U. S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.  20549




FORM 10-K




(Mark One)




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




For the fiscal year ended December 31, 2010




oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934




For the transition period from ___________ to _____________




Commission File Number 000-49672




THE BLACKHAWK FUND


(Name of small business issuer 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 212-3018

Carson City, NV 89701

(Address of principal executive offices, including zip code)





Registrant’s telephone number, including area code:  (775) 887-0670


Securities registered pursuant to Section 12(b) of the Act: None


Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.001 par value










Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes     x No




Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act: o Yes     x No




Indicate by check mark whether the registrant(1) has filed all reports required 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 day. x Yes     o No




Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy ir information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o




Indicate by check mark whether the registrant is a large accelerated filer, an 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 if the Exchange Act.




Large accelerated filter o
Accelerated filter oNon-accelerated filter o (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 oNo x




The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2010 was approximately $191,059.  The aggregate market value was computed by using the closing price of the common stock as of that date on the Over-the-Counter Bulletin Board (“OTCBB”).  (For purposes of calculating this amount only, all directors and executive officers of the registrant have been treated as affiliates.)





As of March 31, 2011, 1,000,293,791shares of our common stock were issued and outstanding.





Documents Incorporated by Reference:      None.









PART I




The Blackhawk Fund, including all its subsidiaries, are collectively referred to herein as “The Blackhawk Fund,” “Blackhawk,” “the Company,” “us,” or “we”.




Item 1.  DESCRIPTION OF BUSINESS




General





We were incorporated in November 1998 in the state of Nevada as USA Telcom and subsequently changed our name in 2000 to USA Telcom Internationale. In 2004, we changed our name to ZannWell, Inc. and, in 2005, we changed our name to Blackhawk Fund.





Our executive offices are located at 1802 N. Carson Street, Suite 212-3018. Our telephone number is (775) 887-0670.





Changes in Control





2004





On November 29, 2004, a change in control occurred as the result of the acquisition of our series A, series B and series C preferred stock by Palomar Enterprises, Inc., a Nevada corporation (“Palomar”).





Pursuant to that certain capital Stock Purchase Agreement dated November 9, 2004, between Robert C. Simpson, our then-sole director and officer and Palomar, on November 29, 2004, Palomar acquired from Dr. Simpson 19,000,000 shares of our series A preferred stock, 10,000,000 shares of our series B preferred stock and 10,000,000 shares of our Series C preferred stock. Each share of the series A preferred stock is convertible into ten shares of our common stock. The shares of the series A preferred stock do not have voting rights. Each share of the series B preferred stock is convertible into two hundred shares of our common stock. On all matters submitted to a vote of the holders of the Common Stock, a holder of the Series B Preferred Stock is entitled to one vote per share of the Series B Preferred Stock held by such holder. The series C preferred stock is not convertible into our common shares. Each share of the series C preferred stock entitles the holder to 100 votes of our common stock on all matters brought before our stockholders.





All of the preferred shares acquired by Palomar carried a legend restricting the transfer thereof under the Securities Act of 1933, as amended. Palomar used $380,000 of its working capital as consideration for the preferred shares purchased by it pursuant to the Capital Stock Purchase Agreement.





Concurrently with the stock purchase transaction, Robert C. Simpson, our then-sole director and officer, nominated Steve Bonenberger and Brent Fouch as directors. Steve Bonenberger was also elected president and chief executive officer and Brent Fouch was elected Secretary and chief financial officer. Following the election of Messrs. Bonenberger and Fouch as our officers and directors, Robert C. Simpson resigned his positions as our director and officer.





2008





On April 24, 2008, in connection with the consummation of the purchase and sale of our Series C Preferred Stock, we entered into a stock purchase agreement with Terminus, Inc. and Palomar Enterprises, Inc. whereby Terminus purchased 10,000,000 shares of our Series C Preferred Stock from Palomar Enterprises, Inc. Each share of Series C Preferred Stock was entitled to 100 votes per share. As of the date thereof, we had approximately 562,293,791 million shares of our common stock outstanding. As a result, the sale of the Series C Preferred Stock by Palomar to Terminus effectively transferred Palomar’s control of the company to Terminus, giving Terminus approximately 62% of all votes entitled to be cast in any matter requiring or permitting a vote of stockholders. The funds for the acquisition were obtained pursuant to the issuance of the $550,000 promissory note.  The sale of the shares of Series C Preferred Stock was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(1) of the Securities Act (under the so-called “4(1 1⁄2) exemption” of the Securities Act).




2




On April 24, 2008, in connection with the stock purchase agreement described above, 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. Their resignations as directors were not based on any disagreement with us on any matter relating to our operations, policies or practices. Mr. Marshik, as the sole remaining director, appointed Terry Ross to fill one of the two vacancies resulting from these resignations.





Fiscal 2009 and 2010 Developments





Acquisition Opportunities.In 2010, we pursued and analyzed opportunities for real estate opportunities, both commercial and residential.   In particular, we pursued an opportunity to acquire a dormant 14 room lakefront lodge and accompanying 45 acres of development land located in the Western United States.  Following our investment process, we conducted market research, qualification analysis, and due diligence with respect to the proposed acquisition, including an assessment of demographics, supply and demand factors, operational history, required improvements, and financial analyses.  We entered into advanced negotiations to acquire the property; however, we were unable to agree on pricing and transaction structure, and accordingly, we decided not to proceed with the acquisition.  We continue to seek additional opportunities to add properties to our portfolio.





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.





Amendment of Note Issued in April 2008 Financing.On May 4, 2009, we and Terminus, Inc., as co-issuers, both defaulted on repayment of a $550,000 12% secured promissory note issued in April 2008.  Prior to the default, we were 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, we became 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.  Accordingly, on July 10, 2009 we, along with Terminus, Inc., entered into a first amendment to the April 2008 Note with the holder of such 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 our 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 (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 our 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 our common stock for a  period of 5 consecutive trading days, we 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 our board of directors in its reasonable judgment.





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, CA 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 Debbie Avey with whom we had previously entered into a joint venture in relation to the residential property in Oceanside, CA.  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 2 mortgage notes on this property ($1,120,000 and $320,000) in exchange for the property.





Current Business Plan





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.  We continue to seek additional opportunities to add properties to our portfolio.




3




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.




Business Objectives and Strategies




Our primary business objective is to acquire, develop and manage real estate properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns.




Investment Strategy — External Growth through Opportunistic Acquisition Platforms




The requirements that acquisitions be accretive on a long-term basis based on our cost of capital, as well as increase the overall portfolio quality and value, are core to our acquisition program. We may also engage in discussions with public and private entities regarding business combinations.




Capital Strategy — Balance Sheet Focus and Access to Capital




Given the significant turmoil in the capital markets and the unprecedented disruption of the economy, our primary capital objective is to maintain a flexible balance sheet through conservative financial practices while seeking access to sufficient capital to fund future growth. We intend to finance acquisitions and property redevelopment with sources of capital determined by management to be the most appropriate based on, among other factors, availability in the current capital markets, pricing and other commercial and financial terms. The sources of capital may include the issuance of public equity, unsecured debt.




Operating Strategy — Experienced Management Team with Proven Track Record




Our management team has experience in the real estate industry. We believe our management team has the ability to create value internally through property development and strategic dispositions. We intend to capitalize on our expertise in the acquisition, redevelopment, leasing and management of retail real estate by establishing joint ventures, in which we intend to earn, in addition to a return on our investment, management, fees.




We intend that in some instances, operating functions such as leasing, property management, construction, finance and legal (collectively, the “Operating Departments”) will be provided by our personnel, providing for fully integrated property management and development. Because we intend that that Operating Departments will have involvement with, and corresponding understanding of, the acquisition process, we expect that transition time is minimized and management can immediately execute on its strategic plan for each asset.




We intend to hold properties in our portfolio for long-term investment. As such, we intend to review our existing portfolio and implement programs to enhance the property’s market position.





Property Acquisitions





Purchase of Desert Hot Springs Real Estate.In December 2008, we purchased two lots consisting of 3.5 acres in Desert Hot Springs, California. This property is zoned for residential dwellings. We are determining whether to build finished lots or in the alternative to sell the land to a developer. The value of the property has been assessed at $100,814.





Asset Dispositions





Distribution of San Diego County Real Estate. In February 2009, we transferred a condominium located in Carlsbad, California and a residential property located in Oceanside, California. We recognized a gain on sale of assets of $1,015,178 in connection with this transaction resulting from the reduction and elimination of the debt associated with these properties.
 
 4
 
 Competition





There are numerous entities that compete with us in seeking properties for acquisition and tenants that will lease space in our properties. Our competitors include real estate investment trusts, financial institutions, private companies and individuals. We expect our properties to compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses) and the design and condition of the improvements.




Company Website




All of our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge at our website at www.blackhawkfund.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. These filings can also be accessed through the Securities and Exchange Commission’s website at www.sec.gov.





Employees





We currently employ one person.  None of our employees are represented by a labor union, and we have not entered into a collective bargaining agreement with any union.  We have not experienced any work stoppages and consider the relations with our employees to be good.





Item 1A.  RISK FACTORS AND CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION




We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.




Item 1B.  UNRESOLVED STAFF COMMENTS




We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.




Item 2.  PROPERTIES




We lease office space at 1802 N. Carson Street, Suite 212, Carson City, Nevada, 89701. Our Carson Street lease costs $100 per month and expired on December 31, 2008.  However, we currently occupy the office space on a month-to-month lease.





The existing facilities are adequate for our current operations.  We anticipate that additional facilities may be leased or purchased as needed and that facilities that are adequate for our needs are readily available.





Item 3.   LEGAL PROCEEDINGS





We are not a party to material legal proceedings as of the date of this report.





Item 4.   (REMOVED AND RESERVED).




5




PART II




Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




Until January 3, 2005, our common stock was quoted on the OTC Bulletin Board (“OTCBB”) under the symbol ZWLL.OB. On January 3, 2005, in connection with our name change and 1-800 reverse stock split, our symbol changed to BHWF.OB.





Effective February 23, 2011, our stock quotation under the symbol “BHWF” deleted from the OTCBB.  The symbol was deleted for factors beyond our control due to various market makers electing to shift their orders from the OTCBB. As a result of not having a sufficient number of market makers providing quotes on our common stock on the OTCBB for four consecutive days, we were deemed to be deficient in maintaining a listing standard at the OTCBB pursuant to Rule 15c2-11.  That determination was made entirely without our knowledge.





Our common stock now trades exclusively on the OTCQB under the symbol BHWF, or BHWF.PK.  The OTCQB is a new electronic interdealer quotation system created by OTC Markets Group, Inc, comparable to the OTCBB whereby all SEC registered companies quoted on the OTC market are eligible to trade.  In the past year, there has been a significant drop off in the number of market makers that quote Bulletin Board stocks as trading has been shifting to the OTCQB.





These quotations reflect inter-dealer prices, without mark-up, mark-down or commission, and may not represent actual transactions.The following table shows the high and low bid prices for our common stock for each quarter since January 1, 2009 as reported by the OTC Bulletin Board and/or OTC Markets.





We consider our stock to be “thinly traded” and any reported sale prices may not be a true market-based valuation of our stock.  Some of the bid quotations from the OTC Bulletin Board set forth below may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.




2010 (OTC Bulletin Board)

High Bid


Low BidFirst quarter

$
0.0007


$
0.0003Second quarter


0.0005



0.0001Third quarter


0.0005



0.0001Fourth quarter


0.0008



0.00022009 (OTC Bulletin Board)

High Bid


Low BidFirst quarter

$
0.0002


$
0.0001Second quarter


0.0010



0.0001Third quarter


0.0045



0.0003Fourth quarter


0.0011



0.0003




As of March 31, 2011 there were approximately 56 record holders of our common stock. This does not include an indeterminate number of shareholders whose shares are held by brokers in street name.





We have not paid cash dividends since our inception and we do not contemplate paying dividends in the foreseeable future.





Shares eligible for future sale could depress the price of our common stock and lower the value of your investment.  Sales of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for shares of our common stock.





SECTION 15(G) OF THE EXCHANGE ACT





The shares of our common stock are covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales practice requirements on broker-dealers who sell our securities to persons other than established customers and accredited investors.





Rule 15g-2 declares unlawful any broker-dealer transactions in “penny stocks” unless the broker-dealer has first provided to the customer a standardized disclosure document.




6




Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a “penny stock” transaction unless the broker-dealer first discloses and subsequently confirms to the customer the current quotation prices or similar market information concerning the penny stock in question.





Rule 15g-4 prohibits broker-dealers from completing “penny stock” transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.





Rule 15g-5 requires that a broker-dealer executing a “penny stock” transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales person’s compensation.





Our common stock may be subject to the foregoing rules. The application of the “penny stock” rules may affect our stockholders’ ability to sell their shares because some broker-dealers may not be willing to make a market in our common stock because of the burdens imposed upon them by the “penny stock” rules.





Securities Authorized for Issuance Under Equity Compensation Plans.The following provides information concerning compensation plans under which our equity securities are authorized for issuance as of December 31, 2010:





(a)

(b)

(c)Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))Equity compensation plans approved by security holders (1)(2)

--

--

612,611,979Equity compensation plans not approved by security holders (3)(4)

--

--

100,500,000Total

--

--

713,111,979





(1)  Amended and Restated 2004 Stock Plan.On June 15, 2004, our board of directors adopted (and further amended and restated on July 22, 2004 and December 6, 2004) our Amended and Restated 2004 Stock Plan.  The purpose of the 2004 Stock Plan is to provide incentives to attract, retain and  motivate  eligible  persons  whose  present and potential contributions are important to the success of The Blackhawk Fund and our subsidiaries, by offering them  an  opportunity to participate in our future performance through awards of options,  restricted  stock  and  stock  bonuses The maximum aggregate number of shares of common stock that may be issued and sold under all awards granted under the plan is 207,500,000 shares, and as of December 31, 2010, we have issued 207,500,000 shares under the plan, and there are no options outstanding under this plan.





(2)  2005 Stock Plans.On February 25, 2005, our board of directors adopted our 2005 Stock Plans (consisting of tEmployee Stock Incentive Plan and the Non-Employee Directors and Consultants Retainer Stock Plan).  The purpose of the 2005 Stock Plans is to provide incentives to attract, retain and  motivate  eligible  persons  whose  present and potential contributions are important to the success of The Blackhawk Fund and our subsidiaries, by offering them  an  opportunity to participate in our future performance through awards of options,  restricted  stock  and  stock  bonuses.   The maximum aggregate number of shares of common stock that may be issued and sold under all awards granted under the 2005 Stock Plans is 975,000,000 shares, and as of December 31, 2010, we have issued 362.388,021 shares under the plan, and there are no options outstanding under these plans.





(3)  2007 Stock Incentive Plan.On June 7, 2007, our board of directors adopted our 2007 Stock Incentive Plan.The purpose of the plan is intendedto secure for the Company and its Affiliates the benefits arising from ownership of the Company’s Common Stock by the Employees, Officers, Directors and Consultants of the Company and its Affiliates, all of whom are and will be responsible for the Company’s future growth. The Plan is designed to help attract and retain for the Company and its Affiliates personnel of superior ability for positions of exceptional responsibility, to reward Employees, Officers, Directors and Consultants for their services and to motivate such individuals through added incentives to further contribute to the success of the Company and its AffiliatesThe maximum aggregate number of shares of common stock that may be issued and sold under all awards granted under the plan is 250,000,000 shares, and as of December 31, 2010, we have issued 200,000,000 shares under the plan, and there are no options outstanding under this plan.




7




(4)2009 Stock Incentive Plan.The purpose of our 2009 Stock Incentive Plan is to advance the best interests of the company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the company, thereby encouraging them to maintain their relationships with us.  Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend.  The total number of shares available for the grant of either stock options or compensation stock under the plan is 220,500,000 shares, subject to adjustment, and as of December 31, 2010, we have issued 170,000,000 shares.





Our compensation committee which is appointed by our board of directors administers our plan and has full power to grant stock options and common stock, construe and interpret the plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable an proper.  Any decision made, or action taken, by the compensation committee or our board of directors arising out of or in connection with the interpretation and administration of the plan is final and conclusive.





The compensation committee or our board of directors, in its absolute discretion, may award common stock to employees of, consultants to, and directors of the company, and such other persons as the board of directors or compensation committee may select, and permit holders of common stock options to exercise such options prior to full vesting therein and hold the common stock issued upon exercise of the option as common stock.  Stock options may also be granted by our board of directors or compensation committee to non-employee directors of the company or other persons who are performing or who have been engaged to perform services of special importance to the management, operation or development of the company.





In the event that our outstanding common stock is changed into or exchanged for a different number or kind of shares or other securities of the company by reason of merger, consolidation, other reorganization, recapitalization, combination of shares, stock split-up or stock dividend, prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to stock options which may be granted under the plan.





Our board of directors may at any time, and from time to time, suspend or terminate the plan in whole or in part or amend it from time to time in such respects as our board of directors may deem appropriate and in our best interest.





Recent Sales of Unregistered Securities





None.




8




Item 6.  SELECTED FINANCIAL DATA




We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.




Item 7.  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.





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 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 are not viable, and accordingly 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.




9




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.





We are currently focused on expanding our real estate development business.   We currently have one property in our portfolio.  We intend to seek additional opportunities to add properties to our portfolio.





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:




Year EndedDecember 31,2010


2009Revenues

$
--


$
--Costs of Sales


--



--General and administrative


169,084



82,165Gain on sale of assets


--



1,015,179Loss on guarantee


(684
)


(618,750
)Interest Expense


(262,940
)


(489,982
)Operating loss

$
(432,708
)

$
(175,718
)




10





Comparison of the year ended December 31, 2010 and 2009





Net sales. Our revenues were $0 for the years ended December 31, 2010 and 2009.  We did not have any sales of any real estate properties held for development or any real estate properties generating rental revenue in the years ending 2010 and 2009.





Cost of Sales.  Costs of sales were $0 for the years ended December 31, 2010 and 2009.





General and administrative.  General and administrative expenses increased to $169,084 for the year ended December 31, 2010 from $82,165 for the year ended December 31, 2009.





Gain on sale of assets. We recognized a non-cash gain on sale of assets of $1,015,179 in 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 properties.  We did not have any such gain in 2010.





Loss on guarantee.We recognized a loss on guarantee of $684 for the year ended December 31, 2010 as compared to $618,750 in the year ended December 31, 2009.  This loss on guarantee is a result of the default under a promissory note on which we are the guarantor.  The issuer defaulted on the note in 2009 giving rise to obligations under the note which became due and payable.





Interest.We had interest expense of $262,940 for the year ended December 31, 2010 as compared to $489,982 for the year ended December 31, 2009.





Net loss.  We incurred an operating loss of $432,708 in the year ended December 31, 2010 as compared to $175,718 for the year ended December 31, 2009.   The increase in net loss resulted primarily from non-cash gain on sale of asset in 2009 as compared to 2010.





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 December 31, 2010 was $712,942, and we had cash of $3,945 as of December 31, 2010.





We used $48,774 of net cash in operating activities for the year ended December 31, 2010, compared to using $31,942 in the year ended December 31, 2009.  The net loss of $432,708 was offset by non-cash expenses of $211,070 in discount accretion on a note, $41,107 of note issued for consulting services, and an increase of $131,757 in accounts payable.





We generated no cash flows from investing activities for the years ended December 31, 2010 and 2009.





Net cash flows provided by financing activities were $50,000 for the year ended December 31, 2010, compared to net cash flows provided by financing activities of $23,500 for the year ended December 31, 2009.  The only proceeds received in 2010 were generated from a $50,000 convertible note issued to an unaffiliated investor.  In 2009, our cash provided by financing activities was due to a $23,500 note payable from a related party.





Capital Requirements





Our financial statements for the fiscal year ended December 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.




11




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.




12





Item 8.  FINANCIAL STATEMENTS




GRUBER & COMPANY, LLC


121 Civic Center Drive, Suite 225
 Lake Saint Louis, MO, United States
 Phone: (636) 561-5639
 
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the Board of Directors
 The Blackhawk Fund
 Carson City, Nevada
   We have audited the accompanying balance sheet of The Blackhawk Fund (“Blackhawk” or the “Company”) as of December 31, 2010 and 2009 and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of Blackhawk’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion . An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Blackhawk as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the period described in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying financial statements have been prepared assuming that Blackhawk will continue as a going concern. As discussed in Note 9 to the financial statements, Blackhawk has suffered recurring losses from operations and a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
 /s/ Gruber & Company, LLC
  Gruber & Company, LLC
  Lake St. Louis, Missouri
 April 8, 2011
 
 13


THE BLACKHAWK FUND


BALANCE SHEETS




December 31,


December 31,2010


2009ASSETSCURRENT ASSETSCash and cash equivalents

$
3,945


$
2,719Total current assets


3,945



2,719PROPERTY -- HELD FOR SALE


1,000



1,000TOTAL ASSETS

$
4,945


$
3,719LIABILITIES AND STOCKHOLDERS’ DEFICITCURRENT LIABILITIESAccounts Payable and Accrued Liabilities

$
317,660


$
199,256Note Payable, net of discount of $18,340 and $209,517 respectively


300,960



130,483Notes Payable - Related Party


98,267



89,764Total current liabilities


716,887



419,503LONG TERM LIABILITIESNote payable


110,000



-TOTAL LIABILITIES


826,887



419,503STOCKHOLDERS’ DEFICITPreferred stock, $0.001 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, 1,000,293,791and 896,293,791 shares issued and outstanding, respectively


100,029



89,629Common Stock B, $0.0001 par value 150,000,000 authorized, 30,000,000 issuedand outstanding


3,000



3,000Additional Paid in Capital


38,029,434



38,013,284Accumulated deficit


(38,956,455
)


(38,523,747
)Total Stockholders’ Deficit


(821,942
)


(415,784
)TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

$
4,945


$
3,719




14




THE BLACKHAWK FUND


STATEMENTS OF OPERATIONS


Years Ended December 31, 2010 and 2009


2010


2009Revenues

$
-


$
-Cost of Sales


-



-Gross Profit


-



-OPERATING EXPENSESGeneral and Administrative


169,084



82,165OTHER INCOME / (EXPENSES)Gain on sale of assets


-



1,015,179Loss on guarantee


(684
)


(618,750
)Interest Expense


(262,940
)


(489,982
)NET LOSS

$
(432,708
)

$
(175,718
)Basic Loss Per Common Share

$
-


$
-Weighted Average Number of Shares Outstanding


963,560,275



693,574,011




15




THE BLACKHAWK FUND


Statement of Stockholders’ Deficit


For the Years Ended December 31, 2010 and 2009


Additional





TotalPreferred Stock Series A


Prferred Stock Series B & C


Common Stock Series B


Common Stock


Paid-In


Accumulated


Stockholders'Shares


Amount


Shares


Amount


Shares


Amount


Shares


Amount


Capital


Deficit


DeficitBalances, December 31, 2008


500,000


$
50



20,000,000


$
2,000



30,000,000


$
3,000



562,293,791


$
56,229


$
37,136,931


$
(38,348,029
)

$
(1,149,819
)Issuance of common stock to retire debt


-



-



-



-



-



-



210,000,000



21,000



820,033



-



841,033Issuance of stock for professional services


-



-



-



-



-



-



124,000,000



12,400



56,320



-



68,720Net loss


-



-



-



-



-



-



-



-



-



(175,718
)


(175,718
)-Balances, December 31, 2009


500,000


$
50



20,000,000


$
2,000



30,000,000


$
3,000



896,293,791


$
89,629


$
38,013,284


$
(38,523,747
)

$
(415,784
)Conversion of notes payable


-



-



-



-



-



-



59,000,000



5,900



14,800



-



20,700Issuance of stock for professional services


-



-



-



-



-



-



45,000,000



4,500



1,350



-



5,850Net loss


-



-



-



-



-



-



-



-



-



(432,708
)


(432,708
)Balances, December 31, 2010


500,000


$
50



20,000,000


$
2,000



30,000,000


$
3,000



1,000,293,791


$
100,029


$
38,029,434


$
(38,956,455
)

$
(821,942
)




16




THE BLACKHAWK FUND


STATEMENTS OF CASH FLOWS


Years Ended December 31, 2010 and 2009


2010


2009Cash Flows From Operating ActivitiesNet Loss

$
(432,708
)

$
(175,718
)Adjustments to reconcile net loss to net cash used in operating activities:Discount accretion on note


211,070



420,516Gain on sale of assets


-



(1,015,178
)Loss on guarantee


-



618,750Stock Issued for services and financing


-



24,000Issuance of note for consulting services


41,107



-Changes in operating assets and liabilities:Prepaid financing costs


-



23,704Accounts payable and accrued liabilities


131,757



71,984Accrued interest on notes payable to related party


-



-Net cash used in operating activities


(48,774
)


(31,942
)Cash Flows From Financing Activities:Proceeds from notes payable


50,000



-Proceeds from notes payable - related party


-



23,500Net cash provided by financing activities


50,000



23,500Net Change in Cash


1,226



(8,442
)Cash Beginning of Period


2,719



11,161Cash End of Period

$
3,945


$
2,719Supplemental disclosures:Cash paid for:Interest

$
-


$
95,549Income Taxes

$
-



-Supplemental disclosures of non-cash financing activity:Issuance of common stock to settle legal invoices

$
5,850


$
-Partial conversion of notes payable to common shares

$
20,700


$
-




17




THE B LACKHAWK 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, 2010, 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 for the year ended December 31, 2010 and 2009.
 
 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.  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.
  18
  As of December 31, 2010, the deferred tax asset is related solely to the Company’s net operating loss carry forward and is fully reserved.
 
 Loss per share
 
 Loss per share is computed by dividing the net 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 December 31, 2010, the Company’s outstanding warrants are considered anti-dilutive.
 
 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
 
 Effective September 30, 2009, the Company adopted the Financial Accounting Standard Board’s new Accounting Standards Codification (“ASC”) as the single source of authoritative accounting guidance under the Generally Accepted Accounting Principles (“GAAP”) Topic.  The ASC does not create new accounting and reporting guidance, rather it reorganizes GAAP pronouncements into approximately 90 topics within a consistent structure.  All guidance in the ASC carries an equal level of authority.  Relevant portions of authoritative content, issued by the Securities and Exchange Commission (“SEC”), for SEC registrants, have been included in the ASC.  After the effective date of the Codification, all nongrandfathered, non-SEC accounting literature not included in the ASC is superseded and deemed nonauthoritative.  Adoption of the Codification also changed how the Company references GAAP in its financial statements.
 
 In February 2010, 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 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.


19
  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.
 
 In December 2009, FASB issued ASU 2009-16 Transfers and Servicing (Topic 860) Accounting for Transfers of Financial Assets (“ASU 2009-16”). ASU 2009-16 amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB SFAS No. 140. The amendments in ASU 2009-16 improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. ASU 2009-16 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009.  The Company does not expect the adoption of ASU 2009-16 to have a material impact on its results of operations or financial position.
 
 In August 2009, FASB issued ASU 2009-5 Fair Value Measurements and Disclosures (Topic 820) Measuring Liabilities at Fair Value (“ASU 2009-5”). ASU 2009-5 provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of liabilities. ASU 2009-5 clarifies that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value. ASU 2009-5 was effective for the Company for interim and annual periods ending after September 30, 2009. The adoption of ASU 2009-5 did not have a material impact on the Company's results of operations or financial position.
 
 20
  In August 2009, FASB issued ASU 2009-4 Accounting for Redeemable Equity Instruments—an Amendment to Section 480-10-S99 (“ASU 2009-4”). ASU 2009-4 represents a SEC update to Section 480-10-S99, Distinguishing Liabilities from Equity. The adoption of guidance within ASU 2009-4 did not have an impact on the Company's results of operations or financial position.
 
 In June 2009, FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—A Replacement of FASB Statement No. 162, (now codified within ASC 105, Generally Accepted Accounting Principles (“ASC 105”)). ASC 105 establishes the Codification as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. All guidance contained in the Codification carries an equal level of authority. Following this statement, FASB will not issue new standards in the form of statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, which will serve only to: (1) update the Codification; (2) provide background information about the guidance; and (3) provide the bases for conclusions on the change(s) in the Codification. ASC 105 was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Codification supersedes all existing non-SEC accounting and reporting standards. The adoption of ASC 105 did not have an impact on the Company's results of operations or financial position.
 
 In May 2009, FASB issued SFAS No. 165, Subsequent Events, (now codified within ASC 855, Subsequent Events (“ASC 855”)). ASC 855 establishes the general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC 855 was effective for the Company on April 1, 2009. The adoption of ASC 855 did not have a material impact on the Company's results of operations or financial position.
 
 In April 2009, FASB issued FSP FAS 115-2 and FSP 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (now codified within ASC 320, Investments—Debt and Equity Securities (“ASC 320”)). ASC 320 provides greater clarity about the credit and noncredit component of an other-than-temporary impairment event and more effectively communicates when an other-than-temporary impairment event has occurred. ASC 320 amends the other-than-temporary impairment model for debt securities. The impairment model for equity securities was not affected. Under ASC 320, an other-than-temporary impairment must be recognized through earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost basis. This standard was effective for interim periods ending after June 15, 2009. The adoption of ASC 320 did not have a material impact on the Company's results of operations or financial position.
 
 In April 2009, FASB issued FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (now codified within ASC 820, Fair Value Measurements and Disclosures). ASC 820 provides guidelines for making fair value measurements more consistent and provides additional authoritative guidance in determining whether a market is active or inactive and whether a transaction is distressed. ASC 820 is applied to all assets and liabilities (i.e., financial and non-financial) and requires enhanced disclosures. This standard was effective for periods ending after June 15, 2009. The adoption of ASC 820 did not have a material impact on the Company's results of operations or financial position.
 
 In April 2009, FASB issued FSP 107-1 and Accounting Principles Board 28-1, Interim Disclosures about Fair Value of Financial Instruments (now codified within ASC 825, Financial Instruments (“ASC 825”)). ASC 825 requires disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. ASC 825 was effective for interim periods ending after June 15, 2009. The adoption of ASC 825 did not have a material impact on the Company's consolidated results of operations or financial position.
 
 21
  NOTE 2 - STOCK BASED COMPENSATION
 
 Effective January 1, 2006, the Company has adopted ASC 505 “Equity” and ASC 718-10 “Stock Compensation,” using the modified-prospective transition method.  The standards require the measurement of compensation cost at the grant date, based upon the estimated fair value of the award, and requires amortization of the related expense over the employee’s requisite service period.  Under ASC 718-10, stock based compensation cost will be recognized over the period during which an employee is required to provide service in exchange for the award.  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 ASC 718-10.  During the year ended December 31, 2010 and 2009, the Company had no stock based consulting expenses as determined under ASC 718-10.
 
 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.
  22
  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.  Although the property comprised of these two parcels has been zoned for residential dwellings, the Company has not yet obtained entitlements on the property for development and construction.
 
 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 Terminus, 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.
  23
 
 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 years ended December 31, 2010 and 2009, the Company issued an aggregate of 59,000,000 and 210,000,000 shares of common stock, respectively, in connection with partial conversions of the Terminus note.  (See Note 6.)
 
 During the years ended December 31, 2010 and 2009, the Company issued 45,000,000 shares and 124,000,000 shares of common stock, respectively, for professional services rendered.  See Note 8.
 
 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.
  24
 
 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.
 
 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 (“Terminus Note 2”) 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.
  25
 
 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.
 
 On April 5, 2010, the holder of the Terminus Note exercised a partial conversion and was issued 45,000,000 shares of common stock. The issuance reduced the debt by $15,345.
 
 On July 7, 2010, the Company entered into a second amendment to the Terminus Note extending the maturity date under the note from July 10, 2010 to February 1, 2011.
 
 The balance of the Terminus Notes at December 31, 2010 and 2009 are $369,300 and $130,483, net of discount of $0 and $420,516, respectively. The note discount related to the Terminus Note was fully amortized as of July 10, 2010.
 
 On September 15, 2010, the Company entered into a consulting agreement.  In connection with the consulting agreement the Company issued a convertible note payable (“Consulting Note”) in the amount of $60,000. The entire principal amount is due on September 15, 2020, and the Consulting Note accrues interest on the unpaid principal amount at the rate of 4% per annum. The holder of the Consulting Note may exercise its right to convert any portion of unpaid principal and accrued interest into shares of the Company’s common stock any time after March 15, 2011 at a conversion price calculated as 85% of the average of the three per share market values of the Company’s common stock immediately preceding a conversion date.  Each conversion is limited to $10,000 per calendar month. In connection with the Consulting Note, the Company recorded a note discount in the amount of $18,893.
 
 NOTE 7 - RELATED PARTY TRANSACTIONS
 
 For the years ended December 31, 2010 and 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 December 31, 2010 and 2009, interest accrued to this loan was $16,140 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 45,000,000 and 124,000,000 shares of common stock pursuant to the 2009 Stock Incentive Plan in payment of legal services, respectively, during the years ended December 31, 2010 and 2009.
 
 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 EVENTS
 
 The Company has evaluated subsequent events through March 30, 2011, which is the date these financial statements were available to be issued.
 
 26





Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





None.





Item 9A. 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 Annual Report on Form 10-K, 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 Annual Report on Form 10-K has been made known to them in a timely fashion.





Our Chief Executive Officer and 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.





Item 9B. OTHER INFORMATION.





None.




27




PART III





Item 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





Set forth below is certain information concerning our directors and executive officers:





Name

Age

PositionFrancis X. Marshik

84

President, Chief Executive Officer, Treasurer and director




Francis X. Marshik has served as President, Chief Executive Officer, Treasurer and director since April 24, 2008.  Mr. Marshik retired in 1986 from M.W. Kellogg, an engineering, construction and fabrication company, where he served as its Senior Vice President of Global Business Development since 1980.  From 1974 to 1980, Mr. Marshik was Commercial Vice President of M.W. Kellogg in London, and from 1968 to 1972, he was the head of the Far East as General Manager of Japan.  From 1950 to 1966, Mr. Marshik held various positions at C.F. Braun, an engineering company.  He received a Bachelor of Science from Oregon State University.  Mr. Marshik served as a director of Hemiwedge Industries, Inc., a publicly traded company on the OTC Bulletin Board from 2002 to 2009.





Director Independence





Our board of directors has determined that currently none of it members  qualify as “independent” as the term is used in Item 407 of Regulation S-B as promulgated by the SEC and in the listing standards of The Nasdaq Stock Market, Inc. - Marketplace Rule 4200.





Involvement in Certain Legal Proceedings





None of our directors or executive officers has, during the past five years:





·
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);





·
had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;





·
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; or





·
been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.





CODE OF ETHICS





We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The code of ethics is designed to deter wrongdoing and to promote:





§
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;





§
Full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submits to, the SEC and in other public communications made by us;





§
Compliance with applicable governmental laws, rules and regulations;





§
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and





§
Accountability for adherence to the code.





28




A copy of our code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions is filed as an exhibit to our Form 10-KSB for the fiscal year end December 31, 2006.





We will provide to any person without charge, upon request, a copy of our code of ethics. Any such request should be directed to our corporate secretary at 1802 N. Carson Street, Suite 212, Carson City, Nevada, 89701.





AUDIT COMMITTEE





The entire board of directors acts as our audit committee. We do not have an audit committee financial expert serving on our audit committee at this time. We propose to expand our board of directors in the near future to include a financial expert.





Communications with the Board of Directors





Stockholders can send communications to the Board of Directors by sending a certified or registered letter to the Chairman of the Board, care of the Secretary, at our main business address set forth above.  Communications that are threatening, illegal, or similarly inappropriate, and advertisements, solicitations for periodical or other subscriptions, and other similar communications will generally not be forwarded to the Chairman.





Item 11. EXECUTIVE COMPENSATION





The following table sets forth the compensation paid to the Chief Executive Officer and our other executive officers for services rendered during the fiscal years ended December 31, 2010, 2009 and 2008.




Summary Compensation TableStock


Option


All OtherName and Position

Year

Salary


Bonus


Awards ($)


Awards ($)


Compensation


Total ($)Francis X. Marshiik

2010

$
0



--



--



--



--


$
0President

2009

$
0



--



--



--



--


$
0Chief Executive Officer, Treasurer and Director

2008

$
0



--



--



--



--


$
0(since April 24, 2008)Steve Bonenberger

2010


N/A



N/A



N/A



N/A



N/A



N/APresident, Chief Executive Officer and Director

2009


N/A



N/A



N/A



N/A



N/A



N/A(until April 24, 2008

2008

$
37,500



--



--



--



--


$
37,500Brent Fouch

2010


N/A



N/A



N/A



N/A



N/A



N/AExecutive Vice President

2009


N/A



N/A



N/A



N/A



N/A



N/ATreasurer and Director

2008

$
37,500



--



--



--



--


$
37,500(until April 24, 2008)


Outstanding Equity Awards





There were no outstanding equity awards, unexercised options, unvested stock, or equity incentive plan awards as of December 31, 2010 for any of the executive officers named in the Summary Compensation Table above.





29





Potential Payments upon Termination





None.





Compensation of Directors





None.





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.  To our knowledge, based solely on review of the copies of such reports furnished to us for the period ended December 31, 2010, all of the  Section 16(a) reports required to be filed by our executive officers, directors, and greater-than-10% stockholders were filed on a timely basis.





Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 31, 2011 by the following persons:





·
each person who is known to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock;





·
each of our directors and executive officers; and





·
all of our directors and executive officers as a group.





Beneficial ownership is determined in accordance with the rules and regulations of the SEC. The number of shares and the percentage beneficially owned by each individual listed above include shares that are subject to options held by that individual that are immediately exercisable or exercisable within 60 days from March 31, 2010, and the number of shares and the percentage beneficially owned by all officers and directors as a group includes shares subject to options held by all officers and directors as a group that are immediately exercisable or exercisable within 60 days from March 31, 2010.





Amount and Nature of Beneficial OwnershipName And

Address (1)

Number Of Common

Shares Beneficially Owned

Percentage

Owned (2)

Number Of Series B Preferred

Shares Beneficially Owned

Percentage

Owned (2)

Number Of Series C Preferred

Shares Beneficially Owned

Percentage

Owned (2)

Percentage

of Total

Voting

Power (3)Terminus, Inc.


—

*


—

*


10,000,000
(4)
100%


86.7%
%Craig B. Garner (5)


45,423,660
(5)
4.99%


10,000,000

100%


—

*


*
%Frank Marshik


—

*


—

*


10,000,000
(4)
100%


86.7%
%All directors and

officers as a group (1 person)


—

*


—

*


10,000,000
(4)
100%


86.7%
%








*Less than 1%


(1)
Unless otherwise noted, the address is 1802 N. Carson Street, Suite 212, Carson City, Nevada 89701.(2)
Based on 1,000,293,791 common shares, 10,000,000 Series B Preferred Shares, and 10,000,000 Series C Preferred Shares issued and outstanding.


(3)
Holders of our common stock are entitled to one vote per share, for a total of 910,293,791 votes. Holders of our Series A preferred stock are not entitled to vote. Holders of our Series B preferred stock are entitled to one vote per share, for a total of 10,000,000 votes. Holders of our Series C preferred stock are 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, for a total of 6,601,914,628 votes, or approximately 87% of the outstanding votes on all matters presented to our stockholders as of the record date.(4)
Mr. Marshik has voting and investment control over the securities owned by Terminus, Inc.(5)
Includes shares issuable upon conversion of Series B Preferred Stock.  Mr. Garner’s address is P.O. Box 11418, Marina del Rey, CA 90295.




30




Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





At March 31, 2008, the Company was indebted to a formerly related party for $801,616. Interest had been imputed at 6% per year. On April 24, 2008, the Company issued, and the formerly related party accepted, a subordinated secured non-recourse note in the principal amount of $841,828, due October 24, 2008. The note is secured by the real estate described in Note 3 above, but is subordinated to the notes described above. The lender’s recovery for default on payment of this note is limited to limited solely to the real estate described above. The note was cancelled in exchange for the property securing the note pursuant to a settlement agreement executed in February 2009.





At December 31, 2010 and 2009, Terminus, Inc., the holder of the Company’s Series C Preferred Stock, has loaned us approximately $82,127.  The loan is payable upon demand with interest at 12% per annum.  At December 31, 2010, interest accrued to this loan was $16,140.





We believe that the foregoing transactions were in our best interests. Consistent with the Nevada Revised Statutes, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is us at is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we will utilize our audit committee for the review of potential conflicts of interest.





Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.





AUDIT FEES





Gruber & Company, LLC, billed us $7,500 in fees for our annual audit for the year ended December 31, 2010, and $7,500 in fees for the review of our quarterly financial statements for that year.





Gruber & Company, LLC, billed us $7,500 in fees for our annual audit for the year ended December 31, 2009, and $7,500 in fees for the review of our quarterly financial statements for that year.




AUDIT-RELATED FEES





We did not pay any fees Gruber & Company, LLC for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements for fiscal years 2010 and 2009.




31




TAX FEES





We did not pay any fees to Gruber & Company, LLC for tax compliance, tax advice, tax planning or other work during our fiscal years 2010 and 2009.





ALL OTHER FEES





There were no other fees billed by Gruber & Company, LLC for professional services rendered, other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees.





With respect to the audit of our financial statements as of December 31, 2010 and 2009 and for the years then ended, none of the hours expended on Gruber & Company, LLC engagement to audit those financial statements were attributed to work by persons other than Gruber & Company, LLC’s full-time, permanent employees.





Item 15. EXHIBITS.





(a)     Exhibits




Exhibit No.
Description3.1**
Articles of Incorporation.3.2**
Certificate of Amendment to Articles of Incorporation, filed on June 30, 2004.3.3**
Certificate of Designation establishing our Series A, B and C Preferred Stock, filed effective July 21, 2004.3.4**
Certificate of Correction to the Certificate of Designation for our Series B Preferred Stock, filed effective on November 29, 2004.3.5**
Certificate of Amendment to Articles of Incorporation, filed effective January 3, 2005.3.6**
Certificate of Amendment to Articles of Incorporation, filed effective January 4, 20053.7
Amendment to Certificate of Designation After Issuance of Class or Series filed with the Nevada Secretary of State on April 24, 2008, filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.3.8
Certificate of Correction filed with the Nevada Secretary of State on April 24, 2008, filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.3.9
Certificate of Withdrawal of Certificate of Designation filed with the Nevada Secretary of State on April 24, 2008, filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.3.10
Certificate of Designation filed with the Nevada Secretary of State on April 24, 2008, filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.3.11
Amendment to Certificate of Designation After Issuance of Class or Series filed with the Nevada Secretary of State on April 24, 2008, filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.3.12
Amended and Restated Articles of Incorporation filed with the Nevada Secretary of State on August 19, 2008, filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended June 30, 2008 and incorporated herein by reference.3.7**
Amended Bylaws of Zannwell, Inc.10.1**
Zannwell Inc. Capital Stock Purchase Agreement, dated November 29, 2004.10.2
2004 Amended and Restated Stock Plan, filed as an exhibit to our Registration Statement on Form S-8 filed on December 8, 2004(file no. 333-116498) and incorporated herein by reference.10.3
2005 Stock Plans, filed as an exhibit to our Registration Statement on Form S-8 filed on March 2, 2005 (file no 333-123083) and incorporated herein by reference.10.4
2007 Stock Plan, filed as an exhibit to our Registration Statement on Form S-8 filed on June 13, 2007 (file no.333-143702) and incorporated herein by reference.10.5
Stock Purchase Agreement dated April 24, 2008 by and among Terminus, Inc., The Blackhawk Fund, and Palomar Enterprises, Inc., filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference. 
 32
 
 10.6
Subscription Agreement dated as of April 24, 2008 by and among Terminus, Inc., The Blackhawk Fund, and the subscriber set forth on the signature pages thereto , filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.10.7
Secured Promissory Note dated as of April 24, 2008, filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2008 and incorporated herein by reference.10.8
Subordinated Secured Promissory Note, filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended June 30, 2008 and incorporated herein by reference.10.9
Settlement Agreement between The Blackhawk Fund and Angel Acquisition Corp, filed as an exhibit to our Annual Report on Form 10-K filed on April 15, 2008 and incorporated herein by reference.10.10
Settlement Agreement between The Blackhawk Fund and Debbie Avey, filed as an exhibit to our Annual Report on Form 10-K filed on April 15, 2008 and incorporated herein by reference.10.11
First Amendment to Secured Promissory Note dated as of July 10, 2009, filed as an exhibit to our Quarterly Report on Form 10Q for the period ended June 30, 2009 filed on August 14, 2009 and incorporated herein by reference.10.12
2009 Stock Incentive Plan, filed as an exhibit to our Registration Statement on Form S-8 filed on August 14, 2009 and incorporated herein by reference.10.13**
Convertible Promissory Note dated March 19, 2010.14**
Code of Ethics21**
Subsidiaries23.1*
Consent of Gruber & Company, LLC,31.1*
Certification of Frank Marshik, President and Chief Executive Officer of The  Blackhawk Fund, pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to  Sec.302 of the Sarbanes-Oxley Act of 2002, to be filed by amendment32.1*
Certification of Frank Marshik, President and Chief Executive Officer of The  Blackhawk Fund, pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, to be filed by amendment.







*filed herewith


** Previously Filed




33





SIGNATURES




In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.




THE BLACKHAWK FUNDBy:
/s/ Francis X. MarshikFrancis X. Marshik, Chairman, President

and Chief Executive Officer




Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this amended report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.




Signatures

Title

Date/s/ Francis X. Marshik

Chairman of the Board, President,

April 14, 2011Francis X. Marshik

Chief Executive Officer




34