OMB
      APPROVALOMB
      Number:     3235-0070Expires:      July
      31, 2011Estimated
      average burdenUNITED
      STATES
                            hours
      per
response...187.50


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 September 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  ̈




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 o      
    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 filerx(Do not check if a smaller reporting
company) Smaller reporting company ̈





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





Yes          ̈                                        No         x





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





Class
                Outstanding on November 10,
      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 September 30, 2009 (unaudited)
      and December 31, 2008
                                  2Condensed
      Schedule of Investments as of September 30, 2009
    (unaudited)
                                  3Condensed
      Statements of Operations for the three and nine months ended
      September 30, 2009 (unaudited) and September 30, 2008
      (unaudited)
                                  4Condensed
      Statements of Changes in Net Assets (Liabilities) for the nine months
      ended September 30, 2009 (unaudited) and year ended December 31,
      2008
                                  5Condensed
      Statement of Stockholders' Equity (Capital Deficit) for the nine months
      ended September 30, 2009 (unaudited) and year ended December 31,
      2008
                                  6Condensed
      Statements of Cash Flows for the nine months ended
      September 30, 2009 (unaudited) and September 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.
                                  20PART
      II.
                                  OTHER
      INFORMATIONItem
      1.
                                  Legal
      Proceedings.
                                  20Item
      1A.
                                  Risk
      Factors.
                                  20Item
      2.
                                  Unregistered
      Sales of Equity Securities and Use of Proceeds.
                                  20Item
      3.
                                  Defaults
      upon Senior Securities.
                                  21Item
      4.
                                  Submission
      of Matters to a Vote of Security Holders.
                                  21Item
      5.
                                  Other
      Information.
                                  21Item
      6.
                                  Exhibits.
                                  21









BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF ASSETS AND LIABILITIES





SEPTEMBER 30,
                                      2009
                                    
                                    
                                    DECEMBER 31,
                                      2008(Unaudited)ASSETS:Investment
      at fair value (cost $250,000 and $654,025)
                                    
                                    $
                                    250,000
                                    
                                    
                                    $
                                    652,737Cash
      and cash equivalents
                                    
                                    
                                    194,919
                                    
                                    
                                    
                                    172,797Prepaid
      expenses
                                    
                                    
                                    33,994
                                    
                                    
                                    
                                    12,544TOTAL
      ASSETS
                                    
                                    $
                                    478,913
                                    
                                    
                                    $
                                    838,078LIABILITIESAccrued
      expenses
                                    
                                    $
                                    441,220
                                    
                                    
                                    $
                                    118,102TOTAL
      LIABILITIES
                                    
                                    
                                    441,220
                                    
                                    
                                    
                                    118,102NET
      ASSETSCommon
      stock, par value $0.00001 per share1,000,000,000 shares
      authorized,32,467,484shares
      issued andoutstanding in 2009 and 2008
                                    
                                    
                                    325
                                    
                                    
                                    
                                    325Additional
      paid-in capital
                                    
                                    
                                    2,106,641
                                    
                                    
                                    
                                    1,974,641Accumulated
      net investment loss
                                    
                                    
                                    (2,069,273
                                    )
                                    
                                    
                                    (1,253,702
                                    )Net
      unrealized loss on investment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (1,288
                                    )TOTAL
      NET ASSETS
                                    
                                    
                                    37,693
                                    
                                    
                                    
                                    719,976TOTAL
      LIABILITIES AND NET ASSETS
                                    
                                    $
                                    478,913
                                    
                                    
                                    $
                                    838,078NET
      ASSET VALUE PER COMMON SHARE
                                    
                                    $
                                    0.00116
                                    
                                    
                                    $
                                    0.02218





See notes
to condensed financial statements




2




BLACKHAWK
CAPITAL GROUP BDC INC.


CONDENSED
SCHEDULE OF INVESTMENTS (Unaudited)


SEPTEMBER
30, 2009





COMPANY
                                      
                                      INVESTMENT
                                      
                                      INITIAL
                                        ACQUISITION
                                        DATE
                                      
                                      SHARES
                                      
                                      
                                      COST
                                      
                                      
                                      FAIR
                                        VALUE
                                      
                                      
                                      % OF
                                        TOTAL
                                        ASSETSMacroMarkets,
      LLC.
                                      
                                      CapitalInterests
                                      
                                      1/21/09
                                      
                                      
                                      624,432
                                      
                                      
                                      $
                                      250,000
                                      
                                      
                                      $
                                      250,000
                                      
                                      
                                      
                                      52.2
                                      %$
                                      250,000
                                      
                                      
                                      $
                                      250,000





See notes
to condensed financial statements




3




BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF OPERATIONS


(Unaudited)





THREE MONTHS ENDED
                            SEPTEMBER 30,
                          
                          
                          NINE MONTHS ENDED
                            SEPTEMBER 30,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008INVESTMENT
      INCOME:Interest
      income
                          
                          $
                          131
                          
                          
                          $
                          3,275
                          
                          
                          $
                          6,099
                          
                          
                          $
                          12,827TOTAL
      INVESTMENT INCOME
                          
                          
                          131
                          
                          
                          
                          3,275
                          
                          
                          
                          6,099
                          
                          
                          
                          12,827EXPENSES:Compensation
                          
                          
                          31,124
                          
                          
                          
                          -
                          
                          
                          
                          206,925
                          
                          
                          
                          -Professional
      fees
                          
                          
                          140,317
                          
                          
                          
                          53,490
                          
                          
                          
                          499,358
                          
                          
                          
                          304,929Consulting
      Fees
                          
                          
                          16,250
                          
                          
                          
                          -
                          
                          
                          
                          16,250
                          
                          
                          
                          -Advisory
      fees
                          
                          
                          2,188
                          
                          
                          
                          3,115
                          
                          
                          
                          12,030
                          
                          
                          
                          6,882Rent-related
      party
                          
                          
                          12,000
                          
                          
                          
                          -
                          
                          
                          
                          36,000
                          
                          
                          
                          -Filing
      fees
                          
                          
                          2,236
                          
                          
                          
                          1,576
                          
                          
                          
                          21,076
                          
                          
                          
                          7,378Insurance
                          
                          
                          14,516
                          
                          
                          
                          5,127
                          
                          
                          
                          26,476
                          
                          
                          
                          15,724Other
                          
                          
                          633
                          
                          
                          
                          104
                          
                          
                          
                          3,555
                          
                          
                          
                          694TOTAL
      EXPENSES
                          
                          
                          219,264
                          
                          
                          
                          63,412
                          
                          
                          
                          821,670
                          
                          
                          
                          335,607NET
      INVESTMENT LOSS
                          
                          
                          (219,133
                          )
                          
                          
                          (60,137
                          )
                          
                          
                          (815,571
                          )
                          
                          
                          (322,780
                          )UNREALIZED
      GAIN (LOSS) ON INVESTMENTS
                          
                          
                          1,288
                          
                          
                          
                          2,943
                          
                          
                          
                          1,288
                          
                          
                          
                          (4,944
                          )NET
      DECREASE IN ASSETS RESULTING FROM OPERATIONS
                          
                          $
                          (217,845
                          )
                          
                          $
                          (57,194
                          )
                          
                          $
                          (814,283
                          )
                          
                          $
                          (327,724
                          )LOSS
      PER COMMON SHARE, BASIC AND DILUTED
                          
                          $
                          (0.00671
                          )
                          
                          $
                          (0.00177
                          )
                          
                          $
                          (0.02508
                          )
                          
                          $
                          (0.01026
                          )WEIGHTED
      AVERAGE SHARES OUTSTANDING,BASIC AND
      DILUTED
                          
                          
                          32,467,484
                          
                          
                          
                          32,382,701
                          
                          
                          
                          32,467,484
                          
                          
                          
                          31,933,241







See notes
to condensed financial statements




4




BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF CHANGES IN NET ASSETS (LIABILITIES)







NINE MONTHS
                                  ENDED
                                  SEPTEMBER 30,
                                  2009
                                
                                
                                YEAR ENDED
                                  DECEMBER 31, 2008(Unaudited)DECREASE
      IN NET ASSETS FROM OPERATIONSNet
      investment loss
                                
                                $
                                (815,571
                                )
                                
                                $
                                (405,089
                                )Unrealized
      (gain) loss on investments
                                
                                
                                1,288
                                
                                
                                
                                (6,501
                                )NET
      DECREASE IN NET ASSETSRESULTING FROM
      OPERATIONS
                                
                                
                                (814,283
                                )
                                
                                
                                (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
                                
                                
                                (682,283
                                )
                                
                                
                                757,211NET
      ASSETS (LIABILITIES) - BEGINNING OF PERIOD
                                
                                
                                719,976
                                
                                
                                
                                (37,235
                                )NET
      ASSETS - END OF PERIOD
                                
                                $
                                37,693
                                
                                
                                $
                                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
                      
                      
                      (814,283
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      
                      
                      
                      
                      1,288
                      
                      
                      
                      (815,571
                      )Stock-based
      compensation
                      
                      
                      132,000
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      132,000Balance-September 30,2009
      (unaudited)
                      
                      $
                      37,693
                      
                      
                      
                      32,467,484
                      
                      
                      $
                      325
                      
                      
                      $
                      2,106,641
                      
                      
                      $
                      -
                      
                      
                      $
                      (2,069,273
                      )





See notes
to condensed financial statements




6




BLACKHAWK
CAPITAL GROUP BDC INC.





CONDENSED
STATEMENTS OF CASH FLOWS





(Unaudited)





NINE MONTHS ENDED SEPTEMBER 30,2009
                        
                        
                        2008CASH
      FLOWS FROM OPERATING AND INVESTING ACTIVITIES:Net
      investment loss and decrease in net assets resulting from
      operations
                        
                        $
                        (814,283
                        )
                        
                        $
                        (327,724
                        )Adjustments  to
      reconcile net investment loss and decrease in net assets to net cash
      provided by (used in) operating activities:Unrealized
      gain on investments
                        
                        
                        (1,288
                        )
                        
                        
                        (269
                        )Stock
      Based Compensation
                        
                        
                        132,000Change
      in operating assets and liabilities:Increase
      (decrease) in accrued expenses
                        
                        
                        323,119
                        
                        
                        
                        (5,126
                        )Increase
      in prepaid expenses
                        
                        
                        (21,450
                        )
                        
                        
                        (148,486
                        )Purchase
      of Investments
                        
                        
                        (250,000
                        )
                        
                        
                        (1,619,737
                        )Proceeds
      from sale and redemption of investments
                        
                        
                        654,024
                        
                        
                        
                        1,278,000NET
      CASH PROVIDED BY (USED IN) OPERATING AND INVESTING
    ACTIVITIES
                        
                        
                        22,122
                        
                        
                        
                        (823,342
                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Offering
      costs
                        
                        
                        -
                        
                        
                        
                        (129,311
                        )Proceeds
      from the issuance of stock
                        
                        
                        -
                        
                        
                        
                        1,298,112NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        -
                        
                        
                        
                        1,168,801NET
      INCREASE IN CASH
                        
                        
                        22,122
                        
                        
                        
                        345,459CASH
      AND EQUIVALENTS – BEGINNING OF PERIOD
                        
                        
                        172,797
                        
                        
                        
                        4,450CASH
      AND EQUIVALENTS – END OF PERIOD
                        
                        $
                        194,919
                        
                        
                        $
                        349,909







See notes
to condensed financial statements




7




BLACKHAWK
CAPITAL GROUP BDC INC.





NOTES TO
CONDENSED FINANCIAL STATEMENTS





SEPTEMBER
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 FASB Accounting
Standards Codification Topic 946, Financial Services - 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 decrease in net
assets from operations for the nine-month period ended September 30, 2009 of
$814,283 and total net assets of $37,693 as of September 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 (“Securities Act”), 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 October 1, 2010 to the extent that Concorde has such capital
available.  If the Company is unable to raise equity capital or if
Concorde is unable to provide sufficient capital to the Company to fund its
operational expenses, it would have an adverse impact on liquidity and
operations and the Company may be unable to continue as a going
concern.  The financial statements have been prepared on a going
concern basis and do not reflect any adjustments that might result from the
outcome of this uncertainty.




8




Revenue
recognition





·
            Unrealized
      gain and losses resulting from the change in the valuation of investments
      are reflected in the condensed statement of
  operations.





·
            Interest
      income is recorded on the accrual
basis.





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




Use
of Estimates





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 June 2009, the FASB issued
Accounting Standards Codification ("ASC" or "Codification") ASC 105 (FAS No.
168), "Hierarchy of Generally Accepted Accounting Principles - a replacement of
FASB Statement No. 162."  FAS No. 168 replaces FAS No. 162, "The
Hierarchy of Generally Accepted Accounting Principles" and establishes the FASB
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 additional authoritative GAAP for SEC registrants.  ASC 105
is effective for interim and annual reporting periods ending after September 15,
2009.  The Company adopted ASC 105 in September 2009. All references
made by the Company to GAAP in its consolidated financial statements use the new
Codification numbering system.  The Codification does not change or
alter existing GAAP and, therefore, did not have any impact on the Company's
condensed financial position and results of operations.





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
September 30, 2009 and 2008:




9




Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareThree
      Months Ended September 30, 2009Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (217,845
                  )
                  
                  
                  32,467,484
                  
                  
                  $
                  (0.00671
                  )





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareThree
      Months Ended September 30, 2008Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (57,194
                  )
                  
                  
                  32,382,701
                  
                  
                  $
                  (0.00177
                  )





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





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareNine
      Months Ended September 30, 2009Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (814,283
                  )
                  
                  
                  32,467,484
                  
                  
                  $
                  (0.02508
                  )





Net Loss
                  
                  
                  Weighted
                    Average Shares
                  
                  
                  Per ShareNine
      months ended September 30, 2008Basic
      and diluted loss per share - Loss available to common
      stockholders
                  
                  $
                  (327,724
                  )
                  
                  
                  31,933,241
                  
                  
                  $
                  (0.01026
                  )





For the three and nine months ended
September 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.





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.




10




As of September 30, 2009, net deferred
tax assets aggregated approximately $881,000, 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 September 30, 2009 and
December 31, 2008, the Company has not recorded any unrecognized tax
benefits.  The Company’s policy is to recognize accrued interest and
penalties in general and administrative expense.





The tax years 2006 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 the accounting topics for investments measured at fair value on a
recurring basis included in FASB ASC 820 “Fair Value Measurements and
Disclosures,” which 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.





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.




11




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)September
      30, 2009:Financial
      AssetsMembership
      interest in LLC
                
                $
                250,000
                
                
                $
                —
                
                
                $
                —
                
                
                $
                250,000Total
      Financial Assets
                
                $
                250,000
                
                
                $
                —
                
                
                $
                —
                
                
                $
                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
nine months ended September 30, 2009:





Membership Interest In LLCBalance
      as of January 1, 2009
                  
                  $
                  —Purchases
                  
                  
                  250,000Balance
      as of September 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 nine months ended September
30, 2009 amounted to $12,000 and $36,000, respectively.





5.
INVESTMENT ADVISORY AGREEMENTS





Pursuant to an investment advisory
management agreement dated October 31, 2006, Blackhawk engaged Barak Asset
Management, LLC (“Barak”), a Delaware limited liability company who is an
investment adviser registered under the Investment Advisers Act of 1940
(“Advisers Act”), to serve as an investment adviser to Blackhawk and manage its
portfolio of investments.  The agreement is for a one-year term and
extendable for one year periods.  The 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.





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).




12




For the three and nine months ended
September 30, 2009, the Company incurred fees in the amount of $2,188 and
$12,030, respectively, and $3,115 and 6,882, 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 September 30, 2009, the Company had not incurred any
liability to Mr. Tull.





6.
ACCRUED EXPENSES





Accrued expenses at September 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 nine months ended September 30, 2009 and 2008, and
the year ended December 31, 2008.





NINE MONTHS ENDED
                        SEPTEMBER 30, 2009
                        (unaudited)
                      
                      
                      NINE MONTHS ENDED
                        SEPTEMBER 30, 2008
                        (unaudited)
                      
                      
                      YEAR ENDED
                        DECEMBER 31,
                        2008Per
      Share Data:Net
      asset value – beginning of period
                      
                      $
                      0.02218
                      
                      
                      $
                      (0.00119
                      )
                      
                      $
                      (0.00119
                      )Net
      investment loss *
                      
                      
                      (0.02512
                      )
                      
                      
                      (0.01011
                      )
                      
                      
                      (0.01263
                      )Issuance
      of common stock
                      
                      
                      -
                      
                      
                      
                      1.00000
                      
                      
                      
                      1.00000Net
      realized and unrealized gain (loss)**
                      
                      
                      0.00410
                      
                      
                      
                      (0.96394
                      )
                      
                      
                      (0.96400
                      )Net
      asset value – end of period
                      
                      $
                      0.00116
                      
                      
                      $
                      0.02476
                      
                      
                      $
                      0.02218Total
      return based on net asset value ***
                      
                      
                      (95
                      )%
                      
                      
                      (849
                      )%
                      
                      
                      (1,061
                      )%Common
      shares outstanding – end of period
                      
                      
                      32,467,484
                      
                      
                      
                      32,467,484
                      
                      
                      
                      32,467,484Ratio/Supplemental
      Data:Net
      assets – end of period
                      
                      $
                      37,693
                      
                      
                      $
                      803,842
                      
                      
                      $
                      719,976Ratio
      of net investment loss to average net assets****
                      
                      
                      (294
                      )%
                      
                      
                      (108
                      )%
                      
                      
                      (88
                      )%Ratio
      of operating expenses to average net assets****
                      
                      
                      296
                      %
                      
                      
                      112
                      %
                      
                      
                      91
                      %





*
            Calculated
      based on weighted average shares outstanding during
  period.




13




**
            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.





***
            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 by regarding stock-based compensation expense in the statement of
operations over the vesting period based on the fair value of the award at the
grant date.





The following table summarizes activity
under the Company's stock option plans for the nine months ended September 30,
2009:





Shares Under
                  Options
                
                
                Weighted Average
                  Exercise Price
                
                
                Remaining
                  Contractual Life
                  (In Years)
                
                
                Aggregate
                  Intrinsic ValueOutstanding
      at beginning of period
                
                
                —
                
                
                
                —Grants
                
                
                600,000
                
                
                $
                0.40Exercised
                
                
                —
                
                
                
                —Forfeited
                
                
                —
                
                
                
                —Outstanding
      at end of period
                
                
                600,000
                
                
                $
                0.40
                
                
                
                9.33
                
                
                
                —Exercisable
      at end of period
                
                
                600,000
                
                
                $
                0.40
                
                
                
                9.33
                
                
                
                —





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 September 30, 2009, there were no options outstanding to
purchase shares with an exercise price below the quoted price of the Company's
common stock.





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:




14




Nine-Months Ended
                        September 30, 2009Risk-free
      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 nine months ended September 30, 2009 was
$0.22.  The Company recorded $132,000of compensation expense
for the nine months ended September 30, 2009.  Estimated unrecognized
stock-based compensation relating to stock options as of September 30, 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
December 31, 2009, unless extended by the Company in its sole discretion, under
Rule 506 under Regulation D under the 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
December 31, 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).





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.




15




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





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





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.





Placement Agent
Agreements.  The Company retained placement agents to raise
equity capital in its private placement offering ("Offering") under Rule 506 of
the Securities Act for Blackhawk pursuant to placement agent agreements with
John W. Loofbourrow Associates, Inc., Direct Access Partners, Lombardi &
Co., Bentley Securities Corporation and Growthink Securities, Inc.,
respectively, dated July 8, July 20, July 27, 2009, August 3, 2009, and August
21, 2009, respectively ("Placement Agent Agreements").  All five 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 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 (two years for the agreement with Growthink Securities, Inc.)
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 entered into a consultation agreement dated August 21, 2009 ("Consulting
Agreement") with Growthink, Incorporated, a Delaware corporation and affiliate
of Growthink Securities, Inc. ("Consultant").  Pursuant to the
Consulting Agreement, Consultant will provide to the Company research, analysis
and data relating to business development company ("BDC") and hedge fund
investments, and include coverage and analysis of similar BDC's and hedge funds,
as well as data on targeted investments.  Consultant will also
syndicate its research and analysis reports into coverage channels to individual
and institutional investors.  Consultant will prepare and distribute
in the appropriate investment channels a research report on the
Company.  Consultant may not release any research or report without
(i) the Company's consent and (ii) during the period of the Company’s private
placement offering.




The
Company paid Consultant $25,000 upon execution of the Consulting Agreement and
must pay it $25,000 every sixty (60) days thereafter unless either party
terminates the agreement upon seven (7) days notice.  The term of the
Consulting Agreement is sixty (60) days, and thereafter for a total of eight (8)
months.  It is automatically renewed thereafter in sixty (60) day
increments until terminated in writing by either party upon seven (7) calendar
days advance written notice.




In the
Consulting Agreement, the Company provides Consultant with indemnification
against certain specified losses.  The Consulting Agreement also
provides that no research or report may be released by the Consultant without
the consent of the Company and review by its legal counsel.




The
Company has evaluated its activity through November 10, 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.




17




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.




Blackhawk had a decrease in net assets
from operations of $814,283 for the nine months ended September 30, 2009,
and had total net assets of $37,693 at September 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 October 1, 2010 to the extent Concorde has such funds.  If the
Company is unable to raise equity capital or if Concorde is unable to provide
sufficient capital to the Company to fund its operational expenses, it would
have an adverse impact on liquidity and operations and the Company may be unable
to continue as a going concern.  The financial statements have been
prepared on a going concern basis and do not reflect any adjustments that might
result from the outcome of this uncertainty.




Use
of Estimates in the Preparation of Financial Statements





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





We recognize deferred tax assets and
liabilities based on the differences between the financial statement carrying
amounts and the tax bases of assets and liabilities.  We regularly
review our deferred tax assets for recoverability and establish a valuation
allowance based upon historical losses, projected future taxable income and the
expected timing of the reversals of existing temporary
differences.  As of September 30, 2009, net deferred tax assets
aggregated $881,000, which was fully reserved based on the likelihood of
realization.





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




Portfolio
and Investment Activity





Blackhawk
did not make any portfolio 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.




18




Results
of Operations





Investment
Income





For the
three months ended September 30, 2009 and 2008, we had $131 and $3,275,
respectively, of interest income.





For the
nine months ended September 30, 2009 and 2008, we had $6,099 and $12,827,
respectively, of interest income.





General
and Administrative Expenses





For the
three months ended September 30, 2009 and 2008, general and administrative
expenses were $219,264 and $63,412, respectively, due to increases in
professional and consulting fees, compensation, insurance and rent.





For the
nine months ended September 30, 2009 and 2008, general and administrative
expenses were $821,670 and $335,607, 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
September 30, 2009, Blackhawk funded its cash operating requirements through the
sale of its common stock and loans from an affiliated company,
Concorde.





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





Blackhawk had a decrease in net assets
from operations of $814,283 for the nine months ended September 30, 2009,
and had total net assets of $37,693 at September 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 October 1, 2010 to the extent Concorde has such funds.  If the
Company is unable to raise equity capital or if Concorde is unable to provide
sufficient capital to the Company to fund its operational expenses, it would
have an adverse impact on liquidity and operations and the Company may be unable
to continue as a going concern.




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.




19




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 September 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
September 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.





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




PART
II.  OTHER INFORMATION





Item
1.  Legal Proceedings.





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





Item
1A. Risk Factors





This Section is not
applicable.





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





This
Section is not applicable.




20




Item
3.  Defaults upon Senior Securities.





This
Section is not applicable.




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





There
were no matters submitted to a vote of security holders during the third quarter
ended September 30, 2009.





Item
5.  Other Information.





This Section is not
applicable.




Item
6.  Exhibits.





10.1
                
                Placement
      Agent Agreement dated August 21, 2009 between the Company and Growthink
      Securities Inc.10.2
                
                Consultation
      Agreement dated August 21, 2009 between the Company and Growthink,
      Incorporated31.1
                
                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




21





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:
      November 10, 2009
                        By:
                        /s/ Craig A. ZabalaCraig
      A. Zabala, Chief Executive OfficerDate:
      November 10, 2009
                        By:
                        /s/ Craig A. ZabalaCraig
      A. Zabala, Acting Chief Financial Officer




22