 18             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
| Item                3.       |   | Defaults                upon Senior Securities.                                                                                                                                                                                                                                                                           |   | 18             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                4.      |   | Submission                of Matters to a Vote of Security Holders.                                                                                                                                                                                                                                                       |   | 18             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
|  Item                5.      |   | Other                Information.                                                                                                                                                                                                                                                                                         |   | 18             |
|                              |   |                                                                                                                                                                                                                                                                                                                      |   |           |
| Item 6.                           |   | Exhibits.                                                                                                                                                                                                                                                                                                                 |   | 18             |

----

----

**PART      I. FINANCIAL INFORMATION**

**Item      1. Financial Statements.**

----

*NINE      MONTHS ENDED SEPTEMBER 30, 2006 AND 2005*

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**BLACKHAWK      CAPITAL GROUP BDC INC.**

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|                                                                         |   | SEPTEMBER                30, 2006 |         | DECEMBER                31, 2005 |   |
|------------------------------------------------------------------------------|--------|-----------------------------------|--------------|----------------------------------|--------|
|                                                                         |   | (Unaudited)                       |         |                             |   |
| **ASSETS:**                                                                  |   |                              |         |                             |   |   |   |
| Cash                                                                         |   | $                                 | 4,806        |                             | $      | 77,877 |   |
| Prepaid                insurance                                             |   |                              | 10,337       |                             |   | 5,522 |   |
|                                                                         |   |                              |         |                             |   |   |   |
| **TOTAL                ASSETS**                                              |   | **$**                             | **15,143**   |                             | **$**  | **83,399** |   |
|                                                                         |   |                              |         |                             |   |   |   |
|                                                                         |   |                              |         |                             |   |   |   |
| **LIABILITIES**                                                              |   |                              |         |                             |   |   |   |
| Due                to affiliated company                                     |   | $                                 | 100,000      |                             | $      | 43,842 |   |
| Accrued                expenses                                              |   |                              | 114,219      |                             |   | 17,536 |   |
| Due                to former stockholder in connection with stock rescission |   |                              | -            |                             |   | 45 |   |
| **TOTAL                LIABILITIES**                                         |   |                              | **214,219**  |                             |   | **61,423** |   |
|                                                                         |   |                              |         |                             |   |   |   |
|                                                                         |   |                              |         |                             |   |   |   |
| **NET                ASSETS (LIABILITIES)**                                  |   |                              |         |                             |   |   |   |
| Common                stock, par value $.00001 per share                     |   |                              |         |                             |   |   |   |
| 1,000,000,000                shares authorized,                              |   |                              |         |                             |   |   |   |
| 30,511,481                and 23,626,781 shares issued                       |   |                              |         |                             |   |   |   |
| and                outstanding in 2006 and 2005, respectively                |   |                              | 305          |                             |   | 236 |   |
| Additional                paid-in capital                                    |   |                              | 147,968      |                             |   | 79,190 |   |
| Accumulated                net investment loss                               |   |                              | (347,349     | )                                |   | (57,450 | ) |
| **TOTAL                NET ASSETS (LIABILITIES)**                            |   |                              | **(199,076** | **)**                            |   | **21,976** |   |
|                                                                         |   |                              |         |                             |   |   |   |
| **TOTAL**                                                                    |   | **$**                             | **15,143**   |                             | **$**  | **83,399** |   |
|                                                                         |   |                              |         |                             |   |   |   |
| **NET                ASSET (LIABILITY) VALUE PER COMMON SHARE**              |   | **$**                             | **(.00652**  | **)**                            | **$**  | **.00093** |   |

----

----

**BLACKHAWK      CAPITAL GROUP BDC INC.**

----

|                                                    |   | THREE                MONTHS ENDEDSEPTEMBER                30, |           | NINE                MONTHS ENDEDSEPTEMBER                30, |   |
|---------------------------------------------------------|--------|---------------------------------------------------------------|----------------|--------------------------------------------------------------|--------|
|                                                    |   | 2006                                                          |           | 2005                                                         |   | 2006 |   | 2005 |   |
|                                                    |   |                                                          |           |                                                         |   |   |   |   |   |
| **INVESTMENT                INCOME:**                   |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| Interest                income                          |   | $                                                             | 54             |                                                         | $      | 391 |   | $ | 457 |   | $ | 701 |   |
| **TOTAL                INVESTMENT INCOME**              |   |                                                          | **54**         |                                                         |   | **391** |   |   | **457** |   |   | **701** |   |
|                                                    |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **EXPENSES:**                                           |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| Professional                fees                        |   |                                                          | 66,594         |                                                         |   | 5,230 |   |   | 237,049 |   |   | 6,730 |   |
| Consulting                fees                          |   |                                                          | 2,325          |                                                         |   | - |   |   | 21,502 |   |   | 12,000 |   |
| Filing                fees                              |   |                                                          | 1,764          |                                                         |   | 350 |   |   | 8,765 |   |   | 1,910 |   |
| Insurance                                               |   |                                                          | 10,485         |                                                         |   | 2,892 |   |   | 22,939 |   |   | 2,892 |   |
| Other                                                   |   |                                                          | 101            |                                                         |   | - |   |   | 101 |   |   | 455 |   |
| **TOTAL                EXPENSES**                       |   |                                                          | **81,269**     |                                                         |   | **8,472** |   |   | **290,356** |   |   | **23,987** |   |
|                                                    |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **NET                INVESTMENT (LOSS) AND**            |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **NET                DECREASE IN ASSETS**               |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **RESULTING                FROM OPERATIONS**            |   | **$**                                                         | **(81,215**    | **)**                                                        | **$**  | **(8,081** | **)** | **$** | **(289,899** | **)** | **$** | **(23,286** | **)** |
|                                                    |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **LOSS                PER COMMON SHARE,**               |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **BASIC                AND DILUTED**                    |   | **$**                                                         | **(0.00266**   | **)**                                                        | **$**  | **(0.00034** | **)** | **$** | **(0.01055** | **)** | **$** | **(0.00120** | **)** |
|                                                    |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **WEIGHTED                AVERAGE SHARES OUTSTANDING,** |   |                                                          |           |                                                         |   |   |   |   |   |   |   |   |   |
| **BASIC                AND DILUTED**                    |   |                                                          | **30,511,481** |                                                         |   | **23,626,781** |   |   | **27,485,229** |   |   | **19,361,755** |   |

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----

**BLACKHAWK      CAPITAL GROUP BDC INC.**

----

|                                                        |   | NINE                MONTHSENDEDSEPTEMBER                30, 2006 |         | YEAR                ENDEDDECEMBER                31, 2005 |   |
|-------------------------------------------------------------|--------|------------------------------------------------------------------|--------------|-----------------------------------------------------------|--------|
|                                                        |   | (Unaudited)                                                      |         |                                                      |   |
|                                                        |   |                                                             |         |                                                      |   |
| **DECREASE                IN NET ASSETS FROM OPERATIONS**   |   |                                                             |         |                                                      |   |   |   |
| Net                investment loss                          |   | $                                                                | (289,899     | )                                                         | $      | (44,935 | ) |
|                                                        |   |                                                             |         |                                                      |   |   |   |
| **NET                DECREASE IN NET ASSETS**               |   |                                                             |         |                                                      |   |   |   |
| **RESULTING                FROM OPERATIONS**                |   |                                                             | **(289,899** | **)**                                                     |   | **(44,935** | **)** |
|                                                        |   |                                                             |         |                                                      |   |   |   |
| **CAPITAL                STOCK TRANSACTIONS:**              |   |                                                             |         |                                                      |   |   |   |
| Proceeds                from common stock sold              |   |                                                             | -            |                                                      |   | 88,917 |   |
| Conversion                of a portion of amounts owed      |   |                                                             |         |                                                      |   |   |   |
| to                affiliate into common stock               |   |                                                             | 68,847       |                                                      |   | 61,432 |   |
| Offering                costs                               |   |                                                             | -            |                                                      |   | (87,635 | ) |
| Rescission                of preferred stock - founder      |   |                                                             | -            |                                                      |   | (85 | ) |
|                                                        |   |                                                             |         |                                                      |   |   |   |
| **NET                INCREASE IN NET ASSETS FROM**          |   |                                                             |         |                                                      |   |   |   |
| **CAPITAL                STOCK TRANSACTIONS**               |   |                                                             | **68,847**   |                                                      |   | **62,629** |   |
|                                                        |   |                                                             |         |                                                      |   |   |   |
| **TOTAL                (DECREASE) INCREASE IN NET ASSETS**  |   |                                                             | **(221,052** | **)**                                                     |   | **17,694** |   |
|                                                        |   |                                                             |         |                                                      |   |   |   |
| **NET                ASSETS - BEGINNING OF PERIOD**         |   |                                                             | **21,976**   |                                                      |   | **4,282** |   |
|                                                        |   |                                                             |         |                                                      |   |   |   |
| **NET                ASSETS (LIABILITIES) - END OF PERIOD** |   | **$**                                                            | **(199,076** | **)**                                                     | **$**  | **21,976** |   |

----

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**BLACKHAWK      CAPITAL GROUP BDC INC.**

----

|                                                                                                  |   |   |     | COMMON                STOCK |   | PREFERRED                STOCK |   | ADDITIONALPAID-INCAPITAL |   |   | ACCUMULATEDNETINVESTMENTLOSS |       |
|-------------------------------------------------------------------------------------------------------|--------|--------|----------|-----------------------------|--------|--------------------------------|--------|--------------------------|--------|--------|------------------------------|------------|
|                                                                                                  |   | TOTAL  |     | SHARES                      |   | AMOUNT                         |   | SHARES                   |   | AMOUNT |                         |       |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |
| Balance                - December 31, 2004                                                            |   | $      | 4,282    |                        |   | 8,591,901                      |   | $                        | 86     |   |                         | 8,500,000  |   | $ | 85 |   | $ | 16,626 |   |   | $ | (12,515 | ) |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Sale                of stock pursuant to offering plan (at $.01 per share)                            |   |   | 88,917   |                        |   | 8,891,680                      |   |                     | 89     |   |                         | -          |   |   | - |   |   | 88,828 |   |   |   | - |   |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Conversion                of a portion of amount owed to affiliate (at $.01 per                share) |   |   | 61,432   |                        |   | 6,143,200                      |   |                     | 61     |   |                         | -          |   |   | - |   |   | 61,371 |   |   |   | - |   |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Rescinded                preferred stock from founder (at $.00001 per share)                          |   |   | (85      | )                           |   | -                              |   |                     | -      |   |                         | (8,500,000 | ) |   | (85 | ) |   | - |   |   |   | - |   |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Offering                costs                                                                         |   |   | (87,635  | )                           |   | -                              |   |                     | -      |   |                         | -          |   |   | - |   |   | (87,635 | )  |   |   | - |   |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                               |   |   | (44,935  | )                           |   | -                              |   |                     | -      |   |                         | -          |   |   | - |   |   | - |   |   |   | (44,935 | ) |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Balance-December                31, 2005                                                              |   |   | 21,976   |                        |   | 23,626,781                     |   |                     | 236    |   |                         | -          |   |   | - |   |   | 79,190 |   |   |   | (57,450 | ) |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                               |   |   | (289,899 | )                           |   | -                              |   |                     | -      |   |                         | -          |   |   | - |   |   | - |   |   |   | (289,899 | ) |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Conversion                of a portion of amount owed to                                              |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| affiliate                (at $.01 per share)                                                          |   |   | 68,847   |                        |   | 6,884,700                      |   |                     | 69     |   |                         | -          |   |   | - |   |   | 68,778 |   |   |   | - |   |
|                                                                                                  |   |   |     |                        |   |                           |   |                     |   |   |                         |       |   |   |   |   |   |   |   |   |   |   |   |
| Balance-                September 30, 2006 (Unaudited)                                                |   | $      | (199,076 | )                           |   | 30,511,481                     |   | $                        | 305    |   | $                            | -          |   | $ | - |   | $ | 147,968 |   |   | $ | (347,349 | ) |

----

----

**BLACKHAWK      CAPITAL GROUP BDC INC.**

----

|                                                                                                            |   | NINE                MONTHS ENDEDSEPTEMBER                30, |         |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------------|
|                                                                                                            |   | 2006                                                         |         | 2005 |   |
|                                                                                                            |   |                                                         |         |   |   |
| **CASH                FLOWS FROM OPERATING****AND                INVESTING ACTIVITIES:**                        |   |                                                         |         |   |   |   |   |
| Net                  investment loss and decrease in net                  assets resulting from operations |   | $                                                            | (289,899     | ) | $ | (23,286 | ) |
| Adjustments                to reconcile net decrease:                                                           |   |                                                         |         |   |   |   |   |
| Increase                (decrease) in accrued expenses                                                          |   |                                                         | 96,683       |   |   | (3,151 | ) |
| ** **Increase                in prepaid expenses                                                           |   |                                                         | (4,815       | ) |   | (2,775 | ) |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| **NET                CASH USED IN OPERATING AND INVESTING ACTIVITIES**                                          |   |                                                         | **(198,031** | **)** |   | **(29,212** | **)** |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                        |   |                                                         |         |   |   |   |   |
| Net                proceeds from the issuance of stock                                                          |   |                                                         | -            |   |   | 88,917 |   |
| Loan                from affiliated company                                                                     |   |                                                         | 125,005      |   |   | 9,999 |   |
| Due                to former stockholder in connection with                                                     |   |                                                         |         |   |   |   |   |
| common                stock rescission                                                                          |   |                                                         | (45          | ) |   | - |   |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| **NET                CASH PROVIDED BY FINANCING ACTIVITIES**                                                    |   |                                                         | **124,960**  |   |   | **98,916** |   |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| **NET                (DECREASE) INCREASE IN CASH**                                                              |   |                                                         | **(73,071**  | **)** |   | **69,704** |   |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| **CASH                - BEGINNING OF PERIOD**                                                                   |   |                                                         | **77,877**   |   |   | **13,600** |   |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| **CASH                - END OF PERIOD**                                                                         |   | **$**                                                        | **4,806**    |   | **$** | **83,304** |   |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| Non-cash                financing activities:                                                                   |   |                                                         |         |   |   |   |   |
| Conversion                of amount due to affiliated company into common stock                                 |   | $                                                            | 68,847       |   | $ | 61,432 |   |
|                                                                                                            |   |                                                         |         |   |   |   |   |
| Deferred                offering costs charged to additional paid-in capital                                    |   | $                                                            | -            |   | $ | 87,635 |   |

----

----

**BLACKHAWK      CAPITAL GROUP BDC INC.**

----

| **1** | **SIGNIFICANT                ACCOUNTING POLICIES** |
|-------|----------------------------------------------------|

***Business      description***

***Basis      of presentation***

| **2** | **INCOME                TAXES** |
|-------|---------------------------------|

| **3** | **RELATED                PARTY TRANSACTIONS** |
|-------|-----------------------------------------------|

----

----

----

----

| **4** | **FINANCIAL                HIGHLIGHTS** |
|-------|-----------------------------------------|

|                                                                   |   | Nine                Months Ended September                30, |       | Year                Ended |   |
|------------------------------------------------------------------------|--------|---------------------------------------------------------------|------------|---------------------------|--------|
|                                                                   |   | 2006                                                          |       | 2005                      |   | December                31, 2005 |   |
|                                                                   |   |                                                          |       |                      |   |   |   |
| **Per                Share Data:**                                     |   |                                                          |       |                      |   |   |   |   |   |   |
| Net                asset value - beginning of period                   |   | $                                                             | 0.00093    |                      | $      | 0.00050 |   | $ | 0.00050 |   |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Net                investment loss *                                   |   |                                                          | (0.01055   | )                         |   | (0.00120 | ) |   | (0.00220 | ) |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Issuance                of common stock                                |   |                                                          | 0.01000    |                      |   | 0.00796 |   |   | 0.00417 |   |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Net                realized and unrealized gain (loss)**               |   |                                                          | (0.00690   | )                         |   | (0.00541 | ) |   | (0.00154 | ) |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Net                asset (liability) value - end of period             |   |                                                          | (0.00652   | )                         |   | 0.00185 |   |   | 0.00093 |   |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| **Total                return based on net asset value *****           |   |                                                          | (1,134     | %)                        |   | (240 | %) |   | (440 | %) |
| Common                shares outstanding - end of period ****          |   |                                                          | 30,511,481 |                      |   | 23,626,781 |   |   | 23,626,781 |   |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| **Ratio/Supplemental                Data**:                            |   |                                                          |       |                      |   |   |   |   |   |   |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Net                assets (liability) - end of period                  |   | $                                                             | (199,076   | )                         | $      | 43,710 |   | $ | 21,976 |   |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Ratio                of net investment loss to average net assets***** |   |                                                          | (7,036     | %)                        |   | (69 | %) |   | (91 | %) |
|                                                                   |   |                                                          |       |                      |   |   |   |   |   |   |
| Ratio                of operating expenses to average net assets*****  |   |                                                          | 7,047      | %                         |   | 72 | % |   | 94 | % |

| * | Calculated                based on average shares outstanding during                period |
|---|--------------------------------------------------------------------------------------------|

| ** | Net                realized and unrealized gain (loss) represents the dilutive effect                of                share issuance.                This caption is used per the AICPA Audit and Accounting Guide for                Investment Companies section 7.69 ( c                ). |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| **** | Common                shares outstanding are reduced by rescinded                shares |
|------|-----------------------------------------------------------------------------------------|

| ***** | Annualized                for periods less than one year |
|-------|----------------------------------------------------------|

----

----

| **5** | **SUBSEQUENT                EVENTS** |
|-------|--------------------------------------|

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

*Overview*

*Accounting      Policies*

*Basis      of Presentation*

*Use      of Estimates in the Preparation of Financial Statements*

----

*Valuation      of Long-Lived and Intangible Assets*

*Income      Taxes*

*Portfolio      and Investment Activity*

*Investment      Strategy*

*Results      of Operations*

*Sales      Revenues*

*General        and Administrative Expenses*

----

*Other      Income (Expenses)*

*Liquidity      and Capital Resources*

----

**Item      3. Quantitative and Qualitative Disclosures about Market      Risk.**

**Item      4. Controls and Procedures.**

**PART      II. OTHER INFORMATION**

**Item      1. Legal Proceedings. **

----

**Item      1A. Risk Factors**

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

**Item      3. Defaults upon Senior Securities.**

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

**Item      5. Other Information.**

**Item      6. Exhibits.**

| Exhibit                No. |   | Description                                                                                                                                                     |
|----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                                                            |
| 10.1                       |   | Terms                of Advisor to the Board Agreement                                                                                                          |
|                       |   |                                                                                                                                                            |
| 10.2                       |   | Investment                Advisory Management Agreement Between Blackhawk Capital Group BDC,                Inc.                and Barak Asset Management, LLC |
|                       |   |                                                                                                                                                            |
| 10.3                       |   | Agreement                Between Blackhawk Capital Group BDC, Inc.and Sanders Morris                Harris                                                      |
|                       |   |                                                                                                                                                            |
| 31.1                       |   | Certification                by Chief Executive Officer Pursuant to Section 302 of the Sarbanes                Oxley                Act of 2002                 |
|                       |   |                                                                                                                                                            |
| 31.2                       |   | Certification                by Chief Financial Officer Pursuant to Section 302 of the Sarbanes                Oxley                Act of 2002                 |
|                       |   |                                                                                                                                                            |
| 32.1                       |   | Certification                by Chief Executive Officer Pursuant to Section 906 of the Sarbanes                Oxley                Act of 2002                 |
|                       |   |                                                                                                                                                            |
| 32.2                       |   | Certification                by Chief Financial Officer Pursuant to Section 906 of the Sarbanes                Oxley                Act of 2002                 |
|                       |   |                                                                                                                                                            |

----

|                                   |                                                    |                             |
|----------------------------------------|---------------------------------------------------------|----------------------------------|
|                                   | **BLACKHAWK                CAPITAL GROUP BDC, INC.**    |
|                              |                                               |                        |
| Date:                November 10, 2006 | By:                                           | /s/              Craig A. Zabala |
|                                   | Craig                A. Zabala, Chief Executive Officer |

|                                       |                                                                                  |                               |
|--------------------------------------------|---------------------------------------------------------------------------------------|------------------------------------|
| Date:                    November 10, 2006 | By:                                                                         | /s/                Craig A. Zabala |
|                                       | Craig                    A. Zabala, Acting Chief Financial                    Officer |

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