OMB
      APPROVALOMB
      Number:     3235-0070Expires:      January
      31, 2008Estimated
      average burdenhours
      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
 
 For the
quarterly period ended June 30, 2009
 
 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.)
 
 14
Wall Street, 11th Floor,
New York, NY      10005
 (Address
of principal executive
offices)          (Zip
Code)
 
 (212)
566-8300
 (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
o
 
 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
 ̈
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filers.  See definition, or a smaller reporting company 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
filer x (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 August 13,
    2009Common
      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.












BLACKHAWK
CAPITAL GROUP BDC, INC.





INDEX





PagePART
      I.
                                                            FINANCIAL
      INFORMATIONItem
      1.
                                                            Financial
      Statements.Condensed
      Statements of Assets and Liabilities as of June 30, 2009 (unaudited) and
      December 31, 2008
                                                            
                                                            2Condensed
      Schedule of Investments as of June 30, 2009 (unaudited)
                                                            
                                                            3Condensed
      Statements of Operations for the three and six months ended June 30, 2009
      (unaudited) and June 30, 2008 (unaudited)
                                                            
                                                            4Condensed
      Statements of Changes in Net Assets (Liabilities) for the six months ended
      June 30, 2009 (unaudited) and year ended December 31, 2008
                                                            
                                                            5Condensed
      Statement of Stockholders' Equity (Capital Deficit) for the six months
      ended June 30, 2009 (unaudited) and year ended December 31,
      2008
                                                            
                                                            6Condensed
      Statements of Cash Flows for the six months ended June 30, 2009
      (unaudited) and June 30, 2008 (unaudited)
                                                            
                                                            7Notes
      to Condensed Financial Statements
                                                            
                                                            8Item
      2.
                                                            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                                                            
                                                            17Item
      3.
                                                            Quantitative
      and Qualitative Disclosures about Market Risk.
                                                            
                                                            19Item
      4T.
                                                            Controls
      and Procedures.
                                                            
                                                            19PART
      II.
                                                            OTHER
      INFORMATION
                                                            
                                                            20Item
      1.
                                                            Legal
      Proceedings.
                                                            
                                                            20Item
      1A.
                                                            Risk
      Factors
                                                            
                                                            20Item
      2.
                                                            Unregistered
      Sales of Equity Securities and Use of Proceeds.
                                                            
                                                            20Item
      3.
                                                            Defaults
      upon Senior Securities.
                                                            
                                                            20Item
      4.
                                                            Submission
      of Matters to a Vote of Security Holders.
                                                            
                                                            20Item
      5.
                                                            Other
      Information.
                                                            
                                                            20Item
      6.
                                                            Exhibits.
                                                            
                                                            20











BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF ASSETS AND LIABILITIES








JUNE 30,
                                  2009
                                
                                
                                DECEMBER 31,
                                  2008(Unaudited)ASSETS:Investment
      at fair value (cost $302,513 and $654,025)
                                
                                $
                                300,308
                                
                                
                                $
                                652,737Cash
      and cash equivalents
                                
                                
                                243,475
                                
                                
                                
                                172,797Prepaid
      expenses
                                
                                
                                7,728
                                
                                
                                
                                12,544TOTAL
      ASSETS
                                
                                $
                                551,511
                                
                                
                                $
                                838,078LIABILITIESAccrued
      expenses
                                
                                $
                                295,973
                                
                                
                                $
                                118,102TOTAL
      LIABILITIES
                                
                                
                                295,973
                                
                                
                                
                                118,102NET
      ASSETSCommon
      stock, par value $.00001 per share 1,000,000,000 shares
      authorized, 32,467,484shares
      issued and outstanding in 2009 and 2008
                                
                                
                                325
                                
                                
                                
                                325Additional
      paid-in capital
                                
                                
                                2,106,641
                                
                                
                                
                                1,974,641Accumulated
      net investment loss
                                
                                
                                (1,849,223
                                )
                                
                                
                                (1,253,702
                                )Net
      unrealized loss on investment
                                
                                
                                (2,205
                                )
                                
                                
                                (1,288
                                )TOTAL
      NET ASSETS
                                
                                
                                255,538
                                
                                
                                
                                719,976TOTAL
      LIABILITIES AND NET ASSETS/(LIABILITIES)
                                
                                $
                                551,511
                                
                                
                                $
                                838,078NET
      ASSET VALUE PER COMMON SHARE
                                
                                $
                                0.00787
                                
                                
                                $
                                0.02218









See notes
to condensed financial statements





2





BLACKHAWK
CAPITAL GROUP BDC INC.


CONDENSED
SCHEDULE OF INVESTMENTS (Unaudited)


JUNE 30,
2009







COMPANY
                                            
                                            INVESTMENT
                                            
                                            INITIAL
                                              ACQUISITION
                                              DATE
                                            
                                            PRINCIPAL
                                              AMOUNT/
                                              SHARES
                                            
                                            
                                            COST
                                            
                                            
                                            FAIR
                                              VALUE
                                            
                                            
                                            % OF
                                              TOTAL
                                              ASSETSWal-Mart
      Stores
                                              6.875%
      due 8/10/09
                                            
                                            Notes
                                            
                                            11/21/08
                                            
                                            
                                            50,000
                                            
                                            
                                            $
                                            52,513
                                            
                                            
                                            $
                                            50,308
                                            
                                            
                                            
                                            9.1
                                            %MacroMarkets,
      LLC.
                                            
                                            CapitalInterests
                                            
                                            1/21/09
                                            
                                            
                                            624,432
                                            
                                            
                                            
                                            250,000
                                            
                                            
                                            
                                            250,000
                                            
                                            
                                            
                                            45.3
                                            %$
                                            302,513
                                            
                                            
                                            $
                                            300,308





See notes
to condensed financial statements





3





BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF OPERATIONS


(Unaudited)





THREE MONTHS ENDED
                        JUNE 30,
                      
                      
                      SIX MONTHS ENDED
                        JUNE 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008INVESTMENT
      INCOME:Interest
      income
                      
                      $
                      2,265
                      
                      
                      $
                      1,436
                      
                      
                      $
                      6,885
                      
                      
                      $
                      9,552TOTAL
      INVESTMENT INCOME
                      
                      
                      2,265
                      
                      
                      
                      1,436
                      
                      
                      
                      6,885
                      
                      
                      
                      9,552EXPENSES:Compensation
                      
                      
                      32,643
                      
                      
                      
                      -
                      
                      
                      
                      175,801
                      
                      
                      
                      -Professional
      fees
                      
                      
                      151,177
                      
                      
                      
                      138,634
                      
                      
                      
                      359,041
                      
                      
                      
                      251,439Advisory
      fees
                      
                      
                      4,521
                      
                      
                      
                      1,367
                      
                      
                      
                      9,842
                      
                      
                      
                      3,767Rent-related
      party
                      
                      
                      12,000
                      
                      
                      
                      -
                      
                      
                      
                      24,000
                      
                      
                      
                      -Filing
      fees
                      
                      
                      1,338
                      
                      
                      
                      1,732
                      
                      
                      
                      18,840
                      
                      
                      
                      5,802Insurance
                      
                      
                      7,855
                      
                      
                      
                      5,126
                      
                      
                      
                      11,960
                      
                      
                      
                      10,597Other
                      
                      
                      631
                      
                      
                      
                      418
                      
                      
                      
                      2,922
                      
                      
                      
                      590TOTAL
      EXPENSES
                      
                      
                      210,165
                      
                      
                      
                      147,277
                      
                      
                      
                      602,406
                      
                      
                      
                      272,195NET
      INVESTMENT LOSS
                      
                      
                      (207,900
                      )
                      
                      
                      (145,841
                      )
                      
                      
                      (595,521
                      )
                      
                      
                      (262,643
                      )UNREALIZED
      LOSS ON INVESTMENTS
                      
                      
                      (1,970
                      )
                      
                      
                      (1,541
                      )
                      
                      
                      (917
                      )
                      
                      
                      (7,887
                      )NET
      DECREASE IN ASSETS RESULTING FROM OPERATIONS
                      
                      $
                      (209,870
                      )
                      
                      $
                      (147,382
                      )
                      
                      $
                      (596,438
                      )
                      
                      $
                      (270,530
                      )LOSS
      PER COMMON SHARE, BASIC AND DILUTED
                      
                      $
                      (0.00646
                      )
                      
                      $
                      (0.00462
                      )
                      
                      $
                      (0.01837
                      )
                      
                      $
                      (0.00853
                      )WEIGHTED
      AVERAGE SHARES OUTSTANDING,BASIC
      AND DILUTED
                      
                      
                      32,467,484
                      
                      
                      
                      31,867,484
                      
                      
                      
                      32,467,484
                      
                      
                      
                      31,706,041







See notes
to condensed financial statements





4





BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF CHANGES IN NET ASSETS (LIABILITIES)









SIX MONTHS
                                ENDED
                                JUNE 30, 2009
                              
                              
                              YEAR ENDED
                                DECEMBER 31, 2008(Unaudited)DECREASE
      IN NET ASSETS FROM OPERATIONSNet
      investment loss
                              
                              $
                              (595,521
                              )
                              
                              $
                              (405,089
                              )Unrealized
      loss on investments
                              
                              
                              (917
                              )
                              
                              
                              (6,501
                              )NET
      DECREASE IN NET ASSETSRESULTING
      FROM OPERATIONS
                              
                              
                              (596,438
                              )
                              
                              
                              (411,590
                              )CAPITAL
      STOCK TRANSACTIONS:Stock-based
      compensation
                              
                              
                              132,000
                              
                              
                              
                              -Proceeds
      from common stock sold
                              
                              
                              -
                              
                              
                              
                              1,298,112Offering
      costs
                              
                              
                              -
                              
                              
                              
                              (129,311
                              )NET
      INCREASE IN NET ASSETS FROMCAPITAL
      STOCK TRANSACTIONS
                              
                              
                              132,000
                              
                              
                              
                              1,168,801TOTAL
      (DECREASE) INCREASE IN NET ASSETS
                              
                              
                              (464,438
                              )
                              
                              
                              757,211NET
      ASSETS (LIABILITIES) - BEGINNING OF PERIOD
                              
                              
                              719,976
                              
                              
                              
                              (37,235
                              )NET
      ASSETS - END OF PERIOD
                              
                              $
                              255,538
                              
                              
                              $
                              719,976









See notes
to condensed financial statements





5





BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENT OF STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT)





COMMON STOCK
                                
                                
                                ADDITIONAL
                                  PAID-IN
                                
                                
                                NET
                                  UNREALIZED
                                  APPRECIATION
                                  ON
                                
                                
                                ACCUMULATED
                                  NET
                                  INVESTMENTTOTAL
                                
                                
                                SHARES
                                
                                
                                AMOUNT
                                
                                
                                CAPITAL
                                
                                
                                INVESTMENT
                                
                                
                                LOSSBalance-December
      31, 2007
                                
                                $
                                (37,235
                                )
                                
                                
                                31,169,372
                                
                                
                                $
                                312
                                
                                
                                $
                                805,853
                                
                                
                                $
                                5,213
                                
                                
                                $
                                (848,613
                                )Net
      decrease in assets resulting from operations
                                
                                
                                (411,590
                                )
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (6,501
                                )
                                
                                
                                (405,089
                                )Sale
      of stock pursuant to offering plan (at $1.00 per share)
                                
                                
                                1,298,112
                                
                                
                                
                                1,298,112
                                
                                
                                
                                13
                                
                                
                                
                                1,298,099Offering
      costs
                                
                                
                                (129,311
                                )
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (129,311
                                )Balance-December
      31,2008
                                
                                
                                719,976
                                
                                
                                
                                32,467,484
                                
                                
                                
                                325
                                
                                
                                
                                1,974,641
                                
                                
                                
                                (1,288
                                )
                                
                                
                                (1,253,702
                                )Net
      decrease in assets resulting from operations
                                
                                
                                (596,438
                                )
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (917
                                )
                                
                                
                                (595,521
                                )Stock-based
      compensation
                                
                                
                                132,000
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                132,000Balance-
      June 30,2009 (unaudited)
                                
                                $
                                255,538
                                
                                
                                
                                32,467,484
                                
                                
                                $
                                325
                                
                                
                                $
                                2,106,641
                                
                                
                                $
                                (2,205
                                )
                                
                                $
                                (1,849,223
                                )








See notes
to condensed financial statements





6





BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF CASH FLOWS





(Unaudited)





SIX
      MONTHS ENDED JUNE 30,2009
                        
                        
                        2008CASH
      FLOWS FROM OPERATING AND INVESTING ACTIVITIES:Net
      investment loss and decrease in net assets resulting from
      operations
                        
                        $
                        (596,438
                        )
                        
                        $
                        (270,530
                        )Adjustments  to
      reconcile net investment loss and decrease in net assets
      tonet
      cash provided by (used in) operating activities:Unrealized
      loss on investments
                        
                        
                        917
                        
                        
                        
                        2,674Stock
      Based Compensation
                        
                        
                        132,000
                        
                        
                        
                        -Change
      in operating assets and liabilities:Increase
      (Decrease) in accrued expenses
                        
                        
                        177,871
                        
                        
                        
                        (3,231
                        )Decrease
      (Increase) in prepaid expenses
                        
                        
                        4,816
                        
                        
                        
                        (10,253
                        )Purchase
      of Investments
                        
                        
                        (250,000
                        )
                        
                        
                        (892,144
                        )Proceeds
      from sale and redemption of investments
                        
                        
                        601,512
                        
                        
                        
                        543,000NET
      CASH PROVIDED BY (USED) IN OPERATING AND INVESTING
    ACTIVITIES
                        
                        
                        70,678
                        
                        
                        
                        (630,484
                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Offering
      costs
                        
                        
                        -
                        
                        
                        
                        (69,311
                        )Proceeds
      from the issuance of stock
                        
                        
                        -
                        
                        
                        
                        698,112NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        -
                        
                        
                        
                        628,801NET
      INCREASE (DECREASE) IN CASH
                        
                        
                        70,678
                        
                        
                        
                        (1,683
                        )CASH
      AND EQUIVALENTS – BEGINNING OF PERIOD
                        
                        
                        172,797
                        
                        
                        
                        4,450CASH
      AND EQUIVALENTS – END OF PERIOD
                        
                        $
                        243,475
                        
                        
                        $
                        2,767








See notes
to condensed financial statements





7





BLACKHAWK
CAPITAL GROUP BDC INC.





NOTES TO
CONDENSED FINANCIAL STATEMENTS





JUNE 30,
2009


(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





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





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 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 should be read in conjunction with the December 31,
2008 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 for the six-month period ended June 30, 2009 of $596,438 and total net
assets of $255,538 as of June 30, 2009.  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.  The Company is currently trying to
raise equity capital through a private placement offering of its common stock
under Rule 506 of the Securities Act of 1933, as amended, although there can be
no assurance such offering will be successful.  To the extent that
current resources are not sufficient for the Company to pay its obligations as
they become due,Concorde has agreed to
provide sufficient capital to the Company to subsidize operational expenses to
operate through July 1, 2010.





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.




8




·
            Realized
      gains or losses on investments are recorded on a trade date basis using
      the specific identification method.




Use
of Estimates





The preparation of financial statements
in conformity with 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.





New
Accounting Pronouncements





In April 2009, the Financial Accounting
Standards Board ("FASB") issued FASB Staff Position ("FSP") Issue No. FAS No.
157-4, “Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
that are not Orderly” ("FSP FAS No. 157-4").  FSP FAS No. 157-4
provides additional guidance for estimating fair value in accordance with SFAS
No. 157.  This FSP No. 157-4 is effective for interim and annual
financial periods ending after June 15, 2009.  The Company adopted FSP
FAS No. 157-4 in June 2009.  The adoption of FSP FAS No. 157-4 did not
have an impact on the Company's condensed financial position and results of
operations.





In April 2009, the FASB issued FSP No.
FAS No. 107-1 and APB No. 28-1, “Interim Disclosures about Fair Value of
Financial Instruments” ("FSP FAS No. 107-1 and APB No 28-1").  FSP FAS
No. 107-1 and APB No. 28-1 require disclosures about fair value of financial
instruments for annual and interim reporting periods of publicly traded
companies.  FSP No. 107-1 and APB No. 28-1 are effective for interim
reporting periods ending after June 15, 2009.  The Company adopted FSP
FAS No. 107-1 and APB No. 18-1 in June 2009.  The adoption of FSP No.
107-1 and APB No. 28-1 did not have an impact on the Company's condensed
financial position and results of operations.





In May 2009, the FASB issued FAS No.
165, "Subsequent Events" ("FAS No. 165").  FAS No. 165 establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before the date the financial statements are issued
or available to be issued.  FAS No. 165 requires an entity to reflect
in its financial statements the effects of subsequent events that provide
additional evidence about conditions at the balance sheet date including the
estimates inherent in the process of preparing financial
statements.  Subsequent events that provide evidence about conditions
that arose after the balance sheet date should be
disclosed.  Disclosures should include the nature of the event and
either an estimate of its financial effect or a statement that an estimate
cannot be made.  FAS No. 165 requires the disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued.  FAS No. 165 is effective for interim and
annual financial periods ending after June 15, 2009.  The Company
adopted FAS No. 165 in June 2009.  The adoption of FAS No. 165 did not
have an impact on the Company's condensed financial position and results of
operations.





In June 2009, the FASB issued FAS No.
168, "The FASB Accounting Standards CodificationTM and the Hierarchy of Generally
Accepted Accounting Principles - a replacement of FASB Statement No. 162" ("FAS
No. 168").  FAS No. 168 replaces FAS No. 162, "The Hierarchy of
Generally Accepted Accounting Principles" and establishes the FASB Accounting
Standards CodificationTM ("Codification") as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in accordance with
GAAP.  All existing accounting standard documents are superseded by
the Codification and any accounting literature not included in the Codification
will not be authoritative.  However, rules and interpretive releases
of the SEC issues under the authority of federal securities laws will continue
to be sources of authoritative GAAP for SEC registrants.  FAS No. 168
is effective for interim and annual reporting periods ending after September 15,
2009.  Therefore, beginning with the Company's fourth fiscal quarter
of 2009, all references made by it to GAAP in its consolidated financial
statements will use the new Codification numbering system.  The
Codification does not change or alter existing GAAP and, therefore, it is not
expected to have any impact on the Company's condensed financial position and
results of operations.




9




Net
loss per common share





Basic EPS is computed solely on the
weighted average number of common shares outstanding during the
period.  Diluted EPS reflects all potential dilution of common stock
as applicable.  The following table provides Basic and Diluted EPS for
the three months ended June 30, 2009 and 2008:





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareThree
      Months Ended June 30, 2009Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (209,870
                  )
                  
                  
                  32,467,484
                  
                  
                  $
                  (0.00646
                  )





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareThree
      Months Ended June 30, 2008Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (147,382
                  )
                  
                  
                  31,867,484
                  
                  
                  $
                  (0.00462
                  )





The following table provides Basic and
Diluted EPS for the six months ended June 30, 2009 and 2008:





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareSix
      Months Ended June 30, 2009Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (596,438
                  )
                  
                  
                  32,467,484
                  
                  
                  $
                  (.01837
                  )





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareSix
      months ended June 30, 2008Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (270,530
                  )
                  
                  
                  31,706,041
                  
                  
                  $
                  (0.00853
                  )





For the three and six months ended June
30, 2009, 600,000 shares attributable to stock options were excluded from the
calculation of diluted EPS because the effect was
anti-dilutive.  There were no dilutive securities issued in
2008.





10





2.
INCOME TAXES





We recognize deferred tax assets and
liabilities based on the differences between the financial statement carrying
amount 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 June 30, 2009, net deferred tax
assets aggregated $782,000, which was fully reserved based on the likelihood of
realization.





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 June 30, 2009 and December 31, 2008,
the Company has not recorded any unrecognized tax benefits. The Company’s
policy, if it had unrecognized benefits, is to recognize accrued interest and
penalties in general and administrative expense.





The tax years 2005 through 2008 remain
open to examination by the major tax jurisdictions to which the Company is
subject.





3.
FAIR VALUE MEASUREMENT





Effective January 1, 2008, the Company
adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair
Value Measurements” (“SFAS 157”), for investments measured at fair value on a
recurring basis. SFAS 157 accomplishes the following key
objectives:





•
            Defines
      fair value as the price that would be received to sell an asset or paid to
      transfer a liability in an orderly transaction between market participants
      at the measurement date;


•
            Establishes
      a three-level hierarchy ("Valuation Hierarchy") for fair value
      measurements;


•
            Requires
      consideration of the Company’s creditworthiness when valuing liabilities;
      and


•
            Expands
      disclosures about instruments measured at fair
  value.





The Valuation Hierarchy is based upon
the transparency of inputs to the valuation of an asset or liability as of the
measurement date. A financial instrument’s categorization within the Valuation
Hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. The three levels of the Valuation Hierarchy and the
distribution of the Company’s financial assets within it are as
follows:





•
            Level
      1 – inputs to the valuation methodology are quoted prices (unadjusted) for
      identical assets or liabilities in active
  markets.


•
            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.




11




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 carrying values and estimated fair
values of the Company's financial instruments for the periods presented are as
follows:





Carrying Value
                
                
                Quote Prices in
                  Active Markets
                  (Level 1)
                
                
                Significant Other
                  Observable Inputs
                  (Level 2)
                
                
                Significant
                  Unobservable
                  Inputs
                  (Level 3)June
      30, 2009:Financial
      AssetsNotes
                
                $
                50,308
                
                
                $
                —
                
                
                $
                50,308
                
                
                $
                —Membership
      interest in LLC
                
                
                250,000
                
                
                
                —
                
                
                
                —
                
                
                
                250,000Total
      Financial Assets
                
                $
                300,308
                
                
                $
                —
                
                
                $
                50,308
                
                
                $
                250,000December
      31, 2008:Financial
      AssetsNotes
                
                $
                652,737
                
                
                $
                —
                
                
                $
                652,737
                
                
                $
                —Total
      Financial Assets
                
                $
                652,737
                
                
                $
                —
                
                
                $
                652,737
                
                
                $
                —





The following table presents additional
information about assets measured at fair value using Level 3 inputs for the six
months ended June 30, 2009:





Membership Interest In LLCBalance
      as of January 1, 2009
                  
                  $
                  —Purchases
                  
                  
                  250,000Balance
      as of June 30, 2009
                  
                  $
                  250,000





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 during the three and six months ended June 30,
2009 amounted to $12,000 and $24,000, respectively.





5.
INVESTMENT ADVISORY AGREEMENT; CONSULTING AGREEMENT





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 agreement with Barak was
extended and expires on October 31, 2009.  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.




12




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 0.50% to 1.80% of assets managed.  Fees are billed and payable
quarterly in arrears (or a prorated period when applicable).





For the three and six month periods
ended June 30, 2009 and 2008, the Company incurred fees in the amount of $4,521
and $9,842, respectively, and $1,367 and $3,767, respectively, for the same
corresponding periods in 2008.





Blackhawk has entered into a consulting
agreement dated September 12, 2006 with Robert S. Tull, Jr. for a three-year
term (the "Agreement").  Under the Agreement, Mr. Tull will consult
with the Blackhawk Board of Directors on investments and have the following
duties: consulting Blackhawk's Board of Directors on investment decisions and
strategies, consulting on investment diversification in the strategies and
consulting on investment opportunities.  Pursuant to the Agreement,
the Blackhawk Board of Directors will determine Mr. Tull's compensation when it
closes its third Regulation E offering and has sufficient proceeds to compensate
Mr. Tull.  Mr. Tull is not a registered investment
adviser.  As of June 30, 2009 and 2008, the Company had not incurred
any liability to Mr. Tull.





6.
ACCRUED EXPENSES





Accrued expenses at June 30, 2009 and
December 31, 2008 consist principally of professional fees.





7.
STOCKHOLDERS’ EQUITY





During 2008, pursuant to a Regulation E
Offering, the Company sold an aggregate of 1,298,112 shares of Common Stock, at
a purchase price of $1.00 per share for aggregate proceeds of $1,168,801, net of
expense of $129,311.





8.
FINANCIAL HIGHLIGHTS





The following is a schedule of
financial highlights for the six months ended June 30, 2009 and 2008, and the
year ended December 31, 2008.





SIX MONTHS
                            ENDED
                            JUNE 30, 2009
                          
                          
                          SIX MONTHS
                            ENDED
                            JUNE 30, 2008
                          
                          
                          YEAR ENDED
                            DECEMBER 31,
                            2008(unaudited)
                          
                          
                          (unaudited)Per
      Share Data:Net
      asset value – beginning of period
                          
                          $
                          0.02218
                          
                          
                          $
                          (0.00119
                          )
                          
                          $
                          (0.00119
                          )Net
      investment loss *
                          
                          
                          (0.01834
                          )
                          
                          
                          (0.00828
                          )
                          
                          
                          (0.01263
                          )Issuance
      of common stock
                          
                          
                          —
                          
                          
                          
                          1.00000
                          
                          
                          
                          1.00000Net
      realized and unrealized gain (loss)**
                          
                          
                          0.00403
                          
                          
                          
                          (0.98046
                          )
                          
                          
                          (0.96400
                          )Net
      asset value – end of period
                          
                          $
                          0.00787
                          
                          
                          $
                          0.01007
                          
                          
                          $
                          0.02218Total
      return based on net asset value ***
                          
                          
                          (65
                          )%
                          
                          
                          (693
                          )%
                          
                          
                          (1,061
                          )%Common
      shares outstanding – end of period
                          
                          
                          32,467,484
                          
                          
                          
                          31,867,484
                          
                          
                          
                          32,467,484Ratio/Supplemental
      Data:Net
      assets – end of period
                          
                          $
                          255,538
                          
                          
                          $
                          321,036
                          
                          
                          $
                          719,976Ratio
      of net investment loss to average net assets****
                          
                          
                          (248
                          )%
                          
                          
                          200
                          %
                          
                          
                          (88
                          )%Ratio
      of operating expenses to average net assets****
                          
                          
                          251
                          %
                          
                          
                          207
                          %
                          
                          
                          91
                          %




13




*
            Calculated
      based on average shares outstanding during
  period.





**
            Net
      realized and unrealized gain (loss), per share, which is balancing amount
      necessary to reconcile the change in net asset value per share with the
      other per share information presented.  This is in accordance
      with the AICPA Audit and Accounting Guide for Investment
      Companies.





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





****
            Annualized
      for periods less than one year.





9.
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.





The Company accounts for stock-based
payments using SFAS No. 123-R (revised 2004), “Share-Based
Payments.”  SFAS 123-R requires recognition of 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 six months ended June 30,
2009:





Shares Under
                  Options
                
                
                Weighted Average
                  Exercise Price
                
                
                Remaining
                  Contractual Life
                  (In Years)
                
                
                Aggregate
                  Intrinsic ValueOutstanding
      at beginning of period
                
                
                —
                
                
                
                —Grants
                
                
                600,000
                
                
                $
                0.40
                
                
                
                9.8Exercised
                
                
                —
                
                
                
                —Forfeited
                
                
                —
                
                
                
                —Outstanding
      at end of period
                
                
                600,000
                
                
                $
                0.40
                
                
                
                9.4
                
                
                
                —Exercisable
      at end of period
                
                
                600,000
                
                
                $
                0.40
                
                
                
                9.4
                
                
                
                —





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 on the date of determination
for those awards that have an exercise price currently below the closing
price.  As of June 30, 2009, there were no options outstanding to
purchase shares with an exercise price below the quoted price of the Company's
common stock.




14




The fair value of stock options is
determined at the date of grant and is charged to compensation expense over the
vesting period of the options.  The fair value of options at date of
grant was estimated using the Black-Scholes option pricing model utilizing the
following assumptions:





Three And Six-Months
                    Ended June 30, 2009Risk-fee
      interest rate
                  
                  
                  1.88
                  %Expected
      option life in years
                  
                  
                  5Expected
      stock price volatility
                  
                  
                  200
                  %Expected
      dividend yield
                  
                  
                  0
                  %





The risk-free interest rate for periods
within the contractual life of the option is based on the U.S. Treasury yield
curve in effect at the time of the grant.  The expected life was
determined using the simplified method as the Company does not have sufficient
historical stock option exercise experience on which to base the expected
term.  Expected volatilities are based on historical volatility of the
Company's common stock.  The Company has not paid any dividends in the
past and does not expect to pay any in the near future.





The weighted average fair value at date
of grant for options granted during the six months ended June 30, 2009 was
$0.22.  The Company recorded $132,000of compensation expense
for the six months ended June 30, 2009.  Estimated unrecognized
stock-based compensation relating to stock options as of June 30, 2009 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 will receive 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 sells a minimum of $3,000,000 of shares of its common
stock in its current private placement offering ("Offering"), which expires
September 30, 2009, unless extended by the Company in its sole discretion, under
Rule 506 under Regulation D under the Securities Act of 1933, as amended
(“Securities Act”), the Company shall increase Zabala's annual base salary to
$250,000 and pay him a $50,000 bonus (which bonus may be increased
proportionately if the Company raises more than $3,000,000 in the Offering but
the amount of the bonus shall not be greater than $100,000).  If the
minimum amount is not raised in the Offering, Zabala's base salary remains at
$60,000.  The Offering expires September 30, 2009, unless extended by
the Company in its sole discretion.





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).




15




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 (for rental of space at 14 Wall Street, New
York, New York 10005) 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.





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.





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.





MacroMarkets is the parent company
founded by Robert Shiller, Sam Masucci and Allan Weiss in 2002 to develop
financial products and new risk management tools on assets that are difficult to
own and hedge.  Macro Financial, LLC, a FINRA member broker dealer, is
a subsidiary of MacroMarkets that provides sales and marketing support for Macro
Securities Depositor, LLC, Macro Inflation Depositor, LLC and Macro Housing
Depositor, LLC, which use proprietary product structures to deliver performance
on commodities, inflation and real estate.





11.
Subsequent Event





The
Company retained placement agents to raise equity capital in its private
placement offering ("Offering") under Rule 506 of the Securities Act of 1933, as
amended ("Securities Act") for Blackhawk pursuant to placement agent agreements
with John W. Loofbourrow Associates, Inc., Direct Access Partners, Lombardi
& Co. and Bentley Securities Corporation, respectively, dated July 8, July
20, July 27, 2009 and August 3, 2009, respectively ("Placement Agent
Agreements").  All four of these agreements contain nearly identical
terms.  The Placement Agents will solicit interest from a limited
number of potential investors who are “qualified institutional buyers” ("QIBs")
as defined under Rule 144A under the Securities Act and "accredited investors"
as defined under Regulation D under the Securities Act in connection with
raising equity capital for Blackhawk in the Offering.  There is no
minimum amount to be raised by the Placement Agents for the Offering and the
maximum amount is $250,000,000.  In return for the Placement Agent
services, Blackhawk will pay a Placement Agent a cash fee equal to five percent
(5%) of the purchase price ($5.00 per share) of any securities placed with a
prospective investor by a Placement Agent and purchased and paid for by the
investor.  Other than Bentley Securities Corporation, where Blackhawk
will reimburse it for any out-of-pocket expenses reasonably incurred in
connection with its placement agent agreement (provided that any such expenses
in excess of $1,000.00 requires prior approval by Blackhawk), Blackhawk does not
have to reimburse the Placement Agents for their expenses.  The
Placement Agent Agreements commenced on the date of the agreement or, in the
case of Bentley Securities Corporation, the day immediately thereafter, and
terminate on the earliest to occur of: (i) ten calendar days after written
notice is given to the Company by the Placement Agent of a potential investor
purchasing at least 50,0000,000 shares that will close on the purchase of the
shares within five calendar days of the date of such written notice; (ii) 180
calendar days from the date of the agreement or, in the case of Bentley
Securities Corporation, the day immediately thereafter; (iii) the date of
closing and funding by an investor of a subscription agreement for a minimum of
50,000,000 shares; or (iv) ten calendar days after written notice is given to
the Placement Agent by the Company that the Offering will be closed at the sole
discretion of the Company (the "Term"), provided further that with respect to
Bentley Securities Corporation, its placement agent agreement also terminates on
upon ten (10) days written notice by either party under the agreement and such
termination right is included as a new (v) within the definition of “Term.”
  The parties may extend the Term by mutual agreement.




16




The
Placement Agent Agreements also provide that for 180 calendar days from the date
of the agreement or, in the case of Bentley Securities Corporation, the day
immediately thereafter (the "Period"), the Placement Agents shall have the
non-exclusive right on behalf of the Company to solicit prospective investors
who are QIBs and/or accredited investors regarding the possible sale to such
investors of shares.  During the Period, the Placement Agents do not
have the right to conduct any other discussions on behalf of the Company
regarding any matter other than the sale of the shares to the prospective
investors.  For purposes of clarification, the Company during the
Period agreed to deal non-exclusively with the Placement Agents concerning the
sale of the shares.   The Placement Agent Agreements contain
customary indemnification and confidentiality provisions.  With the
exception of the Bentley Securities Corporation placement agent agreement, the
Company’s indemnification obligations under each agreement is limited to
$25,000.  The Placement Agent Agreements also provide that for a
period of one year from the termination date of the Placement Agent Agreements,
if a Placement Agent enters into a selling group in any subsequent securities
offerings of Blackhawk, then the Placement Agent shall receive additional
financing fees if Blackhawk sells securities to those investors previously
introduced by the Placement Agent.  The additional fees payable to the
Placement Agent will be at the same rate as any underwriting or placement fees
that are listed in any Blackhawk future offering memorandum or
prospectus.





The
Company has evaluated its activity through August 13, 2009, the date its
financial statements were issued.





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.





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
should be read in conjunction with the December 31, 2008 audited financial
statements and notes thereto included in the Company’s Form 10-K as filed with
the SEC.




17




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 June 30, 2009, net deferred tax assets aggregated
$782,000, which was fully reserved based on the likelihood of realization.





The Company's investments are carried
at fair value.  Effective January 1, 2008, the Company adopted
Statement of Financial Accounting Standard No. 157, “Fair Value Measurements”,
for investments measured at fair value on a recurring basis.  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 investment 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 June 30, 2009 and 2008, we had $2,647 and $1,436,
respectively, of interest income.





For the
six months ended June 30, 2009 and 2008, we had $7,267and $9,552, respectively,
of interest income.





General
and Administrative Expenses





For the
three months ended June 30, 2009 and 2008, general and administrative expenses
were $210,165 and $147,277, respectively, due to increases in professional fees,
compensation, and rent.





For the
six months ended June 30, 2009 and 2008, general and administrative expenses
were $602,406 and $272,195, respectively, due to increases in professional fees,
compensation, and rent.





New
Accounting Pronouncements




See Note 1 to our interim Condensed
Financial Statements for information with respect to new accounting
pronouncements.




Liquidity
and Capital Resources





From inception (April 22, 2004) through
June 30, 2009, Blackhawk funded its cash operating requirements through the sale
of its common stock and loans from an affiliated company, Concorde.




18




The net
cash proceeds from the Regulation E offerings since inception have been
$1,711,731 through June 30, 2009.





Blackhawk has a net decrease in assets
of $596,438 for the six months ended June 30, 2009, and had total net
assets of $255,538 at June 30, 2009 and to date has made one investment in an
eligible portfolio company, which is MacroMarkets, LLC.  Blackhawk
intends to raise capital through another proposed offering 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.  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 equity capital in its offering.  Since inception, Blackhawk's
operations have been principally funded by three Regulation E offerings and by
loans from Concorde.  Blackhawk is presently dependent on Concorde to
subsidize its capital and liquidity needs.  Concorde has agreed to
provide sufficient capital to Blackhawk to subsidize operational expenses to
operate through July 1, 2010.




Item
3. Quantitative and Qualitative Disclosures about Market Risk.





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





Interest
Rate Risk





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





Portfolio
Valuation





Blackhawk
intends to use the U.S. Private Equity Valuation Guidelines ("Guidelines") to
provide its managers with a framework for valuing investments in portfolio
companies at fair value and to provide greater consistency within the private
equity industry with regard to valuation.  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
4T. 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.





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 June 30, 2009.  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
on our assessment management believes that, as of June 30, 2009, the Company's
internal control over financial reporting is ineffective for two
reasons:  (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.




19




Changes in Internal Control over
Financial Reporting.  There have been no significant changes in
our internal control or in other factors that could significantly affect those
control 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 second
quarter ended June 30, 2009.





Item
5. Other Information.





This Section is not
applicable.




Item
6. Exhibits.





10.1
                Placement
      Agent Agreement dated July 8, 2009 between the Company and John W.
      Loofbourrow Associates, Inc.10.2
                Placement
      Agent Agreement dated July 20, 2009 between the Company and Direct Access
      Partners10.3
                Placement
      Agent Agreement dated July 27, 2009 between the Company and Lombardi &
      Co., Inc.10.4
                Placement
      Agent Agreement dated August 3, 2009 between the Company and Bentley
      Securities Corporation31.1
                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





20







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:
      August 13, 2009
                                    By:
                                    /s/ Craig A. ZabalaCraig
      A. Zabala, Chief Executive OfficerDate:
      August 13, 2009
                                    By:
                                    /s/ Craig A. ZabalaCraig
      A. Zabala, Acting Chief Financial
Officer









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