SEC Info - Blackhawk Capital Group BDC Inc

OFFERING

Blackhawk is offering for sale a maximum of 10,000,000 shares of its Common Stock on a "best efforts" basis at a purchase price of $0.50 per share. There is no minimum offering amount. Under the terms of our Offering, all subscription funds will be placed into a non-interest bearing escrow account by Blackhawk with a bank and funds will be released at "rolling" closings. Funds will be released periodically at closings. After the first closing, there will be additional closings at which Blackhawk will issue shares of its Common Stock under Regulation E of the Securities Act. Blackhawk will hold successive "rolling" closings until up to $5,000,000 (10,000,000 shares) has been raised. The dates of, and the amount of shares sold at, closings will be determined at the sole discretion of Blackhawk. The amount of $5,000,000 is the maximum amount that may be raised in the Offering. All shares sold in our Offering will not contain any restrictive legends as to transfer. The Offering will remain open until May 27, 2011, unless extended at the sole discretion of Blackhawk. All investors must complete a subscription agreement and represent that they are "accredited investors."

The Offering is being conducted pursuant to Regulation E under the Securities Act which applies to offerings undertaken by registered business development companies (BDCs) regulated by the Investment Company Act. In our Offering, shares of common stock are only being offered to "accredited investors" as that term is defined in Rule 501 under Regulation D of the Securities Act and in those States that have coordinated exemptions for Regulation E offerings.

The Company took into account the following factors in determining the offering price of $.50: (i) the offering price exceeds the net asset value ("NAV") per share, which on September 30, 2010 on an unaudited basis was ($0.01669) per share; (ii) the last trade on January 25, 2011 on the OTC Market (OTCQB) for the Common Stock was $.23; and (iii) the Company believes that the offering price could attract investor's interest in purchasing the shares. Because the shares of Common Stock trade so infrequently on the OTCQB, the offering price per share could not be determined based upon market value of the shares of Common Stock.

The date we will begin offering our shares of Common Stock for sale pursuant to this Offering is February __, 2011.

Blackhawk has retained Odeon Capital Group LLC as placement agent for the Offering. See "Placement Agent" immediately below.

Each prospective purchaser must be an "accredited investor" (as defined under the Securities Act of 1933, as amended ("Securities Act")) and sign a Subscription Agreement. The Subscription Agreement contains provisions to avoid (a) any resale by any purchaser deemed a public sale, (b) any purchaser being deemed an underwriter, and (c) any rapid resale of shares in the Offering. Also, the Company is working closely with the Placement Agent to safeguard against a purchaser engaging in any of the activities specified in (a), (b) and (c).

The following officers and directors will assist the Placement Agent in the offering and sale of shares of Common Stock in the Offering: Dr. Craig A. Zabala, Chairman and Chief Executive Officer of the Company, and Walter V.E. Parker, President of the Company. No other officers and directors will be involved in selling shares in the Offering. No disinterested director of the Company will assist in the distribution of the Company's shares. They will not receive any compensation for their work assisting the Placement Agent. No existing stockholders of the Company will receive any shares in the Offering.

Dr. Craig A. Zabala, Chairman and Chief Executive Officer of the Company, will receive accrued salary under his employment agreement of $35,000 in connection with the Offering.

Walter V.E. Parker, President, will receive his salary under his employment agreement of $10,000 per month (commencing December 6, 2010) if the Company raises $1,000,000 in the Offering. He also receives options to purchase up to 900,000 shares of Common Stock at $.40 per share if $4,000,000 is raised in the Offering. See "Recent Developments" below describing how he earns these options based upon the amount the Company raises in the Offering.

The Company has raised a total of $1,711,731 in four offerings since 2004. Except for a single $250,000 investment, all of the proceeds of these offerings have been used to pay for professional services, advisory fees, filing fees, insurance, interest expense, and miscellaneous expenses. The first $800,000 of net proceeds raised in the current offering will be used to pay salaries to senior management, sub-advisers, rent, phones and telecommunications, and miscellaneous operating expenses, at market rates.

On January 24, 2011, the Company entered into an agreement ("Placement Agent Agreement") with Odeon Capital Group, LLC, a Delaware limited liability company ("Placement Agent") to provide placement agent, financial advisory and investment banking services in connection with a Regulation E Offering or Regulation D Offering on an exclusive basis and annual advisory services.

Pursuant to the Placement Agent Agreement, the Placement Agent will act as exclusive placement agent in raising on a best efforts basis up to five million dollars ($5,000,000) pursuant to Regulation D or Regulation E under the Securities Act of 1933, as amended ("Securities Act"). The maximum amount to be raised in the Offering is $5,000,000 and the Company anticipates that 10,000,000 shares will be sold at a purchase price of $.50 per share. There is no minimum requirement for the sale of shares by the Company.

Pursuant to the Placement Agent Agreement, from and after the final closing of the Offering, the Placement Agent will (i) act as the exclusive financial advisor to exclusively source, on behalf of the Company, between $75,000,000 and $250,000,000 of potential portfolio assets to be acquired by the Company in exchange for common stock of the Company; provided, however, that under no circumstances shall the Placement Agent be liable for any failure to source such portfolio assets; and (ii) in the event that $5,000,000 of the shares are sold in the Offering, then for a period of two (2) years, to advise the Company with respect to the retention of an investor relations firm and the sourcing of one or more broker-dealer or investment banking firms to provide research services for the Company ("Annual Services").

If, during the term of the Agreement, or within 24 months thereafter, the Company considers or undertakes any other transaction, including any sale (whether in one or a series of transactions) of all or a substantial portion of the assets or capital stock of the Company, any merger, joint venture, partnership, spin-off, reverse spin-off, non-pro rata spin-off or other business combination involving the Company, or any recapitalization, restructuring or liquidation of the Company or any other form of transaction or disposition that results in the effective sale, transfer or other disposition of ownership or control over a substantial portion of one or more of the principal businesses, assets or operations of the Company, offerings, financing, restructuring, repurchases of securities, foreign exchange or derivatives transaction, including, but not limited to, public or private offerings of debt or equity, or in connection with the transactions contemplated hereby, Placement Agent will have a right of first refusal to serve in the relevant lead roles commonly performed by banks, investment banks and financial advisors in connection with such transactions, including those of lead agent and lead arranger, sole bookrunning lead managing underwriter or initial purchaser (as the case may be), exclusive placement agent, lead financial advisor, principal counterparty and dealer manager, as applicable. Also, if during the term of this Placement Agent Agreement or within 24 months thereafter, the Company is considering or undertakes any other transaction to obtain debt or equity financing or investments in connection with its business (a "Subsequent Offering"), Placement Agent will have a right of first refusal to serve as the Company's exclusive Placement Agent in connection with any Subsequent Offering. In addition, if during the term of the Placement Agent Agreement or within 24 months thereafter, the Company is considering or undertakes any transaction to acquire a portfolio asset, subsidiary or company from a source introduced to the Company by Placement Agent in connection with the Annual Services, Placement Agent will have a right of first refusal to serve in the relevant lead roles commonly performed by financial advisors in connection with such transactions, including those of lead agent and lead arranger, sole bookrunning lead managing underwriter or initial purchaser (as the case may be), exclusive Placement Agent, lead financial advisor, principal counterparty and dealer manager, as applicable. As compensation for any of the foregoing services described in this paragraph, Placement Agent will be paid its customary fees for performing comparable roles in connection with comparable transactions and Placement Agent will enter into a separate agreement or other appropriate documentation with the Company for such transaction(s) containing such compensation and other terms and conditions as are customary for internationally recognized investment banking firms for similar transactions, including, without limitation, appropriate indemnification provisions. If the Company sells securities to or receives financing from any investors previously introduced by the Placement Agent, in connection with the Offering ("Protected Investors"), then in connection with such sales or financing Placement Agent shall receive additional financing fees (the "Additional Fees") that are equal to the greater of (a) the fees set forth below and (b) any underwriting, placement or financing fees that are listed in any future offering circular, prospectus, or placement memorandum. Prior to the termination of this Agreement, the Placement Agent will furnish the Company with a written list of the Protected Investors.

The Placement Agent is entitled to the following fees and expenses:

The Placement Agent's engagement may be terminated by either party at any time, with or without cause, upon written notice to the other party, provided, however, (i) the Placement Agent will be entitled to its full fees and expenses in the event that (x) at any time prior to expiration of 24 months after such termination by the Company, an Offering is consummated; (y) the Company enters into a definitive agreement during the term of the Placement Agent Agreement or during such 24 month period which results in an Offering; or (z) the Company enters into a definitive agreement with any third party that the Placement Agent introduced to it, or to which the Placement Agent provided information about the Company.

The Placement Agent Agreement contains standard indemnification provisions pursuant to which the Company indemnifies the Placement Agent for certain losses.

Executive's role in the Offering will be working with the Placement Agent in connection with marketing the Offering, and trying to introduce prospective purchasers to the Placement Agent for purchases of shares of Common Stock. Executive individually will not sell any shares in the Offering. His compensation (stock options described above) should not be treated as a sales load or commission, and the awarding of his options in tranches is reflective of the success of the Offering as a whole, irrespective of his individual marketing effects.

Substantial dilution will be experienced by purchasers of shares of Common Stock in the Offering. The unaudited net tangible book value of the Company at September 30, 2010 was ($0.01669) per share. The Company had total net liabilities of $541,922 as of September 30, 2010. Net tangible book value represents the amount of total tangible assets of the Company reduced by the amount of its total liabilities, divided by the total number of outstanding shares of voting stock of the Company. The difference between the Offering price per share and the net tangible book value per share of the Company’s voting stock after completion of this Offering constitutes the dilution to holders of the shares offered hereby. After giving effect to the sale of the maximum number of shares in the Offering, and receipt of the net proceeds therefrom, the Company’s pro forma adjusted net tangible book value would have been $3,958,078, or $0.0932 per share. This represents an immediate increase in such net tangible book value of $4,450,000 and $0.10989 per share to existing holders of Common Stock in the maximum offering, as illustrated in the following table:

The following table summarizes, for the maximum offering of $5,000,000, as of September 30, 2010, using the Company's unaudited financial statements, the number of shares of Common Stock purchased, the percentage of total consideration paid and the average price per share (i) paid by present stockholders and (ii) paid by investors purchasing shares in the Offering. In Blackhawk's first three Regulation E offerings, purchasers paid $.01, $1.00 and $1.00, respectively, per share for their shares of Common Stock.

The business of Blackhawk is subject to numerous risk factors, including the following:

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.

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 the MacroMarkets investment described above. Blackhawk has invested part of the net proceeds from its second and third Regulation E Offerings received to date in cash equivalents and in investments with maturity dates of less than one year, but no longer retains such investments because they were sold to pay operational and administrative expenses. Also, it has invested part of the proceeds from its third Regulation E offering in MacroMarkets. Blackhawk currently has no money to invest or operate the Company.

With the exception of Dr. Zabala, who founded Blackhawk, and Walter V.E. Parker, who was appointed President of the Company on December 9, 2010 and has BDC experience, management has no experience in BDC investing and no BDC operations experience. There is no guarantee that the management of Blackhawk will be able to meet the regulatory requirements under the Investment Company Act applicable to BDCs on behalf of Blackhawk.

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

Blackhawk has raised in its four Regulation E offerings only $1,711,731, net of expenses of $221,218, in equity capital and has 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 borrowed $25,500 from 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). The Company attempted 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 a Regulation E offering in January 2010. On January 21, 2010, the Company announced that due to adverse market conditions it had not sold any shares of Common Stock in that Regulation E offering and it subsequently terminated the offering. We can provide you with no assurance that we will be able to raise money in this Offering given difficult market conditions. 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.

This is the fifth Regulation E offering that Blackhawk has conducted. This Offering is being conducted on a "best efforts" basis, and not on a maximum-minimum basis as was the case with Blackhawk's second Regulation E offering. Given that this Offering is on a "best efforts" basis, Blackhawk will close on any subscriptions it receives from prospective investors it deems acceptable in amounts up to $5,000,000. This means that investors who purchase shares in this Offering will not have the protection of a maximum-minimum offering structure.

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

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

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.

As of the date of this Amended Preliminary Offering Circular, Blackhawk has made one portfolio investment, the MacroMarkets investment described herein. There can be no assurance that Blackhawk will be successful in identifying and evaluating suitable business opportunities or in concluding an investment. Except with respect to the ETF industry and distressed companies previously discussed, 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.

Pursuant to the requirements of Section 13 and Rule 13a-11 of the Exchange Act, and Item 9.01 of Form 8-K with respect to the financial statements that must be filed in connection with an acquisition, 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.

Although we are limited by the Investment Company Act with respect to the percentage of our assets that must be invested in qualified investment companies, we are not limited with respect to the minimum standard that any investment company must meet, nor the industries in which those investment 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.

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. Concorde has agreed to provide sufficient capital to fund limited operating expenses. However, there can be no assurance that (i) Concorde will have money to loan to Blackhawk, and (ii) Concorde will continue to lend money to Blackhawk after such date. As of the date of this Amended Preliminary Offering Circular, Concorde does not have funds to lend to or contribute 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.

As a BDC, 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 as a business development company without the consent 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 Memorandum, and Blackhawk does not intend to fall below the 70% requirement as set forth in Section 55 of that Act.

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.

Since October 2010 shares of Common Stock have traded very infrequently on the OTC Markets on the OTCQB under the symbol BHCG. Prior to trading on the OTC Markets OTC QB, shares traded very infrequently on the OTC Bulletin Board. During the period from January 2007 to January 25, 2011, shares have traded between $0.04 and $0.90, with extremely limited 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 in considering whether to purchase shares in this Offering.

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.

Effective January 1, 2008, Blackhawk adopted SFAS No. 157, "Fair Value Measurements" ("SFAS 157"), for investments measured at fair value on a recurring basis. SFAS 157 accomplishes the following key objectives:

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

To increase objectivity in valuing its assets and complementing SFAS 157, 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.

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.

In addition to SFAS 157, Blackhawk intends to use four basic methods of valuation for its investments to assist its Board of Directors in the valuation process. 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.

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

The Small Business Investment Incentive Act of 1980 became law on October 21, 1980. This law modified the provisions of the Investment Company Act, which are applicable to a company, such as Blackhawk, which is 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 a majority of its outstanding voting securities.

A BDC 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 small business investment companies 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 Commission. Control, under the Investment Company Act, as amended, 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 Commission in 2007 adopted revised rules expanding certain definitions of eligible portfolio companies.

The Investment Company Act prohibits or restricts Blackhawk 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 Amended Preliminary Offering Circular, Blackhawk has made the MacroMarkets investment, its only portfolio investment. The net proceeds raised in its second and third Regulation E offerings were invested in the securities referenced in subsection (5) above and $250,000 was used to make the MacroMarkets investment.

The Investment Company Act, under specified conditions, permits Blackhawk 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 the issuance 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 Commission.

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 Commission 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 Commission approval in the case of investment companies, which are not business development companies. However, certain transactions involving certain closely affiliated persons of Blackhawk, including its directors, officers and employees, still require the prior approval of the Commission. 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 Commission, 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 Investment Company 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.

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 that 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 Commission 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 for portfolio securities. The most likely exemption available to Blackhawk is Section 4(1) of the Securities Act, which, in effect, exempts sales of securities in transactions by any person other than an issuer, 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. The Commission has adopted changes to Rule 144, including shortening the one-year holding period to six-months for sales of securities by non-affiliates.

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 Commission, will permit the distribution of such securities and also permit distributee stockholders of Blackhawk to sell such distributed securities.

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 believes that providing significant 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 that 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 subordinate its own investment to those of other investors. Where possible, Blackhawk may introduce its investees to potential suppliers, customers and joint venture partners and assist its investees in establishing relationships with commercial and investment bankers and other professionals, including management consultants, recruiters, legal counsel and independent accountants. Blackhawk also intends to assist in obtaining 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 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.

Blackhawk is subject to substantial competition from business development companies, venture capital firms, new product development companies, marketing companies and diversified manufacturers and other companies, 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.

As of the date of this Amended Preliminary Offering Circular, Concorde owns 10,017,591 shares of Blackhawk Common Stock, representing 30.85% of the outstanding shares of Common Stock. Dr. Zabala, Chairman, President and Chief Executive Officer of Concorde, is also Chairman and Chief Executive Officer 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 Dr. Zabala may be deemed to control Blackhawk. 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.

Blackhawk has conducted four prior Regulation E offerings. The first Regulation E offering terminated on May 18, 2005 and raised net cash proceeds of $17,929. Net proceeds were used to pay for professional services (legal and accounting), consulting, filing fees, insurance, interest expense to affiliate, and other miscellaneous expenses. The second Regulation E offering terminated on November 15, 2007 and raised net cash proceeds of $525,001. Proceeds were used to pay for professional services (legal, accounting, and consulting), advisory fees, filing fees, insurance, interest expense to affiliate, and other miscellaneous expenses, and for short-term investments pending portfolio investment. The third Regulation E offering terminated on November 28, 2008 (the last offer or sale in that offering was made on June 29, 2008) and raised net cash proceeds of $1,168,801. Net proceeds were used to pay for professional services (legal and accounting), investment advisory fees, filing fees, insurance, and other miscellaneous expenses, and for short-term investments pending portfolio investment. The fourth Regulation E Offering was unsuccessful and the Company did not raise any money in that offering; it was terminated on January 21, 2010.

On September 14, 2004, Blackhawk filed a Form N-54A Notification with the Securities and Exchange Commission, 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, and conducting five offerings (including this Offering) under Regulation E, and investing in MacroMarkets LLC (see below).

The Company completed its third Regulation E offering in November 2007. The net amount raised in the three offerings was $1,711,731. At this time, the financial crisis in the U.S. economy and among U.S. financial services and other companies was upon us. Thereafter, during the period from late 2007-2010, Blackhawk engaged a number of FINRA-member broker dealers to raise capital, but were all unsuccessful, as the upheaval in the U.S. capital markets and related regulatory policies precluded all but the very largest U.S. companies to access the public markets. Other BDCs sustained severe losses on their portfolio investments during this period. It was not until 2010 that financial markets and general economic conditions began to improve somewhat. While we were only able to make one investment (MacroMarkets) during this period of turmoil, the Company did not suffer the losses, and resulting legacy issues, from additional investments during this period.

In addition, the Company incurred a great deal of expenses as a result of an SEC audit, two very long and comprehensive SEC reviews (financial and non-financial) of the Company’s Form 1-Es and 1-E/As and 1934 Act filings, four Regulation E offerings and several unsuccessful Regulation D offerings and the legal, accounting and placement agent expenses in connection with such offerings, and the drafting, preparation and filing of the Company’s required 1934 Act filings.

The Company is committed to its obligations to operate as a BDC under the Investment Company Act.

Blackhawk will attempt to locate eligible portfolio companies and other assets 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. Blackhawk intends to acquire a portfolio or portfolios of investments, for shares of its Common Stock, from one or several holders of assets. There can be no assurance that Blackhawk will be able to close any of such transactions or on favorable terms if closed. Blackhawk may attempt to negotiate a commitment for a credit facility to provide additional capital for the purchase of portfolio assets, but there can be no assurance that it will be able to secure such a credit facility.

Blackhawk plans to invest in the lower quadrant of the US middle-market in a diverse range of industries. These investments will include various types of debt and equity securities issued by lower middle-market companies with market capitalizations and revenues under $300 million, which Blackhawk believes is a critically underserved segment of the US capital markets. Blackhawk believes its investment strategy with lower middle-market companies is opportunistic because these companies have been historically under-serviced, by both the commercial banking industry and U.S. based investment firms. This situation has been exacerbated during the current credit crisis which has led to a contraction and consolidation of financing sources; there are fewer commercial banks, specialty finance companies, private equity funds and hedge funds focused on financing lower middle-market companies. Record levels of uninvested private equity capital (estimated at over $500 billion) and refinancing needs (including $300 billion of high-yield bonds maturing in next two years), which will fuel demand for leveraged lending, will only exacerbate the tendency of larger financial services firms to underserve the lower middle-market. These market conditions, which are expected to continue for a prolonged period of time, may allow Blackhawk to negotiate favorable terms with lower middle-market companies, including higher yields, lower/safer leverage levels, more significant covenant protection and greater equity participation than typical of other market transactions. Blackhawk will generally seek to avoid competing directly with other capital providers in order to avoid the less favorable terms typically associated with such competitive investment opportunities. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. There can be no assurance that these objectives will be met or that Blackhawk will be able to make any of these investments or have the funds to make any of the investments.

Blackhawk would seek to invest in compelling opportunities in the credit markets for the lower quadrant of the US middle market. Middle market finance sector has lost a significant number of competitors. Bank consolidation has reduced competition; high yield market focus is on larger companies and transactions; senior lending restraint has re-established need for mezzanine funding, particularly for small to mid-size companies. Competition from finance companies, hedge funds and CLOs has diminished due to scarce capital and risk concerns.

Middle market debt securities are more attractive than broadly syndicated debt securities. These generally have more conservative capital structures, tighter financial covenants, better security packages and higher yields. Established financial relationships are a high barrier to entry in the middle market financing business. There is a preference for accessing capital from, and maintaining close and longstanding relationships with, a small group of established capital providers. There is a preference by private middle market companies to execute transactions with private capital providers, rather than public high-yield bond transactions, which generally necessitate SEC compliance and reporting obligations. The middle market debt sector is a highly fragmented portion of the overall leveraged finance market, in which many of the largest capital providers choose not to participate as a result of a preference for larger, more liquid transactions.

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 or BDC, Blackhawk is able to raise money to acquire interests in small private business, as well as larger private companies, and distressed public companies as defined under the business development company 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.

The Company's investment objective is not a fundamental policy and may be changed without shareholder approval. The Company may invest to control or manage any portfolio companies.

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 offers 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.

Blackhawk has engaged Barak Asset Management, LLC, a New York limited liability company ("Barak"), and an investment adviser registered under the Investment Advisers Act of 1940, as amended, to serve as an investment adviser to Blackhawk and manage its portfolio of investments at such time as when Blackhawk has portfolio 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. Fees depend on the type and amount of assets purchased. For example, if the Company purchases equities in the amount of $1,000,000, it would pay Barak a fee of 0.5625% of the amount of equity security purchased. If the Company purchased a bond in the amount of $500,000, it would pay Barak a fee of 0.50% of the amount of bond purchased. The range of fees for all securities managed by Barak is ..20% to .875%, provided that aggregate fees for assets under management equal to $150 million will be no more than .50% annually. The agreement was renewed to October 31, 2011 by the board of directors in accordance with the Investment Company Act. Barak manages assets of Blackhawk on a non-exclusive basis consistent with Blackhawk's business development company ("BDC") investment guidelines and policies and consistent with the BDC provisions under the Investment Company Act.

Since being retained as investment advisor to the Company commencing October 2006, Barak has provided investment and portfolio management services, including selecting, monitoring and selling the Company's short-term investments.

The custodian of the Company's securities is Barak Asset Management LLC

Blackhawk believes that it will be most likely to succeed in its investment strategies if its 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.

On January 12, 2009, Blackhawk made its first portfolio investment when it 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 Dr. Zabala, Chairman and Chief Executive Officer of Blackhawk, was appointed a non-voting board member of MacroMarkets. The Purchase Agreement contains standard representations, warranties and indemnification provisions. The transaction closed on January 12, 2009. Blackhawk used funds from working capital to make the equity investment.

MacroMarkets, LLC owns MacroFinancial LLC, which is a FINRA registered broker-dealer and has served in the role of distributor of all MacroMarkets registered products to date. MacroMarkets terminated its most recent public products in December 2009 under a preauthorized termination event which also terminated MacroFinancial's distribution of these products. The firm maintains its broker-dealer status with FINRA and is current on all required filings and activities. MacroFinancial will resume its distribution role of MacroMarkets products once new product offerings are filed and approved.

To date six (6) MacroShare products (3 pairs) have been publicly listed. Currently, there are no MacroShare products listed. Of the six (6) listed products, the first pair reached an asset level of $1,600,000,000 and average daily trading volume of 3,000,000 before it reached a termination trigger. The second and third pair reached asset levels of $50,000,000 and $30,000,000, respectively, and were terminated due to insufficient investor interest. Currently, MacroMarkets is working on several new MacroShare product offerings which it expects to file for registration in the next few months.

MacroMarkets holds patents for MacroShares®, an exchange-traded product family whose unique structure can be applied to asset classes that can be reliably indexed.

Here is the information on the MacroMarkets investment interest in tabular form:

Blackhawk has the following affiliated relationships with Concorde:

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

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: (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 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 net cash proceeds from the second Regulation E offering were $525,001.

Pursuant to the Company's third Regulation E offering, which commenced on November 30, 2007, Blackhawk 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.

The net cash proceeds from the three (3) Regulation E offerings were $1,711,731.

The fourth Regulation E Offering did not raise any funds. It was terminated on January 21, 2010.

On June 21, 2006, Blackhawk entered into an Exchange Agreement ("Exchange Agreement") with Concorde pursuant to which a 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 were "restricted securities" as defined in Rule 144 of the Securities Act. 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.

Concorde converted a portion of amount due from Blackhawk totaling $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 Blackhawk's first Regulation E offering 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 had against Blackhawk in connection with the issuance and stated that it would 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 stated 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. As of November 29, 2005, all outstanding shares are Common Stock.

Blackhawk had a net decrease in assets resulting from operations for the three and nine-month periods ended September 30, 2010 of $88,679 and $407,426, respectively, and total net liabilities of $541,922 as of September 30, 2010 and to date has made one investment in an eligible portfolio company, MacroMarkets. Blackhawk intends to raise capital through this Offering and thereby access the equity markets to raise cash to fund investments. There can be no assurance that Blackhawk will be able to raise any money in this Offering. Blackhawk also intends to raise additional capital in the future in equity offerings (other than this Offering), although there can be no assurance that it can raise such additional capital. Since inception, Blackhawk's operations have been principally funded by Regulation E offerings and by loans from Concorde. Blackhawk is presently dependent on Concorde to provide capital and liquidity needs. Concorde has agreed to provide sufficient capital to Blackhawk to operate to the extent Concorde has such funds. Concorde currently has no funds to provide to Blackhawk.

The following discussion is a general summary of the material federal income tax considerations applicable to Blackhawk and to an investment in Blackhawk shares. 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 the date of this prospectus 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 this 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 "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.

For federal income tax purposes, distributions by Blackhawk generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions will be taxable as dividend income to U.S. stockholders to the extent of Blackhawk's current or accumulated earnings and profits. For taxable years beginning before January 1, 2013, such dividends should be "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 the stockholder level. Generally, for taxable years beginning before January 1, 2013, such dividends are taxable at a maximum rate of 15% in the case of individuals, trusts or estates. 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.

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. 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, 2013, 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 presumably 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.

At the beginning of each calendar year, Blackhawk will report to each of its stockholders and to the IRS 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 for taxable years beginning before January 1, 2013). Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder’s particular situation.

Blackhawk may be required to withhold federal income tax ("backup withholding"), currently at a rate of 28% (31% for taxable years beginning after December 31, 2012), 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 U.S. stockholder'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.

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 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). 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.)

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.). For a corporate non-U.S. stockholder, distributions 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.

Blackhawk will be treated as a regular C corporation, subject to federal income tax at the regular corporation income tax rates on any ordinary income or net capital gain recognized by it, unless and until it is able to make an election to be treated as a Regulated Investment Company under Subchapter M of the Code, which it cannot currently do.

As a regular C corporation, Blackhawk currently will be subject to federal income tax at rates up to 35%. Long-term capital gains realized by Blackhawk are not taxed at a lower tax rate (unlike individuals), but will be subject to the regular corporate income tax rate. Blackhawk will also not be allowed to use a lower tax rate on qualified dividend income, but depending on its percentage ownership interest in the dividend paying corporation and other factors, may be entitled to a dividends received deduction.

Similar to individuals, Blackhawk will be subject to the Alternative Minimum Tax, with a tax rate of 20% and an annual exemption amount of $40,000. The exemption amount is phased out by 25% of the amount by which alternative minimum taxable income exceeds $150,000. Blackhawk will be required to make estimated tax payments quarterly to avoid incurring an underpayment penalty if its annual tax liability is expected to be $500 or more in a taxable year.

Blackhawk may be required to recognize taxable income in circumstances in which it does not receive cash. For example, if Blackhawk acquired and held debt obligations that are treated under applicable tax rules as having original issue discount, Blackhawk would need to 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.

Transactions in options, futures contracts, hedging transactions and forward contracts are 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. It is not clear that Blackhawk will engage in these types of transactions.

Blackhawk is offering a maximum of 10,000,000 shares of common stock at a purchase price of $0.50 per share on a "best efforts" basis. There is no minimum offering amount that is required to be raised to break escrow. All subscription funds will be placed into a non-interest bearing escrow account with a bank. The offering will remain open until May 27, 2011 unless extended at the discretion of Blackhawk.

Blackhawk will hold successive "rolling" closings until up to $5,000,000 (10,000,000 shares) has been raised. The date of, and number of shares sold at, each successive closing will be determined at the sole discretion of Blackhawk. $5,000,000 is the maximum amount that may be raised in the Offering. The dates of such successive closings will be determined at the sole discretion of Blackhawk.

Investors must be "accredited investors" under the Securities Act and execute a subscription agreement attesting to that fact and providing other information.

The following table sets forth as of January 25, 2011 each person known by Blackhawk to be the beneficial owner of five percent or more of the common stock of Blackhawk, all directors individually and all directors and officers of Blackhawk as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.

Dr. Craig A. Zabala is the Founder, Chairman, President, and Chief Executive Officer of The Concorde Group, Inc., a financial services holding company, 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, Founder, Chairman, President and Chief Executive Officer of DBL Holdings, LLC (dba Drexel Burnham Lambert), and Founder, Chairman, President (until December 9, 2010) and Chief Executive Officer of Blackhawk (OTCBB: BHCG). Previously, from 1998 to 2002, he was 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.

From 2002 to 2003, he was a Registered Representative and an Investment Advisor with Brean Murray & Co., Inc. in New York City under a joint venture with Concorde. 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 Acting Chief Financial Officer and Investment Banker at Gilman Securities, Inc. in New York City. From 1992 through April 1996, Dr. Zabala was Executive Vice Chairman of the Board of Directors of Golf Reservations of America, Inc., Sherman Oaks, California; his areas of responsibility included developing the business plan, joint-venture marketing relationships, capital raising and financial strategies, and commercial banking strategies.

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. Hass 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 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 an Economist at the U.S. Department of Labor (1979 to 1982) and the U.S. Department of Commerce (1982 to 1986) in Washington, D.C. During his career in Washington, 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 Cappa, in 1974, M.A. in 1977, and Ph.D. in 1983 all 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 advanced 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 pursuing graduate studies in finance at the Center for Financial and Management Studies, School of Oriental and African Studies, University of London, United Kingdom since 2003. Dr. Zabala has financed a number of start-up firms and emerging growth firms.

Robert V.E. Parker is the President of the Company and was appointed to that position on December 9, 2010 pursuant to the Interim Agreement. He served as a founding principal of the Sippican Group, LLC, a management consulting firm dealing with closely held and troubled businesses. Mr. Parker's previous experience also includes serving as a Managing Director with Claymore Partners, Inc., a long-standing management advisory firm addressing the needs of troubled businesses; and with the Corporate Finance Division of Xerox Credit Corporation, where he served as Vice President and Senior Credit Officer and was also responsible for commercial finance portfolio workouts. During his employment with Xerox Credit, Mr. Parker successfully managed a commercial investment and loan portfolio with a mid to high nine figure size. In recognition of his performance, Xerox awarded Mr. Parker the President's Award. Earlier, he served with the Project and Lease Finance Group of Kidder Peabody & Co., where he focused on energy transactions and debtor advisories. Previous experience at Manufacturer's Hanover Trust included responsibilities for commercial real estate, REITs and selected non-performing assets. Mr. Parker also formerly served as an Independent Director and Chairman of the Audit Committee for Prospect Capital Corporation, a $832 million asset (June 30, 2010) mezzanine debt and private equity firm, which is a publicly-traded, closed-end, dividend-focused investment company operating as a business development company (PSEC). Mr. Parker's service as an Independent Director for Prospect began with the company's first IPO in 2004.

Robert M. Fujii is the Vice President of Blackhawk. He also holds positions as CFO of The Concorde Group, Inc. and Acting CFO 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 Nichire 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.

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.

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.

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.

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

Dr. Zabala is a principal and controlling shareholder, officer, director and control person of Concorde, a control person of Blackhawk.

Mr. Fujii, Ms. Kurihara, Mr. Woodwards, Mr. Tejral and Mr. Francis are minority shareholders (individually owning less than 1%) of Concorde.

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.

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 in 2009.

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.

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.

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. The term code of ethics means written standards that are reasonably designed to deter wrongdoing and to promote:

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.

Except as set forth herein with respect to the Zabala Employment Agreement and the Interim Agreement with Mr. Parker (see "Recent Developments" above), since its inception (April 2004), Blackhawk has not paid any compensation to its executive officers or directors, except $65,000 to Dr. Zabala, Chairman and Chief Executive Officer, and Brad Silver, a former officer and director of Blackhawk who resigned on December 8, 2005, who 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.

The Company's principal executive officer is Craig A. Zabala, who serves as CEO and Acting Chief Financial Officer and Acting Chief Compliance Officer. Dr. Zabala served as President until December 9, 2010, when Mr. Parker was appointed to that position (see "Recent Developments" above).

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.

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 during 2009.

For the Company's success and enhancement of long-term stockholder value, the Company depends on the management and abilities of Dr. Zabala. 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 Dr. Zabala to enhance stockholder value.

The Board determined that the salary paid to Dr. Zabala 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.

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 Dr. Zabala set forth in his employment agreement; (b) his success in raising equity capital, identifying investments and closing on investments; (c) work with SEC filings; (d) the fact that Dr. Zabala 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.

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

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

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

The Company does not have a profit sharing plan.

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.

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. In 2009 $50,000 in salary payments were made to Dr. Zabala and $5,000 in salary payments were accrued to him.

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.

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

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.

The term of Dr. Zabala's 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 Dr. Zabala in writing that it does not wish to extend the Employment Period for an additional year.

The following are the terms of the Stock Option Grant:

The following is a brief description of the Federal income tax consequences to the participants and Blackhawk 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.

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 Blackhawk 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.

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.

Zabala is entitled to certain compensation and payments pursuant to the Zabala Employment Agreement (he received $55,000 in salary in 2009—$50,000 was paid to him and $5,000 was accrued). Parker is entitled to certain payments under the Interim Agreement. See “Recent Developments” in the front of this Amended Preliminary Offering Circular. No payments have been made to Parker. Except as disclosed in this Amended Preliminary Offering Circular, there are no direct and indirect interests of each person named above in Blackhawk and in any material transactions within the past two years or in any proposed transaction to which Blackhawk was or is to be a party.

Concorde owns 10,017,591 shares of Blackhawk Common Stock, representing 30.85% of the outstanding shares of Common Stock. Craig A. Zabala, Chairman and President of Concorde, is also Chairman and Chief Executive Officer 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. 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 committee of Blackhawk Board of Directors consisting of only independent Blackhawk directors.

During the year ended 2006 Blackhawk borrowed $133,005 from Concorde, a corporation controlled by the founder of Blackhawk and an affiliate of Blackhawk to fund the formation of Blackhawk, offering costs for the offering plan and operating expenses. Of the amounts borrowed (i) $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 second Regulation E offering, and (ii) $25,500 was evidenced by a demand convertible non-interest bearing note convertible into Common Stock of the Company at a price of $1.00 per share or the price per share of the Company'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 interests of Blackhawk.

Blackhawk shares office space and other administrative functions with Concorde. The Board of Directors of Blackhawk voted to start paying Concorde monthly rent of $4,000 beginning January 1, 2009; rent incurred in each of the three and nine months ended September 30, 2010 and 2009 amounted to $12,000 and $36,000, respectively; at September 30, 2010, $14,000 was due to Concorde. As of September 30, 2010, Concorde paid $8,484 of expenses on behalf of Blackhawk.

Concorde loaned $100,000 to Blackhawk on August 1, 2006 and $25,500 to Blackhawk on May 29, 2007 (together, the "Loan") and on June 4, 2007 converted the Loan (plus interest as of May 31, 2007 on a portion thereof in the amount of $7,391) into shares of Common Stock at $1.00 or 132,891 shares of Common Stock in Blackhawk's second Regulation E offering. This transaction was approved by unanimous written consent of the Board of Directors of Blackhawk.

On June 21, 2006, Blackhawk entered into an Exchange Agreement ("Exchange Agreement") with Concorde pursuant to a non-interest bearing promissory note (the "Note") issued by Blackhawk on May 3, 2006 to Concorde in the principal amount of $68,847 exchangeable for 6,884,700 shares ("Shares") of the 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, 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. The shares are "restricted securities" under the Securities Act. 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.

Blackhawk has engaged Barak Asset Management, LLC, a New York limited liability company ("Barak") and an investment adviser registered under the Investment Advisers Act, to serve as an investment adviser to Blackhawk and manage its portfolio of investments at such time as when Blackhawk has portfolio 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 the investment advisory management agreement was extended to October 31, 2011. 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.

The authorized capital stock of Blackhawk consists of one billion (1,000,000,000) shares of Common Stock, par value $.00001 per share, of which there are 32,467,484 issued and outstanding as of the date of this Amended Preliminary Offering Circular. The following statements relating to the capital stock set forth the material terms of the securities of Blackhawk; however, reference is made to the more detailed provisions of, and such statements are qualified in their entirety by reference to, the certificate of incorporation and the by-laws, copies of which are available on the SEC's web site, www.sec.gov, under "Blackhawk Capital Group BDC, Inc."

Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of Common Stock do not have cumulative voting rights. Holders of Common Stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefore. In the event of a liquidation, dissolution or winding up of Blackhawk, the holders of Common Stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All of the outstanding shares of Common Stock are fully paid and non-assessable.

Holders of Common Stock have no preemptive rights to purchase the Common Stock of Blackhawk. There are no conversion or redemption rights or sinking fund provisions with respect to the Common Stock.

Blackhawk does not have any shares of preferred stock authorized.

Reference is made "Remuneration; Affiliated Transactions; Investment Adviser" above regarding Barak and the fees that Blackhawk will pay Barak for its services.

Barak has fees ranging from 0.50% to 1.80% of assets managed. Barak will be responsible with appointing sub-advisors and determining compensation for each sub-advisor individually in consultation with the Company's Board of Directors. Capital that is not vested, held in cash or vested into simple money market accounts, will not be subject to any fee.

Odeon Capital Group LLC will be paid a placement agent fee of (i) $.05 per share (ten percent (10%) of the purchase price per share) for each share sold in the offering to investors not affiliated with the Company, and (ii) $.025 per share (five percent (5%) of the purchase price per share) for each share sold in the offering to investors affiliated with the Company, pursuant to the Placement Agent Agreement.

Subject to the BDC provisions of the Investment Company Act and to having sufficient net income for distribution, we intend to distribute at least 90% of Blackhawk’s net income (net of fees and general administrative expenses) and gains to shareholders. The balance will be held as retained earnings for general corporate purposes including but not limited to expansion of the company’s capital base. No assurance can be given that Blackhawk’s investments will generate such income.

Prospective investors in Blackhawk's Common Stock are urged to carefully review all of Blackhawk's SEC filings. They may be found on the SEC's web site, www.sec.gov.

See attached financial statements.

The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amount and the tax bases of assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences.

As of September 30, 2010, total deferred tax assets aggregated approximately $1,142,000 and consist principally of net operating loss carry forwards and capitalized start up costs, which were fully reserved based on the likelihood of realization. The net operating loss will expire by 2029.

The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of September 30, 2010 and December 31, 2009, the Company has not recorded any unrecognized tax benefits. The Company's policy is to recognize interest and penalties in general and administrative expense.

The tax years 2006 through 2009 remain open to examination by the major tax jurisdictions to which the Company is subject.

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:

Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1, consist of active listed equities.

Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2. These generally include certain U.S. government obligations and investment-grade corporate bonds.

Investments whose values are classified as Level 3 have significant unobservable inputs, as they may trade infrequently or not at all. Investments whose values are classified as Level 3 generally include private investments. When observable prices are not available for these securities, the Company uses one or more valuation techniques (e.g., the market approach or the income approach) for which sufficient and reliable data is available.

Within Level 3 of the fair value hierarchy, the use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

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

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

The following table presents additional information about assets measured at fair value using Level 3 inputs for the three and nine months ended September 30, 2010:

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

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

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

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

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

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

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

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.

Name/address of Officers and Directors		Positions Held
Dr. Craig A. Zabala P.O. Box 377 Canal Street Station New York, New York 10013		Chief Executive Officer, Acting Chief Financial Officer and Acting Chief Compliance Officer, Chairman of the Board
Walter V.E. Parker 4 Old Camp Lane Cos Cob, CT 06807		President
Robert M. Fujii 1624 Acton Street Berkeley, California 94702		Vice President
Janet Buxman Kurihara 11007 North Cottontail Lane Parker, CO 80138		Director
Mick Woodwards 4849 Woodruff Avenue Lakewood, CA 90713		Director
Randy Tejral 6529 Pine Ridge Road Elkhorn, NE 69022		Director
Robert Francis 5416 South 161st Street Omaha, NE 69022		Director

	BLACKHAWK CAPITAL GROUP BDC, INC.

	By:	/s/ *Craig A. Zabala*
		Craig A. Zabala
		Chairman and Chief Executive Officer

	OFFERING PRICE TO PUBLIC		UNDERWRITING DISCOUNTS AND COMMISSIONS		PROCEEDS TO ISSUER (1)
Total Minimum		-		-		-
Total Maximum	$	5,000,000.00	$	500,000.00	$	4,500,000.00
Per Share	$	0.50	$	.05	$	0.45

USE	AMOUNT($)		PERCENTAGE(%)
Portfolio Investments	$	3,250,000		73.03	%
Operating Expenses(*)	$	900,000		20.22	%
Working Capital	$	300,000		6.75	%

				Per Share
Offering price per share of Common Stock				$	0.5000
Net tangible book value (deficit) per share at September 30, 2010		<0.01669	>
Increase attributable to new investors	$	0.10989
Proforma net tangible book value after this Offering				$	0.0932
Dilution per share to new investors				$	0.4068

Blackhawk Capital Group BDC Inc – ‘1-E/A’ on 2/1/11

On: Tuesday, 2/1/11, at 1:55pm ET · Accession #: 1144204-11-5206 · File #: 95-00329

Previous ‘1-E’: ‘1-E’ on 11/16/10 · Latest ‘1-E’: This Filing

Amendment to Notification by a Small Business Investment Company or Business Development Company — Reg. E
Filing Table of Contents

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Dates Referenced Herein and Documents Incorporated by Reference

Affiliate		Nature of Affiliation
Craig A. Zabala		Chief Executive Officer, Acting Chief Financial Officer and Acting Chief Compliance Officer, Chairman of the Board, Principal Shareholder
Walter V.E. Parker		President
Robert M. Fujii		Vice President, Shareholder
The Concorde Group, Inc.		Control Person, Principal Shareholder
Janet Buxman Kurihara		Director
Michael K. Woodwards		Director
Randy Tejral		Director
Robert Francis		Director

Name	Class of Securities	Amount Owned		% of Class

The Concorde Group, Inc.	Common Stock		10,017,591		30.85	%

	Shares Purchased					Total Consideration
	Number		Percent			Amount		Percent			Average Price Per Share

Existing Stockholders		32,467,484		76.45	%	$	2,106,966		29.65	%	$	0.065

New Investors		10,000,000		23.55	%	$	5,000,000		70.35	%	$	0.500

Total		42,467,484		100.0	%	$	7,106,966		100.0	%

Title and Number of Securities	Membership Interests (5%)

Name and Address of Company	MacroMarkets LLC 14 Madison Street Madison, NJ 07940

Nature of Business	Financial technology specializing in exchange traded funds and securities

Original Investment	$250,000

Value of Investment (9/30/2010)	$250,000

Name and Address of Beneficial Owner	Position	Amount of Beneficial Ownership			Percentage of Class
Dr. Craig A. Zabala(2) P.O. Box 377 Canal Street Station New York, New York 10013	CEO, Acting Chief Financial Officer and Acting Chief Compliance Officer and Chairman		2,432,500	(1)		7.49	%

Walter V.E. Parker 4 Old Camp Lane Cos Cob, CT 06807	President			(3)			(3)

The Concorde Group, Inc.(4) P.O. Box 377 Canal Street Station New York, New York 10013	5% Holder		10,017,591	(4)		30.85	%

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

Name and Principal Position	Year	Salary		Bonus		All Other Compensation		Total
Craig A. Zabala, CEO, Acting Chief Financial Officer and Compliance Officer and Director	2009	$	55,000	$	0	$	0	$	55,000
	2008	$	0	$	0	$	0	$	0
	2007	$	0	$	0	$	0	$	0

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

Number of options:	600,000

Exercise Price:	$.40

Grant Date:	February 1, 2009

Vesting:	Fully vested upon issuance

	SEPTEMBER 30, 2010			DECEMBER 31, 2009
	(Unaudited)

ASSETS:
Investment at fair value (cost $250,000 and $326,350)	$	250,000		$	325,123
Cash and cash equivalents		82			59,715
Prepaid expenses		-			17,278

TOTAL ASSETS	$	250,082		$	402,116

LIABILITIES
Salaries payable—Officer	$	35,000		$	5,000
Rent payable to affiliate		14,000			-
Due to affiliate		8,484			-
Investment advisory fees payable		4,504			3,197
Accrued expenses		730,016			528,415
TOTAL LIABILITIES		792,004			536,612

NET LIABILITIES
Common stock, par value $0.00001 per share 1,000,000,000 shares authorized, 32,467,484 shares issued and outstanding in 2010 and 2009		325			325
Additional paid-in capital		2,106,641			2,106,641
Accumulated net investment loss		(2,648,888	)		(2,240,235	)
Net unrealized loss on investment		-			(1,227	)
TOTAL NET LIABILITIES		(541,922	)		(134,496	)

TOTAL LIABILITIES AND NET LIABILITIES	$	250,082		$	402,116

NET LIABILITY VALUE PER COMMON SHARE	$	(0.01669	)	$	(0.00414	)

COMPANY	INVESTMENT	INITIAL ACQUISITION DATE	PRINCIPLE AMOUNT / NUMBER OF OF UNITS		COST		FAIR VALUE		% OF TOTAL ASSETS

*MacroMarkets, LLC	Capital Interests	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

	THREE MONTHS ENDED SEPTEMBER 30						NINE MONTHS ENDED SEPTEMBER 30,
	2010			2009			2010			2009
INVESTMENT INCOME:
Interest income	$	-		$	131		$	192		$	6,099
TOTAL INVESTMENT INCOME		-			131			192			6,099

EXPENSES:
Compensation		15,000			31,124			64,969			206,925
Professional fees		48,020			140,317			250,935			499,358
Consulting fees		-			16,250			-			16,250
Advisory fees		2,263			2,188			7,104			12,030
Rent-related party		12,000			12,000			36,000			36,000
Filing fees		3,174			2,236			9,781			21,076
Insurance		7,960			14,516			24,445			26,476
Other		262			633			15,611			3,555
TOTAL EXPENSES		88,679			219,264			408,845			821,670

NET INVESTMENT LOSS		(88,679	)		(219,133	)		(408,653	)		(815,571	)

NET CHANGE IN UNREALIZED GAIN ON INVESTMENTS		-			1,288			1,227			1,288

NET DECREASE IN ASSETS RESULTING FROM OPERATIONS	$	(88,679	)	$	(217,845	)	$	(407,426	)	$	(814,283	)

LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.00273	)	$	(0.00671	)	$	(0.01255	)	$	(0.02508	)

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		32,467,484			32,467,484			32,467,484			32,467,484

	NINE MONTHS ENDED SEPTEMBER 30, 2010			YEAR ENDED DECEMBER 31, 2009
	(Unaudited)
DECREASE IN NET ASSETS FROM OPERATIONS
Net investment loss	$	(408,653	)	$	(986,533	)
Unrealized gain on investments		1,227			61
NET DECREASE IN ASSETS RESULTING FROM OPERATIONS		(407,426	)		(986,472	)

CAPITAL STOCK TRANSACTIONS:
Stock-based compensation		-			132,000
NET INCREASE IN ASSETS FROM CAPITAL STOCK TRANSACTIONS		-			132,000

TOTAL DECREASE IN NET ASSETS		(407,426	)		(854,472	)

NET (LIABILITIES) ASSETS - BEGINNING OF PERIOD		(134,496	)		719,976

NET LIABILITIES - END OF PERIOD	$	(541,922	)	$	(134,496	)
(Accumulated net investment loss of $2,648,888 and $2,240,235, respectively)

				- - - - COMMON STOCK - - - -				ADDITIONAL PAID-IN		NET UNREALIZED APPRECIATION/ (DEPRECIATION) ON			ACCUMULATED NET INVESTMENT
	TOTAL			SHARES		AMOUNT		CAPITAL		INVESTMENT			LOSS

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	)

Net decrease in assets resulting from operations		(407,426	)		-		-		-		1,227			(408,653	)

Balance-September 30, 2010 (unaudited)	$	(541,922	)		32,467,484	$	325	$	2,106,641	$	-		$	(2,648,888	)

	NINE MONTHS ENDED SEPTEMBER 30,
	2010			2009

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES:
Net investment loss and net decrease in assets resulting from operations	$	(407,426	)	$	(814,283	)
Adjustments to reconcile net investment loss and net decrease in assets to net cash (used in) provided by operating activities:
Unrealized gain on investments		(1,227	)		(1,288	)
Stock Based Compensation		-			132,000
Expenses paid by affiliate		8,484			-
Change in operating assets and liabilities:
Increase in accrued expenses		201,601			324,788
Decrease (increase) in prepaid expenses		17,278			(21,450	)
Salaries payable		30,000			-
Rent payable to affiliate		14,000			-
Investment advisory fees		1,307			(1,669	)
Purchase of Investments		-			(250,000	)
Proceeds from sale and maturity of investments		76,350			654,024

NET CASH (USED IN) PROVIDED BY OPERATING AND NET CHANGE IN CASH		(59,633	)		22,122

CASH AND EQUIVALENTS – BEGINNING OF PERIOD		59,715			172,797

CASH AND EQUIVALENTS – END OF PERIOD	$	82		$	194,919

SUPPLEMENTARY DISCLOSURE OF NON-CASH TRANSACTIONS
Expenses paid by affiliate	$	8,484		$	-

	Net Loss			Weighted Average Shares		Basic and Diluted Loss Per Share

Three Months Ended September 30, 2010	$	(88,679	)		32,467,484	$	(0.00273	)

	Net Loss			Weighted Average Shares		Basic and Diluted Loss Per Share

Three Months Ended September 30, 2009	$	(217,845	)		32,467,484	$	(0.00671	)

	Total Value		Quote Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2010
Financial Assets
Membership Interest in LLC	$	250,000					$	250,000
Total Financial Assets	$	250,000					$	250,000
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

	Membership Interest In LLC
Balance as of January 1, 2010	$	250,000
Purchases		-
Balance as of September 30, 2010	$	250,000

	NINE MONTHS ENDED September 30, 2010 (unaudited)			NINE MONTHS ENDED September 30, 2009 (unaudited)			YEAR ENDED DECEMBER 31, 2009

Per Share Data:
Net asset (liability) value – beginning of period	$	(0.00414	)	$	0.02218		$	0.02218
Net investment loss1		(0.01259	)		(0.02512	)		(0.03039	)
Net change in unrealized gain (loss) 1		0.00004			0.00410			0.00407
Net asset/(liability) value – end of period	$	(0.01669	)	$	0.00116		$	(0.00414	)

Total return based on net asset value 2		(303	)%		(95	)%		(119	)%

Common shares outstanding – end of period		32,467,484			32,467,484			32,467,484
Ratio/Supplemental Data:
Net assets/(liabilities) – end of period	$	(541,922	)	$	37,693		$	(134,496	)

Ratio of net investment loss to average net assets3		[4	]		(294	)%		(334	)%

Ratio of operating expenses to average net assets3		[4	]		296	%		336	%
Portfolio turnover rate		0	%		100	%		100	%

	Shares Under Options		Weighted Average Exercise Price		Remaining Contractual Life (In Years)		Aggregate Intrinsic Value

Outstanding at beginning of period		600,000	$	0.40
Grants
Exercised		—		—
Forfeited		—		—
Outstanding at end of period		600,000	$	0.40		8.33	$	0
Exercisable at end of period		600,000	$	0.40		8.33	$	0