U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM 10-QSB



X  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
   OF 1934 - For the quarterly period ended March 31, 2006.

-- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934

                       Commission file number: 000-32829

                          PALOMAR ENTERPRISES, INC.
                 --------------------------------------------
                (Name of small business issuer in its charter)

           Nevada                                    06-1588136
-------------------------------          -----------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)


   1802 N. Carson Street, Suite 212-3018
          Carson City, Nevada                          89701
-----------------------------------------           -----------
(Address of principal executive offices)	     (Zip Code)

                               (775) 887-0670
                         ---------------------------
                         (Issuer's telephone number)

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.  X Yes  -- No

Indicate  by check mark  whether  the  registrant  is a shell  company
(as defined in Rule 12b-2 of the Exchange Act).   Yes    No X

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:  As of May 11, 2006, the
issuer had 28,068,608 shares of its common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one):  Yes    No X


                                      1
<PAGE>


                              TABLE OF CONTENTS
                              -----------------

                                                                   PAGE NO.
                                                                   --------
PART I - FINANCIAL INFORMATION	                                         3

Item 1.  Financial Statements                                            3

Item 2.  Management's Discussion and Analysis or Plan of Operation      11

Item 3.  Controls and Procedures                                        13


PART II - OTHER INFORMATION	                                        13

Item 1.  Legal Proceedings                                              13

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	13

Item 3.  Defaults Upon Senior Securities                                13

Item 4.  Submission of Matters to a Vote of Security Holders            13

Item 5.  Other Information                                              13

Item 6.  Exhibits                                                       14

SIGNATURES                                                              14





                                       2
<PAGE>


                      PART I - FINANCIAL INFORMATION
                      ==============================

Item 1.	Financial Statements.
----------------------------
The accompanying unaudited interim financial statements of Palomar Enterprises
("Palomar") have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission ("SEC"), and should be read in conjunction
with the audited financial statements and notes thereto contained in Palomar's
Annual Report filed with the SEC on Form 10-KSB. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of financial position and the results of operations for the
interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the results
to be expected for the full year. Notes to the financial statements which
would substantially duplicate the disclosure contained in the audited
financial statements for 2005 as reported in the 10-KSB have been omitted.

<TABLE><CAPTION>
                                  PALOMAR ENTERPRISES, INC.
                      CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2006
                                       (UNAUDITED)

<S>                                                                         <C>
ASSETS
   Cash                                                                     $    351,056
   Prepaids and other current assets                                              15,222
                                                                            -------------
Total current assets                                                             366,278

Property, plant and equipment, net of
  accumulated depreciation of $57,241                                          1,982,964
Other Assets                                                                      73,046
Goodwill                                                                         377,249
                                                                            -------------
TOTAL ASSETS                                                                $  2,799,537
                                                                            =============

LIABILITIES AND STOCKHOLDERS' EQUITY:

   Accounts Payable                                                         $     15,317
   Accrued Expenses                                                               43,657
   Current portion of notes payable                                              854,927
                                                                            -------------
Total current liabilities                                                        913,901

   Note payable, long term                                                     1,597,039
                                                                            -------------
TOTAL LIABILITIES                                                              2,510,940
                                                                            -------------
MINORITY INTEREST								  29,441

STOCKHOLDERS' EQUITY:
   Series A preferred stock, $0.00001 par value, 10,000,000 shares
      authorized, 9,000,000 shares issued or outstanding                              90
   Series B preferred stock, $0.00001 par value, 50,000,000 shares
      authorized, 50,000,000 shares issued or outstanding                            500
   Series C preferred stock, $0.00001 par value, 30,000,000 shares
      authorized, No shares issued and outstanding                                     -
   Common stock, $0.00001 par value, 25,000,000,000 shares
      authorized, 27,468,758 shares issued;
      and outstanding                                                                275
   Shares not yet earned                                                      (1,020,665)
   Additional paid-in capital                                                 14,002,528
   Accumulated deficit                                                       (12,723,572)
                                                                            -------------
      Total stockholders' equity                                                 259,156
                                                                            -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $  2,799,537
                                                                            =============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                     3
<PAGE>

<TABLE><CAPTION>
                             PALOMAR ENTERPRISES, INC.
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2005
                                  (UNAUDITED)



                                       Three Months Ended    Three Months Ended
                                          March 31, 2006        March 31, 2005
                                       -------------------  --------------------
<S>                                           <C>                  <C>

Revenues                               $          174,704  $              86,565
Cost of goods sold                                 98,239                 60,389
                                       -------------------  --------------------
Gross profit                                       76,465                 26,176

Operating expenses
   General and administrative                      169,663               670,462
   Facilities and rent                              18,868                12,831
   Consulting, legal and professional               75,694               212,381
   Payroll and related costs                       269,121                 9,682
                                       -------------------  --------------------
Total operating expenses                           533,346               905,356
                                       -------------------  --------------------
Loss from operations                              (456,881)             (879,180)
                                       -------------------  --------------------
Interest expense                                   (28,450)              (29,925)
Minority interest/JV loss other venturer             3,626               150,130
                                       -------------------  --------------------

Net loss                               $          (481,705) $           (757,975)
                                       ===================  ===================
  Net loss per share of common stock
  - basic and diluted                  $            (0.02)  $              (0.00)
                                       ===================  ====================
  Weighted average number of shares
  of common stock outstanding                  27,373,869            355,322,234
                                       ===================  ====================
* - less than $0.01 per share
</TABLE>




   The accompanying notes are an integral part of these financial statements.





                                     4
<PAGE>

<TABLE><CAPTION>
                              PALOMAR ENTERPRISES, INC.
                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2005
                                    (UNAUDITED)



                                               Three Months Ended    Three Months Ended
                                                 March 31, 2006        March 31, 2005
                                               -------------------  -------------------
<S>                                                    <C>                  <C>
Cash flows from operating activities:
Net loss for the period                           $      (481,705)      $    (757,975)
Minority Interest in Net Loss                              (3,626)           (150,130)

Adjustments to reconcile net loss to net cash
   used by operating activities:
   Depreciation                                             8,089               7,051
   Common stock issued for services                        16,750             510,241
Changes in assets and liabilities:
   Prepaid Expenses                                        64,845               1,592
   Other assets                                           (73,046)                  -
   Accounts payable and accrued liabilities                16,445               4,828
                                               -------------------  -------------------
Net cash used in operating activities                    (452,248)           (384,393)
                                               -------------------  -------------------

Cash flows from investing activities:
   Purchase of property and equipment                    (625,083)             (4,500)
                                               -------------------  -------------------
Net cash used in investing activities                    (625,083)             (4,500)
                                               -------------------  -------------------
Cash flows from financing activities:
   Proceeds from notes payable/net of
     repayments                                         1,173,920              (6,235)
   Proceeds from subscribed stock                         210,104                   -
   Proceeds from sale of common stock                           2             402,680
                                               -------------------  -------------------
Net cash flow from financing activities                 1,384,026             396,445
                                               -------------------  -------------------
Net Increase (decrease) in cash                           306,695               7,552
Cash at beginning of period                                44,361              15,857
                                               -------------------  -------------------
Cash at end of period                            $        351,056   $          23,409
                                               ===================  ===================

SUPPLEMENTAL CASH FLOW INFORMATION:

       Interest Paid                           $           21,175   $             -
                                               ===================  ===================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:

Common stock issued to satisfy liabilities     $           27,221  $              -
                                               ===================  ===================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                   5

<PAGE>

                           PALOMAR ENTERPRISES, INC.
                   NOTES TO UNAUDITED FINANCIAL STATEMENTS
                      FOR THE PERIOD ENDED March 31,2006
                   ---------------------------------------

NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

Palomar Enterprises, Inc. (Company) was incorporated on March 10, 1999 in
accordance with the laws of the State of Nevada.  The Company was initially
formed for the purpose of developing an aircraft service company for private
aircraft owners that would offer on-site preventative maintenance and repair
services.

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 revenues and expenses during the reporting period.  Actual results could
differ from those estimates.
Management further acknowledges that it is solely responsible for adopting
sound accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud.  The Company's system
of internal accounting control is designed to assure, among other items,
that 1) recorded transactions are valid; 2) valid transactions are recorded;
and 3) transactions are recorded in the proper period in a timely manner to
produce financial statements which present fairly the financial condition,
results of operations and cash flows of the Company for the respective
periods being presented

The Company is presently a licensed real estate broker and real estate
developer.

NOTE C - GOING CONCERN UNCERTAINTY

The Company has been unable to generate sufficient operating revenues and has
incurred cumulative operating losses of $12,723,572.

The Company has implemented a business plan to operate as a mortgage broker.
However, the Company is dependent upon the available cash on hand and either
future sales of securities or upon its current management and/or advances or
loans from controlling shareholders or corporate officers to provide
sufficient working capital.

There is no assurance that the Company will be able to obtain additional
funding through the sales of additional securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the
Company.  It is the intent of management and controlling shareholders to
provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity.

However, there is no legal obligation for either management and/or
controlling shareholders to provide such additional funding.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.

The financial statements do not include any adjustments that might result
from this uncertainty.

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and cash equivalents
   -------------------------

     The Company considers all cash on hand and in banks, including accounts
     in book overdraft positions, certificates of deposit and other highly-
     liquid investments with maturities of three months or less, when
     purchased, to be cash and cash equivalents.

2. Principles of consolidation
   ---------------------------

     The consolidated financial statements include the accounts of the Company
     and its ninety nine percent interest in Blackhawk.  All significant
     inter-company accounts and transactions have been eliminated.

                                     6
<PAGE>

   The Blackhawk fund is publicly traded on the OTC B.B. (BHWK).  The
financials of Palomar are inclusive of all activity of The BlackHawk Fund, as
well as Palomar Enterprises, on a consolidated basis. This includes all
revenue, expenses, losses and operations.

3. Research and development expenses
   ---------------------------------
     Research and development expenses are charged to operations as incurred.
     There were no research and development costs incurred in the period
     ending March 31, 2006.

4. Advertising expenses
   --------------------

     Advertising and marketing expenses are charged to operations as incurred.
     Advertising expenses for the period ending March 31, 2006 was $74,121 and
     in 2005 $8,970.

5. Revenue recognition
   -------------------

     The Company generates revenue from the sale of real estate, brokerage
     commissions, rental properties and mortgage loan originations. Revenues
     from real estate sales and commissions are recognized on execution of the
     sales contract. Rental and restaurant income is recognized in the period
     earned. The Company records gross commissions on the sales of properties
     closed. The Company pays the broker of record five percent of all
     transactions and 100 percent of personal sales. This is in accordance
     with standard procedures. The Company compensates its independent agents
     on a sliding scale between 70 and 80 percent based on productivity.

     The Company also realizes revenue from its subsidiary, The Blackhawk
     Fund, from existing consulting services.

6. Income Taxes
   ------------

     The Company utilizes the asset and liability method of accounting for
     income taxes. Temporary differences represent differences in the
     recognition of assets and liabilities for tax and financial reporting
     purposes, primarily accumulated depreciation and amortization.

     As of March 31, 2006, the deferred tax asset is related solely to the
     Company's net operating loss carryforward and is fully reserved.


7. Earnings (loss) per share
   -------------------------

     Basic earnings (loss) per share are computed by dividing the net income
     (loss) by the weighted-average number of shares of common stock and
     common  stock equivalents (primarily outstanding options and warrants).
     Common stock equivalents represent the dilutive effect of the assumed
     exercise of the outstanding stock options and warrants, using the
     treasury stock method. The calculation of fully diluted earnings (loss)
     per share assumes the dilutive effect of the exercise of outstanding
     options and warrants at either the beginning of the respective period
     presented or the date of issuance, whichever is later. As of March 31,
     2006, the Company's outstanding warrants are considered anti-dilutive.

     On July 5 2005, the Company declared a 1,000 to one reverse stock split
     of its common stock. All stock numbers presented in the financial
     statements have been retroactively restated to reflect this reverse
     split.


                                    7
<PAGE>


8. Use of Estimates
   ----------------

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America 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 revenues and expenses during the accounting period. Actual
     results could differ from those estimates.

9. Additional Funding

     During the quarter ended March 31, 2006 the company completed two
     agreements for financing. The first provides a credit line up to 500,000
     from a bank with interest only. At March 31 2006 307,000 was due and was
     used principly for and acquisition of property to be resold. The second
     provides for convertible debt financing equal to 1.35 million of which
     500,000 was owed at  March 31, 2006. The notes bear interest at 6% due
     March 2009.The agreement also grants  warrants equal to 36,000,000
     shares of common stock.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
The Company adopted SFAS No. 142. Under the new rules, the Company will no
longer amortize goodwill and other intangible assets with indefinite lives,
but such assets will be subject to periodic testing for impairment. On an
annual basis, and when there is reason to suspect that their values have been
diminished or impaired, these assets must be tested for impairment, and
write-downs to be included in results from operations may be necessary. SFAS
No. 142 also requires the Company to complete a transitional goodwill
impairment test six months from the date of adoption.

     Any goodwill impairment loss recognized as a result of the transitional
goodwill impairment test will be recorded as a cumulative effect of a change
in accounting principle no later than the end of fiscal year 2002. The
adoption of SFAS No. 142 had no material impact on the Company's consolidated
financial statements SFAS No. 143 establishes accounting standards for the
recognition and measurement of an asset retirement obligation and its
associated asset retirement cost. It also provides accounting guidance for
legal obligations associated with the retirement of tangible long-lived
assets. SFAS No. 143 is effective in fiscal years beginning after June 15,
2002, with early adoption permitted. The Company expects that the provisions
of SFAS No. 143 will not have a material impact on its consolidated results
of operations and financial position upon adoption. The Company plans to
adopt SFAS No. 143 effective January 1, 2003.

     SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS No. 144
superseded Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" (SFAS No. 121), and APB Opinion No. 30, "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions".
The Company adopted SFAS No. 144 effective January 1, 2002. The adoption of
SFAS No. 144 had no material impact on Company's consolidated financial
statements.

     In April 2002, the FASB issued Statement No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." This Statement rescinds FASB Statement No. 4,
"Reporting Gains and Losses from Extinguishment of Debt", and an amendment
of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements" and FASB Statement No. 44, "Accounting
for Intangible Assets of Motor Carriers". This Statement amends FASB
Statement No. 13, "Accounting for Leases," to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the
required accounting for certain lease modifications that have economic
effects that are similar to sale- leaseback transactions. We do not expect
the adoption to have a material impact to our financial position or results
of operations.

     In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The provisions of this statement are effective for exit or
disposal activities that are initiated after December 31, 2002, with early
application encouraged. We do not expect the adoption to have a material
impact to our financial position or results of operations.

     In October 2002, the FASB issued Statement No. 147, "Acquisitions of
Certain Financial Institutions-an amendment of FASB Statements No. 72 and 144
and FASB Interpretation No. 9," which removes acquisitions of financial
institutions from the scope of both Statement 72 and Interpretation 9 and
requires that those transactions be accounted for in accordance with Statements
No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible
Assets. In addition, this Statement amends SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, to include in its scope long-term
customer-relationship intangible assets of financial institutions such as
depositor- and borrower-relationship intangible assets and credit cardholder
intangible assets. The requirements relating to acquisitions of financial
institutions are effective for acquisitions for which the date of acquisition is
on or after October 1, 2002. The provisions related to accounting for the
impairment or disposal of certain long-term customer-relationship intangible
assets are effective on October 1, 2002. The adoption of this
statement did not have a material impact to our financial position or results of
operations as we have not engaged in either of these activities.

                                  8
<PAGE>

     In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure," which amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methodsof transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation. In addition,
this statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about
the method of accounting for stock-based employee compensation and the effect
of the method used on reported results. The transition guidance and annual
disclosure provisions of Statement 148 are effective for fiscal years ending
after December 15, 2002, with earlier application permitted in certain
circumstances. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. The adoption of this statement did not have a material
impact on our financial position or results of operations as we have not
elected to change to the fair value based method of accounting for stock-
based employee compensation.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." Interpretation 46 changes the criteria by which
one company includes another entity in its consolidated financial statements.
Previously, the criteria were based on control through voting interest.
Interpretation 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim
period beginning after June 15, 2003. Certain of the disclosure requirements
apply in all financial statements issued after January 31, 2003, regardless
of when the variable interest entity was established. We do not expect the
adoption to have a material impact to our financial position or results of
operations.
     In April 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 149, Amendment of Statement No. 133 on Derivative Instruments and
Hedging Activities. SFAS 149 amends SFAS No. 133 to provide clarification on
the financial accounting and reporting of derivative instruments and hedging
activities and requires that contracts with similar characteristics be
accounted for on a comparable basis. The provisions of SFAS 149 are effective
for contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The adoption of SFAS 149 did not
have a material impact on our results of operations or financial position.

     In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
SFAS 150 establishes standards on the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. The provisions of SFAS 150 are effective for financial instruments
entered into or modified after May 31, 2003 and to all other instruments that
exist as of the beginning of the first interim financial reporting period
beginning after June 15, 2003. The adoption of SFAS 150 did not have a
material impact on our results of operations or financial position.

NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash, notes receivable, accounts payable, accrued
liabilities and notes payable, as applicable, approximates fair value due to
theshort-term nature of these items.  The fair value of the related party
notes payable cannot be determined because of the Company's affiliation with
the parties with whom the agreements exist.  The use of different assumptions
or methodologies may have a material effect on the estimates of fair values.


                                  9
<PAGE>

NOTE F - RELATED PARTY TRANSACTIONS

 Company pays consulting fees to the two officer's companies for management
services.  The consulting fees totaled 216,677 as of March 31, 2006. The
Company is also a 50% joint venture partner with one of its shareholders in
a property.  All expenses are divided equally.


NOTE G - INCOME TAXES

As of December 31, 2005, the Company had a net operating loss carryforward of
approximately $9,230,000 to offset future taxable income. These carryforwards
expire in 2019 to 2024. Other than the increase in the valuation allowance the
Company's income tax expense (benefit) for the years ended December 31, 2005
and 2004 did not differed significantly from statutory rate.

NOTE H - PROPERTY

Property and equipment consisted of the following at March 31, 2006:

<TABLE><CAPTION>
<S>                                      <C>

Building                              $1,395,612
Office equipment                          19,510
Building held for sale                   625,083                                     -----------
         Total                         2,040,205
Less: Accumulated depreciation           (57,241)
                                      -----------
Property & equipment, net             $1,982,964
                                      ==========
</TABLE>

Assets are being depreciated from five to forty years using the straight line
method.

NOTE I - NOTES PAYABLE AND BANK LINE OF CREDIT

Notes payable and bank line of credit at March 31, 2006 are comprised of the
following:

Note payable to lending institution, original balance of $980,000, interest
at 7.5% per annum.  Requires monthly principal and interest payments of
6,852 through 2034.  Collateralized by building.
$823,898

Convertible debentures payable to investor group, original balance of
325,000, interest at 8% per annum, interest payable quarterly.  Principal
and accrued interest are convertible at any time at the rate of 80% of the
average three lowest closing bid prices of the twenty trading days
immediately preceding the conversion, limited to a maximum of 4.99%
of the total outstanding common stock on the date conversion.  Principal was
due July and August 2005.

<TABLE><CAPTION>
<S>                                                        <C>

Convertible debentures payable to an investor        $  325,000
group, interest at 8% due March 2009.

Mortgage Payable secured by property Interest at        500,000
one over prime interest only for the first ten
years then amortized over 360 months.

Credit line from a bank up to 500,000 interest only     496,000
at one percent over prime.                           ----------

                                             Total   $2,451,966

                              Less current portion     (854,927)
                                                    -----------
                           Total long-term portion  $  1,597,039
                                                     ===========
</TABLE>

NOTE J - LEASES

Our lease at 120 Birmingham Dr.  # 110-G  Cardiff, CA. 92007 costs $875
per month.  We are also a party to a lease agreement with Ikon Financial
Services. We lease a copier from Ikon Financial Services for a price of $445
per month.

NOTE K - LITIGATION

The Company has been notified that it is a defendant in a lawsuit alleging
improper valuations on a property. The Company's insurance carrier has been
notified. The Company intends to vigorously defend the action and does not
forsee any possibility of any material impact on it's financials.

NOTE L - SUBSEQUENT EVENTS

(1) In May, 2006 The Company received gross funding of $400,000 from an
investor group, pursuant to the subscription agreement referred to in
NOTE D-9

(2) On April 1st, The Company received $35,750 related to a sale of a
property, which has been recorded as revenue in the 2nd quarter.


                                  10
<PAGE>


Item 2.	Management's Discussion and Analysis or Plan of Operations.
-------------------------------------------------------------------
Forward-Looking Information
---------------------------
Much of the discussion in this Item is "forward looking" as that term is used
in Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934.  Actual operations and results may materially differ
from present plans and projections due to changes in economic conditions,
new business opportunities, changed business conditions, and other
developments.  Other factors that could cause results to differ materially
are described in our filings with the Securities and Exchange Commission.

There are several factors that could cause actual results or events to differ
materially from those anticipated, and include, but are not limited to general
economic, financial and business conditions, changes in and compliance with
governmental laws and regulations, including various state and federal
environmental regulations, our ability to obtain additional financing from
outside investors and/or bank and mezzanine lenders and our ability to
generate sufficient revenues to cover operating losses and position us to
achieve positive cash flow.

Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof.  We
believe the information contained in this Form 10-QSB to be accurate as of
the date hereof.  Changes may occur after that date.   We will not update
that information except as required by law in the normal course of its public
disclosure practices. Additionally, the following discussion regarding our
financial condition and results of operations should be read in conjunction
with the financial statements and related notes contained in Item 1 of Part I
of this Form 10-QSB, as well as the financial statements in Item 7 of Part II
of our Form 10-KSB for the fiscal year ended,  December 31, 2005.

Management's Plan of Operations.
-------------------------------
Current Business Plan
---------------------
Overview

We provide brokerage services in the real estate market.  Our core
business consists primarily of two areas:

- assisting clients with the sale and purchase of residential real
estate, and
- providing the mortgage loan origination to finance the property.

In addition, we locate undervalued properties to purchase and re-sell at
higher prices.  Some of these properties require cosmetic improvement,
while others may be turned around for immediate re-sale. These properties
are often identified by our agents in the field, which are evaluated to
determine the potential profitability.

Mortgage Origination

Our mortgage lending services is focused on residential properties, primarily
located near the coast in San Diego, California. These properties generally
demand a higher purchase price, which yields higher commissions. These coastal
properties are also in greater demand than inland properties and provide more
turn-around and activity than less attractive markets.  During the year ended
December 31, 2005, the average home in this market sold for approximately
$600,000.

We focus primarily on offering mortgage products to borrowers who generally
satisfy the credit, documentation or other underwriting standards prescribed
by conventional mortgage lenders and loan buyers, such as Fannie Mae and
Freddie Mac (referred to as conforming loans).

Our mortgage loan origination business is comprised of two mortgage officers.
We broker the loans we originate to third party lenders.  In 2005, we placed
90% of the mortgages we brokered with three  particular lenders to receive
the highest level of execution.

In 2005, approximately 70% of the loans that we originated related to the
purchase of residential property and approximately 30% were refinances of
existing mortgages.  All of the loans we originated were secured by owner-
occupied properties.

We broker a broad range of mortgage products that include both fixed-rate
loans and adjustable-rate loans, or ARMs.  In addition, these products are
available at different interest rates and with different origination and
application points and fees depending on the particular borrower's risk
classification.  Borrowers may choose to increase or decrease their interest
rate through the payment of different levels of origination fees.  The
maximum loan amount is generally $800,000 with a loan-to-value ratio of up
to 80%.  We do, however, broker larger loans with higher loan-to-value ratios
through special jumbo programs offered by lenders.  During 2005, the average
loan amount was approximately $450,000.

We have established relationships with several lending institutions and banks
to provide the financing for home loan originations.  These institutions
require us to go through an application process in order to be approved to
offer their loan products.  The application process includes background
checks on us and our officers, as well as an examination of our financial
statements. Once approved, we may offer the loans provided by these
institutions.  We receive a commission paid by the client for the origination
of the loan, which typically ranges from 1% to 3% of the loan value.  The
banks and institutions that Palomar has been approved to work with are: World
Savings Bank, Flagstar Bank, Countrywide Home Loans, Commonwealth, Provident
Funding and Downey savings.  None of these relationships are essential to our
operations as mortgage loans are a commodity.  We believe that in the event
of the termination of the arrangement with any of these financial
institutions, it would be relatively easy to establish relationship with
other institutions.

Real Estate Brokerage

We currently have six independent real estate agents who work out of offices
in Carlsbad, California. The majority of business is conducted in Southern
California, with an emphasis on coastal properties. Revenue is derived by
commissions earned from the sale or purchase of residential properties, as
well as from commissions earned from the origination of mortgage loans. These
commissions range from 1.5% to 6%, depending upon the services provided to
the client. We offer a discounted commission program of 1.5% to clients,
which allows us to compete with the larger, more established real estate
firms.

We encourage our real estate clients to utilize our in-house lending services
for their home loan. This allows us to generate commissions from the purchase
of the property as well as the loan provided to the client.

In order to attract new business, we invest our resources into several
marketing programs.  We send direct mail on behalf of every agent to a pre-
determined sector referred to as "farms". These mail pieces are post card
size and provide specific information relating to the agent's name, contact
number and services offered.  The agents pick their farm area to prevent
overlap from other agents in the office.  We send a minimum of 1,000 cards
per agent per month. In addition to direct mail, we take out display ads in
the two largest newspapers in San Diego, The Tribune and The North County
Times.  These ads list the properties currently in inventory for sale by our
agents, as well as information regarding mortgage loan rates made available
by us.  Potential clients may call the specific agent listing the property
or offering mortgage loan services to receive additional information. Though
we have employed other forms of advertising such as the Yellow Pages, on-line
publications and print media, most of the new business generated comes from
the mailers and newspaper ads.


Results of Operations
---------------------
Continuing operations
---------------------
Revenue
-------
Three months ended March 31, 2006 compared to the three months ended March 31,
2005. Total revenues were at $174,704 for the three months ended March 31,
2006 compared to $86,565 for the prior period, an increase of 102% percent.
Our gross profit for the three months ended March 31, 2006 compared to 2005
increased to ($76,465) from $26,176.  Gross margin as a percentage of sales
increased to (.44%) percent in 2006 from 30% in 2005.

Total operating expenses for the three months ended March 31, 2006 compared
to 2005 decreased by $372,010 to $533,346 from $905,356 in the prior period.
Operating loss of $456,881 in 2006 compared to $879,180 for the prior period.
Interest expense, net for the three months ended March 31, 2006 was $28,450
as compared to the same period of $28,925.

Net loss fOr for the three months ended March 31, 2006 was $481,705 compared
to a net loss of $757,975 for the same period in 2005.

                                   11
<PAGE>

Liquidity and Capital Resources
-------------------------------
As of March 31, 2006, we had a deficiency in working capital of $547,623.

Cash used in investing activities totaled $625,083, used for property, plant
and equipment, and note payable reductions.

Critical Accounting Policies
----------------------------
The preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and
liabilities.  We base our estimates and judgments on historical experience
and on various other assumptions we believe to be reasonable under the
circumstances.  Future events, however, may differ markedly from our current
expectations and assumptions.  While there are a number of significant
accounting policies affecting our consolidated financial statements, we
believe the following critical accounting policy involve the most complex,
difficult and subjective estimates and judgments.

Stock-Based Compensation
-------------------------
In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-Based
Compensation - Transition and Disclosure.  This statement amends SFAS No. 123-
Accounting for Stock-Based Compensation, providing alternative methods of
voluntarily transitioning to the fair market value based method of accounting
for stock based employee compensation.  FAS 148 also requires disclosure of
the method used to account for stock-based employee compensation and the
effect of the method in both the annual and interim financial statements.
The provisions of this statement related to transition methods are effective
for fiscal years ending after December 15, 2002, while provisions related to
disclosure requirements are effective in financial reports for interim
periods beginning after December 31, 2002. We elected to continue to account
for stock-based compensation plans using the intrinsic value-based method of
accounting prescribed by APB No. 25, "Accounting for Stock Issued to
Employees," and related interpretations.  Under the provisions of APB No. 25,
compensation expense is measured at the grant date for the difference
between the fair value of the stock and the exercise price.

Recent Accounting Pronouncements
--------------------------------
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
151, Inventory Costs- an amendment of ARB No. 43, Chapter 4.  This Statement
amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to
clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage).  Paragraph 5 of ARB
43, Chapter 4, previously stated that "under some circumstances, items such
as idle facility expense, excessive spoilage, double freight, and rehandling
costs may be so abnormal as to require treatment as current period charges."
This Statement requires that those items be recognized as current-period
charges regardless of whether they meet the criterion of "so abnormal."  In
addition, this Statement requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the
production facilities. This Statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005.  Management does
not believe the adoption of this Statement will have any immediate material
impact on the
Company.
In  December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
Time-Sharing  Transactions-an amendment of FASB Statements No. 66 and 67"
("SFAS 152). The amendments made by Statement 152 This Statement amends FASB
Statement No. 66, Accounting for Sales of Real Estate, to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions that is  provided in AICPA  Statement  of  Position (SOP) 04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also
amends FASB Statement No. 67, Accounting for Costs and Initial Rental
Operations of Real Estate Projects, to state that the guidance for
(a) incidental operations and (b) costs incurred to sell real estate
projects does not apply to real estate time-sharing transactions.  The
accounting for those operations and costs is subject to the guidance in SOP
04-2. This Statement is effective for financial statements for fiscal years
beginning after June 15, 2005 with earlier application encouraged.  We do
not anticipate that the implementation of this standard will have a material
impact on its financial position, results of operations or cash flows.

On December 16, 2004, the Financial Accounting Standards Board ("FASB")
published Statement of Financial Accounting Standards No. 123 (Revised 2004),
Share-Based Payment ("SFAS 123R").  SFAS 123R requires that compensation cost
related to share-based payment transactions be recognized in the financial
statements.  Share-based payment transactions within the scope of SFAS 123R
include stock options, restricted stock plans, performance-based awards,
stock appreciation rights, and employee share purchase plans.  The provisions
of SFAS 123R are effective as of the first interim period that begins after
June 15, 2005.  Accordingly, the Company will implement the revised standard
in the third quarter of fiscal year 2005. Currently, the Company accounts
for its share-based payment transactions under the provisions of APB 25,
which does not necessarily require the recognition of compensation cost in
the financial statements.  Management is assessing the implications of this
revised standard, which may materially impact the Company's results of
operations in the third quarter of fiscal year 2005 and thereafter.

                                      12
<PAGE>

On December 16, 2004, FASB issued Statement of Financial Accounting Standards
No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions ("SFAS 153").  This statement amends
APB Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance.  Under SFAS 153, if
a nonmonetary exchange of similar productive assets meets a commercial-
substance criterion and fair value is determinable, the transaction must be
accounted for at fair value resulting in recognition of any gain or loss.
SFAS 153 is effective for nonmonetary transactions in fiscal periods that
begin after June 15, 2005.  We do not anticipate that the implementation of
this standard will have a material impact on its financial position, results
of operations or cash flows.

Off-Balance Sheet Arrangements.
------------------------------
We do not have any off-balance sheet arrangements.

Item 3.	Controls and Procedures.
--------------------------------
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
and Exchange Commission's rules and forms.  Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under
the Exchange Act is accumulated and communicated to our management, including
our principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.

Evaluation of Disclosure and Controls and Procedures.  As of the end of the
period covered by this Quarterly Report, we conducted an evaluation, under
the supervision and with the participation of our chief executive officer and
chief financial officer, of our disclosure controls and procedures (as defined
in Rules 13a-15(e) of the Exchange Act).  Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures are effective to ensure that information required to
be disclosed by us in reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls Over Financial Reporting.  There was no change
in our internal controls, which are included within disclosure controls and
procedures, during our most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our
internal controls.

                        PART II - OTHER INFORMATION
                        ===========================

Item 1.	Legal Proceedings.
-------------------------
The Company has been notified that it is a defendant in a lawsuit alleging
improper valuations on a property. The Company's insurance carrier has been
notified. The Company intends to vigorously defend the action and does not
forsee any possibilityof any material impact on it's financials.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
-------------------------------------------------------------------
None.

Item 3. Defaults Upon Senior Securities.
---------------------------------------
None.

Item 4. Submission of Matters to a Vote of Security Holders.
-----------------------------------------------------------
None.

                                  13
<PAGE>

Item 6.	Exhibits.
-----------------
<TABLE><CAPTION>
Exhibit No.	Identification of Exhibit
-----------     -------------------------
<S>              <C>
3.1**	        Articles of Incorporation.
3.2**	        Articles of Amendment to Articles of Incorporation.
3.3**	        Articles of Amendment to Articles of Incorporation
3.4**	        Certificate of Change.
3.5**	        Certificate of Correction to the Certificate of Change.
3.6**	        Certificate of Amendment to the Certificate of Designation
                for the Series B Preferred Stock.
3.7**	        Certificate of Designation for the Series A Preferred Stock.
3.8**	        Certificate of Designation for the Series C Preferred Stock.
3.9**	        Bylaws.
10.1**	        Steven Bonenberger Employment and Stock Purchase Agreement.
10.2**	        Brent Fouch Employment and Stock Purchase Agreement.
10.3**	        Joint Venture Agreement with Prize Pizza, LLC
10.4**	        Joint Venture Agreement with K&S Family Entertainment.
10.5**	        Purchase Agreement dated November 9, 2004, between Robert C.
                Simpson and Palomar Enterprises, Inc.
14**	        Code of Ethics
21**	         Subsidiaries.
31.1*	        Certification of Steven Bonenberger, President, Director and
                Chief Executive Officer of Palomar Enterprises, Inc., pursuant to
                18 U.S.C. 1350, as adopted pursuant to 302 of the Sarbanes-Oxley
                Act of 2002.
31.2*	        Certification of Brent Fouch, Treasurer, Chief Financial Officer
                and Director of Palomar Enterprises, Inc., pursuant to 18 U.S.C.
                Sec. 1350, as adopted pursuant to Sec. 302 of the Sarbanes-Oxley
                Act of 2002.
32.1*	        Certification of Steven Bonenberger, President, Director and
                Chief Executive Officer of Palomar Enterprises, Inc., pursuant to
                18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the
                Sarbanes-Oxley Act of 2002.
32.2*	        Certification of Brent Fouch, Treasurer, Chief Financial Officer
                and Director of Palomar Enterprises, Inc., pursuant to 18 U.S.C.
                Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley
                Act of 2002.
</TABLE>
__________
*    Filed herewith.
**  Previously Filed

                                    SIGNATURES
                                    ==========
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.


                                        Palomar Enterprises, Inc.
Dated: May 10,2006                      By /s/ Steve Bonenberger
                                        ------------------------------------
	                                Steve Bonenberger, President,
                                        Chief Executive Officer and Director


                                       14
<PAGE>