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 March 31,
2010





 ̈
            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 May
14, 2010, 955,293,791 shares of our common stock were outstanding.










ITEM
1 – CONDENSED FINANCIAL STATEMENTS





THE
BLACKHAWK FUND


BALANCE
SHEETS





March 31,
                          
                          
                          December 31,2010
                          
                          
                          2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                          
                          $
                          49,549
                          
                          
                          
                          2,719Total
      current assets
                          
                          
                          49,549
                          
                          
                          
                          2,719PROPERTY
      — HELD FOR SALE
                          
                          
                          1,000
                          
                          
                          
                          1,000TOTAL
      ASSETS
                          
                          $
                          50,549
                          
                          
                          $
                          3,719LIABILITIES
      AND STOCKHOLDERS’ DEFICITCURRENT
      LIABILITIESAccounts
      Payable and Accrued Liabilities
                          
                          $
                          229,532
                          
                          
                          $
                          199,256Note
      Payable, net of discount of $114,532 and $209,517,
      respectively
                          
                          
                          270,293
                          
                          
                          
                          130,483Notes
      Payable - Related Party
                          
                          
                          91,459
                          
                          
                          
                          89,764Total
      current liabilities
                          
                          
                          591,284
                          
                          
                          
                          419,503COMMITMENTS
      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,
      910,293,791and
      896,293,791 shares issued and outstanding, respectively
                          
                          
                          91,029
                          
                          
                          
                          89,629Common
      Stock B, $0.001 par value 150,000,000 authorized, 30,000,000
      issuedand
      outstanding
                          
                          
                          3,000
                          
                          
                          
                          3,000Additional
      Paid in Capital
                          
                          
                          38,017,239
                          
                          
                          
                          38,013,284Accumulated
      deficit
                          
                          
                          (38,654,382
                          )
                          
                          
                          (38,523,747
                          )Total
      Stockholders’ Deficit
                          
                          
                          (540,735
                          )
                          
                          
                          (415,784
                          )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                          
                          $
                          50,549
                          
                          
                          $
                          3,719


2





THE
BLACKHAWK FUND


STATEMENTS
OF OPERATIONS





ThreeMonthsEndedMarch31,2010
                
                
                2009Revenues
                
                $
                -
                
                
                $
                -Cost
      of Sales
                
                
                -
                
                
                
                -Gross
      Profit
                
                
                -
                
                
                
                -OPERATING
      EXPENSESGeneral
      and Administrative
                
                
                22,217
                
                
                
                21,653OTHER
      INCOME / (EXPENSES)Gain
      on sale of assets
                
                
                -
                
                
                
                1,015,178Other
      expense
                
                
                (684
                )
                
                
                -Interest
      Expense
                
                
                (107,405
                )
                
                
                (1,984
                )NET
      INCOME (LOSS)
                
                $
                (130,306
                )
                
                $
                991,541Basic
      and Diluted Net Income (Loss) Per Common Share
                
                $
                -
                
                
                $
                0.00Weighted
      Average Number of Shares Outstanding
                
                
                897,227,124
                
                
                
                562,293,791


3





THE
BLACKHAWK FUND


STATEMENTS
OF CASH FLOWS





ThreeMonthsEndedMarch31,2009
                      
                      
                      2009Cash
      Flows From Operating ActivitiesNet
      income (loss)
                      
                      $
                      (130,306
                      )
                      
                      $
                      991,541Adjustments
      to reconcile net income (loss) to net cash used in operating
      activities:Discount
      accretion on note
                      
                      
                      96,165Gain
      on sale of assets
                      
                      
                      -
                      
                      
                      
                      (1,015,178
                      )Prepaid
      financing costs
                      
                      
                      -
                      
                      
                      
                      208Accounts
      payable and accrued liabilities
                      
                      
                      30,971
                      
                      
                      
                      17,329Net
      cash used in operating activities
                      
                      
                      (3,170
                      )
                      
                      
                      (6,100
                      )Cash
      Flows From Investing Activities:
                      
                      
                      -
                      
                      
                      
                      -Cash
      Flows From Financing Activities:Proceeds
      from notes payable
                      
                      
                      50,000
                      
                      
                      
                      -Net
      cash provided by financing activities
                      
                      
                      50,000
                      
                      
                      
                      -Net
      Change in Cash
                      
                      
                      46,830
                      
                      
                      
                      (6,100
                      )Cash
      Beginning of Period
                      
                      
                      2,719
                      
                      
                      
                      11,161Cash
      End of Period
                      
                      $
                      49,549
                      
                      
                      $
                      5,061Supplemental
      disclosures:Cash
      paid for:Interest
                      
                      
                      -
                      
                      
                      
                      -Income
      Taxes
                      
                      
                      -
                      
                      
                      
                      -Supplemental
      disclosure of non-cash financing activitiesPartial
      conversion of notes payable
                      
                      $
                      5,355
                      
                      
                      $
                      -


4


THE
BLACKHAWK FUND


NOTES
TO FINANCIAL STATEMENTS





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Nature of
Business





The
Blackhawk Fund (“Blackhawk” or the “Company”) was organized on November 5, 1998
in Nevada as USA Telecom.  In 1998, the entity amended its articles of
incorporation to change its name to USA Telcom, in 2000 it amended its articles
of incorporation to change its name to USA Telcom Internationale, in 2004 it
amended its articles of incorporation to change its name to ZannWell Inc., and
in January 2005, it amended its articles of incorporation to change its name to
Blackhawk Fund.  For the year ended December 31, 2009 the Company was in
the business of residential and commercial real estate acquisition and
development.





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.





Advertising
expenses





Advertising
and marketing expenses are charged to operations as incurred there were no
expenses in 2009 or 2008.





Revenue
recognition





The
Company generates revenue from the sale of real estate, brokerage commissions,
and rental income from rental properties.  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 has not recognized any revenue from its new business plan other than
rental income.





Income
Taxes





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





As of
March 31, 2010, the deferred tax asset is related solely to the Company’s net
operating loss carry forward and is fully reserved.





Income / Loss per
share





Basic
income / 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 loss per share assumes the dilutive effect of the exercise of
outstanding options and warrants at either the beginning of the respective
period presented or the date of issuance, whichever is later.  As of March
31, 2010, the Company’s outstanding warrants are considered
anti-dilutive.


5


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
February 2010, Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2010-9 Subsequent Events (Topic 855)
Amendments to Certain Recognition and Disclosure Requirements("ASU
2010-9"). ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An
entity that is an Securities and Exchange Commission ("SEC") filer is not
required to disclose the date through which subsequent events have been
evaluated. This change alleviates potential conflicts between Subtopic 855-10
and the SEC's requirements. ASU 2010-9 is effective for interim and annual
periods ending after June 15, 2010. The Company does not expect the
adoption of ASU 2010-09 to have a material impact on its results of operations
or financial position.




In
January 2010, FASB issued ASU 2010-6 Improving Disclosures about Fair
Measurements ("ASU 2010-6"). ASU 2010-6 provides amendments to
Subtopic 820-10 that require separate disclosure of significant transfers in and
out of Level 1 and Level 2 fair value measurements and the
presentation of separate information regarding purchases, sales, issuances and
settlements for Level 3 fair value measurements. Additionally, ASU 2010-6
provides amendments to Subtopic 820-10 that clarify existing disclosures about
the level of disaggregation and inputs and valuation techniques. ASU 2010-6 is
effective for financial statements issued for interim and annual periods ending
after December 15, 2010. The Company does not expect the adoption of ASU
2010-06 to have a material impact on its results of operations or financial
position.




In
January 2010, FASB issued ASU 2010-2 Accounting and Reporting for
Decreases in Ownership of a Subsidiary- a Scope Clarification ("ASU
2010-2"). ASU 2010-2 addresses implementation issues related to the changes in
ownership provisions in the Consolidation—Overall Subtopic (Subtopic 810-10) of
the FASB Accounting Standards
Codification, originally issued as FASB Statement of Financial Accounting
Standards (“SFAS”) No. 160, Noncontrolling Interests in
Consolidated Financial Statements. Subtopic 810-10 establishes the
accounting and reporting guidance for noncontrolling interests and changes in
ownership interests of a subsidiary. An entity is required to deconsolidate a
subsidiary when the entity ceases to have a controlling financial interest in
the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes a
gain or loss on the transaction and measures any retained investment in the
subsidiary at fair value. The gain or loss includes any gain or loss associated
with the difference between the fair value of the retained investment in the
subsidiary and its carrying amount at the date the subsidiary is deconsolidated.
In contrast, an entity is required to account for a decrease in ownership
interest of a subsidiary that does not result in a change of control of the
subsidiary as an equity transaction. ASU 2010-2 is effective for the
Company starting January 1, 2010. The Company does not expect the adoption of
ASU 2010-2 to have a material impact on the Company's results of operations or
financial position.




NOTE
2 - STOCK BASED COMPENSATION





Prior to
January 1, 2006, we accounted for stock based compensation under SFAS No. 123,
“Accounting for Stock-Based Compensation” (“SFAS 123”).  As permitted under
this standard, compensation cost was recognized using the intrinsic value method
described in Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for
Stock Issued to Employees” (“APB 25”).  Effective January 1, 2006, the
Company has adopted SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS
123R”) and applied the provisions of the Securities and Exchange Commission
Staff Accounting Bulletin No. 107 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 SFAS 123R, stock-based
compensation expense recognized during the 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 of SFAS 123, 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 of SFAS 123R.





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 SFAS 123R.


6





During
the quarter ended March 31, 2009, the Company had no stock based consulting
expenses as determined under SFAS 123R.





NOTE
3 - PROPERTY - HELD FOR SALE/FIXED ASSETS





In late
March 2006, the Company purchased a condominium located in Carlsbad, California
for $625,083 (“Carlsbad Property”).  The Company intended to renovate and
sell the condominium upon completion of the planned renovations, and,
accordingly, it has been designated as “held-for-sale.”  Therefore, it
will be carried at the lower cost or fair value (net of expected sales costs)
during the renovation period and will not be depreciated.  Major
improvements and renovations were capitalized.





In June
of 2006, the Company entered into a joint venture agreement to renovate and then
sell a residential home located in Oceanside, California (“Oceanside
Property”).  The Company is a 50% joint venture partner, but has the right
to exercise control.  The Company is 100% responsible for improvement
costs, with these costs to be reimbursed upon sale and any remaining profits
allocated evenly.  The Company has valued the house at the original value
of the liability assumed of $1,000,000.  As the intention on this property
is identical to the Carlsbad Property, the Oceanside Property has been
designated as “held for sale”.  The Company has capitalized improvements on
this property of $149,817.





In
February 2009, the Company entered into settlement agreements with certain prior
affiliated parties pursuant to which the Company transferred the Carlsbad
Property and Oceanside Property.  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 Property.   The Carlsbad 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 Oceanside, Property.  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 of $1,015,178 in connection with the settlement
agreements for the Carlsbad Property and the Oceanside Property.





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.





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 with Teriminus, Inc.
(“Terminus”).  See Note 6.  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.


7





On August
19, 2008, the Company amended and restated its articles of incorporation
(“August Amendment”) to increase the aggregate number of shares of all classes
of preferred stock which the Company shall have authority to issue to 50,000,000
shares with a par of $0.0001 per share.





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 - COMMON STOCK





During
the year ended December 31, 2009, the Company issued 221,100,000 shares of
common stock under its stock option plan resulting in an expense of $592,300 and
cash received $186,260.





During
the quarter ended March 31, 2010, the Company issued 14,000,000 shares of common
stock in connection with a partial conversion of the Terminus note. See Note
7.





In
connection with the August Amendment, the Company’s changed the par value of its
common stock from $0.001 to $0.0001.





NOTE
6 – PROMISSORY NOTES





On April
24, 2008, the Company and Terminus, as co-issuers, issued and sold to a single
accredited investor: (i) a $550,000 due on demand secured promissory note with
an interest rate of 12% per annum (“Terminus Note Payable”) 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 is a guarantor of the Terminus Note, and accordingly,
has treated the note as a contingent liability and as an “off-balance sheet
arrangement.”





On May 4,
2009, the Company and Terminus both defaulted on repayment of the Terminus Note.
As a result of the default on the Terminus 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, entered into a first amendment to
the Terminus 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. The Company has recorded a
beneficial conversion feature relating to the Terminus Note in the amount of
$631,033.


8





Subsequent
to the Terminus Note amendment, 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.





On March 19, 2010, the Company issued
an 8% $50,000 convertible promissory note to the same holder of the Terminus
Note.  The note is due and payable on March 19, 2015.  In addition,
the note is convertible into shares of our common stock.   The conversion
price for the 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.  The proceeds for the sale
of the note were for working capital and general corporate purposes.  The
issuance was exempt under Section 4(2) and Rule 506 of the Securities Act of
1933, as amended. No discount was recorded in connection with this
note.





On March
25, 2010, the holder of the Terminus Note effected a partial conversion and was
issued 14,000,000 shares of common stock. The issuance reduced the debt by
$5,355.





The
balance of the Terminus Notes at March 21, 2010 and December 31, 2009 are
$270,293 and $130,483, respectively.





NOTE
7 - RELATED PARTY TRANSACTIONS





For the
quarter ended March 31, 2009 and the year ended December 31, 2009, Terminus,
Inc. the holder of the Company’s Series C Preferred Stock, has loaned the
Company $82,127 and $81,127, respectively.  The loan is payable upon demand
with interest at 12% per annum.  At March 31, 2010 and December 31, 2009
interest accrued to this loan was $9,332 and $8,637, respectively.





NOTE
8 – 2009 STOCK INCENTIVE PLAN





On August 10, 2009, the Company’s Board
of Directors adopted its 2009 Stock Incentive Plan (the “Plan”). The Board of
Directors approved the issuance of 124,000,000 shares of common stock pursuant
to the 2009 Stock Incentive Plan in payment of legal services. There were no
issuances of stocks under the Plan during the quarter ended March 31,
2010.





NOTE
9 - GOING CONCERN





The
Company has incurred significant losses, has a negative capital, and negative
current ratio.  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
10 - SUBSEQUENT EVENT





On April 5, 2010, the holder of the
Terminus Note effected another partial conversion and was issued 45,000,000
shares of common stock. In the aggregate, these issuances reduced the debt by
$15,345 in principal.





ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN 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.


9





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 in our real estate portfolio.





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





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





Our new
management determined that our company has incurred operating and net losses in
each of the last two fiscal years, had a working capital deficit as of the end
of the latest fiscal year and as of the latest fiscal quarter, and has a large
accumulated deficit.  Accordingly, new management commenced an analysis of
each of our two business lines to determine the viability of each line during
the second and third quarters of 2008.  Within each line of business,
management has evaluated and is evaluating historical and projected costs in
running the line, existing and potential revenue streams, and the availability
of additional capital for expansion of the business line.  In particular,
with respect to the real estate business, management is evaluating our current
real estate portfolio in light of current market conditions, both in the real
estate markets and the credit markets.  Upon completion of the analysis,
management will determine whether to seek to expand the business line or to
discontinue or divest of the division.





In 2008,
management determined that, based on its analysis of the foregoing factors, the
media and television production operations are not viable.  Accordingly,
management has determined to discontinue the media and television production
operations.  Management is continuing the evaluation of our real estate
business, the existing real estate portfolio valuations, the existing and
potential rental possibilities, the current market values, and the existing
financing arrangements.  In addition, in light of the distress in the real
estate markets, management is looking at potential real estate acquisition
opportunities that, if consummated, would increase and diversify our real estate
portfolio.  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.


10





We are
currently focused on expanding our real estate development business. 
 We currently have one property in our portfolio and are engaged in
preliminary discussion for the acquisition of two others.  We expect to
have at least two properties in our portfolio at the end of fiscal
2010.





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 annual financial statements included this report.





Results
of Operations





Basis
of Presentation





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





Three Months EndedMarch 31,2010
                              
                              
                              2009Revenues
                              
                              $
                              —
                              
                              
                              $
                              —Costs
      of Sales
                              
                              
                              —
                              
                              
                              
                              —General
      and administrative
                              
                              
                              22,217
                              
                              
                              
                              21,653Gain
      on sale of assets
                              
                              
                              —
                              
                              
                              
                              1,015,178Other
      Expense
                              
                              
                              (68 4
                              )
                              
                              
                              —Interest
      Expense
                              
                              
                              (107,405
                              )
                              
                              
                              (1,984
                              )Net
      Income (Loss)
                              
                              $
                              (130,306
                              )
                              
                              $
                              991,541





Comparison
of the three months ended March 31, 2010 and 2009





Net sales. Our revenues were $0
for the three months ended March 31, 2010 and 2009.  This resulted from our
prior decision to cease our media operations in the end of fiscal 2008 as well
as from a lack of sales of any real estate properties held for development or
any real estate properties generating rental revenue.





Cost of Sales.Costs of
sales were $0 for the three months ended March 31, 2010 and 2009.





General and administrative.General and administrative expenses remained generally unchanged for the
three months ended March 31, 2010 at $22,217 as compared to $21,653 for the
three months ended March 31, 2010.





Gain on sale of assets.
We recognized a non-cash gain on sale of assets of $1,015,178 in the three
months ended March 31, 2009.  This gain was related to our settlements with
former affiliates pursuant to which they forgave amounts due under promissory
notes made by us as released us from liability under mortgage notes in exchange
for the real estate properties.


11





Other expense.We
incurred other expenses of $684 in the three months ended March 31, 2010 as
compared to $0 for the three months ended March 31, 2009.





Interest.Interest
expense increased to $107,405 for the three months ended March 31, 2010 as
compared to interest expense of $1,984 for the three months ended March 31,
2009. The increase in interest was primarily attributed to the forgiveness of
promissory notes made by us and former affiliates assuming liability under
mortgage notes in exchange for real estate properties.





Net loss.We incurred a
net loss of $130,306 for the three months ended December 31, 2010 as compared to
net income of $991,541 for the three months ended March 31, 2009.   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.  Our net income on the
three months ended March 31, 2009 is primarily attributable to these
transactions for which we realized a gain on the disposition of assets equal to
$1,015,178.





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 March 31, 2010 was $541,735,
and we had cash of $49,459 as of March31, 2010.





We used
$3,170 of net cash in operating activities for the three months ended March 31,
2010, compared to using $6,100 in the three months ended March 31, 2009. 
The net loss of $130,306 was offset by non-cash expenses of $96,165 in
discount accretion on a note and an increase of $30,971 in accounts payable and
accrued liabilities.





We
generated no cash flows from investing activities for the three months ended
March 31, 2010 and 2009.





Net cash
flows provided by financing activities were $50,000 for the three months ended
March 31, 2010, compared to net cash flows provided by financing activities of
$0 for the three months ended March 31, 2009.  The only proceeds received
in the three months ended March 31, 2010 was generated from a note payable from
related party.





Capital
Requirements





Our
financial statements for the three months ended March 31, 2010 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.





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





None.





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.


12


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.





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





On March
19, 2010, we issued an 8% $50,000 convertible promissory note to a single
accredited investor.  The note is due and payable on March 19, 2015. 
In addition, the note is convertible into shares of our common stock. 
 The conversion price for the note is the greater of (i) the then existing
par value of the Company's common stock or (ii) 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.  The proceeds
for the sale of the note were for working capital and general corporate
purposes.  The issuance was exempt under Section 4(2) and Rule 506 of the
Securities Act of 1933, as amended.





ITEM
3 – DEFAULT UPON SENIOR SECURITIES





None.





ITEM
4 – (REMOVED AND RESERVED)





ITEM
5 – OTHER INFORMATION




None.


13


ITEM
6 - EXHIBITS





Item
                  No.
                
                Description
                
                Method of Filing10.1
                
                Convertible
      Promissory Note dated March 19, 2010
                
                Filed
      as an exhibit to our Annual Report on Form 10-K for the year ended
      December 31, 2009 and incorporated herein by reference.31.1
                
                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 FUNDMay
      21, 2010
            /s/ Frank MarshikFrank
      MarshikPresident(Principal
      Executive Officer and Principal Accounting
  Officer)


14