BLACKHAWK CAPITAL GROUP BDC INC - 10-Q Quarterly Report

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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934.

For the 3 month period ended March 31, 2005.

( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File No. 814-00678

BLACKHAWK CAPITAL GROUP BDC, INC.

(Name of Small Business Issuer in its Charter)

Delaware	20-1031329
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

14 Wall Street, 11^th Floor

New York, New York 10005

(Address of Principal Executive Offices)

Registrant's telephone number, including area code (212) 566-8300

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

(1) Yes X No (2) Yes X No

State the number of shares outstanding of each of the Registrant's classes of common equity, as of the latest applicable date:

17,003,663 - - March 31, 2005

BLACKHAWK CAPITAL GROUP BDC, INC.

FORM 10-Q

March 31, 2005

INDEX

PART I - FINANCIAL INFORMATION		Page

	Item 1 - Financial Statements

	Balance Sheet -
	March 31, 2005

	Statements of Operations -
	For the Three Months Ended March 31, 2005

	Statement of Stockholders’ Equity -
	For the Three Months Ended March 31, 2005

	Statements of Cash Flows -
	For the Three Months Ended March 31, 2005

	Notes to Financial Statements -
	For the Three Months Ended March 31, 2005

	Item 2 - Plan of Operation

	Item 3 - Quantitative and Qualitative Disclosures about Market Risk

	Item 4 - Controls and Procedures

PART II - OTHER INFORMATION

	Item 1 - Legal Proceedings

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

	Item 3 - Default upon Senior Securities

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

	Item 5 - Other Information

	Item 6 - Exhibits

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Paritz & Company, P.A.

BLACKHAWK CAPITAL GROUP BDC INC.

(A Development Stage Company)

FINANCIAL STATEMENTS

WITH

INDEPENDENT AUDITORS' REPORT

THREE MONTHS ENDED MARCH 31, 2005

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

INDEPENDENT AUDITORS' REPORT

Board of Directors

Blackhawk Capital Group BDC Inc.

(A Development Stage Company)

New York, New York

We have audited the accompanying balance sheet of Blackhawk Capital Group BDC Inc. (A Development Stage Company) as of March 31, 2005 and the accompanying statements of operations, stockholders' equity and cash flows for the three months then ended. These financial statements 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 auditing standards generally accepted in the United States of America. 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 statement referred to above presents fairly, in all material respects, the financial position of Blackhawk Capital Group BDC Inc. (A Development Stage Company) as of March 31, 2005 and the results of its operations and its cash flows for the three months then ended in conformity with accounting principles generally accepted in the United States of America.

Paritz & Company, P.A.

Hackensack, New Jersey

April 15, 2005

BLACKHAWK CAPITAL GROUP BDC INC.

(A Development Stage Company)

BALANCE SHEET

MARCH 31, 2005


ASSETS

CURRENT ASSETS:

Cash and cash equivalents	$ 42,815

TOTAL CURRENT ASSETS	42,815

OTHER ASSETS:

Deferred offering costs	79,645

TOTAL ASSETS	$122,460


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Due to affiliated company	$ 98,908

Accrued expenses	1,500

TOTAL CURRENT LIABILITIES	100,408

STOCKHOLDERS’ EQUITY	22,052

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$122,460

See notes to financial statements

BLACKHAWK CAPITAL GROUP BDC INC.

(A Development Stage Company)

STATEMENT OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2005







REVENUES:
Interest income	$ 37
TOTAL REVENUES	37




EXPENSES:
Professional fees	1,500
Consulting fees	11,485
State and local taxes	455
TOTAL EXPENSES	13,440


NET LOSS	$(13,403)

See notes to financial statements

BLACKHAWK CAPITAL GROUP BDC INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS= EQUITY

THREE MONTHS ENDED MARCH 31, 2005


TOTAL	-COMMON STOCK---		---PREFERRED STOCK---		ADDITIONAL PAID-IN CAPITAL	DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
	SHARES	AMOUNT	SHARES	AMOUNT

Sale of formation stock	$ 195	11,000,000	$110	8,500,000	$ 85	$ -	$ -

Sale of stock pursuant to offering plan	20,919	2,091,901	21	-	-	20,898	-

Offering costs	(4,272)	-	-	-	-	(4,272)	-

Net loss	(12,515)	-	-	-	-	-	(12,515)

Balance - January 1, 2005	4,327	13,091,901	131	8,500,000	85	16,626	(12,515)

Sale of stock pursuant to offering plan	39,118	3,911,762	39	-	-	39,079	-

Offering costs	(7,990)	-	-	-	-	(7,990)	-

Net loss	(13,403)	-	-	-	-	-	(13,403)

Balance - March 31, 2005	$22,052	17,003,663	$170	8,500,000	$ 85	$47,715	$(25,918)

See notes to financial statements

BLACKHAWK CAPITAL GROUP BDC INC.

(A Development Stage Company)

STATEMENT OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2005







OPERATING ACTIVITIES:
Net loss	$(13,403)
Changes in operating assets and liabilities:
Due to affiliated company	7,000
Deferred offering costs	7,990
Accrued expenses	(3,500)

NET CASH USED IN OPERATING ACTIVITIES	(1,913)




FINANCING ACTIVITIES:
Net proceeds from the issuance of stock	31,128

NET CASH PROVIDED BY FINANCING ACTIVITIES	31,128



INCREASE IN CASH	29,215

CASH - BEGINNING OF PERIOD	13,600


CASH - END OF PERIOD	$ 42,815

See notes to financial statements

BLACKHAWK CAPITAL GROUP BDC INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005

1	SIGNIFICANT ACCOUNTING POLICIES

Business description

Blackhawk Capital Group BDC Inc. (Athe Company@ or “Blackhawk”) was incorporated in the State of Delaware on April 26, 2004.

On September 14, 2004 the Company filed a Form N-S4A, Notification with the Securities and Exchange Commission electing to become a Business Development Company pursuant to Section 54 of the Investment Company Act of 1940.

Blackhawk has been in the developmental stage since inception and its operations to date have been limited to issuing shares and other organizational matters.

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

As a business development company, Blackhawk will be able to raise money to acquire interests in small private business, as well as larger companies.

Uses of estimates in the preparation of financial statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual results could differ from those estimates.

Deferred income taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109) which requires that deferred tax assets and liabilities be recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, SFAS 109 requires recognition of future tax benefits, such as carryforwards, to the extent that realization of such benefits is more likely than not and that a valuation allowance be provided when it is more likely than not that some portion of the deferred tax asset will not be realized

2 STOCKHOLDERS’ EQUITY

The Company is authorized to issue 1,000,000,000 shares of common stock and 15,000,000 shares of preferred stock, both with a par value of $.00001 per share. Shortly after formation, the Company sold 11,000,000 shares of common stock and 8,500,000 shares of preferred stock to its founders for an aggregate of $195.

Pursuant to an offering circular dated September 15, 2004, the Company is attempting to sell a minimum of 750,000 and a maximum of 45,000,000 shares of common stock at $.01 per share. As of March 31, 2005 the Company has sold 6,003,663 shares for aggregate proceeds of $60,037.

2 STOCKHOLDERS’ EQUITY

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. In the event of liquidation, dissolution or winding up of the Company, 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.

The Board of Directors is authorized to provide for the issuance of shares of preferred stock in series and to establish the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders. Any shares of preferred stock so issued would have priority over the common stock with respect to dividend or liquidation rights.

3 INCOME TAXES

Blackhawk has available net operating loss carryforwards for income tax purposes of approximately $25,000 which expire in 2024.

The Company has a deferred tax asset of approximately $5,000. Since Blackhawk is a development stage company with no operating history, a 100% valuation allowance has been provided.

4 DUE TO AFFILIATED COMPANY

Amount due to affiliated company is non-interest bearing and is due according to the terms of the offering plan.

5 RELATED PARTY TRANSACTIONS

The Company shares office space and other administrative functions with affiliated companies, at no charge to the Company.

ITEM 2. PLAN OF OPERATION

GENERAL

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts may contain forward-looking statements that involve a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated by management. Potential risks and uncertainties include, among other factors, general business conditions, government regulations, competitive market conditions, success of the Company's business strategy, and other risks and uncertainties currently unknown to management.

CRITICAL ACCOUNTING POLICIES

The Company's financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States of America ("GAAP"). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. Valuations based on estimates are reviewed by us for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include acquisitions, valuation of investments, and the realizability of deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

VALUATION OF LONG-LIVED AND INTANGIBLE ASSETS

The recoverability of long-lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or circumstances indicate that the assets may be impaired. As it relates to definite life intangible assets, we apply the impairment rules as required by SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Assets to Be Disposed Of" as amended by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the intangible asset. The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus, the recoverability of the asset.

INCOME TAXES

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of March 31, 2005, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

VALUATION OF INVESTMENTS

As required by ASR 118, the investment committee of the company is required to assign a fair value to all investments. To comply with Section 2(a) (41) of the Investment Company Act and Rule 2a-4 under the Investment Company Act, it is incumbent upon the board of directors to satisfy themselves that all appropriate factors relevant to the value of securities for which market quotations are not readily available have been considered and to determine the method of arriving at the fair value of each such security. To the extent considered necessary, the board may appoint persons to assist them in the determination of such value, and to make the actual calculations pursuant to the board's direction. The board must also, consistent with this responsibility, continuously review the appropriateness of the method used in valuing each issue of security in the company's portfolio. The directors must recognize their responsibilities in this matter and whenever technical assistance is requested from individuals who are not directors, the findings of such intervals must be carefully reviewed by the directors in order to satisfy themselves that the resulting valuations are fair.

No single standard for determining "fair value...in good faith" can be laid down, since fair value depends upon the circumstances of each individual case. As a general principle, the current "fair value" of an issue of securities being valued by the board of directors would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on a multiple of earnings, or a discount from market of a similar freely traded security, or yield to maturity with respect to debt issues, or a combination of these and other methods. Some of the general factors which the directors should consider in determining a valuation method for an individual issue of securities include: 1) the fundamental analytical data relating to the investment, 2) the nature and duration of restrictions on disposition of the securities, and 3) an evaluation of the forces which influence the market in which these securities are purchased and sold. Among the more specific factors which are to be considered are: type of security, financial statements, cost at date of purchase, size of holding, discount from market value of unrestricted securities of the same class at time of purchase, special reports prepared by analysis, information as to any transactions or offers with respect to the security, existence of merger proposals or tender offers affecting the securities, price and extent of public trading in similar securities of the issuer or comparable companies, and other relevant matters.

The board has arrived at the following valuation method for its investments. Where there is not a readily available source for determining the market value of any investment, either because the investment is not publicly traded, or is thinly traded, and in absence of a recent appraisal, the value of the investment shall be based on the following criteria:

1. Total amount of Blackhawk's actual investment ("AI"). This amount shall include all loans, purchase price of securities, and fair value of securities given at the time of exchange.

2. Total revenues for the preceding twelve months ("R").

3. Earnings before interest, taxes and depreciation ("EBITD").

4. Estimate of likely sale price of investment ("ESP").

5. Net assets of investment ("NA").

6. Likelihood of investment generating positive returns (going concern).

The estimated value of each investment shall be determined as follows:

·	Where no or limited revenues or earnings are present, then the value shall be the greater of the investment's a) net assets, b) estimated sales price, or c) total amount of actual investment.

·	Where revenues and/or earnings are present, then the value shall be the greater of one time (1x) revenues or three times (3x) earnings, plus the greater of the net assets of the investment or the total amount of the actual investment.

·	Under both scenarios, the value of the investment shall be adjusted down if there is a reasonable expectation that the Company will not be able to recoup the investment or if there is reasonable doubt about the investments ability to continue as a going concern.

Blackhawk has not retained independent appraisers to assist in the valuation of the portfolio investments because the cost was determined to be prohibitive for the current levels of investments.

COMPANY STRATEGY

Blackhawk Capital Group BDC, Inc. (the "Company” or “Blackhawk") is a closed-end, non - diversified Investment Company under the Investment Company Act of 1940, as amended (the "Investment Company Act"). Blackhawk is engaged in the business of investing in small to mid-sized companies. A business development company is a type of Investment Company that generally must maintain 70% of its assets in new, financially troubled or otherwise qualified companies and offers significant managerial assistance to such companies.

Blackhawk is currently engaged in an offering of its securities pursuant to Regulation E under the Investment Company Act. We have not yet acquired an interest in any companies, nor are we providing managerial assistance to any companies.

Business development companies are not subject to the full extent of regulation under the Investment Company Act. Blackhawk is primarily engaged in the business of investing in and providing managerial assistance to developing companies, which, in its opinion, have significant potential for growth. Blackhawk's investment objective is to achieve long-term capital appreciation, rather than current income, on its investments. Currently, our investment activity is limited by our working capital. There is no assurance that our objective will be achieved.

On September 20, 2004, the Company's Board of Directors elected to be regulated as a business investment company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company is required to maintain at least 70% of its assets invested in "eligible portfolio companies", which are loosely defined as any domestic company which is not publicly traded or that has assets less than $4 million.

SEARCH FOR TARGET COMPANIES

Blackhawk will search for target companies as potential candidates for an investment and stock acquisition.

Blackhawk has not entered into agreements with any third parties to locate potential investment and acquisition candidates.

Blackhawk may seek to locate a target company through solicitation. Such solicitation may include newspaper or magazine advertisements, mailings and other distributions to law firms, accounting firms, investment bankers, financial advisors and similar persons, the use of one or more World Wide Web sites and similar methods. If Blackhawk engages in solicitation, no estimate can be made as to the number of persons who may be contacted or solicited. Blackhawk may utilize consultants in the business and financial communities for referrals of potential target companies. There is no assurance that Blackhawk will locate a target company or that an acquisition or investment will be successful.

To date Blackhawk has not made any investments.

MANAGEMENT OF BLACKHAWK

Blackhawk has no full time employees. There are three officers all of whom are shareholders of Blackhawk, as well: Craig A. Zabala, President, Chief Executive Officer and Chairman of the Board; Robert M. Fujii, Chief Financial Officer; and Brad D. Silver, Executive Vice President, Secretary and director. Each member of management has agreed to allocate a limited portion of his time to the activities of Blackhawk after the effective date of the registration statement without compensation. Potential conflicts may arise with respect to the limited time commitment by Management and the potential demands of the activities of Blackhawk.

GENERAL BUSINESS PLAN

The purpose of Blackhawk is to seek, investigate and, if such investigation warrants, acquire an interest in a business entity. Blackhawk will not restrict its search to any specific business, industry, or geographical location. Blackhawk may participate in a business venture of virtually any kind or nature. Management anticipates that initially, Blackhawk will be able to participate in only a small number of potential business ventures because Blackhawk has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to the shareholders of Blackhawk because it will not permit Blackhawk to offset potential losses from one venture against gains from another.

On September 20, 2004, Blackhawk elected to be treated as a Business Development Company and subject itself to the rules and regulations under the Investment Company Act of 1940. Currently, Blackhawk is engaged in an offering to raise between $7,500 and $450,000 to invest in additional companies. As of March 31, 2005, Blackhawk has sold 6,003,663 shares for a total of $60,037.

Blackhawk may seek an investment and stock acquisition of entities which have recently commenced operations, or which wish to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes.

Blackhawk seeks to invest in small operating companies, and in return, to receive an interest in such companies. Blackhawk will also offer managerial services to both companies in which it invest, as well as others.

In analyzing prospective business opportunities, Blackhawk may consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of Blackhawk; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. This discussion of the proposed criteria is not meant to be restrictive of the virtually unlimited discretion of Blackhawk to search for and enter into potential business opportunities. Blackhawk’s investment committee will assign a fair value to its investments.

Blackhawk will not restrict its search for any specific kind of business entities, but may acquire an interest in a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict at this time the status of any business in which Blackhawk may become engaged, or whether such business may need to seek additional capital.

TERMS OF A STOCK ACQUISITION

In implementing a structure for a particular stock acquisition or investment, Blackhawk may become a party to a consolidation, joint venture, licensing agreement or other arrangement with another corporation or entity. Blackhawk may offer to take control of its board of directors and/or management.

It is anticipated that any securities issued in any such stock acquisition would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the target company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter.

Blackhawk will participate in a stock acquisition only after the negotiation and execution of appropriate agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing and will include miscellaneous other terms.

If Blackhawk stops or becomes unable to continue to pay its operating expenses Blackhawk may not be able to timely make its periodic reports required under the Exchange Act nor to continue to search for an acquisition target.

The Board of Directors has passed a resolution which establishes a policy that Blackhawk will not seek an acquisition with any entity in which an officer, director, shareholder or any affiliate or associate of Blackhawk serves as an officer or director or affiliate.

UNDERTAKINGS AND UNDERSTANDINGS REQUIRED OF TARGET COMPANIES

As part of a subscription agreement to purchase shares of a target company, Blackhawk intends to obtain certain representations and warranties from a target company as to its conduct following the stock acquisition. The target company may also request certain representation from Blackhawk such as (i) the agreement of Blackhawk to make all necessary filings and to take all other steps necessary to remain a reporting company under the Exchange Act for at least a specified period of time; (ii) giving assurances of ongoing compliance with the Securities Act, the Exchange Act, the Investment Company Act, the General Rules and Regulations of the Securities and Exchange Commission, and other applicable laws, rules and regulations.

Prior to completion of an investment and/or share acquisition, Blackhawk may require that it be provided with written materials regarding the target company containing such items as a description of products, services and company history; management resumes; financial information; available projections, with related assumptions upon which they are based; an explanation of proprietary products and services; evidence of existing patents, trademarks, or service marks, or rights thereto; present and proposed forms of compensation to management; a description of transactions between such company and its affiliates during relevant periods; a description of present and required facilities; an analysis of risks and competitive conditions; a financial plan of operation and estimated capital requirements; audited financial statements; and other information deemed relevant.

COMPETITION

Blackhawk will remain an insignificant participant among business development companies. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than Blackhawk. In view of Blackhawk's combined limited financial resources, Blackhawk will continue to be at a significant competitive disadvantage compared to Blackhawk's competitors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We intend to invest in small and medium-sized companies, and our investments will considered speculative in nature. Our investments may include securities that are subject to legal or contractual restrictions on resale that adversely affect the liquidity and marketability of such securities. As a result, we may be subject to risk of loss which may prevent our stockholders from achieving price appreciation and dividend distributions. The portion of our portfolio consisting of investments in private companies will also be subject to valuation risk. We expect to value our privately held investments based on a determination of their fair value made in good faith by our board of directors on a quarterly basis in accordance with our established guidelines. In the absence of a readily ascertainable market value, the estimated values of our future investments may differ significantly from the values that would exist if a ready market for these securities existed. Any changes in valuation will be recorded in our statements of operations as "Net unrealized gain (loss) on investments."

We consider the management of equity price risk essential to conducting our business and maintaining our profitability. It is our goal that in the near future our portfolio will consist of investments in private companies. We anticipate no impact on these investments from modest changes in public market equity prices. However, should significant changes in market prices occur, there could be a long-term effect on valuations of private companies, which could affect the carrying value and the amount and timing of gains realized on these investments. This could also affect our ability to generate cash through the sale of private equity investments, since there may not be realistic initial public offering opportunities.

ITEM 4. CONTROLS AND PROCEDURES

(a) As of the end of the period covered by this quarterly report on Form10-Q, the Company's chief executive officer and chief financial officer conducted an evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934). Based upon this evaluation, the Company's chief executive officer and chief financial officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them of any material information relating to the Company that is required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934.

(b) There have not been any significant changes in the Company's internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, 2005 we sold 3,911,762 shares of our common stock under Regulation E at $.01 per share for a total of $39,118. We are still engaged in this offering. The maximum offering is $450,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit No.	Description

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

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

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

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

(b) Reports on Form 8-K

None.

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 21, 2005		By: /s/ Craig A. Zabala
		Craig A. Zabala, Chief Executive Officer


Date: April 21, 2005		By: /s/ Robert M. Fujii
		Robert M. Fujii, Chief Financial Officer