UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington
D.C. 20549




FORM
10-Q


(Mark
One)




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





For the quarterly period ended September 30,
2009





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





For the transition period from
_________________ to _________________




Commission
      File No.: 000-49672




THE
BLACKHAWK FUND


(Exact
name of registrant as specified in its charter)





Nevada
            88-0408213(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)1802
      N. Carson Street, Suite 108
              Carson
      City, NV 89701
              (Address of
      principal executive offices)


Issuer’s
telephone number:  (775) 887-0670




1802
N. Carson Street, Suite 212-3018, Carson City, NV 89701


(Former
name, former address and former fiscal year, if changed since last
report)




Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes  X   No ___




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).                                                                                                   Yes
___ No ___





Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company.  See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer [  ]
              
              Accelerated
      filer [  ]Non-accelerated
      filer [  ] (Do not check if a smaller reporting
      company)
              
              Smaller
      reporting company [X]


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




APPLICABLE
ONLY TO CORPORATE ISSUERS




As of
November 13, 2009, 852,293,791 shares of our common stock were
outstanding.







1


ITEM
1 – CONDENSED FINANCIAL STATEMENTS





THE
BLACKHAWK FUND


BALANCE
SHEET





ASSETS
            
            September
              30,
      2009
            
            
            December
              31,
      2008Cash
            
            $
            1,111
            
            
            
            11,161Prepaid
      Financing Costs
            
            
            829
            
            
            
            829Total Current Assets
            
            
            1,940
            
            
            
            11,990Fixed
      Assets-Net
            
            
            -
            
            
            
            -Property
      – Held For Sale
            
            
            1,000
            
            
            
            1,775,900Prepaid
      Financing Costs
            
            
            22,460
            
            
            
            22,875TOTAL
      ASSETS
            
            $
            25,400
            
            
            $
            $1,810,765LIABILITIES AND STOCKHOLDERS’
      DEFICITCurrent
      LiabilitiesAccounts
      Payable and Accrued Liabilities
            
            $
            231,211
            
            
            $
            107,990Notes
      Payable, net of discount of $315,775
            
            
            25,225
            
            
            
            854,079Notes
      Payable-Related Party
            
            
            84,591
            
            
            
            62,515Total current liabilities
            
            
            341,027
            
            
            
            1,024,584Long
      term liabilityNote
      payable
            
            
            -
            
            
            
            1,936,000Total
      Liabilities
            
            
            341,027
            
            
            
            2,960,584Commitments
      and contingencies
            
            
            -
            
            
            
            -STOCKHOLDERS’
      DEFICITPreferred
      stock, $0.0001 par value:Series
      A, authorized 500,000, 500,000 issued and outstanding
            
            
            50
            
            
            
            50Series
      B, authorized 10,000,000, 10,000,000 issued and
outstanding
            
            
            1,000
            
            
            
            1,000Series
      C, authorized 20,000,000, 10,000,000 issued and
outstanding
            
            
            1,000
            
            
            
            1,000Common
      Stock, $0.0001 par value, 4,000,000,000 shares authorized, 812,293,791 and
      562,293,791 shares issued and outstanding, respectively
            
            
            81,229
            
            
            
            56,229Common
      Stock B, $0.0001 par value 150,000,000 authorized,30,000,000
      issued and outstanding
            
            
            3,000
            
            
            
            3,000Additional
      Paid in Capital
            
            
            37,976,964
            
            
            
            36,136,931Common
      Stock Subscribed
            
            
            -
            
            
            
            -Retained
      Deficit
            
            
            (38,378,870
            )
            
            
            (38,348,029
            )Total Stockholders’ Deficit
            
            
            (315,627
            )
            
            
            (1,149,819
            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            25,400
            
            
            $
            1,810,765





See
accompanying summary of significant accounting policies and notes to financial
statements.


2


THE
BLACKHAWK FUND


STATEMENTS
OF OPERATIONS


For
the Three Months and Nine Months


(unaudited)





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2009
            2008
            
            
            2009
            2008Revenues
            $
            -
            6,000
            
            
            -
            25,765Cost
      of Sales
            
            -
            -
            
            
            -
            -Gross
      Profit
            
            -
            6,000
            
            
            -
            25,765OPERATING
      EXPENSESStock
      for Services
            
            -
            -
            
            
            -
            92,300General
      & Administrative
            
            41,772
            32,851
            
            
            85,387
            204,597Interest
      Expense
            
            326,943
            51,045
            
            
            341,883
            644,240Total
      Expenses
            $
            368,715
            83,896
            
            
            427,270
            941,137Net
      Loss from operations
            $
            (368,715)
            (77,896)
            
            
            (427,270)
            (915,372)Other
      income:Gain
      on Sale of Assets
            
            -
            -
            
            
            1,015,178
            -Loss
      on Guarantee
            
            -
            -
            
            
            (618,750)
            -Net
      Profit (Loss)
            $
            (368,715)
            (77,896)
            
            
            (30,842)
            (915,372)Net
      Profit (Loss) per Share
            
            0.00
            (0.00)
            
            
            0.00
            0.00Weighted
      Average Number of Shares Outstanding
            
            725,584,114
            562,293,791
            
            
            666,417,079
            488,593,791


See
accompanying summary of significant accounting policies and notes to financial
statements.





3


THE
BLACKHAWK FUND


STATEMENTS
OF CASH FLOWS


For
the Nine Months Ended September 30, 2009 and 2008


(unaudited)





Nine
      Months Ended
              September
      30,2009
            
            
            2008Cash
      Flows From Operating ActivitiesNet
      Profit ( Loss)
            
            
            (30,842
            )
            
            
            (915,372
            )Adjustments
      to reconcile net income (loss) to net cashprovided
      by (used in) operating activities:Gain
      on Sale of Disposition of Assets
            
            
            (1,015,178
            )
            
            
            -Depreciation
            
            
            -
            
            
            
            505Stock
      Issued for Services and Financing
            
            
            24,000
            
            
            
            592,300Discount
      accretion on note
            
            
            315,258Loss
      on Guarantee
            
            
            618,750
            
            
            
            --Changes
      in Operating Assets and Liabilities:(Increase)
      in Prepaid Financing Costs
            
            
            415
            
            
            
            642Increase
      (Decrease) in Accounts Payable
            
            
            58,547
            
            
            
            89,850Net
      cash used in operating activities
            
            
            (29,050
            )
            
            
            (232,075
            )Cash
      Flows From Investing Activities:Sale
      (Purchase) of Assets
            
            
            -
            
            
            
            4,550Net
      cash provided by (used in) investing activities
            
            
            -
            
            
            
            4,550Cash
      Flows From Financing Activities:Payments
      on Notes Payable
            
            
            -
            
            
            
            -Proceeds
      from stock issuances, subscriptions and option exercises
            
            
            -
            
            
            
            186,260Proceeds
      from notes payable - related party
            
            
            19,000
            
            
            
            78,551Payments
      on notes payable
            
            
            -
            
            
            
            (37,324
            )Net
      cash provided by financing activities
            
            
            19,000
            
            
            
            227,487Net
      Change in Cash
            
            
            (10,050
            )
            
            
            (38
            )Cash
      Beginning of Period
            
            
            11,161
            
            
            
            2,381Cash
      End of Period
            
            
            1,111
            
            
            
            2,343Supplemental
      disclosures:Cash
      paid for:Interest
            
            $
            -
            
            
            $
            91,812Income
      Taxes
            
            $
            -
            
            
            $
            -Supplemental
      disclosures:Common
      stock issued for service
            
            $
            24,000
            
            
            
            -Common
      stock issued for debt interest
            
            $
            210,000
            
            
            
            -





4


THE
BLACKHAWK FUND


NOTES
TO FINANCIAL STATEMENTS





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
accompanying unaudited interim financial statements of The Blackhawk Fund
(“Blackhawk” or the “Company”) 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
Blackhawk's Annual Report filed with the SEC on Form 10-K, as amended.  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 2008 as reported in the 10-K,
as amended, have been omitted.





NOTE
2 - STOCK BASED COMPENSATION





Prior to
January 1, 2006, the Company accounted for stock based compensation under FASB
ASC Topic regarding Accounting for Stock-Based Compensation.  As
permitted under this standard,compensation cost was
recognized using the intrinsic value method described in FASB ASC Topic
regarding Accounting for Stock Issued to Employees. Effective January 1,2006, the Company has
adopted FASB ASC Topic regarding Share-Based Payment and applied the provisions
using the modified-prospective transition method. Prior periods were not
restated to reflect the impact of adopting the new standard.  As a
result of the adoption of FASB ASC Topic regarding Accounting for Stock-Based
Compensation, stock-based compensation expense recognized duringthe year ended December
31, 2008 includes compensation expense for all share-based payments granted on
or prior to, but not yet vested as of December 31, 2006, based on the grant date
fair value estimated in accordance with the original provisions, and
compensation cost for all share-based payments granted on or subsequent to
January 1, 2006, based on the grant date fair value estimated in accordance with
the provisions.





Beginning
on January 1, 2006, any future excess tax benefits derived from the exercise of
stock options will be recorded prospectively and reported as cash flows from
financing activities in accordance with FASB ASC Topic regarding Accounting for
Stock-Based Compensation.





During
the nine months ended September 30, 2009, the Company had stock based consulting
expense of $24,000 as determined under FASB ASC Topic regarding Accounting for
Stock-Based Compensation.





NOTE 3 - PROPERTY - HELD FOR
SALE/FIXED ASSETS.





In
December 2008, the Company purchased two parcels of undeveloped land in
Riverside County, City of Desert Hot Springs, California, for a purchase price
of a $1,000 promissory note.  The land approximates 3.5
acres.  This property is zoned for residential
dwellings.  The Company is determining whether to build finished lots
or in the alternative to sell the land to a developer.  The property
comprised of these two parcels has not yet been entitled.





In
February 2009, the Company entered into settlement agreements with certain prior
affiliated parties pursuant to which the Company transferred its condominium
located in Carlsbad, California and its residential property located in
Oceanside, California.  The Company entered into a settlement
agreement with the former controlling stockholder of the Company under which the
former controlling stockholder agreed to cancel and forgive a promissory note
made by the Company in the aggregate principal amount of $841,828 in exchange
for the Carlsbad condominium property.   This property is also
subject to a $496,000 mortgage which is now the responsibility of the former
controlling stockholder.





The
Company also entered into a settlement agreement with a joint venture partner in
relation to the residential property in Oceanside,
California.  Pursuant to the agreement, the joint venture partner
released the Company from any and all liability pursuant to the joint venture as
well as any liability associated with the two mortgage notes on this property
($1,120,000 and $320,000) in exchange for the property.  The Company
recognized a gain on sale of assets of $1,015,178 in connection with these
transactions.  See Note 8.





5


NOTE
4 - PREFERRED STOCK





Series
A Preferred Stock





On April
24, 2008, the Company withdrew its certificate of designation establishing the
Company’s Series A Preferred Stock and filed a new certificate of designation
for 500,000 shares of Series A Preferred Stock, par value $0.001 per
share.  Anytime after October 24, 2008, the Series A Preferred Stock
is convertible based upon the average of the per shares market value of the
Company’s common stock during the 20 trading days immediately preceding a
conversion date.  In addition, upon the consummation of a bona fide
sale third party sale by the Company of its securities resulting in gross
proceeds of at least $1,000,000, the Series A Preferred Stock will automatically
convert into the securities being sold in such offering.  The Series A
Preferred Stock has no voting rights, dividend rights, liquidation preference,
redemption rights, or preemptive rights.





On April
24, 2008, the Company issued 500,000 shares of the newly designated Series A
Preferred Stock as part of a financing transaction.  See Note
5.  The Company has valued the convertible shares using the
Black-Scholes model and has recognized a financing expense equivalent to the
stated value of the Series A Preferred Stock of $500,000.





Series
B Preferred Stock





On April
24, 2008, the Company amended the certificate of designation establishing the
Company’s Series B Preferred Stock. Pursuant to this amendment, the Company’s
Series B Preferred Stock now contains on limitation on conversions such that no
holder of Series B Preferred Stock can convert such shares into the Company’s
common stock if such conversion would result in the holder owning in excess of
4.99% of the Company’s issued and outstanding common stock.





Series
C Preferred Stock





On April
24, 2008, the Company amended the certificate of designation for its Series C
Preferred Stock.  Pursuant to the Amendment, on all matters submitted
to a vote of the holders of the common stock, including, without limitation, the
election of directors, a holder of shares of the Series C Preferred Stock shall
be entitled to the number of votes on such matters equal to the product of (a)
the number of shares of the Series C Preferred Stock held by such holder, (b)
the number of issued and outstanding shares of the Company’s common stock, on a
fully-diluted basis, as of the record date for the vote, or, if no such record
date is established, as of the date such vote is taken or any written consent of
stockholders is solicited, and (c) 0.0000002.





NOTE
5 – PROMISSORY NOTE





On April
24, 2008, the Company and Terminus, Inc. as co-issuers, issued and sold to a
single accredited investor (1) a $550,000 12% secured promissory note and (2)
500,000 shares of the Company’s Series A Preferred Stock.  To secure
payment of the note, Terminus pledged the 10,000,000 shares of the Company’s
Series C Preferred Stock as collateral for the note.





On May 4,
2009, the Company and Terminus, Inc., as co-issuers, both defaulted on repayment
of the note.  Prior to the default, the Company was considered a
guarantor of the note, and accordingly, classified the guaranty a contingent
liability and as an “off-balance sheet arrangement.”  As a result of
the default on the note, the Company has become unconditionally liable for
repayment of all principal and interest due under the note, has recorded the
full amount of $550,000 in principal and $68,750 in accrued interest as a
liability, and has incurred an expense for such amounts.   In
addition, the Company continues to accrue interest from the date of
default.





On July
10, 2009, the Company, along with Terminus, Inc., entered into a first amendment
to the note with the holder of the note. The amended note extends the maturity
date until July 10, 2010. In addition, the amendment provides that the note may
be converted into shares of the Company's common stock The conversion price for
the amended note is the greater of (i) the then existing par value of the
Company's common stock or (i) 75 % of the average of the per shares market
values (as defined in the amended note) during the 20 trading days immediately
preceding a conversion date. If at any time after September 10, 2009, there is
either (i) insufficient shares of the Company's common stock to permit
conversions pursuant to the amended note or (ii) the per share market value is
less than the then existing par value of the Company's common stock for a period
of 5 consecutive trading days, the Company will use its best efforts to amend
its capital structure by means of either a reverse split of its common stock, an
increase in its authorized common stock, or a reduction of the par value of its
common stock, or any combination of the foregoing as determined by the Company's
board of directors in its reasonable judgment.'


6








Since the
note has been amended, the holder of the note has effected a series of partial
conversions and was issued an aggregate of 210,000,000 shares of common stock at
a conversion price of $0.001 per share. In the aggregate, these issuances
reduced the debt by $210,000 in principal. The principal balance of the note at
September 30, 2009 is $340,000.





The
Company has recorded a beneficial conversion feature relating to this note
payable in the amount of $631,033, and recorded $315,258 of the beneficial
conversion feature as additional interest expense for the three months ended
September 30, 2009.





The
balance of the note is recorded on the Company's balance sheet at the net amount
of $25,255 after deducting the remaining beneficial conversion
feature.





NOTE
6 - RELATED PARTY TRANSACTIONS





At
September 30, 2009, Terminus, Inc. the holder of the Company’s Series C
Preferred Stock, has loaned the company approximately $84,591.  The
loan is payable upon demand with interest at 12%.  Accrued interest as
of September 30, 2009 was approximately $10,500.





NOTE
7 - GOING CONCERN





The
Company has a negative capital, and has only recently begun implementing its new
business plan.  These factors, among others indicate that the Company
may not be able to continue as a going concern.  No adjustments have
been made to the carrying value of assets and liabilities should the company not
continue as a going concern.





NOTE 8 - GAIN ON DISPOSITION OF PROPERTY





On
February 25, 2009, the Company entered into a settlement agreement with the
former controlling stockholder of the Company relating to the condominium
located in Carlsbad, California owned by the Company.  Pursuant to the
settlement agreement, the former controlling stockholder agreed to cancel and
forgive a promissory note made by the Company in the aggregate principal amount
of $841,828 and $5,251 in accrued interest in exchange for the Carlsbad
condominium property.   The former controlling stockholder
acquired this property subject to a $496,000 mortgage.





Also on
February 25, 2009, the Company entered into a settlement agreement with a joint
venture partner relating to the residential property located in Oceanside
California.  Pursuant to the agreement, the joint venture partner
released the Company from any and all liability pursuant to the joint venture as
well as any liability associated with the two mortgage notes on this property
($1,120,000 and $320,000) in exchange for the property.





The
Company’s basis in the property was $1,774,901.





As a
result of the two transactions above, the Company realized a gain on the
disposition of assets equal to $1,015,178.





NOTE
9 – 2009 STOCK INCENTIVE PLAN





On August
10, 2009, the Company’s Board of Directors adopted its 2009 Stock Incentive
Plan. The Board of Directors approved the issuance of 40,000,000 shares of
common stock pursuant to the 2009 Stock Incentive Plan in payment of legal
services.


7


ITEM
2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.





The
following discussion and analysis should be read in conjunction with our
financial statements and related notes included in this report.  This
report contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995.  The statements contained in
this report that are not historic in nature, particularly those that utilize
terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“estimates,” “believes,” or “plans” or comparable terminology are
forward-looking statements based on current expectations and
assumptions.  Various risks and uncertainties could cause actual
results to differ materially from those expressed in forward-looking
statements.





All
forward-looking statements in this document are based on information currently
available to us as of the date of this report, and we assume no obligation to
update any forward-looking statements.  Forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking
statements.





General





The
Blackhawk Fund acquires and redevelops residential and commercial real estate
for investment.  Once we acquire a property, we redevelop and
refurbish the properties, seeking to enhance the value of the
properties.  Once a property is refurbished, we seek to generate
revenue by rental of the property, and we also seek to resell the properties if
market conditions permit.





We
currently hold one property (consisting of two parcels as further described
below) in our real estate portfolio, and, in light of the distress in the real
estate markets, we are actively seeking out real estate acquisition
opportunities to increase and diversify our real estate portfolio.  We
have commenced preliminary negotiations and due diligence with respect to the
potential acquisition of two resort properties, and we are also currently in the
process of conducting preliminary due diligence with respect to additional
acquisition opportunities.





Historically,
we also operated a media and television production division.  In this
division, we sought to manage and implement proprietary media properties,
including cable television shows, infomercials, online video magazines, and
DVDs.  However, as discussed below, management determined that the
ongoing media and television production operations were not viable, and
accordingly determined to discontinue the media and television production
operations.





Recent
Developments





Purchase of Land in Riverside
County, City of Desert Hot Springs.In December 2008, we
purchased two parcels of undeveloped land in Riverside County, City of Desert
Hot Springs, California, for a purchase price of a $1,000 promissory note. 
The land approximates 3.5 acres.  This property is zoned for
residential dwellings.  The property comprised of these two parcels
has not yet been entitled, and management is commencing the initial stages of
the entitlement process with Riverside County.  The County has assessed the
value of the property (consisting of these two parcels) at
$100,814.





Distribution of Certain Real
Property Held for Sale.In February 2009, we entered into settlement
agreements with certain prior affiliated parties pursuant to which we
transferred our condominium located in Carlsbad, California and our residential
property located in Oceanside, California.  We entered into a
settlement agreement with Angel Acquisition Corp. under which Angel agreed to
cancel and forgive a promissory note made by us in the aggregate principal
amount of $841,828 in exchange for the Carlsbad condominium
property.   This property also is subject to a $496,000 mortgage
which is now the responsibility of Angel.  We also entered into a
settlement agreement with our former joint venture partner, Debbie Avey, with
respect to a residential property in Oceanside, California.  Pursuant
to the agreement, Ms. Avey released us from any and all liability pursuant to
the joint venture as well as any liability associated with the two mortgage
notes on this property ($1,120,000 and $320,000) in exchange for the
property.  We recognized a gain on sale of assets of $1,015,178 in
connection with this transaction.





Website Launch.  On
July 20, 2009, we launched our new corporate website at www.blackhawkfund.com.  Information
contained on our website shall not be deemed to be part of this
report.


8


Change
of Control and Change in Management





On April
24, 2008, we entered into a stock purchase agreement with Terminus, Inc. and
Palomar Enterprises, Inc. pursuant to which Terminus purchased 10,000,000 shares
of our Series C Preferred Stock from Palomar for $363,000.  As a
result, the sale of the Series C Preferred Stock by Palomar to Terminus
effectively transferred Palomar’s control of our company to
Terminus.





Concurrently,
Steve Bonenberger resigned as our President and Chief Executive Officer, and
Brent Fouch resigned as our Secretary and Chief Financial Officer.  In
connection therewith, the board of directors increased the number of authorized
directors from two to three and appointed Frank Marshik to fill the newly
created vacancy on the board.  The board of directors then appointed
Mr. Marshik as our President, Chief Financial Officer, and
Secretary.  Thereafter, Mr. Bonenberger and Mr. Fouch resigned as
directors.  Mr. Marshik, as the sole remaining director, appointed
Terry Ross to fill one of the two vacancies resulting from these
resignations.





On August
19, 2008, the board of directors reduced the number of authorized directors from
three (3) to one (1).  Concurrently therewith, Terry Ross resigned as
a director.  Mr. Ross’ resignation was not due to any disagreements
with The Blackhawk Fund on matters relating to its operations, policies, and
practices.





Plan
of Operation





In 2008,
our new management conducted an analysis of our two historical business
divisions – our real estate division and our media division.  After
evaluating historical and projected costs in running each division, existing and
potential revenue streams, and the availability of additional capital for
expansion of each division, management determined to discontinue the media and
television production operations due to lack of viability.





In
evaluating the real estate division, management evaluated its real estate
portfolio in light of market conditions, both in the real estate markets and the
credit markets, the existing real estate portfolio valuations, the existing and
potential rental possibilities, the market values, the existing financing
arrangements, as well as the amount of debt encumbering each property in our
portfolio.  In addition, in light of the distress in the real estate
markets, management is looking at new potential real estate acquisition
opportunities that, if consummated, would increase and diversify our real estate
portfolio.





As set
forth above, in December 2008, we purchased two parcels of undeveloped land in
Riverside County, City of Desert Hot Springs, California, for a purchase price
of a $1,000 promissory note.  The land approximates 3.5
acres.  This property is zoned for residential
dwellings.  The property comprised of these two parcels has not yet
been entitled, and management is commencing the initial stages of the
entitlement process with Riverside County.  The County has assessed the
value of the property (consisting of these two parcels) at
$100,814.





Also as
set forth above, in February 2009, we entered into settlement agreements with
certain prior affiliated parties pursuant to which we transferred our
condominium located in Carlsbad, California and our residential property located
in Oceanside, California.  We recognized a gain on sale of assets of
$1,015,178 in connection with this transaction.





In light
of the distress in the real estate markets, we are actively seeking out real
estate acquisition opportunities to increase and diversify our real estate
portfolio.  We have commenced preliminary negotiations and due
diligence with respect to the potential acquisition of two resort properties,
and we are also currently in the process of conducting preliminary due diligence
with respect to additional acquisition opportunities.  We are focusing
on properties, both residential and commercial, that are subject to foreclosure
proceedings or other otherwise considered real-estate owned (REO) properties
held by financial institutions such as banks, credit unions, bankruptcy
debtor-in-possession (DIP) lenders, hedge funds, and private equity
funds.





Management
is also considering diversifying into additional lines of
business.  In all cases, management may seek to form one or more
partnerships, enter into one or more joint ventures, or conduct one or more
strategic acquisitions.





9


Critical
Accounting Policies





The
discussion and analysis of our financial conditions and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles in the United
States.  The preparation of financial statements requires managers to
make estimates and disclosures on the date of the financial
statements.  On an on-going basis, we evaluate our estimates,
including, but not limited to, those related to revenue
recognition.  We use authoritative pronouncements, historical
experience, and other assumptions as the basis for making
judgments.  Actual results could differ from those
estimates.  We believe the following critical accounting policies
affect our more significant judgments and estimates in the preparation of our
consolidated financial statements.  A summary of our critical
accounting policies can be found in the notes to our financial statements
included our annual report on Form 10-K.





Results
of Operations





Basis
of Presentation





The
following table sets forth, for the periods indicated, certain unaudited
selected financial data:


Three
      Months Ended
              
              
              Nine
      months EndedSeptember
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Revenues
              
              $
              --
              
              
              $
              6,000
              
              
              $
              --
              
              
              $
              25,765Costs
      of Sales
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --General
      and administrative
              
              
              41,772
              
              
              
              32,851
              
              
              
              85,387
              
              
              
              204,597Stock
      for services
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              92,300Interest
      Expense
              
              
              326,943
              
              
              
              51,045
              
              
              
              341,883
              
              
              
              644,240Operating
      income (loss)
              
              $
              (368,715
              )
              
              $
              (77,896
              )
              
              $
              (427,270
              )
              
              $
              (915,372
              )





Comparison
of the three months ended September 30, 2009 and 2008





Net sales. Our revenues were $0
for the three months ended September 30, 2009, as compared to $6,000 for the
three months ended September 30, 2008.  The revenues in 2008 resulted
from rental income from our real estate holdings, which we have since
transferred in connection with our settlement agreements with certain prior
affiliated parties.  The decrease in revenues resulted from a lack of
sales of any real estate properties held for development and a lack of revenues
from real estate rentals.





Cost of
Sales.  Costs of sales were $0 for the three months ended
September 30, 2009, as compared to $0 for the three months ended September 30,
2008.





General and
administrative.  General and administrative expenses increased
to $41,772 for the three months ended September 30, 2009 from $32,851 for the
three months ended September 30, 2008.   This increase primarily
resulted from legal and consulting fees we incurred in the third quarter of 2009
in connection with our commencement of preliminary negotiations and due
diligence with respect to the potential acquisition of two resort
properties.





Interest.Interest
expense increased to $326,943 for the three months ended September 30, 2009 from
$51,045 for the three months ended September 30, 2008.  The increase
primarily results from the amortization of a beneficial conversion option that
we recognized in the third quarter of 2009 in connection with the amendment of
an outstanding promissory note.  For the quarter, we recognized
$315,258 of the beneficial conversion feature as additional interest
expense.  This increase was partially offset from our disposition of
certain real estate properties in our portfolio that were heavily encumbered
with high interest-bearing debt.





10


Net loss.  We
incurred a net loss of $368,715 for the three months ended September 30, 2009,
compared to a net loss of $77,896 for the three months ended September 30,
2008.   The increase in net loss resulted primarily from the
amortization of a beneficial conversion option that we recognized in the third
quarter of 2009 in connection with the amendment of an outstanding promissory
note.  This increase was partially offset from our disposition of
certain real estate properties in our portfolio that were heavily encumbered
with high interest-bearing debt.





Comparison
of the nine months ended September 30, 2009 and 2008





Net sales. Our revenues were $0
for the nine months ended September 30, 2009, as compared to $25,765 for the
nine months ended September 30, 2008.  The revenues in 2008 resulted
from sales in our media operations division, which we discontinued in 2008, and
from rental income from our real estate holdings, which we have since
transferred in connection with our settlement agreements with certain prior
affiliated parties.  The decrease resulted from our discontinuation of
our media operations division, a lack of sales of any real estate properties
held for development, and a lack of revenues from real estate
rentals.





Cost of
Sales.  Costs of sales were $0 for the nine months ended
September 30, 2009, as compared to $0 for the nine months ended September 30,
2008.





Stock for
Services.Expenses resulting from the issuance of our common
stock were $0 for the nine months ended September 30, 2009, and compared to
$92,300 for the first nine months ended September 30, 2008.  This
decrease resulted from a complete elimination in shares issued for services in
the first three quarters of 2009 as compared to the comparable period of
2008.





General and
administrative.  General and administrative expenses decreased
to $85,387 for the nine months ended September 30, 2009 from $204,597 for the
nine months ended September 30, 2008.   This decrease resulted
from a significant reduction in operational overhead in 2009 as compared to
2008.  In addition, we incurred a decrease in general and
administrative expenses due to a significant reduction expenses associated with
our cessation of media operations.





Interest.Interest
expense decreased to $341,883 for the nine months ended September 30, 2009 from
$644,240 for the nine months ended September 30, 2008.  The decrease
primarily results from a $500,000 interest expense we incurred in 2008 relating
to the change of control that occurred on April 24, 2008.  The
decrease also results from our disposition of certain real estate properties in
our portfolio that were heavily encumbered with high interest-bearing
debt.  The decrease was partially offset by the amortization of a
beneficial conversion option that we recognized in the third quarter of 2009 in
connection with the amendment of an outstanding promissory note.





Gain on Sale of
Assets.  In February 2009, we disposed of two properties in
connection with settlement agreements under which the transferees assumed
certain notes associated with such properties in connection with the
disposition.  Accordingly, as a result of these transactions, we
realized a gain on the disposition of assets equal to $1,015,178.





Loss on
Guarantee.  We incurred a loss on guarantee of $618,750 in the
second quarter of 2009 as a result of a default by us and Terminus, Inc., as
co-issuers, on repayment of a 12% promissory note in the principal amount of
$550,000 and accrued interest of $68,750.





Net Loss.  We
incurred a net loss of $30,842 for the nine months ended September 30, 2009,
compared to a net loss of $915,372 for the nine months ended September 30,
2008.   The net loss resulted primarily from our incurring a loss
on guarantee of $618,750 in the second quarter of 2009 as a result of a default
by us and Terminus, Inc., as co-issuers, on repayment of a 12% promissory note
in the principal amount of $550,000 and accrued interest of
$68,750.  In addition, the net loss also resulted from the
amortization of a beneficial conversion option that we recognized in the third
quarter of 2009 in connection with the amendment of that promissory
note.  The net loss was offset by a $1,015,178 gain on disposition of
assets we realized in connection with the disposition of two
properties.





The
decrease in net loss from the comparable period in 2008 resulted primarily from
the $1,015,178 gain on disposition of assets we realized in connection with the
disposition of two properties and the elimination of a $500,000 interest expense
we incurred in 2008 relating to the change of control that occurred on April 24,
2008.





11


Liquidity
and Capital Resources





We have
financed our operations, debt service, and capital requirements through cash
flows generated from operations and through issuance of debt and equity
securities.  Our working capital deficit at September 30, 2009 was
$339,087, and we had cash of $1,111 as of September 30, 2009.





We used
$29,050 of net cash in operating activities for the nine months ended September
30, 2009, compared to using $232,075 in the nine months ended September 30,
2008.  The net loss of $30,842 was offset by a non-cash gain on sale
of assets of $1,015,178.  We recognized non-cash expenses of $618,750
in connection with a loss incurred on a guarantee, $315,258 from the
amortization of a beneficial conversion option, and $24,000 from the issuance of
stock for services rendered.  In addition, our accounts payable and
accrued expenses increased by $58,547, while our prepaid financing costs
decreased by $415.





We
generated $0 net cash flows from investing activities for the nine months ended
September 30, 2009, and September 30, 2008.





Net cash
flows provided by financing activities were $19,000 for the nine months ended
September 30, 2009, compared to net cash flows provided by financing activities
of $195,455 for the nine months ended September 30, 2008.  This cash
provided by financing activities for the nine months ended September 30, 2009
was due to proceeds from related party notes of $19,000.  For the nine
months ended September 30, 2008, the cash provided by financing activities was
due to proceeds from the exercise of stock options and receipt of stock
subscriptions of $186,260 and proceeds from related party notes of $46,509,
offset by repayment of $37,324 of debt.





Capital
Requirements





Our
financial statements for the fiscal year ended December 31, 2008 state that we
have incurred significant losses, have a negative capital, and a negative
current ratio.  These factors, among others indicate that we may not
be able to continue as a going concern.  We believe that, as of the
date of this report, in order to fund our plan of operations over the next 12
months, we will need to fund operations out of cash flows generated from
operations, from the borrowing of money, and from the sale of additional
securities.  It is possible that we will be unable to obtain
sufficient additional capital through the borrowing of money or the sale of our
securities as needed.





Pursuant
to our plan of operation, we are actively seeking out real estate acquisition
opportunities to increase and diversify our real estate portfolio.  We
are currently in the process of conducting preliminary due diligence with
respect to potential acquisition opportunities.  We are focusing on
properties, both residential and commercial, that are subject to foreclosure
proceedings or other otherwise considered real-estate owned (REO) properties
held by financial institutions such as banks, credit unions, bankruptcy
debtor-in-possession (DIP) lenders, hedge funds, and private equity
funds.  In connection with any such potential acquisition, we will
likely need to obtain financing for such acquisition.  Such financing
could be from the seller or a third-party, and could take the form of debt,
whether secured or unsecured, equity, or a combination thereof.  It is
possible that, if we locate a potential property acquisition that we seek to
pursue, we will be unable to obtain sufficient financing, whether through the
borrowing of money or the sale of our securities, necessary to consummate the
transaction.





Part of
our growth strategy may include diversifying into additional lines of business,
forming one or more partnerships, entering into one or more joint ventures, or
conducting one or more strategic acquisitions, which may require us to raise
additional capital.  We do not currently have binding agreements or
understandings to acquire any other companies.





We intend
to retain any future earnings to pay our debts, finance the operation and
expansion of our business and any necessary capital expenditures, and for
general corporate purposes.





Off-Balance
Sheet Arrangements





On April
24, 2008, the Company and Terminus, Inc., as co-issuers, issued and sold to a
single accredited investor: (i) a $550,000 12% secured promissory note and (ii)
500,000 shares of the Company’s Series A Preferred Stock.  To secure
payment of the note, Terminus pledged the 10,000,000 shares of the Company’s
Series C Preferred Stock.  The Company was considered a guarantor of
the note, and accordingly, treated the note as a contingent
liability.   The purpose of the Company’s guarantee of the note was to
facilitate the change in control transaction.


12





On May 4,
2009, the Company and Terminus, Inc., as co-issuers, both defaulted on repayment
of the note.  As a result of the default on the note, the Company has
become unconditionally liable for repayment of all principal and interest due
under the note, has recorded the full amount of all such principal and interest
as a liability, and has incurred an expense for such
amount.





13


ITEM
3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide information required by this item.





ITEM
4 – CONTROLS AND PROCEDURES





We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed
in our reports that we file under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized, and reported within the time
periods specified in the Securities and Exchange Commission’s rules and forms,
and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure based on
the definition of “disclosure controls and procedures” in Rule
13a-15(e).  In designing and evaluating the disclosure controls and
procedures, our management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.





At the
end of the period covered by this Quarterly Report on Form 10-Q, we carried out
an evaluation, under the supervision and with the participation of our former
management, including our former Chief Executive Officer and former Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures.  Based on the foregoing, our
former Chief Executive Officer and our former Chief Financial Officer concluded
that our disclosure controls and procedures were effective to ensure that all
material information required to be disclosed in this Quarterly Report on Form
10-Q has been made known to them in a timely fashion.





Our former Chief Executive Officer and
former Chief Financial Officer have also evaluated whether any change in our
internal controls occurred during the last fiscal quarter and have concluded
that there were no material changes in our internal controls or in other factors
that occurred during the last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, these controls.





14


PART
II:  OTHER INFORMATION




ITEM
1 – LEGAL PROCEEDINGS





None.





ITEM
1A – RISK FACTORS





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide information required by this item.





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





As set forth in Item 3 below, on May 4,
2009, the Company and Terminus, Inc., as co-issuers, both defaulted on repayment
of a $550,000 12% secured promissory note.





On July 10, 2009, the Company, along
with Terminus, Inc., entered into a first amendment to the note with the holder
of the note.  The amended note extends the maturity date until July
10, 2010.  In addition, the amendment provides that the note may be
converted into shares of the Company’s common stock   The
conversion price for the amended note is the greater of (i) the then existing
par value of the Company’s common stock or (i) 75 % of the average of the per
shares market values (as defined in the amended note) during the 20 trading days
immediately preceding a conversion date.  If at any time after
September 10, 2009, there is either (i) insufficient shares of the Company’s
common stock to permit conversions pursuant to the amended note or (ii) the per
share market value is less than the then existing par value of the Company’s
common stock for a  period of 5 consecutive trading days, the Company
will use its best efforts to amend its capital structure by means of either a
reverse split of its common stock, an increase in its authorized common stock,
or a reduction of the par value of its common stock, or any combination of the
foregoing as determined by the Company’s board of directors in its reasonable
judgment.





This description set forth above do not
purport to be complete and is qualified in its entirety by reference to the
amended note attached hereto as an exhibit to our quarterly report on Form 10-Q
for the period ended June 30, 2009.





Since the
note has been amended, the holder of the note has effected a series of partial
conversions and was issued an aggregate of 210,000,000 shares of common stock at
a conversion price of $0.001 per share.  In the aggregate, these
issuances reduced the debt by $210,000 in principal.





ITEM
3 – DEFAULT UPON SENIOR SECURITIES





On May 4, 2009, the Company and
Terminus, Inc., as co-issuers, both defaulted on repayment of a $550,000 12%
secured promissory note.  Prior to the default, the Company was
considered a guarantor of the note, and accordingly, classified the guaranty a
contingent liability and as an “off-balance sheet arrangement.”  As a
result of the default on the note, the Company has become unconditionally liable
for repayment of all principal and interest due under the note, has recorded the
full amount of all such principal and interest as a liability, and has incurred
an expense for such amount.





On July 10, 2009, the Company, along
with Terminus, Inc., entered into a first amendment to the note with the holder
of the note.  See Item 2 above.





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





None.





ITEM
5 – OTHER INFORMATION




See Items 2 and 3.





15


ITEM
6 - EXHIBITS





Item
              No.
            Description
            
            Method of
      Filing31.1
            Certification
      of Frank Marshik pursuant to Rule 13a-14(a)
            
            Filed
      herewith.32.1
            Chief
      Executive Officer and Chief Financial Officer Certification pursuant o 18
      U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      2002
            
            Filed
      herewith.




SIGNATURES





Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.





THE
      BLACKHAWK FUNDNovember
      16, 2009
            /s/ Frank
      MarshikFrank
      MarshikPresident(Principal
      Executive Officer and Principal Accounting Officer)







16