UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION





Washington,
      D.C. 20549





**FORM
      10-QSB**





[X]
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934.





For
      the
      quarterly period ended June 30, 2007





OR





[
      ]
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934.





For
      the
      transition period from _______, 20___ to _______, 20___.








Commission
      File Number: 000-49672


**PALOMAR
      ENTERPRISES, INC.**


(Exact
      Name of Small Business Issuer as Specified in its Charter)











**NEVADA**
            
            06-1588136(State
                or Other Jurisdiction of
            
            (IRS
                EmployerIncorporation
                or Organization)
            
            Identification
                Number)








1802
      N.
      CARSON STREET, SUITE 212-3018


CARSON
      CITY, NEVADA 89701


Address
      of Principal Executive Offices





(775)
      887-0670


(Registrant's
      Telephone Number, Including Area Code)











Check
      whether the Issuer (1) has 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 Issuer was required to file such reports), and 2) has been
      subject to such filing requirements for the past 90 days.  [ X ] Yes [ ]
      No





State
      the
      number of shares outstanding of each of the Issuer’s classes of common equity as
      of the latest practicable date: As of August 10 , 2007, the issuer had
      239,748,758 shares of its common stock issued and outstanding.





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





1










**TABLE
      OF CONTENTS**














PART
      I -
      FINANCIAL INFORMATION





Item
      1.
      Financial Statements            
                 
              
         
                                                                
           
3


Consolidated
      Balance Sheet as of June 30, 2007 (unaudited) and December 31,
      2006                               
3-4


Consolidated
      Statement of Operations for the three and six months ended


June
      30,
      2007and 2006 (unaudited)            
                 
                 
                                                                     
   5


Consolidated
      Statement of Cash Flows for the six months ended June 30, 2007


and
      2006
      (unaudited)            
                 
                 
             
                                                                             
 6-7


Notes
      to
      Consolidated Financial Statements (unaudited)      
                 
       
                                                 
8





Item
      2.
      Management's Discussion and Analysis or Plan of Operation    
                 
 
                                  
20





Item
      3.
      Quantitative and Qualitative Disclosures of Market
      Risk                                
                                   
24




Item
      4.
      Controls and Procedures           
                 
                 
             
                                                            
 24





PART
      II -
      OTHER INFORMATION




Item
      1.
      Legal
      Proceedings                                                                                                                                       25




Item
      2.
      Unregistered Sales of Equity Securities and Use of
      Proceeds                                                             25





Item
      3.
      Defaults Upon Senior
      Securities                                                               
                                              
25





Item
      4.
      Submission of Matters to a Vote of Security
      Holders                                                    
              
       25





Item
      5.
      Other
      Information                                                                                                                    
                  
25





Item
      6.
      Exhibits                                                                                                                                        
                
26





SIGNATURES                                                                                                                                                         
      26








2







**PART
      I - FINANCIAL INFORMATION**


**ITEM
      1. FINANCIAL STATEMENTS**.





The
      accompanying unaudited interim consolidated 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 2006 as reported in the 10-KSB have been
      omitted.


































































































3
























**Palomar
                Enterprises, Inc.****Consolidated
                Balance Sheet****as
                of June 30, 2007****(unaudited)**June
                30,2007ASSETS:Cash
            
            
            $
            -Prepaids
                and other current assets
            
            
            22,000Total
                current assets
            
            
            22,000Other
                assets
            
            
            
            
            
            112,125Property,
                plant and equipment, net of accumulated depreciation of
                $99,492
            
            3,098,100Goodwill
            
            
            377,248TOTAL
                ASSETS
            
            $
            3,609,473**LIABILITIES
                AND STOCKHOLDERS' EQUITY**LIABILITIES:Accounts
                payable and Cash Overdraft
            
            $
            28,655Accrued
                expenses
            
            
            212,616Accrued
                Derivative
            
            
            244,892Current
                portion of notes payable
            
            
            2,066,442Total
                current liabilities
            
            
            2,552,605Notes
                payable, long term
            
            
            2,252,304TOTAL
                LIABILITIES
            
            
            4,804,909MINORITY
                INTEREST
            
            
            10,317





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











4

























**Palomar
                Enterprises, Inc.**Consolidated
                Balance Sheet, continuedAs
                of June 30, 2007(unaudited)June
                302007STOCKHOLDERS'
                EQUITY:Preferred
                stock, $0.00001 par value, 10,000,000 sharesauthorized,
                no shares issued or outstanding
            
            -Series
                A preferred stock, $0.00001 par value, 10,000,000
                sharesauthorized,
                8,600,000 shares issued and
              outstanding
            
            
            86Series
                B preferred stock, $0.00001 par value, 50,000,000 sharesauthorized,
                30,000,000 shares issued and outstanding
            
            300Series
                C preferred stock, $0.00001 par value, 30,000,000 sharesauthorized,
                no shares issued or outstanding
            
            -
                -Common
                stock, $0.00001 par value, 25,000,000,000 sharesauthorized,
                578,748,608 shares issued and outstanding
            
            5,787Shares
                Subscribed
            (250,000)-
                -Additional
                paid-in capital
            
            
            16,703,435Accumulated
                deficit
            
            
            (17,665,361)Total
                stockholders' deficit
            
            
            (1,205,753)TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            3,609,473





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













5







**Palomar
                Enterprises, Inc.****Consolidated
                Statements of Operations****For
                the Three Months and Six Months Ended June 30, 2006 and
                2005****(unaudited)**For
                the Three Months Ended
            
            For
                the Six Months EndedJune
                30,
            
            June
                30,2007
            
            2006
            
            2007
            
            2006Revenue
            
            $
            282,749
            
            $
            204,012
            
            $
            606,095
            
            $
            378,716Cost
                of goods sold
            
            
            243,330
            
            
            100,341
            
            
            455,779
            
            
            198,580Gross
                profit
            
            
            39,419
            
            
            103,671
            
            
            150,296
            
            
            180,136Operating
                expenses:General
                and administrative
            
            
            87,218
            
            
            256,347
            
            
            250,072
            
            
            426,010Facilities
                and rent
            
            
            13,918
            
            
            23,766
            
            
            30,306
            
            
            42,634Consulting,
                legal and professional
            
            
            482,318
            
            
            121,640
            
            
            2,288,473
            
            
            197,334Payroll
                and related costs
            
            
            35,553
            
            
            223,219
            
            
            158,036
            
            
            492,340Total
                operating expenses
            
            
            619,007
            
            
            642,971
            
            
            2,726,887
            
            
            1,158,317Loss
                from operations
            
            
            (579,588)
            
            
            (521,300)
            
            
            (2,576,591)
            
            
            (978,181)Other
                income or (expense)Interest
                expense
            
            
            (82,764)
            
            
            (70,845)
            
            
            (181,547)
            
            
            (99,295)Minority
                interest in net loss/jv loss other/derivative loss
            
            
            (219,546)
            
            
            3,298
            
            
            (225,827)
            
            
            6,924Total
                other income or (expense)
            
            
            (302,310)
            
            
            67,547
            
            
            (407,374)
            
            
            (92,371)(Loss)
                before provision for taxes
            
            
            (881,898)
            
            
            (588,847)
            
            
            (2,983,965)
            
            
            (1,070,552)Provision
                for income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                (loss)
            
            $
            (881,898)
            
            $
            (588,847)
            
            $
            (2,983,965)
            
            $
            (1,070,552)Weighted
                average number ofcommon
                shares outstanding - basic
            
            
            558,745,126
            
            
            27,832,604
            
            
            326,394,126
            
            
            27,601,686Net
                (loss) per share - basic
            
            $
            (0.02)
            
            $
            (0.152)
            
            $
            (0.01)
            
            $
            (1.89)





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








6







**Palomar
                Enterprises, Inc.****Consolidated
                Statements of Cash Flows****For
                the Six Months Ended June 30, 2007 and 2006****(unaudited)**For
                the Six Months EndedJune
                30,2007
            
            2006**Cash
                flows from operating activities**Net
                (loss) for the period
            
            $
            (2,983,965)
            
            $
            (1,070,552)Minority
                interest in net loss
            
            
            30,125
            
            
            1,803Adjustments
                to reconcile net (loss) tonet
                cash (used) by operating activities:Depreciation
            
            
            16,600
            
            
            16,178Common
                stock issued for services
            
            
            2,189,936
            
            
            58,150Accrued
                Derivative liability
            
            
            244,892
            
            
            -Changes
                in operating assets and liabilities:Decrease
                in inventory
            
            
            -
            
            
            -(Increase)
                decrease in prepaid expenses/other
            
            
            (44,043)
            
            
            (6,169)-Increase
                in accounts payable and accrued expenses
            
            
            74,021
            
            
            (55,089)Net
                cash (used) by operating activities
            
            
            (472,434)
            
            
            (1,055,679)**Cash
                flows from investing activities**Purchase
                of property and equipment/sale/net
            
            
            32,700
            
            
            (625,083)Purchase
                of notes receivable
            
            
            -Net
                cash (used) by investing activities
            
            
            32,700
            
            
            (625,083)**Cash
                flows from financing activities**Proceeds
                from note payable/net of repayments
            
            
            281,462
            
            
            1,275,596Shares
                issued for debt reduction
            
            
            (68,476)Proceeds
                from sale of common stock/stock subscribed
            
            
            180,946
            
            
            1,543,264Cash
                overdraft
            
            
            10,615Net
                cash provided by financing activities
            
            
            404,547
            
            
            2,818,860Net
                increase (decrease) in cash
            
            
            (35,187)
            
            
            1,138,098Cash
                - beginning
            
            
            35,187
            
            
            44,361Cash
                - ending
            
            $
            -
            
            $
            1,182,459





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





7










**Palomar
                Enterprises, Inc****Consolidated
                Statements of Cash Flows, continued****For
                the Six Months Ended June 30, 2007 and 2006****(unaudited)**For
                the Six Months EndedJune
                30,2007
            
            2006Supplemental
                disclosures:Interest
                paid
            
            $
            22,216
            
            $
            43,739Income
                taxes paid
            
            $
            -
            
            $
            -Non-cash
                investing and financing activities:Common
                stock issued for services
            
            $
            2,189,936
            
            $
            58,150Preferred
                Shares converted to Common
            
            
            9,000.








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








8












**NOTES
      TO UNAUDITED FINANCIAL STATEMENTS**




**FOR
      THE PERIOD ENDED June 30, 2007**




**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.




**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 in the real estate development
      and mortgage business employing 13 real estate brokers.




**NOTE
      C - GOING CONCERN UNCERTAINTY**




The
      Company has been unable to generate sufficient operating revenues and has
      incurred operating losses.




The
      Company is operating as a mortgage broker and real estate developer. 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.


9


**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 eight percent interest in Blackhawk. All significant inter- company
      accounts and transactions have been eliminated.




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 June 30,
      2007.




4.
      Advertising expenses




Advertising
      and marketing expenses are charged to operations as incurred. Advertising
      expenses for the period ending June 30, 2007 was $38,972 and in 2006
      $171,696.




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. 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 recognizes sales when it sells
      properties that have been held for sale when their renovation is complete.
      Revenue is recognized at "closing".




The
      Company also realizes revenue from its subsidiary, The Blackhawk Fund, from
      its
      media production business for sale of media "spots" and
      infomercials.




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
      June 30, 2007, 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 June 30, 2007, the Company's outstanding warrants are considered
      anti-dilutive.


10


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.




**RECENT
      ACCOUNTING PRONOUNCEMENTS**







In
      July
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in
      income taxes recognized in an enterprises' financial statements in accordance
      with SFAS No. 109, "Accounting for Income Taxes". FIN 48 prescribes a
      recognition threshold and measurement attributable for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. FIN 48 also provides guidance on derecognizing, classification,
      interest and penalties, accounting in interim periods, disclosures and
      transitions. FIN 48 is effective for fiscal years beginning after December
      15,
      2006. The Company is currently reviewing the effect, if any, FIN 48 will have
      on
      its financial position and operations.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS
      No.
      157"). SFAS No157 defines fair value, establishes a framework for measuring
      fair
      value in generally accepted accounting principles ("GAAP"), expands disclosures
      about fair value measurements, and applies under other accounting pronouncements
      that require or permit fair value measurements. SFAS No. 157 does not require
      any new fair value measurements, however the FASB anticipates that for some
      entities, the application of SFAS No. 157 will change current practice. SFAS
      No.
      157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007, which for the Company would be its fiscal year
      beginning November 1, 2008. The implementation of SFAS No. 157 is not expected
      to have a material impact on the Company's results of operations and financial
      condition.





In
      September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
      No. 158, "Employers' Accounting for Defined Benefit Pension and Other
      Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
      132(R)". This statement requires employers to recognize the overfunded or
      underfunded status of a defined benefit postretirement plan (other than a
      multi-employer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income of a business entity or changes
      in
      unrestricted net assets of a not-for-profit organization. This statement also
      requires an employer to measure the funded status of a plan as of the date
      of
      its year-end statement of financial position, with limited exceptions. The
      provisions of SFAS No. 158 are effective for employers with publicly traded
      equity securities as of the end of the fiscal year ending after December 15,
      2006. The adoption of this statement is not expected to have a material effect
      on the Company's future reported financial position or results of
      operations.





In
      September 2006, the Securities and Exchange Commission ("SEC") issued Staff
      Accounting Bulletin No. 108 (Topic 1N), "Quantifying Misstatements in Current
      Year Financial Statements" ("SAB No. 108"). SAB No. 108 addresses how the effect
      of prior year uncorrected misstatements should be considered when quantifying
      misstatements in current year financial statements. SAB No. 108 requires SEC
      registrants (i) to quantify misstatements using a combined approach which
      considers both the balance sheet and income statement approaches; (ii) to
      evaluate whether either approach results in quantifying an error that is
      material in light of relevant quantitative and qualitative factors; and (iii)
      to
      adjust their financial statements if the new combined approach results in a
      conclusion that an error is material. SAB No. 108 addresses the mechanics of
      correcting misstatements that include effects from prior years. It indicates
      that the current year correction of a material error that includes prior year
      effects may result in the need to correct prior year financial statements even
      if the misstatement in the prior year or years is considered immaterial. Any
      prior year financial statements found to be materially misstated in years
      subsequent to the issuance of SAB No. 108 would be restated in accordance with
      SFAS No. 154, "Accounting Changes and Error Corrections." Because the combined
      approach represents a change in practice, the SEC staff will not require
      registrants that followed an acceptable approach in the past to restate prior
      years' historical financial statements. Rather, these registrants can report
      the
      cumulative effect of adopting the new approach as an adjustment to the current
      year's beginning balance of retained earnings. If the new approach is adopted
      in
      a quarter other than the first quarter, financial statements for prior interim
      periods within the year of adoption may need to be restated. SAB No. 108 is
      effective for fiscal years ending after November 15, 2006, which for Company
      would be its fiscal year beginning December 1, 2007. The implementation of
      SAB
      No. 108 is not expected to have a material impact on the Company's results
      of
      operations and financial condition.




**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 the short-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.


11


**NOTE
      F - RELATED PARTY TRANSACTIONS**




Company
      pays consulting fees to the two officer's companies for management services.
      The
      consulting fees totaled 161,000 as of June 30, 2007 The Company is also a 50%
      joint venture partner with one of its shareholders in a property. All expenses
      are divided equally.




The
      Company advances funds periodically to its subsidiary. The total advanced to
      date, which is eliminated in consolidation, is $742,996.




In
      the
      first quarter 2007 400,000 shares of preferred stock series A were converted
      into 400,000,000 common shares by the officers.




**NOTE
      G - PROPERTY**




Property
      and equipment consisted of the following at June 30, 2007:





Building                                                  
                $1,395,612
              Office
                equipment                                         
                27,080
              Buildings
                held for
                sale                         1,774,900
              Total                                                     
                 3,197,592
              Less:
                Accumulated
                depreciation        (99,492)
              Property
                & equipment,
                net                 
                $3,098,100
              ========







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




**NOTE
      H - NOTES PAYABLE**




Notes
      payable at June 30, 2007 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.                                    
                $  798,301
              
              
              Convertible
                debentures payable to an
                investor                                        
                1,222,417
              group,
                interest at 8% due March 2009.
              
              Mortgage
                Payable secured by property Interest
                at                                 
                1,000,000
              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.
              
              Credit
                line from a bank up to $500,000 interest only
              At
                one percent over
                prime                                                                              477,028
              
              Convertible
                debenture, interest 8%, past
                due                                   325,000
              
              Total                                                                                                             
                $4,318,746
              
              Less
                current
                portion                                                                                2,066,442
              Total
                long-term
                portion                                                                            
                $2,252,304
              =========





12


**NOTE
      I - LEASES**




Our
      lease
      at 120 Birmingham Dr. # 110-G Cardiff, CA. 92007 costs $975 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
      J-SIGNIFICANT EVENT**




In
      May
      2007, the Company's attorneys, were in receipt of a notification from the SEC,
      alleging a potential violation of The Company's employee stock incentive program
      dating back to 2004. The Company denies any violations occurred and is in the
      process of replying to the letter, but does not feel the event will have a
      material impact on its business.




**Note
      K-SEGMENT INFORMATION**




The
      Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and
      Related Information, in respect of its operating segments. The Company’s
      reportable segment is Blackhawk Media a media and production enterprise, part
      of
      the 98% subsidiary.




The
      segment is managed separately because each business requires different
      technology and marketing strategies. The Company evaluates performance based
      upon operating earnings of the unit. The accounting policy of the segment are
      the same as those described in the summary of significant accounting policies.
      The corporate assets include cash. There were no significant intercompany
      transactions. In determining operating income (loss) by segment, general
      corporate expenses and other income and expense items of a non operating nature
      are not considered, as such items are not allocated to the Company's segments.
      Segment information for the six months 2007 is as follows.





Sales
                from
                Media                               
                $262,668
              
              Cost
                of
                Sales                                        
                234,231
              
              Gross
                Profit                                           
                40,697
              
              Media
                Expenses                                   
                65,483
              
              Loss
                from Media
                Segment               
                (24,786)





**Note
      L-DERIVATIVE LIABILITY**





The
      Company is accounting for the conversion option in the Convertible Note and
      the
      conversion price in the Securities Purchase Agreement and the associated
      warrants as derivative liabilities in accordance with SFAS 133, “Accounting for
      Derivative Instruments and Hedging Activities” and EITF 00-19 “Accounting for
      Derivative Financial Instruments Indexed to and Potentially Settled in a
      Company’s Own Stock” due to the fact that the conversion feature and the
      warrants both have a variable conversion price.




The
      fair
      value of the Convertible Note was determined utilizing the Black-Scholes stock
      option valuation model. The significant assumptions used in the valuation are:
      the exercise price as noted above; the stock price as of June 30, 2007; expected
      volatility of 66%; risk free interest rate of approximately 4.50%; and a term
      of
      one year.




The
      fair
      value of the Securities Purchase Agreement was determined utilizing the
      Black-Scholes option valuation model. The significant assumptions used in the
      valuation are: the exercise price as noted above; the stock price as of June
      30,
      2007; expected volatility of 66%; risk free interest rate of approximately
      4.50%; and a term of three years.




































13


**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, 2006.




**Current
      Business Plan**




**Overview**




We
      provide brokerage services in the real estate market, as well as purchase,
      renovate, develop and sell residential properties. We also through our
      subsidiary produce infomercials and media stream advertising.





RESULTS
      OF OPERATIONS:





**Three
      months ended June 30, 2007 compared to the three months ended June 30,
      2006:**





Total
      net
      sales and revenue were at $282,749 for the three months ending June 30, 2007
      compared to $ 204,012 for the prior period. This represents an increase of
      18
      percent.





Our
      gross
      profit for the three months ended June 30, 2007 compared to 2006 decreased
      to
      $39,1from $103,691. This was mainly due to the fact that the profits on housing
      decreased and our media business results in small gross profits.





Total
      operating expenses for the three months ended June 30, 2007 were $619,007
      compared to $642,971 for the same period in 2006.





Net
      loss
      for the period ending June 30, 2007 was $(881,898) compared to a net loss for
      the prior period in 2006 which was$(588,847). This increase was mainly the
      result of recognizing a derivative loss on our financing.





Interest
      expense, net for the three months ending June 30, 2007 was $82,764 The interest
      expense for the prior period in 2006 was $70,845. .





**Six
      months ended June 30, 2007 compared to the six months ended June 30,
      2006.**





Total
      net
      sales and revenues were at $606,095 for the six months ended June 30, 2007
      compared to $378,716 for the prior period, a increase of 38 percent.





Total
      operating expenses for the six months ended June 30, 2007 were $2,726,887
      compared to 2006, which were $1,158,317. the main area of increase was stock
      issued for services.





Net
      loss
      was ($2,983,965) for six-month period ending June 30, 2007, compared to a loss
      of ($1,070,552) for the same period in 2006.





Interest
      expense, net for the six months ended June 30, 2007 was $181,547 compared to
      99,295.







14







LIQUIDITY
      AND CAPTIAL RESOURCES:




As
      of
      June 30, 2007 we had a deficiency in working capital of $2,530,605.





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.





OFF-BALANCE
      SHEET ARRANGEMENTS.




We
      do not
      have any off-balance sheet arrangements.




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK**





None




ITEM
      4.
      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.**





None.





**ITEM
      1A. RISK FACTORS**





In
      addition to the other information set forth in this report, you should carefully
      consider the risks and other factors set forth and discussed in our Annual
      Report on Form 10-KSB for the year ended December 31, 2006 and our initial
      registration statement on Form SB-2, which could materially affect our business,
      financial condition or future results. Our projected risks, as outlined in
      both
      our Annual Report and registration statement on Form SB-2 have not substantially
      or materially changed and are, therefore, not restated here. These risks may
      not
      the only risks facing our Company. Additional risks and uncertainties not
      currently known to us or that we currently deem to be immaterial also may
      materially adversely affect our business, financial condition and/or operating
      results.




**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.




**ITEM
      5. OTHER INFORMATION**




On
      or
      about August 6th, 2007 The Officers of Palomar Enterprises converted 350,000,000
      common shares back to 350,000 shares of Preferred-A stock; which resulted in
      a
      decrease in the outstanding common stock.







15


**ITEM
      6. EXHIBITS.**





EXHIBIT


NUMBER  ESCRIPTION
      OF EXHIBIT





31.1
          Certification of Chief Executive Officer pursuant to 18 U.S.C.
      Sec.1350, as adopted pursuant   to Sec.302 of the Sarbanes-Oxley Act of
      2002.





31.2
          Certification of Chief Financial Officer 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 Chief Executive Officer, 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 Chief Financial Officer pursuant to 18 U.S.C.
      Sec.1350, as adopted pursuant to   Sec.906 of the Sarbanes-Oxley Act of
      2002.





**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.**





By /s/
      Steve Bonenberger Dated: August 11, 2007


Steve
      Bonenberger, President, Chief


Executive
      Officer and Director





By: /s/
      Brent Fouch Dated: August 11, 2007
























16


Brent
      Fouch, Treasurer, Chief


Financial
      Officer and Director