BLACKHAWK CAPITAL GROUP BDC INC - FORM 10-K

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EX-31.1 - BLACKHAWK CAPITAL GROUP BDC INC	v179521_ex31-1.htm
EX-10.20 - BLACKHAWK CAPITAL GROUP BDC INC	v179521_ex10-20.htm
EX-10.19 - BLACKHAWK CAPITAL GROUP BDC INC	v179521_ex10-19.htm
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EX-31.2 - BLACKHAWK CAPITAL GROUP BDC INC	v179521_ex31-2.htm
EX-32.2 - BLACKHAWK CAPITAL GROUP BDC INC	v179521_ex32-2.htm
EX-32.1 - BLACKHAWK CAPITAL GROUP BDC INC	v179521_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2009

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 incorporation or organization)		(I.R.S. Employer Identification Number)

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

(646) 833-1030

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.00001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No x

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 12 months (or for such shorter period that the registrant was required to submit and most such files). Yes o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Large accelerated filer o Accelerated filer o

Non-accelerated filer (Do not check if a smaller reporting company) x

Smaller reporting company o

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

Yes o No x

The aggregate market value of the registrant's common stock, $0.00001 par value per share, held by non-affiliates of the registrant on June 30, 2009, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $2,112,764 (based on $.13, the closing ask price of the registrant's common stock on that date -- no sales of shares were made on that date). Shares of the registrant's common stock held by each officer and director and each person who owns 5% or more of the outstanding common stock of the registrant are not included in that amount, because such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of March 30, 2010, 32,467,484 shares of the registrant's common stock, $0.00001 par value per share, were issued and outstanding.

TABLE OF CONTENTS

GENERAL NOTE

PART I

Item 1.	Business	2
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	34
Item 2.	Properties	34
Item 3.	Legal Proceedings	35
Item 4.	Submission of Matters to a Vote of Security Holders	35

PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities	35
Item 6.	Selected Financial Data	37
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	37
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 8.	Financial Statements and Supplementary Data	42
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	42
Item 9A.	Controls and Procedures	42
Item 9A(T).	Controls and Procedures	43
Item 9B.	Other Information	44

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	44
Item 11.	Executive Compensation	49
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
Item 13.	Certain Relationships And Related Transactions and Director Independence	62
Item 14.	Principal Accounting Fees and Services	64

PART IV
Item 15.	Exhibits and Financial Statement Schedules	65

PART I

Forward Looking Statements

The matters discussed in this section and in certain other sections of this Form 10-K contain forward-looking statements within the meaning of Section 21D of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and Section 27A of the Securities Act of 1933, as amended ("Securities Act"), that involve risks and uncertainties. All statements other than statements of historical information provided herein may be deemed to be forward-looking statements. Without limiting the foregoing, the words "may", "will", "could", "should", "intends", "thinks", "believes", "anticipates", "estimates", "plans", "expects", or the negative of such terms and similar expressions are intended to identify assumptions and uncertainties which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Report. The following cautionary statements identify important factors that could cause Blackhawk Capital Group BDC, Inc. ("Blackhawk," "we" or "Company") actual results to differ materially from those projected in the forward-looking statements made in this Report. Among the key factors that have a direct bearing on Blackhawk's results of operations include:

General economic and business conditions; the existence or absence of adverse publicity; changes in, or failure to comply with, government regulations; changes in marketing and technology; changes in political, social and economic conditions;

Success of operating initiatives; changes in business strategy or development plans; management of growth;

Availability, terms and deployment of capital;

Availability of desirable portfolio investment opportunities that meet Blackhawk's investment criteria;

Legal, administrative and accounting expenses;

Dependence on senior management; business abilities and judgment of personnel; availability of qualified personnel; labor and employee benefit costs;

Development risks; risks relating to the availability of financing, and

Other factors, including risk factors, referenced in this Report.

Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by Blackhawk, you should not place undue reliance on any such forward-looking statements. Other factors may be described from time to time in Blackhawk's other filings with the Securities and Exchange Commission ("SEC"), news releases and other communications. Further, any forward-looking statement speaks only as of the date on which it is made and Blackhawk undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for Blackhawk to predict which will arise. In addition, Blackhawk cannot assess the impact of each factor on Blackhawk's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Subsequent written and oral forward-looking statements attributable to Blackhawk or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements set forth above and contained elsewhere in this Report.

Blackhawk has been and is currently subject to the informational requirements of the Exchange Act. In accordance with those requirements, we file reports and other information with the SEC. Such reports and other information can be inspected and copied at the public reference facilities maintained by the SEC. Please call the SEC at 1-800-SEC-0330 for more information on the operation of its public reference rooms. The SEC also maintains a Web site that contains reports, proxy and information statements and other materials that are filed through the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. This Web Site can be accessed at http://www.sec.gov. Our reports and information statements and other information that we file electronically with the SEC are available on this site.

Item 1. Business

On September 20, 2004, Blackhawk filed a Form N-54A Notification with the SEC, electing to become a business development company pursuant to Section 54 of the Investment Company Act.

Blackhawk was incorporated on April 22, 2004 under the laws of the State of Delaware to engage in any lawful corporate undertaking. Blackhawk's operations to date have been limited to issuing shares to its original shareholders, organizational and administrative activities, conducting a private placement under Rule 506 under Regulation D of the Securities Act and four (4) offerings under Regulation E of the Securities Act, and making the MacroMarkets investment (see "MacroMarkets Investment" herein).

Blackhawk will attempt to locate and negotiate with eligible portfolio companies for Blackhawk to invest in, lend funds to, acquire an interest in and/or possibly manage. Blackhawk intends to offer managerial assistance to eligible portfolio companies in which it invests.

In addition to the broad investment strategy to be pursued by Blackhawk discussed herein, Blackhawk also intends to develop a strategy to invest in special purpose vehicles developing products and seeking exemptive relief to issue securities registered under the Investment Company Act and Securities Act identified with the Exchange Traded Funds ("ETFs") industry. Blackhawk may only invest in these entities if they are not investment companies under the Investment Company Act or investment advisers registered under the Investment Advisers Act. The investment strategy will be in compliance with, and consistent with, the BDC provisions of the Investment Company Act. Additionally, Blackhawk would seek to invest in ETF distribution companies focusing on the expanding ETF broker models that are not associated with the traditional mutual fund industry. Finally, Blackhawk plans to invest in companies that invest in specialized ETF focused companies seeking to establish alliance or acquisitions in traditional unit investment trusts, closed-end funds and traditional mutual fund companies that use commissions, loads and annual revenue sharing to achieve their current distribution goals. Blackhawk does not intend to invest directly in ETFs.

Blackhawk would seek to invest in companies seeking broad and generic ETF exemptive relief for specific asset classes such as equity, debt, commodities, currency and other asset classes. The Blackhawk investments would include index and active based investment strategies.

All of the above investment categories are subject to the investment restrictions in the BDC provisions of the Investment Company Act applicable to Blackhawk, including without limitation that Blackhawk not invest in an "investment company" registered under the Investment Company Act.

As a business development company ("BDC"), Blackhawk is able to raise money to acquire interests in small private businesses, as well as larger private companies, and distressed public companies as defined under the BDC provisions of the Investment Company Act. We intend to seek equity positions and on going relationships with companies offering sustainable and profitable growth. We do not intend to limit our acquisitions to a single line of business or industry.

All acquisitions will be designed to enhance shareholder value through capital appreciation and dividend payments.

Consistent with Section 58 of the Investment Company Act, we may not, unless authorized by the vote of a majority of our outstanding common stock, change the nature of our business so as to cease to be, or to withdraw our election as, a business development company. In addition, as a BDC, we will not make any significant material changes in our investment guidelines and policies without obtaining the approval of our Board of Directors.

Blackhawk may invest in a variety of securities, including bonds, convertible debentures, preferred stock and common stock. We have not set a policy as to what proportion of our assets may be invested in any type of security, nor have we set a policy regarding a potential concentration in any particular industry or group of industries.

Blackhawk will seek to render significant managerial assistance to and/or control of eligible companies. While we do not currently intend to invest as part of a group, we have not set any policy to that effect, and may determine to so invest in the future without seeking shareholder approval. We have not yet set a policy with respect to any assets that are not required to be invested in eligible portfolio companies or other companies qualifying under Section 55 of the Investment Company Act.

Consistent with its objective of long-term capital appreciation, Blackhawk will consult with its investees with respect to obtaining capital and offer managerial assistance to selected businesses that, in the opinion of our management, have a significant potential for growth.

In addition to acquiring investment positions in new and developing companies, Blackhawk may also occasionally invest in more mature privately and publicly-held companies, some of which may be experiencing financial difficulties, but which, Blackhawk believes, have potential for further development or revitalization, and which, in the long-term, could experience growth and achieve profitability.

2009 Capital Raising Efforts

The Company retained placement agents to raise equity capital in its private placement offering ("Offering") under Rule 506 of the Securities Act which commenced on March 9, 2009 pursuant to placement agent agreements with John W. Loofbourrow Associates, Inc., Direct Access Partners, LLC, Lombardi & Co., Bentley Securities Corporation and Growthink Securities, Inc., respectively, dated July 8, July 20, July 27, August 3, and August 21, 2009, respectively ("Placement Agent Agreements"). All five of these agreements contain nearly identical terms. The Placement Agents solicited 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 in the Offering. There was no minimum amount to be raised by the Placement Agents for the Offering and the maximum amount was $250,000,000. In return for the Placement Agent services, Blackhawk agreed to pay a Placement Agent a five percent (5%) placement fee for securities placed. The Placement Agent Agreements commenced on the date of the agreement or, in the case of Bentley Securities Corporation, the day immediately thereafter, and terminated 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 50,000,000 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 terminated 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 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.

On December 14, 2009, the Company determined to terminate its private placement offering under Rule 506 of Regulation D of the Securities Act, which commenced on August 25, 2009, because no shares were sold in the Offering.

On December 14, 2009, Blackhawk entered into an amendment ("Amendment") of its Placement Agent Agreement with Growthink Securities, Inc. On December 15, 2009, the Company entered into an Amendment of its Placement Agent Agreement with Bentley Securities Corporation and an Amendment of its Placement Agent Agreement with Direct Access Partners, LLC. The purpose of each Amendment was to clarify that: (a) the term "Offering" in each Placement Agent Agreement also included the Company's offering of up to 1,000,000 shares (5.00 per share) pursuant to Regulation E (the "Regulation E Offering") under the Investment Company Act and the Securities Act; (b) the term "Offering Materials" includes the Company's Form 1-Es and Offering Circulars to be filed with the Securities and Exchange Commission, and distributed to prospective investors, for the Regulation E Offering; and (c) Section 2 of each Placement Agent Agreement provides that the Placement Agent receive a ten percent (10%) placement agent fee for shares sold in the Regulation E Offering. Growthink Securities declined to participate in the Regulation E Offering.

On January 21, 2010, the Company announced that due to adverse market conditions it had not sold any shares of Common Stock in the Regulation E offering and that it was terminating its Regulation E offering.

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 agreed to 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 and other services. The Company paid Consultant $25,000 upon execution of the Consulting Agreement and agreed to 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 was 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. To date, the Company has only paid the Consultant $25,000 and does not believe that it owes any additional money to the Consultant because the Consultant failed to perform work under the Consulting Agreement. In October 2009, the Company advised the Consultant that it was terminating the Consulting Agreement because of the Consultant's failure to perform under it.

Pre-2009 Capital Transactions

Pursuant to Blackhawk's third Regulation E Offering, which commenced on November 30, 2007, Concorde sold in 2008 an aggregate of 1,298,112 shares of Common Stock, at a purchase price of $1.00 per share to nine (9) purchasers for an aggregate amount of $1,298,112. Selling commissions were $129,311, which were paid as follows: (i) $69,311 to Richard J. Kelly, prior selling agent; and (ii) $60,000 to John W. Loofbourrow Associates, Inc. ("JWL"). Blackhawk had retained JWL to act as placement agent to raise equity capital for Blackhawk pursuant to an agreement dated April 9, 2008 ("JWL Agreement") which was executed on April 14, 2008. JWL solicited interest from a limited number of potential investors who were "accredited investors" in connection with raising equity capital for Blackhawk in its third Regulation E offering. In return for JWL's services, Blackhawk paid JWL a cash fee equal to ten percent (10%) of the purchase price of securities placed by JWL. Blackhawk did not have to reimburse JWL for its expenses. The JWL Agreement had a term of sixty (60) days from the date that Blackhawk's Form 1-E (filed with the SEC) was available to be sent to prospective investors and contained customary indemnification and confidentiality provisions. The JWL Agreement also provided that for a period of up to five (5) years from the termination date of the JWL Agreement, if JWL enters into a selling group in any subsequent securities offerings of Blackhawk, then JWL shall receive additional financing fees if Blackhawk sells securities to those investors previously introduced by JWL. The additional fees payable to JWL will be at the same rate as any underwriting or placement fees that are listed in any Blackhawk future offering memorandum or prospectus. The JWL Agreement expired on June 18, 2008. The JWL Agreement was amended on June 30, 2008 ("Amendment"). The Amendment acknowledged that the JWL Agreement expired on June 18, 2008 ("Expiration Date") and that JWL was entitled to receive financing fees with respect to share purchases by investors after the Expiration Date, but were introduced to Blackhawk by JWL before the Expiration Date. In July 2008, Blackhawk sold $600,000 in shares of Common Stock from investors, introduced to it by JWL and paid $60,000 in placement fees to JWL.

Pursuant to Blackhawk's second Regulation E offering, Blackhawk sold and exchanged as of June 4, 2007 an aggregate of 502,891 shares of Common Stock at a purchase price of $1.00 per share, to four (4) accredited investors for an aggregate amount of $502,891. The sale consisted of the following: (i) 370,000 shares sold to three (3) accredited investors for the purchase price of $1.00 per share, or an aggregate of $370,000; and (ii) the issuance of 132,891 shares to Concorde, an affiliate and the largest stockholder of Blackhawk, in exchange for (a) $107,391 in a convertible note (consisting of $100,000 in principal and $7,391 in accrued and unpaid interest) owed by Blackhawk to Concorde and issued on August 1, 2006 and (b) $25,500 in a convertible note owed by Blackhawk to Concorde and issued on May 29, 2007. The conversion price for both of these notes was $1.00 per share of Common Stock. In June and July 2007, Blackhawk sold an additional 150,000 and 5,000, respectively, shares of its Common Stock for an aggregate of $155,000 in cash in its second Regulation E offering. The second offering was terminated on November 15, 2007. The aggregate net cash proceeds from the second Regulation E offering was $525,001.

On June 21, 2006, Blackhawk entered into an Exchange Agreement ("Exchange Agreement") with Concorde, the largest stockholder and affiliate of Blackhawk, pursuant to which a non-interest bearing promissory note (the "Note") issued by Blackhawk on May 3, 2006 to Concorde in the principal amount of $68,847 was exchanged for 6,884,700 shares of Common Stock of Blackhawk. The Shares are "restricted securities" as defined in Rule 144 of the Securities Act. Pursuant to the Exchange Agreement, Concorde acquired 6,884,700 shares of the Common Stock of Blackhawk in exchange for the Note. The stock was issued in the exchange at $.01 per share. This exchange took place pursuant to Section 3(a)(9) of the Securities Act as an exchange by an issuer with an existing security holder where no commission or other remuneration was paid or given to Concorde or any other party for soliciting such exchange. This transaction was approved by all of the directors of Blackhawk pursuant to action by unanimous written consent as fair and in the best interests of Blackhawk and its stockholders.

On behalf of Blackhawk, Network 1 Financial Securities, Inc. ("Network 1") submitted an application on Form 211 on July 5, 2006 to the National Association of Securities Dealers, Inc. ("NASD") to initiate quotations in the OTC Bulletin Board Service for Blackhawk's common stock, par value $.00001 per share ("Common Stock"). On August 22, 2006, the NASD issued a letter to Network 1 stating that unpriced quotations could begin on the OTC Bulletin Board on Blackhawk's Common Stock and that if Network 1 decides to enter a priced quotation (bid or offer) in the Common Stock in any quotation medium, Network 1 must supplement its filing with the Form 211. This supplemental filing must include the basis and factors for Network 1's priced quotation and be received by the NASD three days before the priced entry appears in a quotations medium. The symbol for the Common Stock is "BHCG."

Blackhawk became aware that certain of its state blue-sky filings were not correctly made in connection with its first Regulation E offering made in 2004 and 2005. To rectify this, Blackhawk made a rescission offer to its stockholders with respect to their shares of Common Stock and filed such offer with each applicable State. Before making the rescission offer, legal counsel for Blackhawk notified each applicable state's securities commission of Blackhawk's intention and submitted Blackhawk's proposed rescission offer letter for comments and approval. To date, all stockholders have either rejected the rescission offer or the thirty (30) day period which they were given to either accept or reject the rescission offer has expired. Blackhawk also has made post-rescission offer filings which were requested by each applicable state.

Blackhawk has engaged Barak Asset Management, LLC ("Barak"), a New York limited liability company, and an investment adviser registered under the Investment Advisers Act of 1940, as amended ("Investment Advisers Act"), to serve as an investment adviser to Blackhawk and manage its portfolio of investments. Barak was formed by Sharon Highland in 2006. From 2002 to 2006, Ms. Highland was Director of Product Development and Management in the Private Client Group for managed accounts, open and closed-end funds at BlackRock. From 1997 to 2002, she was Senior Vice President and Head of Wrap Fee Investments at PIMCO Allianz. Barak’s engagement is pursuant to an investment advisory management agreement dated October 31, 2006, with a one-year term (extendable for one year periods) subject to Blackhawk's right to terminate upon sixty (60) days notice, and has fees ranging from 0.50% to 1.80% of assets managed. The term of this agreement was extended to October 31, 2010. Barak will manage assets of Blackhawk on a non-exclusive basis consistent with Blackhawk's BDC investment guidelines and policies and consistent with the BDC provisions under the Investment Company Act of 1940. Barak was paid fees by Blackhawk of $16,738 for its work in 2009.

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 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.

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 MacroShares Housing Depositor, LLC, which use proprietary product structures to deliver performance on commodities, inflation and real estate.

MacroMarkets holds patents for MacroShares®, an exchange-traded product family whose unique structure can be applied to asset classes that can be reliably indexed. MacroMarkets was a key catalyst in launching the U.S. house price futures and options markets on the Chicago Mercantile Exchange (CME) in 2006, and with their partners at Fiserv Inc. and Standard & Poors, in establishing the S&P/Case-Shiller Home Price Indices as the globally recognized benchmark for U.S. home prices. Robert Shiller and Chip Case co-founded Case-Shiller Home Price Indexes based on the fundamental designs of the S&P 500 equity index. Sam Masucci, the CEO of MacroMarkets, and Robert Shiller, the Chief Economist of MacroMarkets, are currently working on additional products in the real estate market.

Relationship With Concorde and Other Matters

As of the date of this Form 10-K, Blackhawk has the following affiliated relationships with Concorde:

Concorde owns 10,317,681 shares of Common Stock of Blackhawk, representing 31.78% of the outstanding shares of Common Stock of Blackhawk;

Provided Concorde has sufficient funds available, it will provide funds to Blackhawk through January 1, 2011 if Blackhawk is unable to raise sufficient proceeds from an equity offering or offerings and operations;

Concorde provides office space and secretarial assistance to Blackhawk for which, commencing on January 1, 2009, Blackhawk has been invoiced by Concorde $4,000 per month for such sublease of space; Blackhawk paid Concorde $48,000 under this arrangement as of December 31, 2009; and

Craig A. Zabala, Chairman, President and Chief Executive Officer of Blackhawk, also holds such positions with Concorde and owns 62.42% of Concorde's outstanding shares of Common Stock.

From inception (April 22, 2004) through December 31, 2009, Blackhawk funded its cash operating requirements through the sale of its common stock and loans from Concorde.

During 2006, Blackhawk borrowed $133,005 from Concorde to fund the formation of Blackhawk, offering costs for its first two Regulation E offerings and operating expenses. Of the amount borrowed in 2006, $100,000 was evidenced by a demand convertible note bearing interest at 8.25% per annum convertible after November 1, 2006 into common stock of Blackhawk at a price of $1.00 per share or the price per share of Blackhawk's second Regulation E offering. The balance of borrowings were non-interest bearing and were due on demand. The borrowings were approved unanimously by the Board of Directors of Blackhawk as fair and in the best interest of Blackhawk.

On May 29, 2007, Blackhawk issued a convertible note in the principal amount of $25,500 ("Note") to Concorde. The Note evidenced a loan from Concorde to Blackhawk for advances of $17,500 during the nine months ended September 30, 2007 together with $8,000 of advances made to Blackhawk prior to January 1, 2007. The advances were used to fund a portion of expenses incurred by Blackhawk consisting of legal fees and expenses, accounting fees and expenses, general and administrative expenses. The Note was repayable upon demand and does not bear interest. The Note was convertible into shares of common stock of Blackhawk at a conversion rate of one share of common stock per $1.00 of principal amount of Note converted, the price per share in Blackhawk's second Regulation E offering. The transaction was approved by unanimous written consent of the Board of Directors of Blackhawk as being fair and in the best interests of Blackhawk. On June 4, 2007, pursuant to the terms of the Note, Concorde converted the $25,500 principal amount of the note into 25,500 shares of Common Stock at $1.00 of principal amount of Note converted, the price per share in Blackhawk's second Regulation E offering.

At December 31, 2009 and 2008, there were no outstanding amounts due to Concorde.

For the year ended December 31, 2009, Blackhawk has a decrease in net assets resulting from operations of $986,472 and total net liabilities of $134,496.

On June 21, 2006, Blackhawk entered into an Exchange Agreement ("Exchange Agreement") with Concorde, pursuant to which a promissory note (the "Note") issued by Blackhawk on May 3, 2006 to Concorde in the principal amount of $68,847 was exchanged for 6,884,700 shares ("Shares") of Common Stock of Blackhawk. The Shares are "restricted securities" as defined in Rule 144 of the Securities Act. The stock was issued in the exchange at $.01 per share, the price per share in Blackhawk's first Regulation E offering. This exchange took place pursuant to Section 3(a)(9) of the Securities Act as an exchange by an issuer with an existing security holder where no commission or other remuneration was paid or given to Concorde or any other party for soliciting such exchange. This transaction was approved by all of the directors of Blackhawk pursuant to action by unanimous written consent as fair and in the best interests of Blackhawk and its stockholders.

Concorde converted a portion of amount due from Blackhawk totalling $61,432 into 6,143,200 shares of Common Stock at the offering price of $.01 per share in 2005.

On April 23, 2004, Blackhawk issued 8,500,000 shares of Series A preferred stock and 11,000,000 shares of common stock to its founders at $.00001 per share for a total of $195. Between September 27, 2004 and December 31, 2005, Blackhawk sold 17,126,781 shares of its common stock at $.01 per share for a total of $171,267.81. These shares were sold pursuant to Blackhawk's first Regulation E offering. On November 9, 2005, the board of directors rescinded the issuance of shares of preferred stock to Concorde. Blackhawk refunded to Concorde the $85 that Concorde paid for the shares. Concorde waived any rights it may have had against Blackhawk in connection with the issuance and stated that it will not assert any claim against Blackhawk. On November 12, 2005, certain investors returned 4,500,000 shares of common stock and were refunded $45 on March 22, 2006. Each investor waived any rights he or she may have had against Blackhawk in connection with the issuance and agreed that he or she would not assert any claim against Blackhawk. On November 29, 2005, Blackhawk amended its Certificate of Incorporation in the State of Delaware to eliminate the right to issue preferred shares.

Item 1A. Risk Factors

No Fixed Investment Policy; Limited Investments to Date

We have no fixed policy as to the business or industry group in which we may invest or as to the amount or type of securities or assets that we may acquire. To date, we have not made any investments in a portfolio company except for the MacroMarkets investment described above, which was made in January 2009. Blackhawk has invested the net proceeds from its second and third Regulation E Offerings received to date in cash equivalents, investments with maturity dates of less than one year, and in the MacroMarkets investment. During 2009 Blackhawk was unable to sell any of its shares in a private placement offering under Rule 506 under the Securities Act and a fourth Regulation E Offering. We seek to assist our investee companies and their management teams in devising realistic business strategies and obtaining necessary financing.

There Is Substantial Doubt About Our Ability To Continue As A Going Concern

Our independent public accounting firm has issued an opinion on our financial statements that states that the financial statements were prepared assuming we will continue as a going concern and further states that our inability to raise equity capital, or if Concorde is unable to provide sufficient capital to the Company to sustain our operations, raises substantial doubt about our ability to continue as a going concern. If we fail to raise equity capital or obtain sufficient funds from Concorde, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code.

Investors May Lose Their Entire Investment In Any Offering

Investing in the common shares of the Company is highly risky. The Company cannot assure an investor that it will raise adequate capital. Investors may lose all of any investment in such common shares.

Management's Lack of BDC Experience

Management of the Company, including Craig A. Zabala, Chairman of the Board, President and Chief Executive Officer, and acting Chief Compliance Officer and Chief Financial Officer of the Company, have no experience in BDC investing and no BDC operations experience. There is no guarantee that management of the Company will be able to meet the regulatory requirements under the Investment Company Act applicable to BDCs on behalf of the Company.

A Failure on Our Part to Maintain Our Status as a BDC Would Significantly Reduce Our Operating Flexibility

If we do not continue to qualify as a BDC, we might be regulated as a non-BDC closed-end investment company under the Investment Company Act, which would significantly decrease our operating flexibility.

Our Ability to Grow Will Depend on Our Ability to Raise Capital

Blackhawk has raised in its three Regulation E offerings only $1,711,731, net of expenses of $221,218, in equity capital and had borrowed $255,779 from Concorde, the largest stockholder of Blackhawk of which $255,779 along with $7,391 of accrued interest was converted into 13,160,791 shares of common stock by Concorde. On May 29, 2007, Blackhawk issued a convertible note in the principal amount of $25,500 to Concorde. This amount was converted into shares of Common Stock in Blackhawk's second Regulation E Offering at the exchange rate of $1.00 per share (25,500 shares). We can provide you with no assurance that we will be able to raise money in future equity offerings given difficult market conditions. During 2009 Blackhawk was unable to sell any shares of Common Stock in its private placement offering and fourth Regulation E Offering. We will need to periodically access the equity markets to raise cash to fund new investments. An inability to successfully access the equity markets could limit our ability to grow our business and fully execute our business strategy. We cannot assure you that we will be able to raise adequate capital in the future.

Fluctuation in Net Asset Value (NAV) of Common Stock

Blackhawk's net asset value (NAV) of its common stock as of December 31, 2009 was ($134,496) or ($0.00414) per share. The NAV has fluctuated over the past four (4) years and was negative at the end of 2009, 2007 and 2006. There are material risks associated with the changes in Blackhawk's NAV and the fact that it has been negative during such periods. These risks are: (i) Blackhawk may be insolvent or bankrupt due to negative NAV; (ii) fluctuations in NAV may not be reflected in the price of the Common Stock in the market place and the price of the Common Stock may be at a premium or discount to NAV; and (iii) when Blackhawk purchases assets in a portfolio investment, NAV may reflect this as a liability and not an asset.

Blackhawk Not Having Sufficient Funds For Expenses of Regulatory Compliance Under Investment Company Act

If Blackhawk does not raise sufficient net proceeds in its common stock offerings or operations, or is unable to borrow sufficient funds from its controlling shareholder Concorde, it may not have sufficient funds for paying for the expenses of regulatory compliance under the Investment Company Act.

Our Ability to Enter into Transactions With our Affiliates will be Restricted

We will be prohibited under the Investment Company Act from participating in certain transactions with certain of our affiliates without the prior approval of a majority of the independent members of our Board of Directors and, in some cases, the SEC. Any person that owns, directly or indirectly, five percent (5%) or more of our outstanding voting securities will be our affiliate for purposes of the Investment Company Act and we will generally be prohibited from buying or selling any securities from or to such affiliate, absent the prior approval of our Board of Directors. The Investment Company Act also prohibits certain "joint" transactions with certain of our affiliates, which could include investments in the same portfolio company (whether at the same or different times), without prior approval of our Board of Directors and, in some cases, the SEC. If a person acquires more than 25% of our voting securities, we will be prohibited from buying or selling any security from or to such person or certain of that person's affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates.

Concorde's Ownership of Blackhawk Common Stock; Affiliates, Conflicts of Interest

As of the date of this Form 10-K, Concorde owns 10,317,681 shares of Blackhawk Common Stock, representing 31.78% of the outstanding shares of Common Stock. Craig A. Zabala, Chairman and President of Concorde, is also Chairman and President of Blackhawk, and controls Concorde through his 62.42% stock ownership of Concorde. He also owns or controls 2,432,500 shares of Blackhawk Common Stock, representing 7.49% of the outstanding shares of Blackhawk Common Stock. Concorde and Zabala may be deemed to control Blackhawk. The Investment Company Act regulates affiliate transactions. See "Our Ability to Enter into Transactions With Our Affiliates will be Restricted" above. Conflicts of interest may arise between Concorde and Blackhawk for business and investment opportunities and other matters. Any conflicts of interest will be resolved by a board committee of Blackhawk directors consisting of only independent Blackhawk directors.

Reliance on Strong Management Teams of Investee Companies

Blackhawk believes that it will be most likely to succeed in its investment strategies if its prospective investee companies have strong management teams. Generally, Blackhawk intends to focus as much or more on finding and supporting business executives who have the ability, entrepreneurial motivation and experience required to build independent companies with a significant potential for growth, as it will on identifying, selecting and financing investment opportunities based on promising ideas, products or marketing strategies. Consistent with this belief, Blackhawk believes it will be able to provide investee companies with managerial assistance. For example, we intend to encourage our investee companies to afford their management teams opportunities for meaningful equity participation and assist them in planning means to accomplish this result.

Start-up Operations; No Cash Dividend Payments to Date; Possibility of Substantial Losses

Blackhawk has never paid cash dividends nor does it have any present intent to do so.

Business development is by nature a high-risk activity that often results in substantial losses. The companies in which Blackhawk intends to invest often lack effective management, face operating problems and have incurred substantial losses. Potential investees include established businesses which may be experiencing severe financial or operating difficulties or may, in the opinion of their management, be managed ineffectively and yet have the potential for substantial growth or for reorganization into separate independent companies.

Blackhawk will attempt to reduce the level of its investment risks through one or more of the following factors:

carefully investigating potential investees;

financing only what it believes to be practical business opportunities, as contrasted to research projects;

selecting effective, entrepreneurial management for its investees;

providing managerial assistance and support to investees in areas, where the need is apparent;

obtaining, alone or with others, actual or working control of its investees;

supporting the investees in obtaining necessary financing, and, where feasible, arranging major contracts, joint ventures or mergers and acquisitions; and

where possible, maintaining sufficient capital resources to make follow-on investments where necessary, appropriate and feasible.

The proposed operations of Blackhawk are speculative

The success of the proposed business plan of Blackhawk will depend to a great extent on the operations, financial condition and management of the identified target companies. While investments in entities having established operating histories are preferred, there can be no assurance that Blackhawk will be successful in locating candidates meeting such criteria. The decision to invest in a company will likely be made without detailed feasibility studies, independent analysis, market surveys or similar information which, if Blackhawk had more funds available to it, would be desirable. In the event Blackhawk completes one or more stock acquisitions, the success of its operations will be dependent upon management of those target companies and numerous other factors beyond the control of Blackhawk. There is no assurance that Blackhawk can identify a target company to invest in, or that such investments will be successful.

There is no agreement for any stock acquisitions and no minimum requirements for any stock acquisitions

As of the date of this Form 10-K, Blackhawk has no current arrangement, agreement or understanding with respect to making an investment in a specific entity. Blackhawk's MacroMarkets investment closed in January 2009. There can be no assurance that Blackhawk will be successful in identifying and evaluating suitable business opportunities or in concluding an investment. No particular industry or specific business within an industry has been selected for a target company. Blackhawk has not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria, which it will require a target company to have achieved, or without which Blackhawk would not consider an investment. Accordingly, Blackhawk may invest in a company which has no significant operating history, losses, limited or no potential for immediate earnings, limited assets, negative net worth or other negative characteristics. There is no assurance that Blackhawk will be able to negotiate an investment on terms favorable to Blackhawk.

Reporting requirements may delay or preclude investments

Pursuant to the requirements of Section 13 of the Exchange Act, Blackhawk is required to provide certain information about significant acquisitions including audited financial statements of the acquired company. These audited financial statements normally must be furnished within 75 days following the effective date of a stock acquisition. Obtaining audited financial statements are the economic responsibility of the target company. The additional time and costs that may be incurred by some potential target companies to prepare such financial statements may significantly delay or essentially preclude consummation of an otherwise desirable investment by Blackhawk. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for investment so long as the reporting requirements of the Exchange Act are applicable. Notwithstanding a target company's agreement to obtain audited financial statements within the required time frame, such audited financial statements may not be available to Blackhawk at the time of effecting an investment in such target company. In cases where audited financial statements are unavailable, Blackhawk will have to rely upon information that has not been verified by outside auditors in making its decision to engage in a transaction with the business entity. This risk increases the prospect that an investment with such a target company might prove to be an unfavorable one for Blackhawk.

We May Change Our Investment Policies Without Further Shareholder Approval

Although we are limited by the Investment Company Act with respect to the percentage of our assets that must be invested in qualified investee companies, we are not limited with respect to the minimum standard that any investee company must meet, nor the industries in which those investee companies must operate. We may make investments without shareholder approval and such investments may deviate significantly from our historic operations. Any change in our investment policy or selection of investments could adversely affect our stock price, liquidity, and the ability of our shareholders to sell their stock. Any investment made by Blackhawk must be consistent with the BDC provisions of the Investment Company Act.

Our Investments May Not Generate Sufficient Income to Cover Our Operations

We intend to make investments into qualified companies that will provide the greatest overall return on our investment. However, certain of those investments may fail, in which case we will not receive any return on our investment. In addition, our investments may not generate income, either in the immediate future, or at all. As a result, we may have to sell additional stock, or borrow money, to cover our operating expenses. In the past, Blackhawk has borrowed money from its largest stockholder, Concorde, to fund its operating expenses and Concorde has agreed to fund operating expenses through January 1, 2011 if it has the wherewithal to fund such operations. However, there can be no assurance that Concorde would be able to lend money to Blackhawk. The effect of such actions could cause our stock price to decline or, if we are not successful in raising additional capital, we could cease to continue as a going concern.

Regulatory Oversight; Compliance Requirements

As a business development company, Blackhawk is subject to the provisions of Sections 55 through 65 of the Investment Company Act, and certain additional provisions of that Act made applicable to business development companies by Section 59 of that Act. Under these regulations, Blackhawk's investment policies are defined and subject to certain limitations. Furthermore, under Section 58 of that Act, Blackhawk may not withdraw its election to be so regulated without the consent of the holders of a majority of its issued and outstanding voting securities.

Blackhawk has no fixed policy as to any particular business or industry group in which it may invest or as to the amount or type of securities or assets that it may acquire. Blackhawk may in the future invest in assets that are not qualifying assets as defined by Section 55 of the Investment Company Act; however, no such additional assets have been identified as of the date of this Form 10-K, and Blackhawk does not intend to fall below the 70% requirement as set forth in Section 55 of that Act.

Blackhawk seeks to achieve its objectives in accordance with the following general policies:

Blackhawk intends to acquire securities through negotiated private placement transactions directly from the investee company, its affiliates, or third parties, or through open market transactions.

Blackhawk will attempt to acquire, if possible and consistent with Blackhawk's capital resources, a large or controlling interest in its investees through purchases of equity securities, including warrants, options, and other rights to acquire such securities combined, if appropriate, with debt securities, including demand notes, term loans and guarantees, or debt instruments or preferred stock, convertible into, or with warrants to purchase additional equity securities.

Blackhawk may make additional or "follow-on" investments in its investees, when appropriate to sustain the investees or to enhance or protect Blackhawk’s existing investment.

Blackhawk will determine the length of time it will retain its investment by evaluating the facts and circumstances of each investee and Blackhawk’s relationship with such investee. Blackhawk may retain its investments for a relatively long period, sometimes as long as five to ten years, with the result that its rate of portfolio turnover may be low. Investments may be retained until, in the sole opinion of Blackhawk, the investee company has a demonstrated record of successful operations and there is a meaningful public market for its securities which reflects the investment value Blackhawk sought (or such a market can be readily established) or until Blackhawk, in its sole discretion, decides that its investment is not likely to result in future long-term capital appreciation.

Subject to compliance with the BDC provisions of the Investment Company Act, Blackhawk will invest in Special Purpose Vehicles ("SPVs") and other entities and vehicles seeking special strategies in the ETF marketplace.

Market Illiquidity

At the time of sale of Blackhawk’s portfolio securities, there may not be a market of sufficient stability to allow Blackhawk to sell its entire position, potentially resulting in Blackhawk not being able to sell such securities at prevailing market prices or at the prices at which Blackhawk may have valued its position in the investee's securities.

Market Price for Common Stock

Shares of Common Stock trade very infrequently on the OTC Bulletin Board under the symbol BHCG.OB. During the period from January 2007 to March 25, 2010, shares have traded between $.04 and $1.00, with little trading volume. The shares do not trade frequently and there can be wide gaps in the bid and ask prices for the shares of Common Stock. Investors should be aware of these market conditions.

Difficulty in Valuing Investments and Portfolio Performance

Valuation-Policy Guidelines

Blackhawk's Board of Directors is responsible for the valuation of Blackhawk's assets in accordance with its approved guidelines. Blackhawk's board of directors is responsible for recommending overall valuation guidelines and the valuation of the specific investments.

There is a range of values that are reasonable for an investment at any particular time. Fair value is generally defined as the price at which the investment in question could change hands, the "exit price," assuming that both parties to the transaction are under no unusual pressure to buy or sell and have both reasonable knowledge of all the relevant facts.

A fair value hierarchy consists of three levels that are used to prioritize inputs to fair value techniques:

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

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.

To increase objectivity in valuing its assets, Blackhawk also intends to use external measures of value such as public markets or significant third-party transactions whenever possible. Neither a long-term workout value nor an immediate liquidation value will be used, and no increment of value will be included for changes that may take place in the future. Certain members of Blackhawk's Board of Directors may hold positions in some of Blackhawk's investee companies and certain members of the Board of Directors may hold offices or director positions with some of Blackhawk's investee companies.

Valuations assume that, in the ordinary course of its business, Blackhawk will eventually sell its position in the private or public market or may distribute its larger positions to its stockholders. Accordingly, no premiums will be placed on investments to reflect the ability of Blackhawk to sell block positions or control of companies, either by itself or in conjunction with other investors.

In fact, in certain circumstances, Blackhawk may have to sell the securities it owns of its investees in the open market at discounts to market prices at the time of sale, due to the large position it may hold relative to the average daily trading volume.

Blackhawk intends to use four basic methods of valuation for its investments and there are variations within each of these methods. Blackhawk's board of directors, in its sole discretion, has determined that Blackhawk's four basic valuation methods constitute fair value. As an investee evolves, its progress may sometime require changes in Blackhawk's method of valuing the investee's securities. Blackhawk's investment will be separated into its component parts (such as debt, preferred stock, common stock or warrants), and each component will be valued separately to arrive at a total value. Blackhawk believes that a mixture of valuation methods is often essential to represent a fair value of Blackhawk's investment position in any particular investee. For example, one method may be appropriate for the equity securities of a company while another method may be appropriate for the senior securities of the same company. In various instances of valuation, the board of directors of Blackhawk may modify the valuation methods mentioned below based on the board of directors best judgment in any particular situation.

The cost method values an investment based on its original cost to Blackhawk, adjusted for the amortization of original issue discount, accrued interest and certain capitalized expenditures of Blackhawk. While the cost method is the simplest method of valuation, it is often the most unreliable because it is applied in the early stages of an investee's development and is often not directly tied to objective measurements. All investments are carried at cost until significant positive or adverse events subsequent to the date of the original investment warrant a change to another method. Some examples of such events are: (1) a major recapitalization; (2) a major refinancing; (3) a significant third-party transaction; (4) the development of a meaningful public market for the investee's common stock; and (5) material positive or adverse changes in the investee's business.

The appraisal method is used to value an investment position based upon a careful analysis of the best available outside information when there is no established public or private market in the investee company's securities and it is no longer appropriate to use the cost method. Comparisons are made using factors (such as earnings, sales or net worth) that influence the market value of similar public companies or that are used in the pricing of private transactions of comparable companies. Major discounts, usually in percentages up to 50%, are taken when private companies are appraised by comparing private company to similar public companies. Liquidation value may be used when an investee company is performing substantially below plan and its continuation as an operating entity is in doubt. Under the appraisal method, the differences among companies in terms of the source and type of revenues, quality of earnings, and capital structure are carefully considered.

An appraisal method value can be defined as the price at which the investment in question could change hands, assuming that both parties to the transaction are under no unusual pressure to buy or to sell, and both have reasonable knowledge of all the relevant facts. In the case of start-up companies where the entire assets may consist of only one or more of the following: (1) a marketing plan, (2) management or (3) a pilot operation, an evaluation may be established by capitalizing the amount of the investment that could reasonably be obtained for a predetermined percentage of the ownership in the particular company. Valuations under the appraisal method are considered to be more subjective than the cost, public market or private market methods.

The private market method uses third-party transactions (actual or proposed) in the investee's securities as the basis for valuation. This method is considered to be an objective measure of value since it depends upon the judgment of a sophisticated, independent investor. Actual firm offers are used as well as historical transactions, provided that any offer used was seriously considered and well documented.

The public market method is the preferred method of valuation when there is an established public market for the investee's securities, since that market provides the most objective basis for valuation. In determining whether the public market is sufficiently established for valuation purposes, we intend to examine the trading volumes, the number of stockholders and the number of market makers. Under the public market method, as well as under the other valuation methods, we may discount investment positions that are subject to significant legal, contractual or practical restrictions. When an investee's securities are valued under the public market method, common stock equivalents such as presently exercisable warrants or options are valued based on the difference between the exercise price and the market value, subject to management and board discretion, of the underlying common stock.

Regulations governing our operation as a BDC affect our ability to raise additional capital.

Under the provisions of the Investment Company Act, Blackhawk will be permitted to issue senior securities in amounts such that its asset coverage ratio equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of its assets declines, Blackhawk may be unable to satisfy this test. Then, Blackhawk may be required to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of its indebtedness at a time when such sales may be disadvantageous. Also, as a result of issuing senior securities, Blackhawk would be exposed to typical risks associated with leverage, including an increased risk of loss. If preferred stock is issued, the preferred stock would rank "senior" to common stock, preferred stockholders would have separate voting rights and might have rights, preferences, or privileges more favorable than those of common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for holders of common stock.

Blackhawk generally is not able to issue and sell common stock at a price below net asset value per share. It may, however, sell common stock, or warrants, options or rights to acquire common stock, at a price below the then-current net asset value per share of common stock if the Board of Directors determines that such sale is in the best interests of Blackhawk and its stockholders, and stockholders approve such sale.

Regulation - BDCs

The following is a summary description of the Investment Company Act, as applied to business development companies. This description is qualified in its entirety by reference to the full text of the Investment Company Act and the rules promulgated thereunder by the SEC.

The Small Business Investment Incentive Act of 1980 became law on October 21, 1980. This law modified the provisions of the Investment Company Act, that are applicable to a company, such as Blackhawk, which elects to be treated as a "business development company." Blackhawk elected to be treated as a business development company on September 20, 2004. Blackhawk may not withdraw its election without first obtaining the approval of holders of a majority of its outstanding voting securities.

A business development company must be operated for the purpose of investing in the securities of certain present and former "eligible portfolio companies" and certain bankrupt or insolvent companies and must make available significant managerial assistance to its investee companies. An eligible portfolio company generally is a United States company that is not an investment company (except for wholly-owned SBIC's licensed by the U.S. Small Business Administration) and (1) does not have a class of securities included in the Federal Reserve Board's over-the-counter margin list, (2) is actively controlled by the business development company and has an affiliate of the business development company on its board of directors, or (3) meets such other criteria as may be established by the SEC. Control, under the Investment Company Act, is presumed to exist where the business development company, and its affiliates or related parties, own 25% or more of the issued and outstanding voting securities of the investee. The SEC recently adopted new rules expanding the definition of eligible portfolio company to include certain publicly traded companies.

The Investment Company Act prohibits or restricts a registrant from investing in certain types of companies, such as brokerage firms, insurance companies, investment banking firms and investment companies. Moreover, the Investment Company Act limits the type of assets that Blackhawk may acquire to "qualifying assets" and certain other assets necessary for its operations (such as office furniture, equipment and facilities) if, at the time of the acquisition, less than 70% of the value of Blackhawk's assets consists of qualifying assets. The effect of this regulation is to require that at least 70% of a business development company's assets be maintained in qualifying assets. Qualifying assets include: (1) securities of companies that were eligible portfolio companies at the time Blackhawk acquired their securities; (2) securities of bankrupt or insolvent companies that are not otherwise eligible portfolio companies; (3) securities acquired as follow-on investments in companies that were eligible at the time of Blackhawk's initial acquisition of their securities but are no longer eligible, provided that Blackhawk has maintained a substantial portion of its initial investment in those companies; (4) securities received in exchange for or distributed on or with respect to any of the foregoing; and (5) cash items, government securities and high-quality, short-term debt. The Investment Company Act also places restrictions on the nature of the transactions in which, and the persons from whom, securities can be purchased in order for the securities to be considered to be qualifying assets. As of the date of this Form 10-K, Blackhawk has made the MacroMarkets investment.

Blackhawk is permitted by the Investment Company Act, under specified conditions, to issue multiple classes of senior debt and preferred stock, if its asset coverage, as defined in the Investment Company Act, is at least 200% after the issuance of the debt or the preferred stock. Blackhawk currently has no policy regarding issuing of multiple classes of senior debt.

Blackhawk may issue, in limited amounts, warrants, options and rights to purchase its securities to its directors, officers and employees (and provide loans to such persons for the exercise thereof) in connection with an executive compensation plan, if certain conditions are met. These conditions include the authorization of such issuance by a majority of Blackhawk's voting securities (as defined below) and the approval by a majority of the independent members of the board of directors and by a majority of the directors who have no financial interest in the transaction. The issuance of options, warrants or rights to directors who are not also officers requires the prior approval of the SEC.

As defined in the Investment Company Act, the term "majority of a registrant's issued and outstanding voting securities" means the vote of (a) 67% or more of a registrant's issued and outstanding common stock present at a meeting, if the holders of more than 50% of the issued and outstanding common stock are present or represented by proxy, or (b) more than 50% of a registrant's outstanding common stock, whichever is less.

Blackhawk may sell its securities at a price that is below the prevailing net asset value per share only upon the approval of the policy by the holders of a majority of its issued and outstanding voting securities, including a majority of the voting securities held by non-affiliated persons, at its last annual meeting or within one year prior to the transaction. In addition, Blackhawk may repurchase its common stock, subject to the restrictions of the Investment Company Act.

In accordance with the Investment Company Act, a majority of the members of Blackhawk's Board of Directors must not be "interested persons" of Blackhawk, as that term is defined in the Investment Company Act. Generally, "interested persons" of Blackhawk include all affiliated persons of Blackhawk and members of their immediate families, any "interested person" of an underwriter or of an "investment advisor" to Blackhawk, any person who has acted as legal counsel to Blackhawk within the last two fiscal years, or any broker or dealer, or affiliate of a broker or dealer.

Most of the transactions involving Blackhawk and its affiliates (as well as affiliates of those affiliates) which were prohibited without the prior approval of the SEC under the Investment Company Act, prior to its amendment by the Small Business Investment Incentive Act now require the prior approval of a majority of Blackhawk's independent directors and a majority of the directors having no financial interest in the transactions. The effect of this amendment is that Blackhawk may engage in certain affiliated transactions that would be prohibited, absent prior SEC approval in the case of investment companies, which are not business development companies. However, transactions involving certain closely affiliated persons of Blackhawk, including its directors, officers and employees, still require the prior approval of the SEC. In general, "affiliated persons" of a person include: (a) any person who owns, controls or holds with power to vote, more than five percent of Blackhawk's issued and outstanding common stock, (b) any director, executive officer or general partner of that person, (c) any person who directly or indirectly controls, is controlled by, or is under common control with that person, and (d) any person five percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other person. Such persons generally must obtain the prior approval of a majority of Blackhawk's independent directors and, in some situations, the prior approval of the SEC, before engaging in certain transactions involving Blackhawk or any company controlled by Blackhawk. In accordance with the Investment Company Act, a majority of the members of Blackhawk's board of directors are not interested persons as defined in the Act. The Investment Company Act generally does not restrict transactions between Blackhawk and its investee companies.

Finally, notwithstanding restrictions imposed under federal securities laws, it is anticipated that Blackhawk will acquire securities of investee companies pursuant to stock purchase agreements or other agreements that may further limit Blackhawk's ability to distribute, sell or transfer such securities. And as a practical matter, even if such transfers are legally or contractually permissible, there may be no market, or a very limited market, for such securities. Economic conditions may also make the price and terms of a sale or transfer transactions unattractive.

Other Securities Law Considerations

In addition to the above-described provisions of the Investment Company Act, there are a number of other provisions of the federal securities laws that affect Blackhawk's operations. For example, restrictions imposed by the federal securities laws, in addition to possible contractual provisions, may adversely affect the ability of Blackhawk to sell or otherwise to distribute or dispose of its portfolio securities.

Most if not all securities which Blackhawk acquires as venture capital investments will be "restricted securities" within the meaning of the Securities Act and will not be permitted to be resold without compliance with the Securities Act. Thus, Blackhawk will not be permitted to resell portfolio securities unless a registration statement has been declared effective by the SEC with respect to such securities or Blackhawk is able to rely on an available exemption from such registration requirements. In most cases Blackhawk will endeavor to obtain from its investee companies "registration rights," pursuant to which Blackhawk will be able to demand that an investee company register the securities owned by Blackhawk at the expense of the investee company. Even if the investee company bears this expense, however, the registration of any securities owned by Blackhawk is likely to be a time-consuming process, and Blackhawk always bears the risk, because of these delays, that it will be unable to resell such securities, or that it will not be able to obtain an attractive price for such securities.

At times Blackhawk will not register portfolio securities for sale but will seek to sell and sometimes seek an exemption from registration. The most likely exemption available to Blackhawk is section 4(1) of the Securities Act, which, in effect, exempts sales of securities by any person other than an issuer, an underwriter or dealer. This exemption will likely be available to permit a private sale of portfolio securities and in some cases a public sale, if the provisions of Rule 144 under the Securities Act, are complied with. Among other things, Rule 144 generally requires that securities be sold in "broker transactions," and imposes a six-month holding period prior to any resale of restricted securities by a non-affiliate.

Blackhawk may elect to distribute in-kind securities of investee companies to its stockholders. Prior to any such distribution, Blackhawk expects that it will need to file, or cause the issuers of such distributed securities, to file, a registration statement or, in the alternative, an information statement, which when declared effective by the SEC, will permit the distribution of such securities and also permit distributee stockholders of Blackhawk to sell such distributed securities.

Future Distributions

Blackhawk does not currently intend to pay cash dividends. Blackhawk's current dividend policy is to make in-kind distributions of its larger investment positions to its stockholders when Blackhawk's board of directors deems such distributions appropriate. Because Blackhawk does not intend to make cash distributions, stockholders would need to sell securities distributed in-kind, when and if distributed, in order to realize a return on their investment.

An in-kind distribution will be made only when, in the judgment of Blackhawk’s board of directors, it is in the best interest of Blackhawk's stockholders to do so. The board of directors will review, among other things, the investment quality and marketability of the securities considered for distribution; the impact of a distribution of the investee's securities on the investee's customers, joint venture associates, other investors, financial institutions and management; tax consequences and the market effects of an initial or broader distribution of such securities. Securities of Blackhawk's larger investment positions in more mature investee companies with established public markets are most likely to be considered for distribution. It is possible that Blackhawk may make an in-kind distribution of securities that are substantially liquid irrespective of the distributee's stockholder rights to sell such securities. Any such in-kind distribution would require stockholder approval only if the distribution represents substantially all of Blackhawk's assets. It is possible that Blackhawk may make an in-kind distribution of securities that have appreciated or depreciated from the time of purchase depending upon the particular distribution. Blackhawk has not established a policy as to the frequency or size of distributions and indeed there can be no assurance that any distributions will be made. Blackhawk closed on the MacroMarkets investment in January 2009.

Managerial Assistance

Blackhawk believes that providing managerial assistance to its investees is critical to its business development activities. "Making available significant managerial assistance" as defined in the Investment Company Act, with respect to a business development company such as Blackhawk means (a) any arrangement whereby a business development company, through its directors, officers, employees or general partners, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations, or business objectives and policies of a portfolio company; or (b) the exercise by a business development company of a controlling influence over the management or policies of a portfolio company by the business development company acting individually or as a part of a group acting together which controls such portfolio company. Blackhawk is required by the Investment Company Act to make significant managerial assistance available at least with respect to investee companies that Blackhawk will treat as qualifying assets for purposes of the 70% test. The nature, timing and amount of managerial assistance provided by Blackhawk varies depending upon the particular requirements of each investee company.

Blackhawk may be involved with its investees in recruiting management, product planning, marketing and advertising and the development of financial plans, operating strategies and corporate goals. In this connection, Blackhawk may assist clients in developing and utilizing accounting procedures to record efficiently and accurately, transactions in books of account which will facilitate asset and cost control and the ready determination of results of operations. Blackhawk may also seek capital for its investees from other potential investors and occasionally subordinates its own investment to those of other investors. Where possible, Blackhawk may introduce its investees to potential suppliers, customers and joint venture partners and assists its investees in establishing relationships with commercial and investment bankers and other professionals, including management consultants, recruiters, legal counsel and independent accountants. Blackhawk also assists with joint ventures, acquisitions and mergers.

In connection with its managerial assistance, Blackhawk may be represented by one or more of its officers or directors who are members of the board of directors of an investee. As an investment matures and the investee develops management depth and experience, Blackhawk's role will become progressively less active. However, when Blackhawk owns or, on a pro forma basis, could acquire a substantial proportion of a more mature investee company's equity, Blackhawk may remain active in, and may frequently be involved in, the planning of major transactions by the investee. Blackhawk's goal is to assist each investee company in establishing its own independent and effective board of directors and management.

Federal Income Tax Matters

The following discussion is a general summary of the material federal income tax considerations applicable to Blackhawk and to an investment in common stock. This summary does not purport to be a complete description of the income tax considerations applicable to such an investment. For example, it does not describe tax consequences that are assumed to be generally known by investors or certain considerations that may be relevant to certain types of holders subject to special treatment under federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, regulated investment companies, dealers in securities, pension plans and trusts, and financial institutions. This summary assumes that investors hold Blackhawk common stock as capital assets (within the meaning of the Internal Revenue Code of 1986, as amended ("Code")). The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as in effect as of March 30, 2010 and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. Blackhawk has not sought and will not seek any ruling from the Internal Revenue Service (the "IRS") regarding any offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under federal income tax laws that could result if Blackhawk invested in tax-exempt securities or certain other investment assets in which it does not currently intend to invest.

A "U.S. stockholder" generally is a beneficial owner of shares of Blackhawk common stock who is for federal income tax purposes:

a citizen or individual resident of the United States including an alien individual who is a lawful permanent resident of the United States or meets the “substantial presence” test in Code Section 7701 (b);

a corporation or other entity taxable as a corporation, for federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision thereof;

a trust over which a court in the U.S. has primary supervision over its administration or over which U.S. persons have control; or

an estate, the income of which is subject to federal income taxation regardless of its source.

A "Non-U.S. stockholder" is a beneficial owner of shares of Blackhawk common stock that is neither a U.S. stockholder nor a partnership for federal income tax purposes.

If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of Blackhawk common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective stockholder who is a partner of a partnership holding shares of Blackhawk common stock should consult his, her or its tax advisors with respect to the purchase, ownership and disposition of shares of Blackhawk common stock.

Tax matters are often very complicated and the tax consequences to an investor of an investment in Blackhawk shares will depend on the facts of his, her or its particular situation. Blackhawk encourages investors to consult their own tax advisors regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

Election to be Taxed as a Regulated Investment Company ("RIC")

As a business development company ("BDC"), Blackhawk intends to elect to be treated as a RIC under Subchapter M of the Code when its Board of Directors determines this is in the best interests of its shareholders after it acquires investments. As a RIC, Blackhawk generally will not have to pay corporate level taxes on any income or gains that it distributes to its stockholders as dividends. To qualify for tax treatment as a RIC, Blackhawk must, among other requirements, meet certain source of income and asset diversification requirements (as described below). In addition, to obtain the federal income tax benefits allowable to RICs, Blackhawk must distribute to its stockholders, for each taxable year, at least 90% of its “investment company taxable income,” which is generally the sum of its net ordinary income plus the excess, if any, of realized net short term capital gains over realized net long tern capital losses (the "Annual Distribution Requirement").

Taxation as a Regulated Investment Company

For any taxable year in which Blackhawk qualifies as a RIC and satisfies the Annual Distribution Requirement, it generally will not be subject to federal income tax on the portion of its investment company taxable income and net capital gain (i.e., net realized long-term capital gains in excess of net realized short-term capital losses) that it distributes to stockholders with respect to that year. Blackhawk will be subject to federal income tax at the regular corporate rates on any net ordinary income or capital gain not distributed (or deemed distributed) to its stockholders.

As a RIC, Blackhawk will be subject to a 4% nondeductible federal excise tax on certain net taxable undistributed income unless it distributes in a timely manner an amount at least equal to the sum of (1) 98% of its net ordinary income for each calendar year, (2) 98% of its capital gain net income for the one year period ending October 31 in that calendar year, and (3) any net income realized, but not distributed, in the preceding year. Blackhawk will not be subject to excise taxes on amounts on which it is required to pay corporate income tax (such as retained net capital gains). Blackhawk anticipates that it would make sufficient distributions each taxable year and/or pay sufficient corporate income tax to avoid any excise tax liability, although Blackhawk reserves the right to pay an excise tax rather than make an additional distribution when circumstances warrant (e.g., the payment of an excise tax amount that it deems to be de minimis).

To qualify for tax treatment as a RIC for federal income tax purposes, in addition to satisfying the Annual Distribution Requirement, Blackhawk must, among other things:

have in effect at all times during each taxable year an election to be regulated as a BDC under the Investment Company Act;

derive in each taxable year at least 90% of its gross income from (a) dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities, or other income derived with respect to its business of investing in such stock or securities and (b) net income derived from an interest in a "qualified publicly traded partnership" (all such income "Qualifying Income"); and

diversify its holdings so that at the end of each quarter of the taxable year, at least 50% of the value of its assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of its assets or more than 10% of the outstanding voting securities of such issuer; and no more than 25% of the value of its assets is invested in the securities, other than U.S. government securities or securities of other RICs, of (a) one issuer, (b) securities of two or more issuers that are controlled, as determined under applicable tax rules, by Blackhawk and that are engaged in the same or similar or related trades or businesses or (c) securities of one or more "qualified publicly traded partnerships" (the "Diversification Tests").

Blackhawk may be required to recognize taxable income in circumstances in which it does not receive cash. For example, if Blackhawk holds debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment in kind interest or, in certain cases, increasing interest rates or issued with warrants), Blackhawk must include in income in each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by it in the same taxable year. Because any original issue discount accrued will be included in Blackhawk’s investment company taxable income for the year of accrual, it may be required to make a distribution to its stockholders to satisfy the Annual Distribution Requirement, even though it will not have received any corresponding cash amount.

Blackhawk anticipates that it will be authorized to borrow funds and to sell assets to satisfy the Annual Distribution Requirement and to avoid any excise tax liability. However, under the Investment Company Act, Blackhawk is not currently permitted to make distributions to its stockholders while its debt obligations and other senior securities are outstanding unless certain "asset coverage" tests are met. Moreover, Blackhawk’s ability to dispose of assets to meet the Annual Distribution Requirement and to avoid any excise tax liability may be limited by (1) the illiquid nature of Blackhawk’s portfolio, or (2) other requirements relating to Blackhawk’s tax treatment as a RIC, including the Diversification Tests. If Blackhawk disposes of assets to meet the Annual Distribution Requirements and to avoid any excise tax liability, it may make such dispositions at times that, from an investment standpoint, are not advantageous.

Gain or loss realized by Blackhawk from the sale or exchange of warrants as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss. Such gain or loss generally will be long-term or short-term, depending on how long Blackhawk held a particular warrant. Blackhawk’s transactions in options, futures contracts, hedging transactions and forward contracts will be subject to special tax rules, the effect of which may be to accelerate income to Blackhawk, defer losses, cause adjustments to the holding periods of investments, convert long-term capital gains into short-term capital gains, convert short-term capital losses into long-term capital losses or have other tax consequences. These rules could affect the amount, timing and character of distributions to stockholders. Blackhawk has not yet determined the extent to which it might engage in these types of transactions, if at all.

A RIC is not permitted to deduct expenses in excess of its "investment company taxable income" (which is, generally, ordinary income plus net short-term capital gains in excess of net long-term capital losses). If Blackhawk’s expenses in a given year exceed investment company taxable income (e.g., as the result of large amounts of equity based compensation), it would experience a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent years. In addition, expenses can be used only to offset investment company taxable income, not net capital gain (that is, the excess of net long-term capital gains over the net short-term capital losses). Due to these limits on the deductibility of expenses, Blackhawk may for tax purposes have aggregate taxable income over a period of several years that it is required to distribute and that is taxable to its stockholders even if such income is greater than the net income it actually earned during those years in the aggregate. Such required distributions may be made from Blackhawk's cash assets or by liquidation of investments, if necessary. Blackhawk may realize gains or losses from such liquidations. In the event Blackhawk realizes net capital gains from such transactions, a stockholder may receive a larger capital gain distribution than the stockholder would have received in the absence of such transactions. Assuming Blackhawk qualifies for tax treatment as a RIC, its corporate-level federal income tax should be substantially reduced or eliminated, and, as explained above, a portion of Blackhawk's distributions or deemed distributions may be characterized as long-term capital gain in the hands of stockholders. See "Election to be Taxed as a Regulated Investment Company" above.

Except as otherwise provided, the remainder of this discussion assumes that Blackhawk qualifies for tax treatment as a RIC and has satisfied the Annual Distribution Requirement.

Taxation of U.S. Stockholders

For federal income tax purposes, distributions by Blackhawk generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of "investment company taxable income" (which is, generally, Blackhawk's ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses) will be taxable as ordinary income to U.S. stockholders to the extent of Blackhawk's current or accumulated earnings and profits. For taxable years beginning before January 1, 2011, to the extent such distributions are attributable to dividends from U.S. corporations and certain qualified foreign corporations, such distributions may be designated by Blackhawk as "qualified dividend income" eligible to be taxed in the hands of non-corporate stockholders at the rates applicable to long-term capital gains, provided holding period and other requirements are met at both the stockholder and company levels. In this regard, it is anticipated that distributions generally will not be attributable to dividends and, therefore, generally will not be qualified dividend income. Distributions of net capital gains (which is generally Blackhawk's realized net long-term capital gains in excess of realized net short-term capital losses) properly designated by Blackhawk as "capital gain dividends" will be taxable to a U.S. stockholder as long-term capital gains (currently at a maximum rate of 15% in the case of individuals, trusts or estates), regardless of the U.S. stockholder's holding period for his, her or its common stock. Distributions in excess of Blackhawk’s current and accumulated earnings and profits first will reduce a U.S. stockholder's adjusted tax basis in such stockholder's common stock and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S. stockholder.

Blackhawk may retain some or all of its realized net long-term capital gains in excess of realized net short-term capital losses and designate the retained net capital gains as a "deemed distribution." In that case, among other consequences, Blackhawk will pay tax on the retained amount, each U.S. stockholder will be required to include his, her or its share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal to his, her or its allocable share of the tax paid thereon by Blackhawk. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder's cost basis for his, her or its common stock. Since Blackhawk expects to pay tax on any retained net capital gains at Blackhawk’s regular corporate tax rate, and since that rate is in excess of the maximum rate currently payable by individuals on long-term capital gains, the amount of tax that individual stockholders will be treated as having paid and for which they will receive a credit will exceed the tax they owe on the retained net capital gain. Such excess generally may be claimed as a credit against the U.S. stockholder's other federal income tax obligations or may be refunded to the extent it exceeds a stockholder's liability for federal income tax. A stockholder that is not subject to federal income tax or otherwise required to file a federal income tax return would be required to file a federal income tax return on the appropriate form to claim a refund with respect to the allocable share of the taxes that Blackhawk has paid. For federal income tax purposes, the tax basis of shares owned by a stockholder will be increased by an amount equal to the excess of the amount of undistributed capital gains included in the stockholder's gross income and the tax deemed paid by the stockholder as described in this paragraph. To utilize the deemed distribution approach, Blackhawk must provide written notice to its stockholders prior to the expiration of 60 days after the close of the relevant taxable year. Blackhawk cannot treat any of its investment company taxable income as a “deemed distribution.” Blackhawk may also make actual distributions to it stockholders of some or all of realized net long-term capital gains in excess of realized net short-term capital losses.

For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year, and (2) the amount of capital gain dividends paid for that year, Blackhawk may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If Blackhawk makes such an election, the U.S. stockholder will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by Blackhawk in October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it had been received by Blackhawk's U.S. stockholders on December 31 of the year in which the dividend was declared.

A U.S. stockholder generally will recognize taxable gain or loss if the U.S. stockholder sells or otherwise disposes of his, her or its shares of Blackhawk common stock. Any gain arising from such sale or disposition generally will be treated as long-term capital gain or loss if the U.S. stockholder has held his, her or its shares for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of Blackhawk common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of Blackhawk common stock may be disallowed if other shares of Blackhawk common stock are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.

For taxable years beginning before January 1, 2011, individual U.S. stockholders are subject to a maximum federal income tax rate of 15% on their net capital gain (i.e., the excess of realized net long-term capital gain over realized net short-term capital loss for a taxable year) including any long-term capital gain derived from an investment in Blackhawk shares. Such rate is lower than the maximum rate on ordinary income currently payable by individuals. Corporate U.S. stockholders currently are subject to federal income tax on net capital gain at the maximum 35% rate also applicable to ordinary income. Non-corporate stockholders with net capital losses for a year (i.e., capital losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each year ($1,500 for married individuals filing separately); any net capital losses of a non-corporate stockholder in excess of $3,000 ($1,500 for married individuals filing separately) generally may be carried forward and used in subsequent years as provided in the Code. Corporate stockholders generally may not deduct any net capital losses for a year, but may carry back such losses for three years or carry forward such losses for five years.

Distributions are taxable to stockholders even if they are paid from income or gains earned by Blackhawk before a stockholder’s investment (and thus were economically included in the price the stockholder paid). If an investor purchases shares of Blackhawk common stock shortly before the record date of a distribution, the price of the shares will include the value of the distribution and the investor will be subject to tax on the distribution even though economically, it may represent a return of his, her or its investment.

Blackhawk will send to each of its U.S. stockholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts includible in such U.S. stockholder's taxable income for such year as ordinary income and as long-term capital gain. In addition, the federal tax status of each year's distributions generally will be reported to the IRS (including the amount of dividends, if any, eligible for the 15% "qualified dividend income" rate). Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder’s particular situation. Dividends distributed by Blackhawk generally will not be eligible for the corporate dividends received.

Blackhawk may be required to withhold federal income tax ("backup withholding"), currently at a rate of 28%, from all taxable distributions to any non-corporate U.S. stockholder (1) who fails to furnish Blackhawk with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding, or (2) with respect to whom the IRS notifies Blackhawk that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual's taxpayer identification number is his or her social security number. Any amount withheld under backup withholding is allowed as a credit against the U.S. stockholder's federal income tax liability, provided that proper information is provided to the IRS.

Taxation of Non-U.S. Stockholders

Whether an investment in the shares is appropriate for a non-U.S. stockholder will depend upon that person’s particular circumstances; non-U.S. stockholders should consult their tax advisors before investing in Blackhawk common stock. In general, dividend distributions (other than certain distributions derived from net long-term capital gains, certain interest income and short-term capital gains, as described below) paid by Blackhawk to a non-U.S. stockholder are subject to withholding of federal income tax at a rate of 30% (or lower applicable treaty rate) even if they are funded by income or gains that, if paid to a non-U.S. stockholder directly, would not be subject to withholding. If the distributions are effectively connected with a U.S. trade or business of the non-U.S. stockholder (and, if an income tax treaty applies, attributable to a permanent establishment in the United States), Blackhawk will not be required to withhold federal tax if the non-U.S. stockholder complies with applicable certification and disclosure requirements, although the distributions will be subject to federal income tax at the rates applicable to U.S. stockholders. (Special certification requirements apply to non-U.S. stockholders that are foreign partnerships or foreign trusts - such entities are urged to consult their tax advisors.)

Actual or deemed distributions of Blackhawk's net capital gain to a non-U.S. stockholder, and gains realized by a non-U.S. stockholder upon the sale of Blackhawk common stock, will not be subject to federal withholding tax and generally will not be subject to federal income tax unless the distributions or gain, as the case may be, are effectively connected with a U.S. trade or business of the non-U.S. stockholder (and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the non-U.S. stockholder in the U.S.), or in the case of an individual stockholder, the stockholder is present in the U.S. for a period or periods aggregating 183 days or more during the year of the sale or capital gain dividend and certain other conditions are met. If Blackhawk distributes its net capital gain in the form of deemed rather than actual distributions, a non-U.S. stockholder will be entitled to a federal income tax credit or tax refund equal to the stockholder’s allocable share of the tax Blackhawk paid on the capital gains deemed to have been distributed. To obtain the refund, the non-U.S. stockholder must obtain a U.S. taxpayer identification number and file a federal income tax return even if the non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a federal income tax return. For a corporate non-U.S. stockholder, distributions (both actual and deemed), and gains realized upon the sale of Blackhawk common stock that are effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate (or at a lower rate if provided for by an applicable treaty).

A non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to withholding of federal tax, may be subject to information reporting and backup withholding of federal income tax on dividends unless the non-U.S. stockholder provides Blackhawk or the dividend paying agent with an IRS Form W-8BEN (or an acceptable substitute or successor form) or otherwise meets documentary evidence requirements for establishing that it is a non-U.S. stockholder or otherwise establishes an exemption from backup withholding.

Investment in the shares may not be appropriate for a non-U.S. stockholder; non-U.S. persons should consult their tax advisors with respect to the federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in the shares.

Failure to Qualify as a Regulated Investment Company

If Blackhawk fails to qualify for treatment as a RIC (including if Blackhawk's Board of Directors elects to temporarily or permanently revoke its RIC election), Blackhawk would be subject to tax on all of its taxable income at regular corporate rates. Blackhawk would not be able to deduct distributions to stockholders, nor would distributions be required to be made. Such distributions would be taxable to Blackhawk’s stockholders as dividend income to the extent of Blackhawk’s current and accumulated earnings and profits and (if made in a taxable year beginning before January 1, 2011) provided certain holding period and other requirements were met, could potentially qualify for treatment as "qualified dividend income" in the hands of stockholders taxed as individuals eligible for the 15% maximum rate. Subject to certain limitations under the Code, corporate distributees may be eligible for the dividends received deduction with respect to Blackhawk's dividend distributions. Distributions in excess of Blackhawk’s current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder's tax basis, and any remaining distributions would be treated as a capital gain. If Blackhawk realized a net capital loss for any taxable year, it could carry back such net capital loss only against capital gain. Such a net capital loss for any taxable year could generally be carried back to each of the three preceding taxable years, and then any unused portion thereof may be carried over into the subsequent taxable years for a period of five years.

To requalify as a RIC in a subsequent taxable year, Blackhawk would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which it failed to qualify for tax treatment as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying year, Blackhawk could be subject to tax on any unrealized net built-in gains in the assets held by Blackhawk during the period in which it failed to qualify for tax treatment as a RIC that are recognized within the subsequent 10 years, unless Blackhawk made a special election to pay corporate-level tax on such built-in gain at the time of its requalification as a RIC.

Competition

Blackhawk is subject to substantial competition from business development companies, venture capital firms, new product development companies, marketing companies and diversified manufacturers, most of whom are larger than Blackhawk and have significantly larger net worth, financial and personnel resources than does Blackhawk. In addition, Blackhawk competes with companies and individuals engaged in the business of providing management consulting services.

Employees

As of December 31, 2009, Blackhawk had two (2) employees.

Item 1B. Unresolved Staff Comments

This Section is not applicable.

Item 2. Properties

Blackhawk subleases office space at 14 Wall Street, 11th Floor, New York NY 10005 from Concorde, an affiliate of Blackhawk. Commencing January 1, 2009, Blackhawk is paying or accruing $4,000 to Concorde for this space. Prior to January 1, 2009, Blackhawk did not pay Concorde for the sublease of space. Blackhawk owes Concorde $48,000 for such rental payments as of December 31, 2009. The sub-lease is on a month-to-month basis.

Item 3. Legal Proceedings

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

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

During the fourth quarter of 2009, there were no matters submitted to stockholders for a vote.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Market Information

The common stock of Blackhawk is not listed on any principal United States market or exchange. It trades on the OTC Bulletin Board under the symbol "BHCG.OB." The stock was added to the OTC Bulletin Board effective August 23, 2006. The stock first started trading on the OTC Bulletin Board on January 24, 2007 as reported by BigCharts.com. However, the common stock trades infrequently and sporadically and thus there is not an established public trading market for the common stock. Listed below is the range of high and low bid quotations as reported by OTC Bulletin Board, Historical Research Reports for four quarters in 2008 and in 2009 and the first quarter of 2010 (to March 25, 2010).

	Bid
	High		Low
2010
First Quarter (through March 25, 2010)	$	0.10	$	0.04

2009
First Quarter	$	0.35	$	0.08
Second Quarter	$	0.22	$	0.09
Third Quarter	$	0.14	$	0.05
Fourth Quarter	$	0.10	$	0.04

2008
First Quarter	$	0.36	$	0.06
Second Quarter	$	0.19	$	0.10
Third Quarter	$	0.17	$	0.06
Fourth Quarter	$	0.12	$	0.04

Such over-the counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Holders

As of March 25, 2010, the approximate numbers of holders of the Company's common stock was eighty-seven (87) holders.

Dividends

Blackhawk has paid no cash or other dividends on its common stock and for the foreseeable future has no plans to pay cash or other dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

The Board of Directors and stockholders of the Company in November 2008 and December 2008, respectively, approved the Company's Stock Option Plan. For a description of the Stock Option Plan, see Item 11 "Executive Compensation--Stock Option Plan" herein. There are 3,000,000 shares authorized for issuance under the Stock Option Plan, and 600,000 options issued and outstanding. On February 1, 2009, the Stock Option Committee of the Board of Directors of the Company issued to Craig A. Zabala, President and Chief Executive Officer of the Company, options to purchase 600,000 shares at an exercise price of $.40 per share. The Options are exercisable beginning February 1, 2009 and ending February 1, 2019. As of the date of this filing, none of these options have been exercised.

Sale of Unregistered Securities

(a) Blackhawk did not sell any unregistered securities during 2009.

(b) Not applicable.

Item 6. Selected Financial Data

The selected financial data presented below for the years ended December 31, 2009, 2008, 2007, 2006, and 2005 are derived from the audited financial statements of the Company. This data is qualified in its entirety by reference to, and should be read in conjunction with, Management's Discussion and Analysis of Financial Condition and Results of Operations and the Company's financial statements and related notes thereto for the years ended December 31, 2009, 2008 and 2007 (included in this Annual Report), and 2006 and 2005 (not included in this Annual Report).

BLACKHAWK CAPITAL GROUP BDC, INC.

SELECTED FINANCIAL DATA

Years Ended December 31, 2009, 2008, 2007, 2006, 2005

Year Ended
	2009			2008			2007			2006			2005
Total Investment Income	$	6,101		$	17,613		$	3,263		$	460		$	1,139
Total Expenses		(992,634	)		(422,702	)		(407,179	)		(387,707	)		(46,074	)
Net Investment (Loss)		(986,533	)		(405,089	)		(403,916	)		(387,247	)		(44,935	)
Net Decrease in Assets Resulting from Operations		(986,472	)		(411,590	)		(398,703	)		(387,247	)		(44,935	)

Per Share Data:
Loss Per Common Share, Basic and Diluted:*		(0.03038	)		(0.01284	)		(0.01290	)		(0.01371	)		(0.00220	)

As of December 31
Total Assets	$	402,116		$	838,078		$	261,023		$	9,637		$	83,399
Total Liabilities		536,612		$	118,102			298,258			306,061			61,423
Total Net Assets (Liabilities)		(134,496	)	$	719,976			(37,235	)		(296,424	)		21,976

Other Data:
Total Return Per Share Based on Net Asset Value**		(119	%)		(1,061	%)		(135	%)		(1,474	%)		(440	%)

*	Calculated based on weighted average shares outstanding.

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

Item 7. 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.

Overview

Blackhawk is a business development company registered under the Investment Company Act formed to engage in the business of investing primarily in small to mid-sized companies. The Company also offers managerial assistance to developing companies.

Accounting Policies

Basis of Presentation

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

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.

Portfolio and Investment Activity

On January 12, 2009, Blackhawk entered into a Voting Capital Interests Purchase Agreement ("Purchase Agreement") with MacroMarkets LLC, a Delaware limited liability company ("MacroMarkets"), its first portfolio investment. 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 year ended December 31, 2009, interest income decreased to $6,101 from $17,613 for the year ended December 31, 2008 due to a reduced amount of interest bearing securities owned by Blackhawk in 2009.

For the year end December 31, 2008, interest income increased to $17,613 from $3,263 for the year ended December 31, 2007. The increase was primarily attributable to higher balances of interest bearing securities.

General and Administrative Expenses

For the year ended December 31, 2009, expenses increased to $992,634 from $422,702 for the year ended December 31, 2008. The increase was primarily attributable to an increase in professional fees and compensation expense.

For the year end December 31, 2008, expenses increased to $422,702 from $407,179 for the year ended December 31, 2007. The increase was primarily attributable to an increase in professional fees and advisory fees mitigate by a reduction in interest expense.

Liquidity and Capital Resources

From inception (April 22, 2004) through December 31, 2009, Blackhawk funded its cash operating requirements through the sale of its common stock and loans from an affiliated company, Concorde.

In 2004, Blackhawk received $65 from the founders and $16,647, net of costs of $4,272, from the sale of stock under its Regulation E offering.

In 2005, Blackhawk received $1,282, net of costs of $87,635, from the sale of stock under its first Regulation E offering.

During 2004, 2005 and 2006, Blackhawk borrowed $91,908, $13,281 and $133,005 respectively, from Concorde to fund the formation of Blackhawk, offering costs for the offering plan and operating expenses. Of the amount borrowed in 2006, $100,000 was evidenced by a demand convertible note bearing interest at 8.25% per annum convertible after November 1, 2006 into common stock of Blackhawk at a price of $1.00 per share or the price per share of Blackhawk's second Regulation E offering. The balance of borrowings were non-interest bearing and are due on demand. The borrowings were approved unanimously by the Board of Directors of Blackhawk as fair and in the best interest of Blackhawk.

At December 31, 2009 and 2008, Blackhawk did not have any borrowings due to Concorde.

Pursuant to the Company's second Regulation E Offering, as of June 4, 2007, the Company sold and exchanged an aggregate of 502,891 shares of Common Stock at a purchase price of $1.00 per share, to four (4) accredited investors for an aggregate amount of $502,891. The sale consisted of the following: (1) 370,000 shares sold to three (3) accredited investors for the purchase price of $1.00 per share, or an aggregate of $370,000; and (ii) the issuance of 132,891 to Concorde, an affiliate and the largest stockholder of the Company, in exchange for (x) $107,391 in a convertible note (consisting of $100,000 in principal and $7,391 in accrued and unpaid interest) owed by the Company to Concorde and issued on August 1, 2006 and (y) $25,500 in a convertible note owed by the Company to Concorde and issued on May 29, 2007. The conversion price for both of these notes was $1.00 per share of Common Stock.

In June and July 2007, the Company sold an additional 150,000 and 5,000, respectively, shares of its Common Stock for an aggregate of $155,000 in cash in the second Regulation E offering. The Offering Circular was amended on August 30, 2007 to keep the offering open until October 15, 2007. On October 16, 2007, the Company extended the offering until November 15, 2007. The net cash proceeds from the second Regulation E offering have been $525,001 through October 31, 2007.

Pursuant to the Company's third Regulation E Offering, which commenced on November 30, 2007, Concorde sold an aggregate of 1,298,112 shares of Common Stock, at a purchase price of $1.00 per share to nine (9) purchasers for an aggregate amount of $1,298,112 during the year ended December 31, 2008. Selling commissions were $129,311, which were paid as follows: (i) $69,311 to Richard J. Kelly, prior selling agent; and (ii) $60,000 to John W. Loofbourrow Associates, Inc. ("JWL"), prior selling agent. The Company retained JWL to act as placement agent to raise equity capital for the Company pursuant to an agreement dated April 9, 2008 ("JWL Agreement") which was executed on April 14, 2008. JWL solicited interest from a limited number of potential investors who are "accredited investors" in connection with raising equity capital for the Company in its third Regulation E offering. In return for JWL's services, the Company paid JWL a cash fee equal to ten percent (10%) of the purchase price of any securities placed by JWL. The Company does not have to reimburse JWL for its expenses. The JWL Agreement had a term of sixty (60) days from the date that the Company's Form 1-E offering document (filed with the SEC) was available to be sent to prospective investors and contained customary indemnification and confidentiality provisions. The JWL Agreement also provided that for a period of up to five (5) years from the termination date of the JWL Agreement, if JWL enters into a selling group in any subsequent securities offerings of the Company, then JWL shall receive additional financing fees if the Company sells securities to those investors previously introduced by JWL. The additional fees payable to JWL will be at the same rate as any underwriting or replacement fees that are listed in any Company future offering circular or prospectus. The JWL Agreement expired on June 18, 2008. The JWL Agreement was amended on June 30, 2008 ("Amendment"). The Amendment acknowledged that the JWL Agreement expired on June 18, 2008 ("Expiration Date") and that JWL is entitled to receive financing fees with respect to purchases by investors that purchased their shares after the Expiration Date, but were introduced to the Company by JWL before the Expiration Date. In July 2008, the Company raised $600,000 and paid $60,000 in placement fees to JWL.

The net cash proceeds from the three (3) Regulation E offerings since inception have been $1,711,731 through December 31, 2008.

During the year ended December 31, 2009, the Company conducted the following offerings for the sale of its shares of Common Stock: (a) a private placement offering under Rule 506 under Regulation D of the Securities Act to "accredited investors" and "qualified institutional buyers" or QIBs to raise a maximum of $250,000,000, and (b) a fourth offering under Regulation E under the Securities Act to raise a maximum of $5,000,000. Due to adverse market conditions for raising equity capital, the Company did not sell any shares of Common Stock in either offering and consequently terminated each offering.

On June 21, 2006, Blackhawk entered into an Exchange Agreement ("Exchange Agreement") with Concorde, the largest stockholder and affiliate of Blackhawk, pursuant to which a promissory note (the "Note") issued by Blackhawk on May 3, 2006 to Concorde in the principal amount of $68,847 was exchanged for 6,884,700 shares ("Shares") of the common stock, par value $.00001 per share ("Common Stock") of Blackhawk. The Shares are "restricted securities" as defined in Rule 144 of the Securities Act. Pursuant to the Exchange Agreement, Concorde acquired 6,884,700 shares ("Shares") of the Common Stock of Blackhawk in exchange for the Note. The stock has issued in the exchange at $.01 per share. This exchange took place pursuant to Section 3(a)(9) of the Securities Act as an exchange by an issuer with an existing security holder where no commission or other remuneration was paid or given to Concorde or any other party for soliciting such exchange. This transaction was approved by all of the directors of Blackhawk pursuant to action by unanimous written consent as fair and in the best interests of Blackhawk and its stockholders.

Concorde converted a portion of amount due from Blackhawk totalling $61,432 into 6,143,200 shares of Common Stock at the offering price of $.01 per share in 2005.

On April 23, 2004, Blackhawk issued 8,500,000 shares of Series A preferred stock and 11,000,000 shares of common stock to its founders at $.00001 per share for a total of $195. Between September 27, 2004 and December 31, 2005, Blackhawk sold 17,126,781 shares of its common stock at $.01 per share for a total of $171,268, which includes 6,143,200 shares issued to Concorde paid for by reducing a portion of amounts owing to Concorde of $61,432. These shares were sold pursuant to an offering under Regulation E under the Securities Act. On November 9, 2005, the board of directors rescinded the issuance of shares of preferred stock to Concorde. Blackhawk refunded to Concorde the $85 that Concorde paid for the shares. Concorde waived any rights it may have against Blackhawk in connection with the issuance and stated that it will not assert any claim against Blackhawk. On November 12, 2005, certain investors returned 4,500,000 shares of common stock and were refunded $45 on March 22, 2006. Each investor waived any rights he or she may have against Blackhawk in connection with the issuance and stated that he or she will not assert any claim against Blackhawk. On November 29, 2005, Blackhawk amended its Certificate of Incorporation in the State of Delaware to eliminate the right to issue preferred shares. As of November 29, 2005, all outstanding shares are common shares.

Blackhawk had a decrease in net assets resulting from operations for the year ended December 31, 2009 of $986,472 and total net liabilities of $134,496 as of December 31, 2009 and to date has made one investment in an eligible portfolio company, which is MacroMarkets. Blackhawk intends to raise capital through another proposed offering and access the equity markets to raise cash to fund investments although there can be no assurance it will raise such equity capital on terms acceptable to the Company at all. Blackhawk was unable to raise equity capital in two offerings of its Common Stock in 2009. Since inception, Blackhawk's operations have been principally funded by three Regulation E offerings and by loans from Concorde. Concorde has agreed to provide sufficient capital to Blackhawk to operate through January 1, 2011 if Concorde has capital to provide to or lend to Blackhawk.

Item 7A. 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 GAAP. Blackhawk has made one investment to date in MacroMarkets.

Item 8. Financial Statements and Supplementary Data

The response to this is enclosed in a separate section of this report, see page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

There have not been any significant changes in Blackhawk's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Blackhawk's internal control over financial reporting.

Item 9A(T). Controls and Procedures

Management Report on Internal Control Over Financial Reporting

The management of Blackhawk is responsible for establishing and maintaining adequate internal control over financial reporting. Blackhawk's internal control system is a process designed to provide reasonable assurance to management and the board of directors regarding the preparation and fair presentation of published financial statements.

Blackhawk's 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. GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors of Blackhawk; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Blackhawk's assets that could have a material effect on Blackhawk 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 Blackhawk's internal control over financial reporting as of December 31, 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 December 31, 2009, Blackhawk'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.

This Annual Report does not include an attestation report of Blackhawk's independent registered public accounting firm, Eisner LLP, regarding internal control over financial reporting. Management's report was not subject to attestation by Blackhawk's independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report.

Changes in Internal Control Over Financial Reporting

During the three months ended December 31, 2009, there have been no significant changes in our internal control 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.

Item 9B. Other Information

This Section is not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table sets forth information concerning our directors and executive officers:

Name and Address	Age	Position Held with Company
Dr. Craig A. Zabala(1)	58	President, Chief Executive
P.O. Box 377		Officer, Acting Chief
Canal Street Station		Financial Officer, Acting
New York, New York 10013		Chief Compliance Officer, Secretary, Chairman

Robert M. Fujii(2)(3)	60	Vice President
1624 Acton Street
Berkeley, California 94702

Robert J. Francis(3)	39	Director
5416 South 161st Street Omaha, NE 68135
Janet Buxman Kurihara(3)	51	Director
11007 North Cottontail Lane
Parker, Colorado 80138

Randy Tejral(3)	54	Director
6529 Pine Ridge Road
Elkhorn, Nebraska 68022

Mick Woodwards(1)(3)	51	Director
4849 Woodruff Avenue
Lakewood, California 90713

(1)	Control person as defined in Section 2(a)(1) of the Investment Company Act.

(2)	Resigned as Chief Financial Officer on March 17, 2006; assumed the position of Vice President on March 24, 2006.

(3)	Minority shareholder of The Concorde Group, Inc.

The following is a brief summary of the background of each executive officer and director:

Dr. Craig A. Zabala is Founder, Chairman, President and Chief Executive Officer of Blackhawk founded on April 22, 2004.

Dr. Zabala is also Managing Director of 787 Capital Group LLC, a financial services company, since February 1, 2010; Founder, Chairman, President and Chief Executive Officer of The Concorde Group, Inc., a financial services holding company, since February 1998; Chairman, President and Chief Executive Officer of Concorde Europe Inc. founded September 12, 2002; Chairman, President and Chief Executive Officer of Concorde Europe, Ltd., a company formed under the Laws of Wales and England, founded April 18, 2001; Founder, Chairman, President and Chief Executive Officer of DBL Holdings, LLC (d/b/a Drexel Burnham Lambert) founded May 9, 2000. Since June 15, 2007, Dr. Zabala has been a Registered Representative at Torsiello Securities, Inc., New York, New York. Torsiello Securities is a Financial Industry Regulatory Authority ("FINRA") member broker dealer.

From 1998 to 2002, he was a Scholar in Residence and Visiting Lecturer at the Zicklin School of Business and the Department of Finance, Graduate School, Baruch College, City University of New York, where he taught an MBA course on Entrepreneurial Strategy and a course on Special Topics in Investment Banking for the M.S. degree in Finance. Additionally, Dr. Zabala was on the editorial board of Global Focus, an academic journal on international business, economics, and social policy at the Zicklin School of Business.

From 2002 to 2003, he was a Registered Representative and an Investment Advisor with Brean Murray & Co., Inc., in New York City. From 1999 to 2001, Dr. Zabala was Senior Vice President of Merchant Banking and Investment Advisor with Trautman, Wasserman & Company, a merchant bank and broker dealer in New York City under a joint venture with Concorde. Prior to this, from 1997 to 1998, Dr. Zabala was Vice President and Investment Advisor, Private Client Group, Merrill Lynch & Co., New York City. From 1996 to 1997, Dr. Zabala was an investment banker at Baird Patrick & Company, Inc., New York City. Prior to this, from 1994 to 1995, Dr. Zabala was an Acting Chief Financial Officer and Investment Banker at Gilman Securities, Inc., in New York City. From 1992 through April 1996, Dr. Zabala was Vice Chairman of the Board of Directors of Gold Reservations of America, Inc., Sherman Oaks, California.

From 1991 to 1993, Dr. Zabala was a Visiting Scholar and Visiting Lecturer, teaching the following courses, Entrepreneurship, Venture Capital and Applied Finance, at the Walter A. Haas School of Business, University of California at Berkeley. From 1990 to 1991, he was a Visiting Fellow at the School of Industrial and Business Studies, University of Warwick, Coventry, England. From 1989 to 1990, he was a Vice President of Corporate Finance at D.H. Blair and Company. From 1986 to 1990, he served as Assistant Professor of Management at the School of Management, Rensselaer Polytechnic Institute, in Troy, New York.

Dr. Zabala was a Doctoral Fellow conferred by the U.S. Senate (1979 to 1981) and an Economist at the U.S. Department of Labor (1979 to 1982) and an Economist at the U.S. Department of Commerce (1982 to 1986) in Washington, D.C. During part of his career in Washington, D.C., he was also employed full-time as an autoworker from 1976 to 1983 at the General Motors Assembly Division, General Motors Corporation, Van Nuys, California, where he worked and also carried out research on production relations for his doctoral research on the U.S. automobile industry.

Dr. Zabala received his A.B., magna cum laude, Pi Gamma Mu and Phi Beta Kappa, in 1974, and Chancellor Fellow conferred by the Graduate Division (1974 to 1983) leading to the M.A. in 1977 and Ph.D. in 1983 from the University of California, Los Angeles, and was also a Postdoctoral Scholar in 1986 at the University of California, Los Angeles. He also pursued post-graduate studies in production theory and econometrics in the Department of Economics, The George Washington University, Washington, D.C., from 1980 to 1984. he is currently completing a MSc degree in finance with focus on globalization at the Center for Financial and Management Studies, School of Oriental and African Studies, University of London, United Kingdom.

Dr. Zabala holds the General Securities Registered Representative (Series 7), Uniform State Securities Agent (Series 63), Investment Advisor Representative (Series 65), and Investment Banking Representative (Series 79) securities licenses.

Robert M. Fujii is a Vice President at Blackhawk. He also holds positions as Chief Financial Officer of The Concorde Group, Inc. and Acting Chief Financial Officer of Concorde Commercial Finance, LLC. Mr. Fujii was previously a financial consultant for Craig A. Zabala & Company, a business consulting company in New York City. From 1992 to 1993, Mr. Fujii worked as a financial analyst for Nichirei Foods America sales office in San Francisco. From 1979 to 1992, Mr. Fujii worked as the Supervisor of Budgets and General Accounting for Varian Associates, Inc., a manufacturer of scientific measuring instruments, located in Walnut Creek, California. He received his BA in Biochemistry in 1971 from the University of California at Berkeley and an MBA in International Business and Finance from the Haas School of Business, University of California at Berkeley in 1993.

Robert J. Francis is the founder and Vice President of Omaha Telecom, LLC, a telecommunications construction and service company in Omaha, Nebraska. Mr. Francis has been a director of Blackhawk since March 2005.

Janet Buxman Kurihara has been a director of Blackhawk since August 2004. Ms. Kurihara was regional director at Telenisus Corp., a network security and data storage company from 2000-2001. From January 2001 to October 2001, she was regional director at Riptechi Inc., a network security company. From October 2001 to March 2003, she owned Definitive Market Consultants, a consulting company. Since March 2003, Ms. Kurihara has been a senior manager of new product development and product strategy at Qwest.

Randy Tejral is retired and is a private investor in residential real estate. Mr. Tejral was the founder and President of Tejral Masonry, Inc., a masonry construction firm in Omaha, Nebraska. Mr. Tejral has been a director of Blackhawk since March 2005.

Mick Woodwards has been a director of Blackhawk since August 2004. Since November 1993, Mr. Woodwards has been owner of Lakewood Rent-All, a party rental firm in Lakewood, California.

Except as indicated above, none of our directors holds any directorships in companies with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act.

There are no family relationships among any of our directors or executive officers.

Board Composition

Blackhawk's Board of Directors consists of five directors. At each annual meeting of its stockholders, all of its directors are elected to serve from the time of election and qualification until the next annual meeting following election. In addition, Blackhawk's bylaws provide that the maximum authorized number of directors may be changed by resolution of the stockholders or by resolution of the board of directors.

Meetings and Committees of the Board of Directors

Our Board of Directors conducts its business through meetings of the Board and by acting pursuant to unanimous written consent without a meeting. From January 1, 2009 to December 31, 2009, the Board of Directors held four (4) meetings in person or by teleconference. During 2009, the Board of Directors also acted by unanimous written consent nine (9) times.

Blackhawk has a Stock Option Committee but does not have any other board committees, including an audit committee. Blackhawk's Stock Option Committee was formed in January 2009 and consists of Robert J. Francis and Janet Buxman Kurihara. The Stock Option Committee administers the Company's Stock Option Plan. The Stock Option Committee acted by unanimous written consent one (1) time.

Blackhawk does not have a nominating committee or committee performing similar functions. Blackhawk's Board of Directors believes that it is appropriate for Blackhawk not to have such a committee because of the costs associated with such process and that Blackhawk has not yet raised sufficient capital or made its first portfolio investment. All directors participate in the consideration of director nominees.

Blackhawk does not have any procedures by which security holders may recommend nominees to its board of directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Based upon a review of filings with the SEC, we believe that all our directors, executive officers and 10% beneficial owners complied during fiscal 2009 with the reporting requirements of Section 16(a) of the Exchange Act.

Limitations of Liability and Indemnification of Directors and Officers

Our bylaws limit the liability of directors and officers to the maximum extent permitted by Delaware law. We will indemnify any person who was or is a party, or is threatened to be made a party to, an action, suit or proceeding, whether civil, criminal, administrative or investigative, if that person is or was a director, officer, employee or agent of ours or serves or served any other enterprise at our request.

We have been advised that it is the position of the SEC that insofar as the indemnification provisions referenced above may be invoked to disclaim liability for damages arising under the Securities Act, these provisions are against public policy as expressed in the Securities Act and are, therefore, unenforceable.

Code of Ethics

Blackhawk has adopted a Code of Ethics under Rule 17j-1 of the Investment Company Act that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For purposes of this item, the term code of ethics means written standards that are reasonably designed to deter wrongdoing and to promote:

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

full, fair, accurate, timely, and understandable disclosure in reports and documents that Blackhawk files with, or submits to, the SEC and in other public communications made by the issuer;

compliance with applicable governmental laws, rules and regulations;

the prompt internal reporting of violations of the code to the board of directors or another appropriate person or persons; and

accountability for adherence to the code.

The Board of Directors voted by unanimous written consent on August 17, 2006 to amend and restate the Code of Ethics to include additional compliance provisions applicable to Blackhawk's directors, officers and employees recommended by a consulting firm specializing in SEC compliance matters for business development companies registered under the Investment Company Act, such as Blackhawk. The Company does not have an audit committee.

Blackhawk hereby undertakes to provide to any person without charge, upon request, a copy of such code of ethics. Such request may be made in writing to the Chairman of the Board of Directors at Blackhawk Capital Group BDC, Inc., 880 Third Avenue, 12th Floor, New York, NY 10022.

Item 11. Executive Compensation

Except as set forth herein with respect to the Zabala Employment Agreement, since its inception (April 2004), Blackhawk has not paid any compensation to its executive officers or directors, except to Brad Silver, a former officer and director of Blackhawk who resigned on December 8, 2005, was paid $12,000 in consulting fees to assist Blackhawk in extraordinary administration duties during fiscal year 2005. Other than its Stock Option Plan described herein, Blackhawk does not presently have and never has had any stock option plans, equity incentive or award plans, pension or retirement plans, non-qualified deferred compensation plans, director compensation plans, or any other similar plan.

Blackhawk's Board of Directors does not have a standing compensation committee or committee performing similar functions. It is the view of the Board of Directors that it is inappropriate for Blackhawk to have such a committee because Blackhawk to date has not raised sufficient capital, has made only one portfolio investment (MacroMarkets) and except as noted in the previous paragraph, has not paid any compensation to its officers and directors.

Compensation Discussion and Analysis

The Company's principal executive officer is Craig A. Zabala, who serves as President, CEO and Acting Chief Financial Officer and Acting Chief Compliance Officer.

The Company does not have a Compensation Committee or similar committee. The determination of Mr. Zabala's compensation is made by the Board of Directors and pursuant to his employment agreement. See "Zabala Employment Agreement" herein.

Introduction

This Compensation Discussion and Analysis is designed to provide shareholders with an understanding of the Company's compensation philosophy and objectives and the analysis that we performed in setting executive compensation. It discusses the Board's compensation actions with respect to Dr. Zabala, the only salaried employee of the Company.

Objectives

For the Company's success and enhancement of long-term stockholder value, the Company depends on the management and abilities of its President. The Board's compensation objectives are to provide an important oversight function of compensation and appropriate levels of compensation, reward above average performance, recognize individual initiative and achievement, assist the Company in attracting and retaining qualified management to contribute to its success and motivate the President to enhance stockholder value.

Key Elements of Compensation

Base Salary - Base salaries should meet the objectives of attracting and retaining executive officers needed to successfully manage the Company's business. Actual individual salary amounts are not determined by formulas, but instead reflect the Board's judgment with respect to responsibility, performance, experience, historical compensation, equitable considerations and other factors, including any retention concerns. The Company set Dr. Zabala's base salary in his employment agreement at a low level with increases based upon his success in raising equity capital for the Company.

Bonus - The Company may pay annual bonuses to executive officers to motivate them to achieve the Company principal business and investment goals and to bring total compensation to competitive levels. The bonus is based on a qualitative consideration of individual and company performance. The Board considers a variety of factors in establishing bonuses, including performance, exceeding budgets, peer review and commitment to the Company. The bonus for Dr. Zabala in his employment agreement is also based upon a closing of an equity raise.

Common Stock - We believe that equity ownership by management aligns management's interests with increasing stockholder value. The Company has a stock option plan adopted in 2009 pursuant to which executives are awarded stock options. Dr. Zabala was awarded options to purchase 600,000 shares at $.40 per share pursuant to his employment agreement.

Compensation Determinations

Salary and Bonus

The Board determined that the salary accrued to the President during the 2009 fiscal year was at a level that was in the best interests of shareholders. In making its determination, the Board considered whether the salary payable to Dr. Zabala by the Company pursuant to his employment agreement was consistent with the compensation philosophies described above.

Establishing Compensation Levels

When making compensation decisions for executive officers, the Board of Directors takes many factors into account, including the individual's role and responsibilities, performance, tenure, and experience; the overall performance of the Company; the recommendations of the Board; the individual's historical compensation; and comparison to other executive officers of the Company. The Company does not utilize any benchmarking or performance targets to set its compensation levels.

The Board considers: (a) responsibilities and duties of the President set forth in his employment agreement; (b) President's success in raising equity capital, identifying investments and closing on investments; (c) work with SEC filings; (d) the fact that the President performs all management functions for the Company; (e) compensation in relation to the size of the Company and its investments and their performance; (f) the performance of the Company's assets; and (g) the assets, liabilities and financial performance of the Company.

Evaluating Performance

The Board evaluates the performance of the President on an annual basis. The Board also seeks the input of the President in connection with his performance evaluation; however, the President is not present when the Board meets to evaluate his performance and determine his compensation.

CEO Performance

The Board of Directors uses discretion in its evaluation of individual performance and considers the following factors, among others, in approving any bonus to the President: the President's management, raising of equity or debt capital for the Company strategic planning, business development and investment returns.

Change of Control and Termination Benefits

The Company has an employment agreement with Dr. Zabala which provides for termination benefits. See "Zabala Employment Agreement" below.

Profit Sharing Plan

The Company does not have a profit sharing plan.

Conclusion

The Board of Directors recognizes the important contributions Dr. Zabala has made to the Company in 2009 -- principally, his efforts trying to raise equity capital for the Company through private placements and a Regulation E Offering, closing the MacroMarkets investment (the Company's first investment) and looking for other investments for the Company, establishing relationships with placement agents and investment bankers, working with the Company's investment adviser and managing the operations of the Company.

The Company's compensation philosophy is to incentivize its management and reward them for performance linked to long-term shareholder value. Based upon these factors, the Board of Directors reviewed Dr. Zabala's employment agreement and determined he was not entitled to an increased salary (above $60,000 per annum) and a bonus principally because no equity offering was closed in 2009.

By the Board of Directors of Blackhawk Capital Group BDC, Inc.

Craig A. Zabala	Janet Buxman Kurihara	Mick Woodwards
Randy Tejral	Robert J. Francis

Summary Compensation Table

The following table sets forth information with respect to the compensation paid, earned and accrued for the 2009, 2008 and 2007 fiscal years to each named executive officer, and to each officer of the Company with aggregate compensation in excess of $100,000.

Name and Principal Position	Year	Salary		Bonus		All Other Compensation		Total
Craig A. Zabala, President, CEO, Acting Chief Financial Officer and Compliance Officer and Director	2009	$	60,000	$	0	$	0	$	60,000
	2008	$	0	$	0	$	0	$	0
	2007	$	0	$	0	$	0	$	0

Stock Option Plan

2009 Grants of Plan-Based Awards

The following table sets forth certain information with respect to each grant of an award made to a named executive officer in 2009 under our stock option plan.

Name		Grant Date		All Other Stock Awards: Number of Securities Underlying Options				Exercise or Base Price of Option Awards				Grant Date Fair Value of Stock and Option Awards
Craig A. Zabala		2/1/2009			600,000			$	.40			$	132,000

Outstanding Equity Awards at Fiscal Year End

Name

Number of Securities Underlying Unexercised Unearned Options:

Exercisable

Number of Securities Underlying Unexercised Unearned Options:

Unexercisable

Option Exercise Price

($)

Option Expiration Date

Craig A. Zabala

600,000

.40

2/1/2019

Option Exercises and Stock Vested

No options were exercised in 2009 and no stock awards were made in 2009.

Pension Benefits

The Company does not provide any tax-qualified defined benefit plan or supplemental executive retirement plan, or similar plan that provides for specified retirement payments or benefits.

Employment Agreements

We have no employment agreements other than the Zabala Employment Agreement.

Zabala Employment Agreement

General. On January 30, 2009, we entered into an employment agreement with Zabala. Up to this point, Zabala had not received any kind of compensation for the leadership, management and hard work that he provided to the Company.

For the past five years, in addition to his responsibilities for the Company as its founder, Chairman, President and Chief Executive Officer and acting Chief Financial Officer and Chief Compliance Officer, Zabala has been the founder, Chairman, President, and Chief Executive Officer of Concorde, Chairman, President, and Chief Executive Officer of Concorde Europe Inc., Chairman, President, and Chief Executive Officer of Concorde Europe, Ltd., a company formed under the laws of Wales and England, and founder, Chairman, President and Chief Executive Officer of DBL Holdings, LLC (dba Drexel Burnham Lambert). Zabala is 58 years old. Concorde owns 10,317,681 shares of Company common stock, representing 31.78% of the outstanding shares of Common Stock. Zabala controls Concorde through his 62.42% stock ownership of Concorde. He also owns or controls 2,432,500 shares of Company common stock, representing 7.49% of the outstanding shares of the common stock. Concorde and Zabala may be deemed to control the Company.

Term. The term of the Employment Agreement is three (3) years. The term 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 DBL Holdings, LLC, affiliates of the Company, provided that such work does not compete with the business and business opportunities of the Company.

Compensation. Zabala receives a base annual salary of $60,000 under the Employment Agreement. Each year, the Board of Directors may increase the base salary in its discretion. In the event that the Company sells a minimum of $3,000,000 of shares of its common stock in its current private placement offering ("Offering") under Rule 506 under Regulation D under the Securities Act, the Company shall increase Zabala's 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.

As of December 31, 2009, the Company owes Zabala $60,000 in accrued and unpaid salary under the terms of the Employment Agreement. The Company was unable to pay Zabala's salary payments during 2009.

Pursuant to the Employment Agreement, Zabala is entitled to be granted 600,000 options to purchase shares of Common Stock at an exercise price of fair market value per share on date of grant as determined by the Board of Directors pursuant to the requirements of the Company's Stock Option Plan. The terms of the options granted to Zabala are described above.

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

If Zabala is terminated without cause, or if he resigns for "good reason," he would receive accrued salary and bonuses, if any, to the end of the employment term. In addition, if Zabala is terminated without cause or if he resigns for "good reason," the Company must pay to Concorde rental payments of $4,000 per month from April 2004 until the month Zabala is terminated without cause or resigns for "good reason." If he is terminated for cause, he is not entitled to any rights or compensation under the Employment Agreement, provided that the Company must make the $4,000 monthly rental payment to its affiliate Concorde described in the preceding sentence. 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

General. On January 30, 2009, the Stock Option Committee, consisting of independent directors Janet Buxman Kurihara and Robert J. Francis, approved and administered the Stock Option Grant to Zabala which had been approved by the Board of Directors of the Company. The stockholders of the Company owning approximately 53.25% of the Company's outstanding shares of Common Stock subsequently approved the issuance of the options to Zabala by means of written consent of the stockholders dated January 30, 2009. The Stock Option Grant was made pursuant to the Company's Stock Option Plan and the Zabala Employment Agreement.

The purpose of the issuance of the options is to advance the interests of the Company by rewarding Zabala for the leadership, management and hard work that he has provided to the Company without any compensation to date, providing Zabala with an additional incentive to exert his best efforts on behalf of the Company, to increase Zabala’s proprietary interest in the success of the Company, to reward Zabala’s outstanding performance and to provide a means to retain Zabala’s service to the Company.

Terms. The following are the terms of the stock option grant to Zabala:

Number of options:		600,000
Underlying Security		600,000 shares of Common Stock
Exercise Price:		$.40
Grant Date:		February 1, 2009
Per Share Market Value (as of February 1, 2009)1		0.22
Vesting:		Fully vested upon issuance.
Expiration Date:		February 1, 2019

(1)	Shares of Common Stock trade very infrequently on the OTC Bulletin Board under the symbol BHCG.OB and there can be wide gaps in the bid and ask prices for the shares of Common Stock. Stockholders should be aware of these market conditions.

The Stock Option Committee determined that after a good faith review of the current and historical bid, ask and sales prices of the Company’s common stock on the Over The Counter Bulletin Board market, that the exercise price of the stock options ($.40) is at fair market value of the shares of Common Stock on the date of grant based upon the trailing 52-week high of $.40 per share as reported on the Over the Counter Bulletin Board, and that such exercise price is above net asset value per share on grant date.

No Awards under the Company’s Stock Option Plan (other than the Award to Zabala) were made in 2009 or have been granted to any other officer, director, nominee for election as a director, associate of any director, executive officer or nominee, or to any employee of the Company.

Compensation Committee Interlock and Insider Participation

The Company does not have a compensation committee. During the 2009 fiscal year, the Board of Directors did not hold any meetings to discuss executive officer compensation. Thus, no officer of the Company participated in deliberations of the Board of Directors concerning executive officer compensation. In addition, no executive officer of the Company served as a director or member of the compensation committee of any other entity.

Director Compensation

Members of the Company's Board of Directors are not compensated (in cash or equity) for any services provided as directors.

Stock Option Plan

General. The purpose of the Stock Option Plan is to advance the interests of the Company by providing to directors and officers of the Company and to other key employees of the Company who have substantial responsibility for the direction and management of the Company additional incentives to exert their best efforts on behalf of the Company, to increase their proprietary interest in the success of the Company, to reward outstanding performance and to provide a means to attract and retain persons of outstanding ability to the service of the Company.

Under the Stock Option Plan, options (“Awards”) may be granted from time to time to officers, directors and key employees (“Eligible Persons”), all generally in the Stock Option Committee's (“Committee’s”) discretion. The Committee is composed of at least two non-employee directors, which are responsible for administering the Stock Option Plan. Directors Robert J. Francis and Janet Buxman Kurihara serve as the members of the Committee. Each Award under the Plan will be evidenced by a separate written agreement which sets forth the terms and conditions of the Award. There is no maximum number of persons eligible to receive Awards under the Stock Option Plan, nor is there any limit on the amount of Awards that may be granted to any such person, except as described below with respect to incentive stock options. As a business development company, the Company's Stock Option Plan must be approved by a required majority, as defined in Section 57(o) of the Investment Company, of the Board of Directors on the basis that such issuance is in the best interests of the Company and its stockholders. Non-employee directors will be eligible to participate in the Plan upon issuance of an order by the Securities and Exchange Commission pursuant to Section 61(a)(3)(B)(i)(II) of the Investment Company Act and then only in accordance with the terms and conditions of such order.

Number of Shares. The Company has reserved 3,000,000 shares of Common Stock for issuance under the Stock Option Plan, subject to adjustment to protect against dilution in the event of certain changes in our capitalization. Of such shares, 2,500,000 shall be reserved for incentive stock options.

Administration. The Stock Option Plan will be administered by the Committee. To the extent necessary to comply with Rule 16b-3 under the Exchange Act, the Committee will consist solely of two or more non-employee directors, as that term is defined in Rule 16b-3 under the Exchange Act. Under the Stock Option Plan, the Committee will have complete authority to determine the persons to whom Awards will be granted from time to time, as well as the terms and conditions of such Awards. The Committee also will have discretion to interpret the Stock Option Plan and the Awards granted under the Stock Option Plan and to make other determinations necessary or advisable for the administration of the Stock Option Plan.

Stock Option Terms. The Committee may grant either incentive stock options (for purposes of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)), or nonqualified stock options under the Stock Option Plan. 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 numbers 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.

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

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

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

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

Changes of Control or Other Fundamental Change. The Stock Option Plan provides that upon certain mergers or other reorganizations to which we are a party that involves an exchange or conversion or other adjustment of our outstanding Common Stock, each participant generally shall be entitled upon the exercise of his or her stock options to receive the number and class of securities or other property to which such participant would have been entitled in the merger or reorganization if such participant had exercised such stock option prior to such merger or reorganization.

The Stock Option Plan also provides that, upon the occurrence of a change of control, the Committee has the right, but not the obligation, to accelerate the time at which all or a portion of any outstanding options may be exercised.

Miscellaneous. The Board of Directors generally may amend or terminate the Stock Option Plan or any provision of the Stock Option Plan at any time. To the extent required by the Exchange Act or the Code, however, absent approval by our stockholders, no amendment may (i) materially alter the group of persons eligible to participate in the Stock Option Plan; (ii) except as specifically provided in the Stock Option Plan, increase the number of shares available for Awards under the Stock Option Plan; (iii) extend the period during which incentive stock options may be granted; or (iv) decrease the exercise price of any option granted under the Stock Option Plan. Furthermore, without the consent of the participant, no amendment to or discontinuance of the Stock Option Plan or any provision thereof shall adversely affect any Award granted to the participant under the Stock Option Plan.

Federal Income Tax Consequences. The following is a brief description of the Federal income tax consequences to the participants and the Company of the issuance and exercise of stock options under the Stock Option Plan. All ordinary income recognized by a participant with respect to Awards under the Stock Option Plan shall be subject to both wage withholding and employment taxes. The deduction allowed to us for the ordinary income recognized by a participant with respect to an Award under the Stock Option Plan will be limited to amounts that constitute reasonable, ordinary and necessary business expenses.

Incentive Stock Options. In general, no income will result for Federal income tax purposes upon either the granting or the exercise of any incentive option issued under the Stock Option Plan. If certain holding period requirements (at least two years from the date of grant of the option and at least one year from the date of exercise of the option) are satisfied prior to a disposition of stock acquired upon exercise of an incentive option, the excess of the sales price upon disposition over the option exercise price generally will be recognized by the participant as a capital gain, and the Company will not be allowed a business expense deduction.

If the holding period requirements with respect to incentive options are not met, the participant generally will recognize, at the time of the disposition of the stock, ordinary income in an amount equal to the difference between the option price of such stock and the lower of the fair market value of the stock on the date of exercise and the amount realized on the sale or exchange. The difference between the option price of such stock and the fair market value of the stock on the date of exercise is a tax preference item for purposes of calculating the alternative minimum tax on a participant’s federal income tax return. If the amount realized on the sale or exchange exceeds the fair market value of the stock on the date of exercise, then such excess generally will be recognized as a capital gain. In the case of a disposition prior to satisfaction of the holding period requirements which results in the recognition of ordinary income by the participant, we generally will be entitled to a deduction in the amount of such ordinary income in the year of the disposition.

If a participant delivers shares of our Common Stock in payment of the option price, the participant generally will be treated as having made a like-kind exchange of such shares for an equal number of the shares so purchased, and no gain or loss will be recognized with respect to the shares surrendered in payment of said option price. In such a case, the participant will have a tax basis in a number of shares received pursuant to the exercise of the option equal to the number of shares of Common Stock used to exercise the option and equal to such participants tax basis in the shares of Common Stock submitted in payment of the option price. The remaining shares of Common Stock acquired pursuant to the exercise of the option will have a tax basis equal to the gain, if any, recognized on the exercise of the option and any other consideration paid for such shares on the exercise of the option.

Notwithstanding the foregoing, if a participant delivers any stock that was previously acquired through the exercise of an incentive stock option in payment of all or a portion of the option price of an option, and the holding period requirements described above have not been satisfied with respect to the shares of stock so delivered, the use of such stock to pay a portion of the option price will be treated as a disqualifying disposition of such shares, and the participant generally will recognize income.

Nonqualified Stock Options. The grant of nonqualified stock options under the Stock Option Plan will not result in any income being taxed to the participant at the time of the grant or in any tax deduction for us at such time. At the time a nonqualified stock option is exercised, the participant will be treated as having received ordinary income equal to the excess of the fair market value of the shares of Common Stock acquired as of the date of exercise over the price paid for such stock. At that time, we will be allowed a deduction for Federal income tax purposes equal to the amount of ordinary income attributable to the participant upon exercise. The participant's holding period for the shares of Common Stock acquired will commence on the date of exercise, and the tax basis of the shares will be the greater of their fair market value at the time of exercise or the exercise price.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth each person known by Blackhawk to be the beneficial owner of five percent (5%) or more of the common stock of Blackhawk, all directors and executive officers individually and all directors and executive officers of Blackhawk as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.

Name and Address of Beneficial Owner	Amount of Beneficial Ownership			Percentage of Class
Dr. Craig A. Zabala
P.O. Box 377
Canal Street Station
New York, New York 10013		2,432,500	(1)(2)		7.36	%

The Concorde Group, Inc.
400 Park Avenue, 14th Floor
New York, New York 10022		10,317,681	(3)		31.78	%

Robert M. Fujii(4)
1624 Acton Street
Berkeley, California 94702		500,000			1.54	%

Robert J. Francis(4) 5416 South 161st Street Omaha, Nebraska 68135		0			0	%

Janet Buxman Kurihara(4)
11007 North Cottontail Lane
Parker, Colorado 80138		0			0	%

Randy Tejral(4) 6529 Pine Ridge Road Elkhorn, Nebraska 68022		0			0	%

Mick Woodwards(4)
4849 Woodruff Avenue Lakewood, California 90713		1,320,269			4.07	%

Doreen McCarthy(5) 426 Broome Street New York, NY 10013		2,245,000			6.91	%

All Executive Officers and
Directors as a Group (6 Persons)		4,252,769			12.86	%

(1)

Excludes 10,317,681 shares of common stock and held by The Concorde Group, Inc. of which Dr. Zabala is the control person. Includes 100,000 shares held in Uniform Transfer to Minors accounts for Dr. Zabala's two nieces. Also includes options to purchase 600,000 shares, which are presently exercisable.

(2)	Dr. Craig A. Zabala may be deemed to be a control person of Blackhawk as defined in Section 2(a)(1) of the Investment Company Act of 1940, as amended.

(3)	Dr. Craig A. Zabala is an officer, director and controlling stockholder of The Concorde Group, Inc.

(4)	The individual listed is a less than one percent (1%) shareholder of The Concorde Group, Inc.

(5)	An aggregate of 165,000 shares are held in UTMA accounts for Ms. McCarthy's nieces, nephews and close family friends.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Concorde owns 10,317,681 shares of Blackhawk Common Stock, representing 31.78% of the outstanding shares of Common Stock. Craig A. Zabala, Chairman and President of Concorde, is also Chairman and President of Blackhawk, and controls Concorde through his 62.42% stock ownership of Concorde. He also owns or controls 2,432,500 shares of Blackhawk Common Stock, representing 7.36% of the outstanding shares of Blackhawk Common Stock. Concorde and Zabala may be deemed to control Blackhawk.

During 2004, 2005 and 2006, the Company borrowed $91,908, $13,281 and $133,005, respectively, from Concorde to fund the formation of Blackhawk, offering costs for the offering plan and operating expenses. Of the amount borrowed in 2006, $100,000 was evidenced by a demand convertible note bearing interest at 8.25% per annum convertible after November 1, 2006 into common stock of the company at a price of $1.00 per share, or the price per share of the Company's Regulation E Offering. On June 4, 2007 Concorde converted the note (including accrued interest of $7,391) for 107,391 shares of common stock. The balance of borrowings were non-interest bearing and are due on demand. The borrowings were approved unanimously by the board of directors of Blackhawk as fair and in the best interest of Blackhawk.

In 2006 and 2005, the Board of Directors unanimously voted to allow Concorde to convert amounts due to Concorde of $68,847 (evidenced by a non-interest bearing promissory note due on demand) and $61,432, respectively into 6,884,700 and 6,143,200 shares respectively of common stock at $.01 per share, which was the offering price set forth in Blackhawk’s Form 1-E and its Offering Circular for its first Regulation E offering, which the Board of Directors approved unanimously and determined was in the fair and best interest of Blackhawk.

At December 31, 2009 and 2008, Blackhawk had no outstanding borrowings due to Concorde.

Blackhawk paid a consulting fee of $12,000 to a former vice president and stockholder of the Company during the year ended December 31, 2005.

The Company shares office space and other administrative functions with Concorde at $4,000 per month commencing January 1, 2009. Prior to January 1, 2009, the Company did not pay rent to Concorde for this sublease of space and services. As of December 31, 2009, Blackhawk owed Concorde $48,000 under such arrangement.

On May 29, 2007, Blackhawk issued a convertible note in the principal amount of $25,500 ("Note") to Concorde. The Note evidenced a loan from Concorde to the Company for advances of $17,500 during the nine months ended September 30, 2007 together with $8,000 of advances made to the Company prior to January 1, 2007. The advances were used to fund a portion of expenses incurred by the Company consisting of legal fees and expenses, accounting fees and expenses, general and administrative expenses. The Note is repayable upon demand and does not bear interest. The Note is convertible into shares of common stock of the Company at a conversion rate of one share of common stock per $1.00 of principal amount of Note converted, the price per share in the Company's second Regulation E offering. The transaction was approved by unanimous written consent by the Board of Directors of the Company as being fair and in the best interests of the Company. On June 4, 2007, pursuant to the terms of the Note, Concorde converted the $25,500 principal amount of the Note into 25,500 shares of Common Stock at $1.00 of principal amount of Note converted, the price per share in the Company's second Regulation E offering.

See discussion above in Item 11. Executive Compensation regarding the Zabala Employment Agreement. Mr. Zabala is a control person of Concorde, Blackhawk’s largest shareholder.

Review, Approval or Ratification of Transactions with Related Persons

Blackhawk has a Code of Ethics which governs, in part, review, approval and ratification of transactions between Blackhawk and an affiliated party. Blackhawk also complies with the provisions of the Investment Company Act applicable to transactions by a business development company and an affiliated or related party. All affiliated transactions must be approved by all of the independent directors of Blackhawk and be fair and reasonable to Blackhawk and its stockholders.

Director Independence

The Board of Directors has determined that all of the directors except Craig A. Zabala and Mick Woodwards are "independent" under NASDAQ Corporate Governance Listing Standards, as well as in the assessment of the Board of Directors. The Board of Directors based this determination on a review of the responses of the directors and executive officers to oral questions regarding employment and compensation history, Company stock ownership, affiliations and family and other relationships and on discussions with directors. Blackhawk does not have any audit, compensation, nominating or governance committee of the Board of Directors.

Item 14. Principal Accountant Fees and Services

AUDIT FEES

The aggregate fees expected to be billed by Eisner LLP, our independent registered public accounting firm, for professional services rendered for the audit and quarterly reviews of our financial statements for fiscal years 2009, 2008, 2007 and 2006 were $115,000, $113,000, $61,219 and $14,223, respectively.

The aggregate fees billed by Paritz & Company, P.A. for professional services rendered for the audit of our financial statements for fiscal year 2005 were $3,915.

AUDIT-RELATED FEES

The aggregate fees billed during the period of December 31, 2009 and December 31, 2008 for assurance and related services by Eisner LLP that are reasonably related to the performance of the audit or review of Blackhawk's financial statements was $0.

The aggregate fees billed during the year ended December 31, 2005 for assurance and related services by Paritz & Company, P.A. that are reasonably related to the performance of the audit or review of Blackhawk's financial statements was $0.

TAX FEES

The aggregate fees billed for the period ended December 31, 2009 and December 31, 2008 for professional services rendered by Eisner LLP for tax compliance, tax advice and tax planning was $0.

The aggregate fees billed for the year ended December 31, 2005 for professional services rendered by Paritz & Company, P.A. for tax compliance, tax advice, and tax planning was $0.

ALL OTHER FEES

The aggregate fees billed for the year ended December 31, 2009 and December 31, 2008 by Eisner LLP other than services reported above was $0.

The aggregate fees billed for the fiscal year ended December 31, 2005 for products and services provided by Paritz & Company, P.A., other than the services reported above was $0.

PRE-APPROVAL POLICIES AND PROCEDURES

Before the accountants are engaged by Blackhawk to render audit or non-audit services, the engagement is nominated and approved by Blackhawk's board of directors.

Item 15. Exhibits and Financial Statement Schedules

(a)

Exhibits

10.18		Amendment dated December 14, 2009 to Private Placement Agreement dated August 21, 2009 between Registrant and Growthink Securities, Inc.

10.19		Amendment dated December 15, 2009 to Private Placement Agreement dated August 3, 2009 between Registrant and Bentley Securities Corporation

10.20		Amendment dated December 15, 2009 to Private Placement Agreement dated July 20, 2009 between Registrant and Direct Access Partners, LLC

31.1		Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

31.2		Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32.1		Certification by Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

32.2		Certification by Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BLACKHAWK CAPITAL GROUP BDC, INC. (Registrant)

Dated: March 30, 2010	BY:	/s/ Craig A. Zabala
		Craig A. Zabala
		Chairman, President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Craig A. Zabala		/s/ Robert M. Fujii
Craig A. Zabala		Robert M. Fujii
Chairman, President and Chief Executive Officer		Vice President

Dated: March 26, 2010		Dated: March 26, 2010

/s/ Craig A. Zabala		/s/ Robert J. Francis
Craig A. Zabala		Robert J. Francis
Acting Chief Financial Officer Principal Accounting Officer		Director

Dated: March 26, 2010		Dated: March 26, 2010

/s/ Janet Buxman Kurihara		/s/ Randy Tejral
Janet Buxman Kurihara		Randy Tejral
Director		Director

Dated: March 26, 2010		Dated: March 26, 2010

/s/ Mick Woodwards
Mick Woodwards
Director

Dated: March 26, 2010

BLACKHAWK CAPITAL GROUP BDC INC.

INDEX TO FINANCIAL STATEMENTS

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS		F-1 & F-2
STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2009 AND 2008		F-3
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2009		F-4
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007		F-5
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007		F-6
STATEMENTS OF STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007		F-7
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007		F-8
NOTES TO FINANCIAL STATEMENTS		F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Board of Directors

Blackhawk Capital Group BDC, Inc.

We have audited the accompanying statements of assets and liabilities of Blackhawk Capital Group BDC, Inc. (the "Company") as of December 31, 2009 and 2008, including the schedule of investments as of December 31, 2009, and the related statements of operations, changes in net assets, stockholders' equity (capital deficit), and cash flows for each of the years in the three-year period ended December 31, 2009 and the financial highlights for each of the years in the four-year period ended December 31, 2009. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Blackhawk Capital Group BDC, Inc. as of December 31, 2009 and 2008, the results of its operations, the changes in its net assets, and its cash flows for each of the years in the three-year period ended December 31, 2009 and the financial highlights for each of the years in the four-year period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company has liabilities in excess of assets at December 31, 2009 and may not be able to fund operating expenses without additional capital and/or loans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Eisner LLP

New York, New York

March 30, 2010

F-1

Paritz	& Company, P.A.	15 Warren Street, Suite 25 Hackensack, New Jersey 07601 (201) 342-7753 Fax: (201) 342-7598 E-Mail: PARITZ@paritz.com

Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Blackhawk Capital Group BDC Inc.

New York, New York

We have audited the accompanying statements of operations, changes in net assets, stockholders’ equity and cash flows of Blackhawk Capital Group BDC Inc. for the year ended December 31, 2005 (which statements are not presented herein) and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, Blackhawk Capital Group BDC Inc.’s results of operations, and its cash flows, changes in stockholders’ equity and the changes in its net assets for the year ended December 31, 2005 and its financial highlights for the year then ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

Paritz & Company, P.A.

Hackensack, New Jersey

March 27, 2006

F-2

BLACKHAWK CAPITAL GROUP BDC INC.

STATEMENTS OF ASSETS AND LIABILITIES

	------ December 31, -----
	2009			2008
ASSETS
Investments at fair value (cost $326,350 and $654,025)	$	325,123		$	652,737
Cash and cash equivalents		59,715			172,797
Prepaid expenses		17,278			12,544
TOTAL ASSETS	$	402,116		$	838,078


LIABILITIES
Accrued expenses	$	536,612		$	118,102
TOTAL LIABILITIES		536,612			118,102


NET (LIABILITIES) ASSETS
Common stock, par value $.00001 per share
1,000,000,000 shares authorized,
32,467,484 shares issued and outstanding in 2009, 2008, respectively		325			325
Additional paid-in capital		2,106,641			1,974,641
Accumulated net investment loss		(2,240,235	)		(1,253,702	)
Net unrealized loss on investment		(1,227	)		(1,288	)
TOTAL NET (LIABILITIES) ASSETS		(134,496	)		719,976

TOTAL LIABILITIES AND NET(LIABILITIES) ASSETS	$	402,116		$	838,078

NET (LIABILITY) ASSET VALUE PER COMMON SHARE	$	(0.00414	)	$	0.02218

See notes to financial statements

F-3

BLACKHAWK CAPITAL GROUP BDC INC.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2009

COMPANY	INVESTMENT	INITIAL ACQUISITION DATE	PRINCIPAL AMOUNT/ NUMBER OF UNITS		COST		FAIR VALUE		% OF TOTAL ASSETS
MacroMarkets LLC	Capital Interest	1/21/09		624,432	$	250,000	$	250,000		62.17
Caterpillar Fin. 4.15% due 1/15/10	Notes	10/13/09	$	25,000		25,495		25,024		6.22
Citigroup 4.125% due 2/22/10	Notes	10/13/09	$	25,000		25,421		25,100		6.24
Protective Life 4.05% due 1/15/10	Notes	10/13/09	$	25,000		25,434		24,999		6.22
					$	326,350	$	325,123

See notes to financial statements

F-4

BLACKHAWK CAPITAL GROUP BDC INC.

STATEMENTS OF OPERATIONS

	YEAR ENDED DECEMBER 31,
	2009			2008			2007
INVESTMENT INCOME:
Interest income	$	6,101		$	17,613		$	3,263
Total Investment Income		6,101			17,613			3,263

EXPENSES:
Compensation		232,222			-			-
Professional fees		607,540			380,835			366,147
Advisory fee		16,738			11,301			3,117
Consulting fees		25,000			-			-
Rent-related party		48,000			-			-
Filing fees		22,543			8,726			8,767
Insurance		34,292			20,851			21,053
Interest expense to affiliate		-			-			3,266
Other		6,299			989			4,829

TOTAL EXPENSES		992,634			422,702			407,179

NET INVESTMENT LOSS		(986,533	)		(405,089	)		(403,916	)

UNREALIZED GAIN (LOSS) ON INVESTMENTS		61			(6,501	)		5,213
NET DECREASE IN ASSETS RESULTING FROM OPERATIONS	$	(986,472	)	$	(411,590	)	$	(398,703	)

LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.03038	)	$	(0.01284	)	$	(0.01290	)

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		32,467,484			32,067,532			30,896,792

See notes to financial statements

F-5

BLACKHAWK CAPITAL GROUP BDC INC.

STATEMENTS OF CHANGES IN NET ASSETS

	--YEAR ENDED DECEMBER 31, --
	2009			2008			2007
NET DECREASE IN ASSETS FROM OPERATIONS
Net investment loss	$	(986,533	)	$	(405,089	)	$	(403,916	)
Unrealized gain (loss) on investments		61			(6,501	)		5,213
NET DECREASE IN ASSETS
RESULTING FROM OPERATIONS		(986,472	)		(411,590	)		(398,703	)


CAPITAL STOCK TRANSACTIONS:
Proceeds from common stock sold		-			1,298,112			525,001
Conversion of notes and advances
to affiliate into common stock		-			-			132,891
Offering costs		-			(129,311	)		-
Stock based compensation		132,000			-			-

NET INCREASE IN ASSETS
FROM CAPITAL STOCK TRANSACTIONS		132,000			1,168,801			657,892


TOTAL (DECREASE) INCREASE IN NET ASSETS		(854,472	)		757,211			259,189

NET ASSETS (LIABILITIES) – BEGINNING OF YEAR		719,976			(37,235	)		(296,424	)

NET (LIABILITIES) ASSETS – END OF YEAR	$	(134,496	)	$	719,976		$	(37,235	)

See notes to financial statements

F-6

BLACKHAWK CAPITAL GROUP BDC INC.

STATEMENTS OF NET (LIABILITIES) ASSETS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

				-------COMMON STOCK--------				ADDITIONAL PAID-IN			NET UNREALIZED APPRECIATION ON			ACCUMULATED NET INVESTMENT
	TOTAL			SHARES		AMOUNT		CAPITAL			INVESTMENT			LOSS
Balance – December 31, 2006	$	(296,424	)		30,511,481	$	305	$	147,968		$	-		$	(444,697	)

Net decrease in assets resulting from operations		(398,703	)		-		-					5,213			(403,916	)

Sale of stock pursuant to offering plan (at $1.00 per share)		525,001			525,000		6		524,995			-			-

Conversion of amount owed to affiliate (at $1.00 per share)		132,891			132,891		1		132,890			-			-

Balance-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		1,298,099			-			-

Offering 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		(986,472	)		-		-		-			61			(986,533	)

Stock-based compensation		132,000			-		-		132,000			-			-

Balance - December 31, 2009	$	(134,496	)		32,467,484	$	325	$	2,106,641		$	(1,227	)	$	(2,240,235	)

See notes to financial statements

F-7

BLACKHAWK CAPITAL GROUP BDC INC.

STATEMENTS OF CASH FLOWS

	YEAR ENDED DECEMBER 31,
	2009			2008			2007
CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES:
Net decrease in assets resulting from operations	$	(986,472	)	$	(411,590	)	$	(398,703	)
Adjustments to reconcile net decrease in assets to net cash used in operating and investing activities:
Unrealized (gain) loss on investments		(61	)		6,501			(5,213	)
Stock Based Compensation		132,000
Change in:
Increase (decrease) in accrued expenses		418,510			(180,156	)		104,323
(Decrease) increase in prepaid expenses		(4,734	)		(4,000	)		455
Purchase of Investments		(326,350	)		(2,379,209	)		(391,226	)
Proceeds from sale and redemption of investments		654,025			1,968,000			151,676
NET CASH USED IN
OPERATING AND INVESTING ACTIVITIES		(113,082	)		(1,000,454	)		(538,688	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Offering costs		-			(129,311	)		-
Proceeds from the issuance of stock		-			1,298,112			525,001
Advance from affiliated company		-			-			17,500

NET CASH PROVIDED BY FINANCING ACTIVITIES		-			1,168,801			542,501

NET (DECREASE) INCREASE IN CASH		(113,082	)		168,347			3,813

CASH AND EQUIVALENTS – BEGINNING OF YEAR		172,797			4,450			637

CASH AND EQUIVALENTS – END OF YEAR	$	59,715		$	172,797		$	4,450
Non-cash financing activities:
Conversion of amount due affiliated company into Common stock	$	-		$	-		$	132,891

See notes to financial statements

F-8

BLACKHAWK CAPITAL GROUP BDC INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009

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 20, 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 and pursuant to the requirements for reporting on Form 10-K and Regulation S-X.

The Company had a decrease in net assets resulting from operations for the year ended December 31, 2009 of $986,472 and total net liabilities of $134,496 as of December 31, 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, 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 January 1, 2011 to the extent that Concorde has such capital available and may lend it to Blackhawk. 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. Such uncertainty raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not reflect any adjustment that might result from the outcome of this uncertainty.

Uses 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 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.

F-9

Cash and Cash Equivalents

The Company considers all highly liquid investment instruments purchased with a maturity of three months or less to be cash equivalents.

Income Taxes

The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amount and the tax basis of assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance when it is not more likely than not that such assets will be realized.

As of December 31, 2009, net deferred tax assets aggregated approximately $958,000, 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 December 31, 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 2009 remain open to examination by the major tax jurisdictions to which the Company is subject.

Revenue recognition

Unrealized gain and losses resulting from the change in the valuation of investments are reflected in the statements 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.

Investments

The Company's investments are carried at fair value.

Net loss per common share

Basic earnings (loss) per share is computed solely on the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects all potential dilution of common stock as applicable.

F-10

The following table provides Basic and diluted earnings (loss) per share for the years ended December 31, 2009 and 2008 and 2007:

	Net Loss			Weighted Average Shares		Basic and Diluted Loss Per share
Year Ended December 31, 2009
	$	(986,472	)		32,467,484	$	(0.03038	)

	Net Loss			Weighted Average Shares		Basic and Diluted Loss Per share
Year Ended December 31, 2008
	$	(411,590	)		32,067,532	$	(0.01284	)

	Net Loss			Weighted Average Shares		Basic and Diluted Loss Per share
Year Ended December 31, 2007
	$	(398,703	)		30,896,792	$	(0.01290	)

For the year ended December 31, 2009, 600,000 shares attributable to stock options were excluded from the calculation of diluted loss per share because the effect was anti-dilutive. There were no potential dilutive securities outstanding in 2008 and 2007.

2. STOCKHOLDERS’ EQUITY

During 2007, pursuant to a Regulation E Offering, the Company sold and exchanged an aggregate of 657,891 shares of common stock, $.00001 par value per share ("Common Stock"), at a purchase price of $1.00 per share. The Company issued $525,500 shares for $525,001. In addition, the Company issued to Concorde, an affiliate and the largest stockholder of the Company, 132,891 shares in exchange for (x) $107,391 in a convertible note (consisting of $100,000 in principal and $7,391 in accrued and unpaid interest) owed by the Company to Concorde and issued on August 1, 2006 and (y) $25,500 in a convertible note owed by the Company to Concorde and issued on May 29, 2007. The conversion price for both of these notes was $1.00 per share of Common Stock.

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.

During 2009, the Company did not sell any shares of its Common Stock or any other equity security.

F-11

3. INCOME TAXES

The net deferred tax asset in the accompanying table include the following amounts of deferred tax assets and liabilities:

Deferred Tax Assets	2009			2008
Capitalized Startup Costs	$	594,000		$	564,000
Net Operating Loss		364,000			-
		958,000			564,000
Valuation Allowance		(958,000	)		(564,000	)
Net Deferred Tax Asset	$	-		$	-

The deferred tax assets represent the benefit of its capitalized startup costs and the net operating loss carry forward. The net operating loss will expire by 2029. The Company has provided a full valuation allowance for such deferred tax assets based on the likelihood of realization.

The difference between the statutory tax rate of 34% and the company's effective tax rate is due to the increase in the valuation allowance of $394,000 (2009), $182,000 (2008), and $182,000 (2007) and certain expenses not deductible for tax purposes.

4. FAIR VALUE MEASUREMENT

The Company carries its investments at fair value. Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction costs. A fair value hierarchy consists of three levels that are used to prioritize inputs to fair value techniques:

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

	·	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.

F-12

The inputs used by the Company in estimating the value of investments classified as Level 3 may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows.

The values assigned to investments are based on available information and do not necessarily represent amounts that might be realized if a ready market existed and such differences could be material. Furthermore, the ultimate realization of such amounts depends on future events and circumstances and therefore valuation estimates may differ from the values realized upon disposition of individual positions.

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

	Carrying Value		Quote Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2009:
Financial Assets
Notes	$	75,123			$	75,123
Membership Interest in LLC		250,000				-	$	250,000
Total Financial Assets	$	325,123			$	75,123	$	250,000
December 31, 2008:
Financial Assets
Notes	$	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 year ended December 31, 2009:

	Membership Interest In LLC
Balance as of January 1, 2009	$	-
Purchases		250,000
Balance as of December 31, 2009	$	250,000

There was no change in the unrealized gain/(losses) in earnings of the Company's Level 3 assets still held at December 31, 2009.

In the normal course of its business, the Company’s investments may be subject to the following risks:

Market risk represents the potential loss that can be caused by increases or decreases in the fair value of investments.

F-13

Interest rate risk is the risk that the fair value or future cash flows of fixed income or rate sensitive investments will increase or decrease because of changes in interest rates. Generally the value of fixed income securities will change inversely with changes in interest rates. As interest rates rise, the fair value of fixed income securities tends to decrease. Conversely, as interest rates fall, the fair value of fixed income securities tends to increase. This risk is generally greater for long-term securities than for short-term securities.

Credit risk represents the potential loss that would occur if counterparties fail to perform pursuant to the terms of their obligations. In addition to its investments, the Company is subject to credit risk to the extent a custodian or broker with whom it conducts business is unable to fulfill contractual obligations.

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

5. RELATED PARTY TRANSACTIONS

At December 31, 2006, the Company owed Concorde $8,000 of outstanding non-interest bearing borrowings and a demand convertible note in the principal amount of $100,000 bearing interest at 8.25% per annum. The note was convertible after November 1, 2006 into common stock of the Company at a price of $11.00 per share or the price per share of the Company’s next Regulation E offering.

On May 29, 2007, Blackhawk issued a convertible note in the principal amount of $25,500 to Concorde. The note evidenced a loan from Concorde to the Company for advances of $17,500 during 2007 together with $8,000 of the advances owed to Concorde as of December 31, 2006. The advances were used to fund a portion of expenses incurred by the Company consisting of legal fees and expenses, accounting fees and expenses, general and administrative expenses. The note was repayable upon demand and did not bear interest and was convertible into shares of common stock of the Company at a conversion rate of one share of common stock per $1.00 of principal amount of note converted, the price per share in the Company's Regulation E offering. On June 4, 2007, pursuant to the terms of the notes, Concorde converted the $125,500 principal amount of the notes plus accrued interest of $7,391 into 132,891 shares of Common Stock at $1.00 of principal amount of note converted, the price per share in the Company's Regulation E offering.

Through December 31, 2008, the Company shared office space and other administrative functions with Concorde at no charge to the Company. Commencing January 1, 2009, Concorde charged the Company monthly rent of $4,000. Rent expense for the year ended December 31, 2009 amounted to $48,000.

6. 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 was for a one-year term and extendable for one year periods. The agreement with Barak was extended and expires on October 31, 2010. 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.

F-14

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 (or a prorated period when applicable).

For the year ended December 31, 2009 and 2008, the Company incurred fees to Barak in the amount of $16,738 and $11,301, respectively.

7. ACCRUED EXPENSES

Accrued expenses at December 31, 2009 and 2008 consist principally of legal fees.

8. STOCK OPTION PLAN

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 shall be 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”). As of December 31, 2009, one grant has been made under the Stock Option Plan.

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.

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

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

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

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

9.	STOCK-BASED COMPENSATION

The Company accounts for stock-based payments by recording 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 year ended December 31, 2009:

	Shares Under Options		Weighted Average Exercise Price		Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at beginning of period		-		-
Grants		600,000	$	0.40
Exercised		-		-
Forfeited		-		-
Outstanding at end of period		600,000	$	0.40		9.08		-
Exercisable at end of period		600,000	$	0.40		9.08		-

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company's common stock. As of December 31, 2009, there were no options outstanding to purchase shares with an exercise price below the quoted price of the Company's common stock.

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The fair value of stock options was 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:

	Year Ended December 31, 2009
Risk-free interest rate		1.88	%
Expected option life in years		5
Expected 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 of 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' 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 the date of grant for options granted during the year ended December 31, 2009 was $0.22. The Company recorded $132,000 of compensation expense for the year ended December 31, 2009. Estimated unrecognized stock-based compensation relating to stock options as of December 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 term 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") 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. As of December 31, 2009, the Company owed Mr. Zabala $60,000 under his Employment Agreement.

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

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

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 market value) which expires on February 1, 2019. The options were fully vested upon issuance.

Placement Agent Agreements:

The Company retained placement agents to raise equity capital in a private placement offering the ("Offering") under Rule 506 of the Securities Act pursuant to placement agent agreements with John W. Loofbourrow Associates, Inc., Direct Access Partners, LLC, Lombardi & Co., Bentley Securities Corporation and Growthink Securities, Inc., respectively, dated July 8, July 20, July 27, August 3, and August 21, 2009, respectively ("Placement Agent Agreements"). All five of these agreements contain nearly identical terms. The Placement Agents solicited 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 in the Offering. There was no minimum amount to be raised by the Placement Agents for the Offering and the maximum amount was $250,000,000. In return for the Placement Agent services, Blackhawk agreed to pay a Placement Agent a five percent (5%) placement fee for securities placed. The Placement Agent Agreements commenced on the date of the agreement or, in the case of Bentley Securities Corporation, the day immediately thereafter, and terminated 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 50,000,000 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 terminated 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."

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On December 14, 2009, the Company determined to terminate the offerings because no shares were sold. As a result, the Company determined to raise up to $5,000,000 (1,000,000 shares of Common Stock at an offering price of $5.00 per share) pursuant to Regulation E under the Investment Company Act and the Securities Act.

On December 14, 2009, Blackhawk entered into an amendment ("Amendment") of its Placement Agent Agreement with Growthink Securities, Inc. On December 15, 2009, the Company entered into an Amendment of its Placement Agent Agreement with Bentley Securities Corporation and an Amendment of its Placement Agent Agreement with Direct Access Partners, LLC. The purpose of each Amendment was to clarify, among other things, that: (a) the term "Offering" in each Placement Agent Agreement also included the Company's offering of up to 1,000,000 shares (5.00 per share) pursuant to Regulation E (the "Regulation E Offering") under the Investment Company Act and the Securities Act, and (b) that the Placement Agent receive a ten percent (10%) placement agent fee for shares sold in the Regulation E Offering. Growthink Securities declined to participate in the Regulation E Offering.

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"). MacroMarkets develops financial products and new risk management tools on assets that are difficult to own and hedge. 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.

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11. FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the years ended December 31, 2009, 2008, 2007, 2006 and 2005.

	YEAR ENDED DECEMBER 31,
	2009			2008			2007			2006			2005
Per Share Data:
Net asset value – beginning of period	$	0.02218		$	(0.00119	)	$	(0.00972	)	$	0.00093		$	0.00050

Net investment loss *		(0.03039	)		(0.01263	)		(0.01307	)		(0.01371	)		(0.00220	)
Issuance of common stock		-			1.00000			1.00000			0.01000			0.00417
Net realized and unrealized gain(loss)**		0.00407			(0.96400	)		(0.97840	)		(0.00694	)		(0.00154	)
Net (liability) asset value – end of period	$	(0.00414	)	$	0.02218		$	(0.00119	)	$	(0.00972	)	$	0.00093

Total return based on net asset value		(119	%)		(1,061	%)		(135	%)		(1,474	%)		(440	%)

Common shares outstanding – end of period***		32,467,484			32,467,484			31,169,372			30,511,481			23,626,781
Ratio/Supplemental Data:
Net (liabilities) assets – end of period		(134,496	)	$	719,976		$	(37,235	)	$	(296,424	)	$	21,976

Ratio of net investment loss to average net assets		(334	%)		(88	%)		(813	%)		(3,524	%)		(91	%)

Ratio of operating expenses to average net assets		(336	%)		91	%		819	%		3,528	%		94	%

*	Calculated based on weighted average shares outstanding during period.

**	Net realized and unrealized gain(loss), per share, which is balancing amounts necessary to reconcile the change in net asset value per share with the other per share information presented.

***	Common shares outstanding are reduced by rescinded shares.

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BLACKHAWK CAPITAL GROUP BDC INC - FORM 10-K - March 31, 2010

Attached files

BLACKHAWK CAPITAL GROUP BDC INC Reports