U.
S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549




AMENDMENT
NO. 1 TO




FORM
10-K




(Mark
One)




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




For the
fiscal year ended December 31, 2008




 ̈           TRANSITION
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.  ̈YesxNo




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act:  ̈YesxNo




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. xYes ̈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.  ̈




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  ̈
                
                Accelerated
      filter  ̈Non-accelerated
      filter  ̈(Do
      not check if a smaller reporting company)
                
                Smaller
      reporting company x




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




As of
March 31, 2009, 563,293,791 shares of our common stock were issued and
outstanding.





Documents
Incorporated by
Reference:      None.





EXPLANATORY
NOTE





This
Amendment No. 1 to annual report on Form 10-K is being filed to provide the
financial statements required by Article 8
of Regulation S-X; management’s discussion and analysis required by Item 303 of
Regulation S-K; disclosure controls and procedures required by Item 307 of
Regulation S-K; internal control over financial reporting required by Item 308
of Regulation S-K, principal accounting fees and services required by Item 9(e)
of Schedule 14A and certifications required under Rule 13a-14 of the Securities
Exchange Act of 1934, as amended, and Section 1350 of the Sarbanes-Oxley Act of
2002.  These items were not available for filing with the annual report on
Form 10-K filed by us on April 15, 2009.





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.




2


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).





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.





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 three properties in our
real estate portfolio, although 2 of these properties are in the process of
being distributed from our portfolio as discussed below under “Fiscal 2008 and
First Quarter 2009 Developments.”





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.





Upon
completion of the change of control in April 2008 discussed above, 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 has 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.





As of the
date of this report, management has 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.




3


Fiscal
2008 and First Quarter 2009 Developments





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 $496,00 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 poperty.





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





Change in Control and
Management.  In April 2008, there was a change in control and
in management of our company.  See “Changes in Control—2008”
above





April 2008
Financing.  In April 2008, we, along with Terminus, Inc. as
co-issuers, issued and sold to a single accredited investor: (i0 a $550,000 12%
secured promissory note and (ii) 500,000 shares of our series A preferred
stock.  To secure payment of the note, Terminus pledge the 10,000,000
shases of its series C preferred stock.





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.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.





None.




4


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 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.


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,
2007 as reported by the OTC Bulletin Board.





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.





2008 (OTC Bulletin Board)
                  
                  High Bid
                  
                  
                  Low BidFirst
      quarter
                  
                  $
                  0.002
                  
                  
                  $
                  0.001Second
      quarter
                  
                  
                  0.001
                  
                  
                  
                  0.001Third
      quarter
                  
                  
                  0.00
                  
                  
                  
                  0.10Fourth
      quarter
                  
                  
                  0.00
                  
                  
                  
                  0.00





2007 (OTC Bulletin Board)
                  
                  High Bid
                  
                  
                  Low BidFirst
      quarter
                  
                  $
                  0.048
                  
                  
                  $
                  0.015Second
      quarter
                  
                  
                  0.019
                  
                  
                  
                  0.009Third
      quarter
                  
                  
                  0.015
                  
                  
                  
                  0.008Fourth
      quarter
                  
                  
                  0.015
                  
                  
                  
                  0.0005





As of
March 31, 2009 there were approximately 35 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.





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.




5


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, 2008:





(a)
                  
                  
                  (b)
                  
                  
                  (c)PlanCategory
                  
                  Numberof
                    securitiestobe
                    issuedupon
                    exerciseof
                    outstanding
                    options,warrants
                    andrights
                  
                  
                  Weighted-average
                    exercisepriceof
                    outstanding
                    options,warrants
                    andrights
                  
                  
                  Numberofsecurities
                    remainingavailable
                    forfutureissuance
                    underequity
                    compensationplans
                    (excludingsecurities
                    reflectedincolumn
                    (a))Equity
      compensation plans approved by security holders (1)(2)
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  612,611,979Equity
      compensation plans not approved by security holders (3)
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  50,000,000Total
                  
                  
                  -
                  
                  
                  
                  —
                  
                  
                  
                  652,611,979





(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, 2008, 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, 2008, we have issued 362.388,021
shares under the plan, and there are no options outstanding under these
plans.





(3)
2007 Stock Incentive Plan.OnJune 7, 2007, our board of directors
adoptedour
2007Stock 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, 2008, we
have issued 200,000,000 shares under the plan, and there are no options
outstanding under this plan.




Recent
Sales of Unregistered Securities





None.


6




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 two properties in our real estate
portfolio.





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





Change
of Control and Change in Management





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





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





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





Plan
of Operation





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




7


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.





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
      31,2008
                            
                            
                            2007Revenues
                            
                            $
                            31,765
                            
                            
                            $
                            305,908Costs
      of Sales
                            
                            
                            —
                            
                            
                            
                            234,231General
      and administrative
                            
                            
                            344,462
                            
                            
                            
                            2,208,360Interest
      Expense
                            
                            
                            632,483
                            
                            
                            
                            181,968Operating
      income (loss)
                            
                            $
                            (945,180
                            )
                            
                            $
                            (2,318,651
                            )





Comparison
of the year ended December 31, 2008 and 2007





Net sales. Our revenues were
$31,765 for the year ended December 31, 2008, as compared to $305,908 for the
year ended December 31, 2007.  This decrease resulted from lower
demand for our media products and services which resulted in our decision to
cease our media operations.  The decrease also resulted from a lack of
sales of any real estate properties held for development.  Our
revenues were generated from rental income from our real estate properties and
revenues from our former media operations.





Cost of
Sales.  Costs of sales were $0 for the year ended December 31,
2008, as compared to $234,231 for the year ended December 31, 2007, all of which
resulted from our media operations.




8


General and
administrative.  General and administrative expenses decreased
to $344,462 for the year ended December 31, 2008 from $2,208,360 for the year
ended December 31, 2007.   This decrease resulted from a
significant reduction in shares and options issued for services in 2008 as
compared to 2007.





Interest.Interest
expense increased to $632,483 for the year ended December 31, 2008 from $181,968
for the year ended December 31, 2007.  This increase resulted
primarily from the issuance of 500,000 shares of Series A Preferred Stock,
valued at $500,000, in connection with our change of control
financing.





Net loss.  We
incurred an operating loss of $945,180 for the year ended December 31, 2008,
compared to a net loss of $2,318,651 for the year ended December 31,
2007.   The reduction in net loss resulted primarily from a
significant reduction in shares and options issued for services in 2008 as
compared to 2007.  The reduction was offset by the issuance of 500,000
shares of Series A Preferred Stock, valued at $500,000, in connection with our
change of control financing





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, 2008 was
$1,012,594, and we had cash of $11,161 as of December 31, 2008.





We used
$247,796 of net cash in operating activities for the year ended December 31,
2008, compared to using $969,640 in the year ended December 31,
2007.  The net loss of $945,180 was offset by non-cash expenses of
$505 in depreciation and amortization, $92,300 of stock and options issued for
services, $500,000 of stock issued for interest in connection with the change in
control financing, an increase of $103,750 in accounts payable, and an increase
of $829 in prepaid financing costs.





We
generated $3,550 net cash flows from investing activities for the year ended
December 31, 2008, whereas we used $88,365 in net cash flows from investing
activities for the year ended December 31, 2007.  The cash flow
generated from investing activities related to the disposition of certain
equipment.





Net cash
flows provided by financing activities were $253,026 for the year ended December
31, 2008, compared to net cash flows provided by financing activities of
$1,048,638 for the year ended December 31, 2007.  This increase in net
cash provided by financing activities is due to proceeds from the exercise of
stock options and receipt of stock subscriptions of $186,260, proceeds from a
note payable of $26,251, and proceeds from related party notes payable of
$40,151.





Capital
Requirements





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





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





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





Off-Balance
Sheet Arrangements





On April
24, 2008, the Company and Terminus, Inc., as co-issuers, issued and sold to a
single accredited investor: (i) a $550,000 12% secured promissory note and (ii)
500,000 shares of the Company’s Series A Preferred Stock.  To secure
payment of the note, Terminus pledged the 10,000,000 shares of the Company’s
Series C Preferred Stock.  The Company is considered a guarantor of
the note, and accordingly, has treated the note as a contingent
liability.  In the event that Terminus defaults on the note, the
Company will become unconditionally liable for repayment of all principal and
interest then due under the note and will incur an expense for the full amount
of all such principal and interest.  The purpose of the Company’s
guarantee of the note was to facilitate the change in control
transaction.




9


Item
8.  FINANCIAL STATEMENTS





GRUBER
& COMPANY, LLC


400 Lake Saint Louis Blvd.


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, 2008 and 2007 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.  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,
2008 and 2007 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


Lake St.
Louis, MO.


May 12,
2009


10


THE
BLACKHAWK FUND


BALANCE
SHEET


DECEMBER
31





2008
                                
                                
                                2007ASSETSCash
                                
                                $
                                11,161
                                
                                
                                
                                2,381Prepaid
      Financing Costs
                                
                                
                                829
                                
                                
                                
                                829Total
      Current Assets
                                
                                
                                11,990
                                
                                
                                
                                3,210Fixed
      Assets-Net
                                
                                
                                —
                                
                                
                                
                                5,055Property
      – Held For Sale
                                
                                
                                1,775,900
                                
                                
                                
                                1,774,900Prepaid
      Financing Costs
                                
                                
                                22,875
                                
                                
                                
                                23,704TOTAL
      ASSETS
                                
                                $
                                1,810,765
                                
                                
                                $
                                1,806,869LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      LiabilitiesAccounts
      Payable and Accrued Liabilities
                                
                                $
                                107,990
                                
                                
                                $
                                4,240Note
      Payable
                                
                                
                                854,079
                                
                                
                                
                                827,828Notes
      Payable-Related Party
                                
                                
                                62,515
                                
                                
                                
                                22,000Total
      current liabilities
                                
                                
                                1,024,584
                                
                                
                                
                                854,068Long
      term liabilityNote
      payable
                                
                                
                                1,936,000
                                
                                
                                
                                1,936,000Total
      Liabilities
                                
                                
                                2,960,584
                                
                                
                                
                                2,790,068Commitments
      and contingencies
                                
                                
                                -
                                
                                
                                
                                -STOCKHOLDERS’
      DEFICITPreferred
      stock, $0.001 par value:Series
      A, authorized 500,000, 500,000 issued and outstanding
                                
                                
                                500
                                
                                
                                
                                -Series
      B, authorized 10,000,000, 10,000,000 issued and
outstanding
                                
                                
                                10,000
                                
                                
                                
                                10,000Series
      C, authorized 20,000,000, 10,000,000 issued and
outstanding
                                
                                
                                10,000
                                
                                
                                
                                10,000Common
      Stock, $0.001 par value, 4,000,000,000 shares authorized, 562,293,791 and
      341,193,791 shares issued and outstanding, respectively
                                
                                
                                562,294
                                
                                
                                
                                341,194Common
      Stock B, $0.001 par value 150,000,000 authorized,30,000,000
      issued and outstanding
                                
                                
                                30,000
                                
                                
                                
                                30,000Additional
      Paid in Capital
                                
                                
                                36,585,416
                                
                                
                                
                                36,252,318Common
      Stock Subscribed
                                
                                
                                —
                                
                                
                                
                                (223,862
                                )Retained
      Deficit
                                
                                
                                (38,348,029
                                )
                                
                                
                                (37,402,849
                                )Total
      Stockholders’ Deficit
                                
                                
                                (1,149,819
                                )
                                
                                
                                (983,199
                                )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                                
                                $
                                1,810,765
                                
                                
                                $
                                1,806,869





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


11


THE BLACKHAWK
FUND


STATEMENTS
OF OPERATIONS


Years
Ended December 31, 2008 and 2007








December
      31,2008
                                    
                                    
                                    2007Revenues
                                    
                                    $
                                    31,765
                                    
                                    
                                    
                                    305,908Cost
      of Sales
                                    
                                    
                                    —
                                    
                                    
                                    
                                    234,231Gross
      Profit
                                    
                                    
                                    31,765
                                    
                                    
                                    
                                    71,667OPERATING
      EXPENSESGeneral
      & Administrative
                                    
                                    
                                    344,462
                                    
                                    
                                    
                                    2,208,360Interest
      Expense
                                    
                                    
                                    632,483
                                    
                                    
                                    
                                    181,968NET
      LOSS
                                    
                                    $
                                    (945,180
                                    )
                                    
                                    
                                    (2,318,651
                                    )Basic
      and Diluted Net Income (Loss) Per Common Share
                                    
                                    $
                                    (0.00
                                    )
                                    
                                    
                                    (0.01
                                    )Weighted
      Average Number of Shares Outstanding
                                    
                                    
                                    507,018,791
                                    
                                    
                                    
                                    246,948,708





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




12


THE
BLACKHAWK FUND


Statement
of Stockholders’ Equity




Preferred Stock
                          
                          
                          
                          
                          
                          PreferredStock
                          
                          
                          
                          
                          
                          CommonStock
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          Additional
                          
                          
                          Stock
                          
                          
                          Retained
                          
                          
                          TotalSeries A
                          
                          
                          
                          
                          
                          Series B&C
                          
                          
                          
                          
                          
                          Series B
                          
                          
                          
                          
                          
                          Common Stock
                          
                          
                          
                          
                          
                          Paid-In
                          
                          
                          Subscriptions
                          
                          
                          Earnings
                          
                          
                          Stockholders’Shares
                          
                          
                          Amount
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Receivable
                          
                          
                          (Deficit)
                          
                          
                          (Deficit)$
                          
                          
                          
                          
                          
                          $
                          
                          
                          
                          
                          
                          $
                          
                          
                          
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $Balance
      December 31, 2006
                          
                          
                          9,000,000
                          
                          
                          
                          9,000
                          
                          
                          
                          20,000,000
                          
                          
                          
                          20,000
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          24,664,792
                          
                          
                          
                          24,665
                          
                          
                          
                          34,646,962
                          
                          
                          
                          
                          
                          
                          (35,084,198
                          )
                          
                          
                          (383,571
                          )Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          9,915,333
                          
                          
                          
                          9,915
                          
                          
                          
                          67,085
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          77,000Stock
      for Services
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          67,300,000
                          
                          
                          
                          67,300
                          
                          
                          
                          1,046,300
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,113,600Exchange
      of Shares
                          
                          
                          (9,000,000
                          )
                          
                          
                          (9,000
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          90,000,000
                          
                          
                          
                          90,000
                          
                          
                          
                          (81,000
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -Stock
      for Services
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          24,767,000
                          
                          
                          
                          24,767
                          
                          
                          
                          155,569
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          180,336Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          213,333
                          
                          
                          
                          213
                          
                          
                          
                          2,787
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          3,000Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          14,000,000
                          
                          
                          
                          14,000
                          
                          
                          
                          (4,000
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          10,000Services
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          7,000,000
                          
                          
                          
                          7,000
                          
                          
                          
                          21,900
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          28,900Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          10,000,000
                          
                          
                          
                          10,000
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          240,000
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          250,000Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          20,000,000
                          
                          
                          
                          20,000
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          180,000
                          
                          
                          
                          (143,862
                          )
                          
                          
                          
                          
                          
                          
                          56,138Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          40,000,000
                          
                          
                          
                          40,000
                          
                          
                          
                          (40,000
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -Stock
      for Services
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          97,107
                          
                          
                          
                          97
                          
                          
                          
                          (49
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          48Proceeds
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          63,236,226
                          
                          
                          
                          63,237
                          
                          
                          
                          16,764
                          
                          
                          
                          (80,000
                          )
                          
                          
                          
                          
                          
                          
                          1Net
      Loss
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (2,318,651
                          )
                          
                          
                          (2,318,651
                          )Balances,
      December 31, 2007
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          20,000,000
                          
                          
                          
                          20,000
                          
                          
                          
                          30,000,000
                          
                          
                          
                          30,000
                          
                          
                          
                          341,193,791
                          
                          
                          
                          341,194
                          
                          
                          
                          36,252,318
                          
                          
                          
                          (223,862
                          )
                          
                          
                          (37,402,849
                          )
                          
                          
                          (983,199
                          )Issuance
                          
                          
                          500,000
                          
                          
                          
                          500
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          499,500
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          500,000Stock
      for cash and services
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          221,100,000
                          
                          
                          
                          221,100
                          
                          
                          
                          (102,763
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          118,337Subscription
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (179,124
                          )
                          
                          
                          223,862
                          
                          
                          
                          
                          
                          
                          
                          44,738Options/Net
      loss for year
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          115,485
                          
                          
                          
                          
                          
                          
                          
                          (945,180
                          )
                          
                          
                          (829,695
                          )Balances,
      December31,
      2008
                          
                          
                          500,000
                          
                          
                          
                          500
                          
                          
                          
                          20,000,000
                          
                          
                          
                          20,000
                          
                          
                          
                          30,000,000
                          
                          
                          
                          30,000
                          
                          
                          
                          562,293,791
                          
                          
                          
                          562,294
                          
                          
                          
                          36,585,416
                          
                          
                          
                          -
                          
                          
                          
                          (38,348,029
                          )
                          
                          
                          (1,149,819
                          )




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


13


THE
BLACKHAWK FUND


STATEMENTS
OF CASH FLOWS


Years
Ended December 31, 2008 and 2007




2008
                                    
                                    
                                    2007Cash
      Flows From Operating ActivitiesNet
      Loss
                                    
                                    $
                                    (945,180
                                    )
                                    
                                    $
                                    (2,318,651
                                    )Adjustments
      to reconcile net income (loss) to net cashprovided
      by (used in) operating activities:Depreciation
                                    
                                    
                                    505
                                    
                                    
                                    
                                    1,010Stock
      Issued for Services and Financing
                                    
                                    
                                    592,300
                                    
                                    
                                    
                                    1,322,885Changes
      in Operating Assets and Liabilities:(Increase)
      in Prepaid Financing Costs
                                    
                                    
                                    829
                                    
                                    
                                    
                                    (24,533
                                    )Increase
      (Decrease) in Accounts Payable
                                    
                                    
                                    103,750
                                    
                                    
                                    
                                    3,021Net
      cash used in operating activities
                                    
                                    
                                    (247,796
                                    )
                                    
                                    
                                    (969,640
                                    )Cash
      Flows From Investing Activities:Sale
      (Purchase) of Assets
                                    
                                    
                                    3,550
                                    
                                    
                                    
                                    (88,365
                                    )Net
      cash provided by (used in) investing activities
                                    
                                    
                                    3,550
                                    
                                    
                                    
                                    (88,365
                                    )Cash
      Flows From Financing Activities:Increase
      in Notes Payable
                                    
                                    
                                    26,251
                                    
                                    
                                    
                                    462,000Proceeds
      from stock issuances, subscriptions and option exercises
                                    
                                    
                                    186,260
                                    
                                    
                                    
                                    396,138Proceeds
      from notes payable - related party
                                    
                                    
                                    40,515
                                    
                                    
                                    
                                    190,500Net
      cash provided by financing activities
                                    
                                    
                                    253,026
                                    
                                    
                                    
                                    1,048,638Net
      Change in Cash
                                    
                                    
                                    8,780
                                    
                                    
                                    
                                    (9,367
                                    )Cash
      Beginning of Period
                                    
                                    
                                    2,381
                                    
                                    
                                    
                                    11,748Cash
      End of Period
                                    
                                    
                                    11,161
                                    
                                    
                                    
                                    2,381Supplemental
      disclosures:Cash
      paid for:Interest
                                    
                                    $
                                    95,549
                                    
                                    
                                    $
                                    135,340Income
      Taxes
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -





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


14


THE
BLACKHAWK FUND


NOTES
TO FINANCIAL STATEMENTS





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Nature of
Business





The
Blackhawk Fund (“Blackhawk” or the “Company”) was organized on November 5, 1998
in Nevada as USA Telecom.  In 1998, the entity amended its articles of
incorporation to change its name to USA Telcom, in 2000 it amended its articles
of incorporation to change its name to USA Telcom Internationale, in 2004 it
amended its articles of incorporation to change its name to ZannWell Inc., and
in January 2005, it amended its articles of incorporation to change its name to
Blackhawk Fund.  For the year ended December 31, 2008 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.





Research and development
expenses





Research
and development expenses are charged to operations as incurred.  There
were no research and development costs incurred in the periods.





Advertising
expenses





Advertising
and marketing expenses are charged to operations as incurred there were no
expenses in 2008 or 2007.





Revenue
recognition





The
Company generates revenue from the sale of real estate, brokerage commissions,
and rental income from rental properties.  Revenues from real estate
sales and commissions are recognized on execution of the sales
contract.  The Company records gross commissions on the sales of
properties closed.  The Company pays the broker of record five percent
of all transactions and 100 percent of personal sales.  This is in
accordance with standard procedures.  The Company compensates its
independent agents on a sliding scale between 70 and 80 percent based on
productivity.  The Company also recognizes sales when it sells
properties that have been held for sale when their renovation is
complete.  Revenue is recognized at “closing”.





The
Company has not recognized any revenue from its new business plan other than
rental income.





Income
Taxes





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





As of
December 31, 2008, the deferred tax asset is related solely to the Company’s net
operating loss carry forward and is fully reserved.





Earnings (loss) per
share





Basic
earnings (loss) per share are computed by dividing the net income (loss) by the
weighted-average number of shares of common stock and common stock equivalents
(primarily outstanding options and warrants).  Common stock
equivalents represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury stock
method.  The calculation of fully diluted earnings (loss) per share
assumes the dilutive effect of the exercise of outstanding options and warrants
at either the beginning of the respective period presented or the date of
issuance, whichever is later.  As of December 31, 2008, the Company’s
outstanding warrants are considered anti-dilutive.


15





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.





NOTE
2 - STOCK BASED COMPENSATION





Prior to
January 1, 2006, we accounted for stock based compensation under Statement of
Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation
(FAS 123).  As permitted under this standard, compensation cost was
recognized using the intrinsic value method described in Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25).  Effective January 1, 2006, the Company has adopted Statement of
Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment (FAS
123R) and applied the provisions of the Securities and Exchange Commission Staff
Accounting Bulletin No. 107 using the modified-prospective transition
method.  Prior periods were not restated to reflect the impact of
adopting the new standard.  As a result of the adoption of FAS 123R,
stock-based compensation expense recognized during the year ended December 31,,
2008 includes compensation expense for all share-based payments granted on or
prior to, but not yet vested as of December 31, 2006, based on the grant date
fair value estimated in accordance with the original provisions of FAS 123, and
compensation cost for all share-based payments granted on or subsequent to
January 1, 2006, based on the grant date fair value estimated in accordance with
the provisions of FAS 123R.





Beginning
on January 1, 2006, any future excess tax benefits derived from the exercise of
stock options will be recorded prospectively and reported as cash flows from
financing activities in accordance with FAS 123R.





During
the year ended December 31, 2008, the Company recorded stock based consulting
expense of $92,300, as determined under FASB 123R.





NOTE
3 - PROPERTY - HELD FOR SALE/FIXED ASSETS





In late
March 2006, the Company purchased a condominium located in Carlsbad, California
for $625,083.  The Company intends to renovate and sell the
condo.  Since the Company intends to sell the condominium upon
completion of the planned renovations, 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 are
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.  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 split
50/50.  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 described above the description related to “held for sale” no
depreciation applies.  The Company has capitalized improvements on
this property of $149,817.





In 2008
the Company paid $1,000 for a property in foreclosure.





NOTE
4 - COMMON STOCK





During
the year ended December 31, 2008, the company issued 221,100,000 shares of
common stock under its stock option plan resulting in an expense of $92,300 and
cash received $186,260.




16


NOTE
5-PREFERRED STOCK





Series
A Preferred Stock





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





On April
24, 2008, the Company issued 500,000 shares of the newly designated Series A
Preferred Stock as part of a financing transaction.  See Note
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.





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
6 – NOTES PAYABLE/MORTGAGES PAYABLE





In
conjunction with the purchase of the condominium described in Note 3 above, the
Company executed a 30-year adjustable rate promissory note for
$496,000.  The initial interest rate on the note is
7.875%.  Pursuant to the terms of the note, the Company is required to
make interest-only payments for the first 10 years (first 120
payments).  The initial monthly payments were $3,225 and have since
been reduced to $2,273.  The note payable is personally guaranteed by
the Company’s former president.  This note is arrears at December
31,2008.





In
conjunction with the joint venture property described in Note 3 above, the
Company refinanced this note in July 2007 and assumed a 50% interest and
corresponding promissory note debt of $1,440,000. Terms indicate that the first
note is for $1,120,000 over 30 years, with interest only payments required for
the first 10 years. The second note is carried for $320,000 with interest at
9.875% over 30 years, with interest only payments required for the first 10
years. Monthly amounts are presently $9,983. Both of the above notes are
classified as long term notes payable.  This amount is in arrears at
December 31, 2008.





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
December 31, 2008.  The balance on this note as of December 31, 2008
is $854,079.  See Note 8.





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


17





NOTE
7- CONTINGENT LIABILITY





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





NOTE
8-RELATED PARTY 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 balance on this note
as of December 31, 2008 is $854,079.





At
December 31, 2008, Terminus, Inc. the holder of the Company’s Series C Preferred
Stock, has loaned the company approximately $58,627.  The loan is
payable upon demand with interest at 12%.  Interest added to this loan
is $3,888 at December 31, 2008.





During
the year ended December 31, 2008, the Company made payments totaling $65,000 to
entities controlled by the former CEO and CFO for consulting
services.





NOTE
9-GOING CONCERN





The
Company has incurred significant losses, has a negative capital, and negative
current ratio.  These factors, among others indicate that the Company
may not be able to continue as a going concern.  No adjustments have
been made to the carrying value of assets and liabilities should the company not
continue as a going concern.





NOTE
10-SUBSEQUENT EVENT





On
February 25, 2009, the Company entered into a settlement agreement with Angel
Acquisition Corporation relating to the condominium located in Carlsbad
California owned by the Company.  Pursuant to the settlement agreement
the Company transferred the property to Angel Acquisition in full satisfaction
of the note payable due to Angel for $854,079 including
interest.  Angel Acquisition acquired the property subject to the note
of $496,000.





Also on
February 25, 2009, the Company entered into a settlement agreement relating to
the residential property located in Oceanside California.  The Company
has transferred the property to a third party who has assumed the note amount of
$1,440,000.





As a
result of the two transactions above the Company will realize a gain on the
disposition of assets equal to $1,014,179.


18





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.


19


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
            
            82
            
            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 has served as a director of
Hemiwedge Industries, Inc., a publicly traded company on the OTC Bulletin Board
since 2002.





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;




20





§
            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.





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, 2008, 2007 and 2006.





Summary
      Compensation TableStock
                                      
                                      
                                      Option
                                      
                                      
                                      All
      OtherName
      and Position
                                      
                                      Year
                                      
                                      Salary
                                      
                                      
                                      Bonus
                                      
                                      
                                      Awards
      ($)
                                      
                                      
                                      Awards
      ($)
                                      
                                      
                                      Compensation
                                      
                                      
                                      Total
      ($)Francis
      X. Marshiik
                                      
                                      2008
                                      
                                      $
                                      0
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      0President
                                      
                                      2007
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/AChief
      Executive Officer, Treasurer and Director
                                      
                                      2006
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      N/A(since
      April 24, 2008)Steve
      Bonenberger
                                      
                                      2008
                                      
                                      $
                                      37,500
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      37,500President,
      Chief Executive Officer and Director
                                      
                                      2007
                                      
                                      $
                                      165,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      165,000(until
      April 24, 2008
                                      
                                      2006
                                      
                                      $
                                      90,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      90,000Brent
      Fouch
                                      
                                      2008
                                      
                                      $
                                      37,500
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      37,500Executive
      Vice President
                                      
                                      2007
                                      
                                      $
                                      150,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      150,000Treasurer
      and Director
                                      
                                      2006
                                      
                                      $
                                      90,000
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      $
                                      90,000(until
      April 24, 2008)




21


Outstanding
Equity Awards





There were no outstanding equity awards, unexercised options, unvested stock, or
equity incentive plan awards as of December 31, 2008 for any of the executive
officers named in the Summary Compensation Table above.





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, 2008, 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, except that our controlling
stockholder failed to file a Form 3 in connection with its purchase of the
series C preferred stock.





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, 2009 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, 2009, 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, 2009.


22





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
                                              (5)
                                              
                                              
                                              100
                                              %
                                              
                                              
                                              89.95
                                              %Angel
      Acquisition Corp.
                                              
                                              
                                              281,191,127
                                              (4)
                                              
                                              
                                              4.9999
                                              %
                                              
                                              
                                              10,000,000
                                              
                                              
                                              
                                              100
                                              %
                                              
                                              
                                              —
                                              
                                              
                                              
                                              *
                                              
                                              
                                              
                                              0.18
                                              %Frank
      Marshik
                                              
                                              
                                              —
                                              
                                              
                                              
                                              *
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              *
                                              
                                              
                                              
                                              10,000,000
                                              (5)
                                              
                                              
                                              100
                                              %
                                              
                                              
                                              89.95
                                              %All
      directors and officers as a group (1 person)
                                              
                                              
                                              —
                                              
                                              
                                              
                                              *
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              *
                                              
                                              
                                              
                                              10,000,000
                                              (5)
                                              
                                              
                                              100
                                              %
                                              
                                              
                                              89.95
                                              %





(1)
            Unless
      otherwise noted, the address is 1802 N. Carson Street, Suite 212, Carson
      City, Nevada 89701.(2)
            Based
      on 562,393,791 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
      562,393,791 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 5,124,727,582 votes, or
      approximately 89% of the outstanding votes on all matters presented to our
      stockholders as of the record date.(4)
            Includes
      shares issuable upon conversion of Series B Preferred
  Stock(5)
            Mr.
      Marshik has voting and investment control over the securities owned by
      Terminus, Inc





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, 2008, Terminus, Inc. the holder of the Company’s Series C Preferred
Stock, has loaned the company approximately $46,000. The loan is payable upon
demand with interest at 12%.





During
the year ended December 31, 2008, we paid $37,500 in consulting fees to BMM,
LLC, a Limited liability company owned and controlled by Steve Bonenberger, our
former officer and director. We also paid $ 37,500 in consulting fees to Prize
Entertainment, Inc., a corporation owned and controlled by Brent Fouch, our
former officer and director.


23





During
the year ended December 31, 2007, we paid $165,000 in consulting fees to BMM,
LLC, a Limited liability company owned and controlled by Steve Bonenberger, our
former officer and director. We also paid $ 150,000 in consulting fees to Prize
Entertainment, Inc., a corporation owned and controlled by Brent Fouch, our
former officer and director.





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, 2008, and $9,000 in fees for the review of our quarterly
financial statements for that year.





Gruber
& Company, LLC, billed us $15,000 in fees for our annual audit for the year
ended December 31, 2007, and $9,000 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 2008 and 2007.





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 2008 and 2007.





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 Decmeber31, 2008 and
2007 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.
  24
 
 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.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.14**
                
                Code
      of Ethics21**
                
                Subsidiaries23.1
                
                Consent
      of Gruber & Company, LLC, to be filed by amendment31.1
                
                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.







**
Previously Filed


25





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,
                          
                          May
      19, 2009Francis
      X. Marshik
                          
                          Chief
      Executive Officer




26