U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE
                             SECURITIES ACT OF 1934

                        COMMISSION FILE NUMBER 000-50893

                           LAKESIDE MORTGAGE FUND, LLC
                 (Name of Small Business Issuer in its Charter)

                       CALIFORNIA                 52-2387294
           (State or other jurisdiction of      (I.R.S. Employer
            Incorporation or organization)     Identification No.)

            443 REDCLIFF DRIVE, SUITE 240, REDDING, CALIFORNIA, 96002
                     (Address of Principal Executive Office)

                                 (530) 226-5850
                           (Issuer's Telephone Number)

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

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

Transitional Small Business Disclosure Format (Check One):   Yes [X]  No [ ]

                                      -1-

<PAGE>

                                TABLE OF CONTENTS

Part I - Financial Information

         Item 1     Financial Statements and Notes                            4

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

         Item 3     Controls and Procedures                                  21

Part II - Other Information

         Item 1     Legal Proceedings                                        22

         Item 2     Unregistered Sales of Equity Securities and
                      Use of Proceeds                                        22

         Item 3     Defaults Upon Senior Securities                          23

         Item 4     Submission of Matters to a Vote of Security Holders      23

         Item 5     Other Information                                        23

         Item 6     Exhibits                                                 23

         Signatures                                                          24

                                      -2-

<PAGE>

PART I

                           FORWARD-LOOKING STATEMENTS

This Form  10-QSB  contains  "forward-looking  statements"  relating to Lakeside
Mortgage Fund,  LLC (the "Fund" or the  "Company"),  which  represent the Fund's
current  expectations  or beliefs  including,  but not  limited  to,  statements
concerning the Fund's operations,  performance,  financial condition and growth.
For this  purpose,  any  statements  contained  in this Form 10-QSB that are not
statements of historical fact are forward-looking  statements.  Without limiting
the generality of the foregoing, words such as "may", "anticipation",  "intend",
"could",   "estimate",  or  "continue"  or  the  negative  or  other  comparable
terminology  are  intended  to  identify   forward-looking   statements.   These
statements by their nature involve substantial risks and uncertainties,  such as
credit  losses,  dependence  on management  and key  personnel,  variability  of
quarterly  results,  and the ability of the Fund to continue its growth strategy
and competition,  certain of which are beyond the Fund's control.  Should one or
more of these  risks or  uncertainties  materialize  or  should  the  underlying
assumptions prove incorrect, actual outcomes and results could differ materially
from those indicated in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement
is made,  and the Fund  undertakes no  obligation to update any  forward-looking
statement or statements  to reflect  events or  circumstances  after the date on
which such  statement  is made or to reflect  the  occurrence  of  unanticipated
events.  New  factors  emerge  from  time to  time  and it is not  possible  for
management to predict all of such factors,  nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors,  may cause actual results to differ  materially from those contained in
any forward-looking statements.

                                      -3-

<PAGE>

ITEM 1.   FINANCIAL STATEMENTS AND NOTES

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                           BALANCE SHEETS (UNAUDITED)
                                    JUNE 30,

<TABLE>
<CAPTION>
                                                                                       2006          2005
                                                                                   -----------   -----------
                                                             ASSETS
<S>                                                                                <C>           <C>
     Cash in bank (Note 5)                                                         $   297,718   $   279,504
     Loan interest reserve (restricted)                                                238,539       322,869
     Accrued interest receivable                                                        27,188        15,291
     Notes receivable - related parties (Notes 3 and 4)                                724,390       982,000
     Notes receivable - non related parties, net of allowance for
          bad debts: $ 91,000 and $ 32,535 in 2006 and 2005, respectively
          (Note 3)                                                                  12,973,467     6,826,401
                                                                                   -----------   -----------
TOTAL ASSETS                                                                       $14,261,302   $ 8,426,065
                                                                                   ===========   ===========

                                                 LIABILITIES AND MEMBERS' EQUITY

     Accounts payable and other current liabilities                                $    66,401   $    17,529
     Uninvested subscriptions                                                            6,130       192,289
     Deferred interest on notes receivable                                             238,539       322,869
                                                                                   -----------   -----------
Total liabilities                                                                      311,070       532,687
                                                                                   -----------   -----------
Members' equity (Note 4)
     Members' contributions, net                                                    13,867,151     7,856,761
     Retained earnings                                                                  83,081        36,617
                                                                                   -----------   -----------
     Total members' equity                                                          13,950,232     7,893,378
                                                                                   -----------   -----------
TOTAL LIABILITIES AND MEMBERS' EQUITY                                              $14,261,302   $ 8,426,065
                                                                                   ===========   ===========
</TABLE>

     SEE ACCOMPANYING NOTES

                                      -4-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                      STATEMENTS OF OPERATIONS (UNAUDITED)
                         FOR THE QUARTERS ENDED JUNE 30,

<TABLE>
<CAPTION>
                                                          2006                        2005
                                                --------------------------   ----------------------
                                                APR-JUNE       JAN-JUNE      APR-JUNE      JAN-JUNE
                                                --------------------------   ----------------------
<S>                                             <C>            <C>           <C>           <C>
REVENUES
     Interest and other income                  $354,161       $691,831      $199,002      $354,637
                                                               --------                    --------
     Total revenues                              354,161        691,831       199,002       354,637
                                                --------       --------      --------      --------
OPERATING EXPENSES
     Professional fees - accounting and taxes     13,200         24,400         6,300        12,583
     Advertising                                     750          1,500           750         1,750
     Provision for loan losses                    10,000         59,034        16,836        25,436
     Management fees (Note 4)                     17,403         31,796        17,348        26,345
     Permits fees and licenses                       750          1,500           750         3,998
     Printing                                      1,800          2,400         1,010         2,559
     Legal                                         2,100          4,350           750         2,077
     Trailer commissions                          18,000         31,000         4,296         7,296
     Conference and seminars                       1,500          3,000         1,800         1,800
     Other operating expenses                      3,300          7,400            --            --
     Taxes                                           450            900           450         2,300
                                                --------       --------      --------      --------
     Total operating expenses                     69,253        167,280        50,290        86,144
                                                --------       --------      --------      --------
NET INCOME                                      $284,908       $524,551      $148,712      $268,493
                                                ========       ========      ========      ========
</TABLE>

     SEE ACCOMPANYING NOTES

                                      -5-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)

                          STATEMENTS OF MEMBERS' EQUITY
       FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)

<TABLE>
<CAPTION>
                                                       MEMBERS'     RETAINED
                                                    CONTRIBUTIONS   EARNINGS       TOTAL
                                                    ------------    --------   ------------
<S>                                                 <C>             <C>        <C>
BALANCE, JANUARY 1, 2006                            $ 10,102,408    $ 56,549   $ 10,158,957
     Contributions                                     2,638,158                  2,638,158
     Costs incurred in raising capital                  (116,325)                  (116,325)
     Reinvestment of members' share of net income        150,260                    150,260
     Investors' withdrawal                               (14,934)                   (14,934)
     Net income                                                      239,643        239,643
     Cash distribution                                              (252,862)      (252,862)
                                                    ------------    --------   ------------
BALANCE, MARCH 31, 2006                             $ 12,759,567    $ 43,330   $ 12,802,897
     Contributions                                     1,115,319                  1,115,319
     Costs incurred in raising capital                   (41,319)                   (41,319)
     Reinvestment of members' share of net income        177,506                    177,506
     Investors' withdrawal                              (143,922)                  (143,922)
     Net income                                                      284,908        284,908
     Cash distribution                                              (245,157)      (245,157)
                                                    ------------    --------   ------------
BALANCE, JUNE 30, 2006                              $ 13,867,151    $ 83,081   $ 13,950,232
                                                    ============    ========   ============
BALANCE, JANUARY 1, 2005                            $  5,267,710    $ 19,760   $  5,287,470
     Contributions                                     1,013,147                  1,013,147
     Costs incurred in raising capital                   (42,863)                   (42,863)
     Reinvestment of members' share of net income         80,822                     80,822
     Investors' withdrawal                                    --                         --
     Net income                                                      119,782        119,782
     Cash distribution                                              (111,611)      (111,611)
                                                    ------------    --------   ------------
BALANCE, MARCH 31, 2005                             $  6,318,816    $ 27,931   $  6,346,747
     Contributions                                     1,507,829                  1,507,829
     Costs incurred in raising capital                   (71,882)                   (71,882)
     Reinvestment of members' share of net income        101,998                    101,998
     Investors' withdrawal                                    --                         --
     Net income                                                      148,712        148,712
     Cash distribution                                              (140,026)      (140,026)
                                                    ------------    --------   ------------
BALANCE, JUNE 30, 2005                              $  7,856,761    $ 36,617   $  7,893,378
                                                    ============    ========   ============
</TABLE>

SEE ACCOMPANYING NOTES

                                      -6-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                            STATEMENTS OF CASH FLOWS
                         FOR THE PERIODS ENDED JUNE 30,

<TABLE>
<CAPTION>
                                                                         2006                          2005
                                                              --------------------------------------------------------
                                                                 APR-JUNE      JAN-JUNE       APR-JUNE       JAN-JUNE
                                                              --------------------------------------------------------
<S>                                                           <C>            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                               $   284,908    $   524,551    $   148,712    $   268,493
     Provision for bad debts                                       10,000         32,000         16,836         25,436
     Accrued interest receivable                                   (1,615)        (8,119)        (6,447)        (1,111)
     Loan interest reserves (restricted)                           12,734         44,701         (5,922)       (87,248)
     Accounts payable and other liabilities                        20,009         35,446         (3,763)         2,007
     Deferred interest receivable                                 (12,734)       (44,701)         5,922         87,248
                                                              -----------    -----------    -----------    -----------
     Change                                                       313,301        583,878        155,338        294,825
                                                              -----------    -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Investment in related parties' notes receivable              177,000        177,000             --             --
     Notes receivable-non related parties:
               Funding                                         (1,563,970)    (4,773,352)    (1,675,012)    (3,907,148)
               Payoff                                                            439,310         80,500      1,082,700
                                                              -----------    -----------    -----------    -----------
     Change                                                    (1,386,970)    (4,157,042)    (1,594,512)    (2,824,448)
                                                              -----------    -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Members' contributions                                       899,575      3,346,429      1,513,908      2,661,345
     Members' withdrawals                                        (143,922)      (158,856)            --             --
     Costs incurred in raising capital and commissions, net       (41,319)      (157,644)       (71,882)      (114,745)
     Cash distributions to members                               (245,157)      (498,019)      (140,026)      (251,637)
                                                              -----------    -----------    -----------    -----------
     Change                                                       469,177      2,531,910      1,302,000      2,294,963
                                                              -----------    -----------    -----------    -----------
NET CHANGE IN CASH DURING THE PERIOD                             (604,491)    (1,041,254)      (137,175)      (234,660)
CASH IN BANK, BEGINNING OF PERIOD                                 902,209      1,338,972        416,679        514,164
                                                              -----------    -----------    -----------    -----------
CASH IN BANK, END OF PERIOD                                   $   297,718    $   297,718    $   279,504    $   279,504
                                                              ===========    ===========    ===========    ===========
</TABLE>

SEE ACCOMPANYING NOTES

                                      -7-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

NOTE 1 -  ORGANIZATION AND DESCRIPTION OF BUSINESS

Lakeside Mortgage Fund, LLC (the "Fund"), a California limited liability company
was formed on  December  4, 2002  under the  California  Beverly-Killea  Limited
Liability  Company Act (the "Act") to conduct  any lawful  business  for which a
limited liability company may be organized under the Act,  including  investment
of the Fund's  cash and making or  investing  in notes,  mortgages  and loans to
members  of the  general  public  secured  by  deeds  of  trust  on real  estate
properties located primarily in the State of California.

The accompanying  unaudited condensed financial statements of the Fund have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America ("U.S.  GAAP") for interim  financial  information  and
pursuant to the  instructions to Form 10-QSB and Article 10 of Regulation S-X of
the Securities and Exchange Commission ("SEC"). Accordingly, these statements do
not include  all of the  information  and  footnotes  required by U.S.  GAAP for
complete  financial  statements.  In the  opinion of the Fund's  Manager,  these
unaudited condensed financial statements reflect all adjustments  (consisting of
normal recurring adjustments) necessary to present fairly the financial position
of the Fund at June 30,  2006 and 2005,  the results of  operations  for the six
months ended June 30, 2006 and 2005 and cash flows for the six months ended June
30, 2006 and 2005.  Results of operations for the six months ended June 30, 2006
are not  necessarily  indicative of results of operations  expected for the full
fiscal year ending  December  31,  2006.  Please refer to the Fund's 2005 Annual
Report on Form 10-KSB for the complete financial statements for the period ended
December 31, 2005.

The Fund will continue to operate indefinitely until dissolved and terminated by
vote of members holding a majority of the outstanding membership interests, with
the concurrence of the Fund Manager.

The  Fund's  operating  plan is to  continue  to seek  investors  and use  those
proceeds to fund suitable loans  consistent  with the Fund's  lending  criteria.
Management  believes qualified  investors will continue to invest in the Fund so
that the Fund will  continue to raise  capital from such  investors,  and invest
such capital in commercial mortgage loans.

The Manager of the Fund is Lakeside  Financial  Group,  Inc.  (the  "Manager" or
"Lakeside"),  a  California  corporation  formed for the purpose of managing the
Fund.  Lakeside  was  incorporated  in August 2002 and began  doing  business in
November  2002.  Lakeside  is  not a  member  of  the  Fund,  and  is  owned  by
shareholders who are not members of the Fund.

The profit or loss of the Fund is  allocated  to the  members in  proportion  to
their respective percentage interest. The Manager is required to allocate to the
members all  profits and losses  realized by the Fund during the month as of the
close of business on the last day of each calendar  month,  in  accordance  with
their  respective  Percentage  Interests and in proportion to the number of days
during the calendar month that they owned the interests.

                                      -8-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

Cash  available for  distribution  is the net income  during the calendar  month
using the accrual method of accounting and in accordance with US GAAP.  Monthly,
the Fund provides  statements of account to members and distributes or reinvests
amounts  equal to the  members'  proportionate  share of the  Fund's  net income
during such month.  The  Manager is  required  to  distribute  funds only to the
extent that funds are available.

Fund  members are allowed to withdraw  from the Fund and receive a return of the
amount in their capital accounts only after 12 months from the date of admission
into the Fund  ("Holding  Period").  Members must give a 60-day  written  notice
prior to  withdrawing  and payments to any  withdrawing  member are limited to $
25,000 per quarter. After the Holding Period, members may withdraw and receive a
return of their  capital  accounts  subject to the  availability  of cash in the
Fund, and subject to the following  penalties for early  withdrawal  pursuant to
the terms of the operating  agreement:  (i) 3% of  withdrawal  amount within the
first year following the Holding Period; (ii) 2% of withdrawal amount within the
second year  following the Holding  Period;  and (iii) 1% of  withdrawal  amount
within the third year following the Holding Period.  Aggregate withdrawals among
all members  may not exceed 10% of the Fund's  total  capital  for any  calendar
year. The Fund does not maintain a reserve for withdrawing  members.  The Fund's
capacity  to return a  withdrawing  member's  capital  account is limited by the
availability  of cash on hand  after  payment  of  expenses  and  provision  for
maintaining adequate reserves, in the discretion of the Manager.

The  Manager is  entitled  to receive  certain  fees,  compensation  and expense
reimbursements  from the Fund.  The Manager is entitled to receive from the Fund
an asset management fee,  payable  monthly,  in a maximum amount of 2.75% of the
gross assets under  management per year (0.229% per month).  The Manager is also
entitled to receive a loan servicing fee, payable  monthly,  in a maximum amount
of 0.25% of the total unpaid  principal  balances of loans  serviced  (0.02% per
month).  The  Manager  may waive  these fees in order to  improve  the return to
investor members. The Manager is also entitled to receive reimbursement from the
Fund for  organizational,  syndication and other operating  expenses incurred on
behalf of the Fund, including  out-of-pocket general and administrative expenses
of the Fund  related to the offering of  membership  interests,  accounting  and
audit fees,  legal fees and expenses,  postage and other expenses related to the
preparation of reports to members.

The  Manager  receives  other fees from third  parties  as  compensation  to the
Manager for acting as broker in arranging loans from the Fund. These fees (which
are not paid by the Fund, but rather by third party borrowers) are determined on
a case-by-case  basis, are generally 3% to 5% of the loan amount,  and generally
consist of brokerage, origination, renewal and/or processing fees.

                                      -9-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)      BASIS OF ACCOUNTING
         The financial  statements of the organization have been prepared on the
         accrual basis of accounting  and  accordingly  reflect all  significant
         receivables, payables and other liabilities.

(b)      ESTIMATES AND ASSUMPTIONS
         The  preparation  of financial  statements in  conformity  with US GAAP
         requires  management to make estimates and assumptions  that affect the
         reported amounts of assets and liabilities and disclosure of contingent
         assets and liabilities at the date of the financial  statements and the
         reported amounts of revenues and expenses during the reporting  period.
         Actual results could differ from those estimates.

(c)      REVENUE RECOGNITION
         Interest  is  recognized  as  revenue  when  earned  according  to  the
         contractual terms of the loan and in accordance with US GAAP.

(d)      INCOME TAXES
         The Fund is treated as a partnership for federal and California  income
         tax  purposes.  Consequently,  all tax effects of the Fund's  income or
         loss are passed through to the members individually,  and no federal or
         California income taxes are provided for in the financial statements of
         the Fund. The Fund pays an annual  California tax of $800 and an annual
         California LLC fee based upon its annual gross receipts.

(e)      CASH AND CASH EQUIVALENTS
         For purposes of the statements of cash flows, cash and cash equivalents
         include  interest-bearing and non interest-bearing bank deposits, money
         market accounts and commercial paper with original  maturities of three
         months or less.

(f)      LOANS SECURED BY TRUST DEEDS
         Loans  secured by trust deeds are recorded at cost.  To date,  no loans
         had been purchased from outside third party issuers of loans.  Interest
         is recognized as revenue when earned according to the contractual terms
         of the loan.  The Fund loans will have varying terms at the  discretion
         of the  Manager.  Construction  loans  will  generally  have a term  of
         between one and five years and will  provide  for  monthly  payments of
         interest  only with a "balloon  payment" at the end of the term.  Other
         Fund  loans may have a longer  amortization  schedule  and may be fully
         amortizing,  i.e. original  principal amount of the loan will be repaid
         in equal monthly  installments of principal and interest over the term.
         In such  cases,  the Fund will  recognize  income  using the  effective
         interest method of accounting in accordance with US GAAP. The Fund will
         not recognize  interest  income on loans once they are determined to be
         impaired  until the  interest is  collected in cash. A loan is impaired
         when, based on current  information and events, it is probable that the
         Fund  will be  unable to  collect  all  amounts  due  according  to the
         contractual  terms  of  the  loan  agreement.  Cash  receipts  will  be
         allocated   to  interest   income,   except  when  such   payments  are
         specifically  designated as principal reduction or when management does
         not believe the Fund's investment in the loan is fully recoverable.

                                      -10-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

         As of June 30, 2006,  four (4) loans totaling  $1,938,250  have matured
         and  remained  unpaid,  each  for  less  than 60 days.  The  loans  are
         adequately  covered  by  the  fair  market  values  of  the  underlying
         collateral,  and the Fund does not expect to suffer  losses in the case
         of any of these loans. Subsequently, as of the date of this filing: (i)
         one of the above loans, in the principal  amount of $484,000,  has been
         repaid, and (ii) another of the above loans, in the principal amount of
         $206,000, has been extended.

(g)      ALLOWANCE FOR LOAN LOSSES
         The  allowance  for loan  losses  will be  established  as  losses  are
         estimated  to have  occurred  through a provision  for loan losses that
         will be charged to  earnings.  Loan losses will be charged  against the
         allowance  when  management  believes  the  uncollectibility  of a loan
         balance is confirmed.  Subsequent recoveries,  if any, will be credited
         to income. The allowance for loan losses will be evaluated on a regular
         basis by management and is based upon  management's  periodic review of
         the collectibility of the loans in light of historical experience,  the
         types and dollar amounts of loans in the portfolio,  adverse situations
         that may affect the borrower's ability to repay, estimated value of any
         underlying   collateral  and  prevailing  economic   conditions.   This
         evaluation is inherently  subjective as it requires  estimates that are
         susceptible  to  significant   revision  as  more  information  becomes
         available. Impairment is measured on a loan by loan basis by either the
         present  value of expected  future cash flows  discounted at the loan's
         effective interest rate, the loan's obtainable market price or the fair
         value of the underlying collateral.

         The following shows the activities in the allowance for loan losses
         during the 6-month period ended June 30, 2006:

                         Balance, December 31, 2005   $59,000
                         Additions                    $32,000
                         Write offs                   $     0

                         Balance, June 30, 2006       $91,000

(h)     LOAN  INTEREST  RESERVE  The Fund  often  requires  borrowers  to set up
        interest  reserve  accounts from which monthly  payments of interest are
        made. The interest  reserve is deposited into a separate bank account in
        the name of the Fund,  designated  specifically  as interest  reserve on
        loans  issued by the Fund.  At the end of the month,  the Fund draws the
        calculated  monthly  interest  on  outstanding  loans from the  interest
        reserve  account and  transfers  such amount into the general  operating
        account  of the Fund as part of the  distributable  fund  available  for
        monthly  disbursement to the members.  The equivalent unearned amount is
        recorded as deferred interest in the liabilities  section of the balance
        sheet.  As of June 30,  2006 and 2005,  the loan  interest  reserve  and
        deferred interest were $238,539 and $322,869, respectively.

                                      -11-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

(i)      CONTRA-EQUITY  ACCOUNTS:  OFFERING  COSTS AND  COMMISSIONS  INCURRED IN
         CONNECTION WITH RAISING OF CAPITAL
         Syndication costs incurred in connection with the raising of capital by
         offering units of membership  interest in the Fund are being treated as
         a reduction  of paid in capital.  Initial  marketing  fees and broker's
         commissions   paid  to  an  outside   brokerage  firm  are  treated  as
         contra-equity  accounts.  The fees range between 3.5% - 4.5%, depending
         on the commission plan selected by individual brokers.  The brokers are
         also entitled to receive  "trailer  commissions"  equivalent to 0.5% of
         the average daily invested  capital at the  anniversary of the invested
         funds.   The  initial   marketing/broker's   fees  are  capitalized  in
         accordance with US GAAP, pursuant to the AICPA's Technical Practice Aid
         TIS 7200.07 (Accounting for Syndication Costs of Limited Partnerships).
         Subsequent  payments  of trailer  commissions  however  are  treated as
         period costs and charged to current  earnings of the Fund. As such, the
         initial marketing/broker's fees are included in the balance sheet under
         the caption  heading  "Members'  contributions,  net" while the trailer
         commissions  are shown in the statement of  operations,  when incurred.
         The Fund has  capitalized  $41,319  (YTD:  $157,644)  and $71,882 (YTD:
         $114,745) of  syndication  costs and brokers'  fees during the quarters
         ended June 30, 2006 and 2005, respectively.

(j)      ORGANIZATION COSTS
         All costs including  registration and legal fees incurred in connection
         with the  setting up and  incorporating  of the Fund have been borne by
         the Manager.

(k)      SUBSCRIPTION ACCOUNT
         Upon receipt of the funds from  prospective  investors  subscribing  to
         purchase  membership  interests,  those  funds  are  deposited  into  a
         subscription  account.  The funds are held, in the Manager's discretion
         up to a  maximum  of 60 days,  until  needed  by the Fund for a loan or
         other  purpose.  The funds are then  contributed  to the capital of the
         Fund in exchange for a membership interest.  The Manager may hold funds
         in the  subscription  account  for  longer  than 60 days  only upon the
         written consent of the subscriber.

         As of June 30, 2006 and 2005, the uninvested funds in the subscription
         account were $6,130 and $192,289, respectively.

                                      -12-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

NOTE 3 -  LOANS SECURED BY TRUST DEEDS

At June 30, 2006 and 2005, the Fund held the following types of mortgages:

                       2006          2005
                   -----------   -----------
Commercial         $ 2,655,390   $ 1,497,756
Construction       $ 3,052,380   $ 1,009,180
Unimproved Land    $ 8,081,087   $ 5,334,000
                   -----------   -----------
Total              $13,788,857   $ 7,840,936
                   -----------   -----------
First Mortgages    $ 8,700,417   $ 3,692,680
Second Mortgages   $ 5,088,440   $ 4,148,256
                   -----------   -----------
Total              $13,788,857   $ 7,840,936
                   -----------   -----------

Scheduled maturities of loans secured by trust deeds as of June 30, 2006 and the
interest sensitivity of such loans are as follows:

                             Fixed            Variable
                             Interest         Interest
                             Rate             Rate               Total
                            -----------      -----------      -----------
Year Ending December 31:
2006                        $ 8,828,239                0      $ 8,828,239
2007                        $ 4,408,618                0      $ 4,408,618
2008                        $   552,000                0      $   552,000
2009                                  0                0                0
                            -----------      -----------      -----------
Total                       $13,788,857                0      $13,788,857
                            -----------      -----------      -----------

The Fund has no variable interest rate loans at June 30, 2006.

At June 30,  2006,  98% of the Fund's loans  receivable  was  collateralized  by
properties located in California.

                                      -13-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

As of June 30,  2006,  the Fund's loan  portfolio  consisted of twenty (23) real
estate  loans to  unrelated  parties  totaling $  13,064,467,  and two (2) loans
receivable  from related parties  amounting to $ 724,390.  One loan was paid off
during the quarter (loan number 24 listed below).  These debt securities are all
secured by deeds of trust.

1.    Loan 200301 amounting to $ 484,000, due in monthly installments of $ 4,396
      interest only at 10.90% maturing on May 1, 2006. This loan is secured by a
      first trust deed on the underlying property.

2.    Loan 200408 amounting to $ 206,000, due in monthly installments of $ 1,871
      interest only at 10.90% maturing on June 22, 2006. This loan is secured by
      a second trust deed on the underlying property.

3.    Loan 200410 amounting to $ 890,000, due in monthly installments of $ 8,900
      interest  only at 12.00%  maturing on  September  14,  2006.  This loan is
      secured by a second trust deed on the underlying property.

4.    Loan 200409 amounting to $ 450,000, due in monthly installments of $ 4,088
      interest only at 10.90% maturing on October 12, 2006. This loan is secured
      by a first trust deed on the underlying property.

5.    Loan 200411 amounting to $ 877,710, due in monthly installments of $ 7,972
      interest only at 10.90% maturing on December 6, 2006. This loan is secured
      by a first trust deed on the underlying property.

6.    Loan 200502 amounting to $ 470,737, due in monthly installments of $ 4,276
      interest only at 10.90% maturing on January 18, 2007. This loan is secured
      by a first trust deed on the underlying property.

7.    Loan 200503 amounting to $ 868,250, due in monthly installments of $ 7,887
      interest only at 10.90% maturing on May 1, 2006. This loan is secured by a
      second trust deed on the underlying property.

8.    Loan 200504 amounting to $ 750,000 due in monthly  installments of $ 7,500
      interest  only at 12.00%  maturing  on  September  8,  2006.  This loan is
      secured by a second trust deed on the underlying property.

9.    Loan 200507 amounting to $ 230,000 due in monthly  installments of $ 2,300
      interest  only at 12.00%  maturing on  September  25,  2006.  This loan is
      secured by a second trust deed on the underlying property.

10.   Loan 200508 amounting to $ 490,000 due in monthly  installments of $ 4,900
      interest only at 12.00% maturing on October 11, 2006. This loan is secured
      by a second trust deed on the underlying property.

11.   Loan 200509  amounting to $ 380,000 due in monthly  installments of $3,452
      interest only at 10.90%  maturing on May 19, 2006. This loan is secured by
      a first trust deed on the underlying property.

12.   Loan 200510 amounting to $ 400,000 due in monthly  installments of $ 4,000
      interest only at 12.00% maturing on November 8, 2006. This loan is secured
      by a second trust deed on the underlying property.

                                      -14-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

13.   Loan 200511  amounting  to $ 1,103,857  due in monthly  installments  of $
      11,038  interest only at 12.00%  maturing on September 15, 2006. This loan
      is secured by a first trust deed on the underlying property.

14.   Loan 200512 amounting to $ 850,000 due in monthly  installments of $ 8,500
      interest only at 12.00% maturing on October 14, 2006. This loan is secured
      by a first trust deed on the underlying property.

15.   Loan 200513 amounting to $ 124,032 due in monthly  installments of $ 1,240
      interest  only at 12.00%  maturing  on  December  12,  2006.  This loan is
      secured by a first trust deed on the underlying property.

16.   Loan 200601 amounting to $ 552,000 due in monthly  installments of $ 5,014
      interest only at 10.90% maturing on January 11, 2008. This loan is secured
      by a first trust deed on the underlying property.

17.   Loan 200602 amounting to $ 586,300 due in monthly  installments of $ 5,863
      interest only at 12% maturing on January 30, 2007. This loan is secured by
      a first trust deed on the underlying property.

18.   Loan 200603 amounting to $ 946,781 due in monthly  installments of $ 9,468
      interest only at 12% maturing on February 2, 2007. This loan is secured by
      a first trust deed on the underlying property.

19.   Loan 200604 amounting to $ 680,000 due in monthly  installments of $ 6,177
      interest only at 10.90% maturing on March 7, 2007. This loan is secured by
      a first trust deed on the underlying property.

20.   Loan 200605 amounting to $ 350,000 due in monthly  installments of $ 3,179
      interest  only at 10.90%  maturing  on  February  27,  2007.  This loan is
      secured by a first trust deed on the underlying property.

21.   Loan 200606 amounting to $ 320,000 due in monthly  installments of $ 3,173
      interest only at 11.90%  maturing on May 25, 2007. This loan is secured by
      a first trust deed on the underlying property.

22.   Loan 200608 amounting to $ 525,000 due in monthly  installments of $ 4,769
      interest only at 10.90%  maturing on June 7, 2007. This loan is secured by
      a first trust deed on the underlying property.

23.   Loan 200609 amounting to $ 529,800 due in monthly  installments of $ 5,254
      interest only at 11.90%  maturing on May 23, 2007. This loan is secured by
      a second trust deed on the underlying property.

24.   Loan  200405 to a related  party  amounting  to $ 177,000,  due in monthly
      installments of $ 1,608 interest only at 10.90% maturing on June 11, 2006.
      This loan was secured by a second trust deed on the  underlying  property.
      The loan was paid in full on June 11, 2006.

25.   Investment in 2003 Combined Note  Participation  amounting to $305,000 and
      maturing at various dates from September 2006 through  December 2006. This
      amount was partially  paid off by $ 80,610 on December 23, 2005.  Interest
      is payable monthly at 12% per annum.


                                      -15-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

26.   Investment in  participation  notes issued by Mountain  House Golf Course,
      LLC  amounting  to $ 500,000 and  maturing in December  2006.  Interest is
      payable monthly at an effective rate of approximately 11.00% per annum.

NOTE 4 -  RELATED PARTY TRANSACTIONS

LOANS SECURED BY TRUST DEEDS
The  Fund may  invest  up to 20% of its  total  assets  in  loans to  affiliated
entities. On June 30, 2006, the Fund had an interest in one (1) loan and two (2)
loan participations by affiliated entities. One loan is a participation interest
in five  separate  promissory  notes.  The loan is  carried  at cost.  This loan
anticipates earning a 12% interest rate and will be repaid between various dates
ranging from  September  21, 2006 to December 21, 2006, at which time the amount
of the loan will be returned  to the Fund.  The life of the loan may be extended
up to two years pursuant to an extension option in the notes. The loan does have
an option for early  withdrawal.  A portion of the combined  notes was partially
paid off ($80,610) on December 23, 2005. The second  participation  loan matures
in December 2006 and bears an effective interest of approximately 11% per annum.
Additionally,  the  Fund  has a  loan  receivable  from  another  related  party
amounting to $177,000 secured by a second trust deed on the underlying property.
This loan accrues  monthly  interest of $1,608 (10.90% per year) and was paid in
full on June 11, 2006.  For the quarters  ended June 30, 2006 and 2005, the Fund
recognized  interest  income on loans to related  parties  amounting  to $24,488
(YTD: $49,626) and $27,891 (YTD: $55,335), respectively.

As noted, the Fund is limited in its investments  with affiliated  entities to a
maximum of 20% of its total assets, as defined. As of June 30, 2006, the Fund is
in compliance with this restriction.

CONTRA  EQUITY COSTS
During  the  quarters  ended  June 30,  2006  and  2005  the Fund did not  incur
additional costs in connection with the offering of units of membership interest
in the Fund. These  expenditures  consisted  primarily of the initial accounting
and filing  costs  relating  to the  registration  and as such being  treated as
syndication  costs as  contemplated  in the AICPA's  Technical  Practice Aid TIS
7200.07 (Accounting for Syndication Costs of Limited Partnerships). Accordingly,
these costs are treated as reduction of paid in capital.

The Fund paid  commissions to securities  brokers in connection with the sale of
membership  interests by the Fund. The commission rates ranged between 3.50% and
4.50% of the gross sales  proceeds from the sale of units of the Fund. The total
amount of net brokers'  commissions paid during the quarters ended June 30, 2006
and 2005 were $41,319 (YTD: $157,644) and $71,882 (YTD: $114,745), respectively.
These costs are recorded as "Costs incurred in raising  capital" and included in
the balance sheet under the heading "Members' contributions, net".

                                      -16-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

BORROWER'S COSTS
The Manager  acts as loan broker in the initial  placement of the Fund loans and
performs loan  servicing  functions as well.  The Manager is  compensated by the
Fund for such loan  servicing  activities and is compensated by the borrower for
the initial placement of the loans. The Fund does not incur "Incremental  Direct
Costs" as defined in SFAS No. 91,  "Accounting for Nonrefundable  Fees and Costs
Associated  with  Originating  or  Acquiring  Loans and Initial  Direct Costs of
Leases." These are costs to originate  loans that result  directly from, and are
essential  to, the lending  transaction  and would not have been incurred by the
Fund had the lending  transaction  not occurred.  The Manager of the Fund incurs
these types of costs;  consequently  the Manager is entitled to receive  certain
fees for its services such as loan brokerage  commissions,  loan  processing and
documentation  fees, loan servicing and asset management fees and  reimbursement
of other expenses of the Manager. None of these fees are paid by the borrower to
the Fund  directly and  therefore are not included in the income and expenses of
the Fund.

BROKER'S COMMISSIONS ON INVESTED FUNDS
The Fund has retained the services of securities broker/dealers to sell units of
membership interest in the Fund. One such broker/dealer is ePlanning Securities,
Inc., which is affiliated with the Manager.  Certain shareholders of the Manager
(who are not  members of the Fund) are also  shareholders  and/or  directors  of
ePlanning.  ePlanning sold membership units of the Fund to its  client-investors
during the quarters ended June 30, 2006 and 2005  amounting to $1,115,319  (YTD:
$3,753,477) and $1,507,829  (YTD:  $2,520,976) of which it realized  commissions
totaling $41,319 (YTD: $157,644) and $71,882 (YTD: $114,745),  respectively. The
brokers  do  not  earn  a  commission  until  funds  are  transferred  from  the
Subscription  Account to the "Invested  Funds" account,  at which time the funds
become contributed capital of the Fund.


MANAGEMENT AND SERVICING FEES
The Manager earned $17,403 (YTD:  $31,796) and $17,348 (YTD: $26,345) during the
quarters ended June 30, 2006 and 2005, respectively, representing management and
servicing fees it was entitled to receive from the Fund.

NOTE 5 -  CONCENTRATIONS

CASH AND CASH  EQUIVALENTS Cash and cash equivalents are maintained with several
financial  institutions.  Deposits  held with  banks may  exceed  the  amount of
insurance   provided  on  such  deposits.   At  June  30,  2006,  the  Fund  had
approximately $263,122 of cash that exceeded this limit and thus was not covered
by federal depository insurance.  These deposits may be redeemed upon demand and
therefore  bear minimal risk.  The Fund has not  experienced  any losses in such
accounts.

                                      -17-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

NOTES RECEIVABLE - NON RELATED PARTIES
Seven (7) loans totaling $4,450,157 were made to separate entities controlled by
the same person.  The various  borrowing  entities were  organized for different
purposes,  and own real property in various places in California,  mostly in the
Central Valley. These loans represent 32% of the total loan portfolio and 39% of
total interest income. The loans are all current, are adequately  collateralized
by the underlying real estate properties,  and are personally  guaranteed by the
controlling person.

COMMITMENTS AND CONTINGENCIES
The Fund has  outstanding  loan  commitments  on three  (3)  construction  loans
totaling $1,479,852 which was undisbursed at June 30, 2006.

NOTE 6 -  REGULATORY REQUIREMENTS

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 ("ERISA")
Some of the  investors  purchasing  membership  interests  are employee  benefit
plans,  including Individual  Retirement  Accounts,  which are subject to ERISA.
Persons making the investment  decisions for such ERISA  investors are deemed to
be  "fiduciaries"  of such  investors and must  discharge  their duties with the
care,  skill  and  prudence  which a prudent  person  would  exercise  under the
circumstances.

Normally an investment in an equity interest of an entity,  such as a membership
interest in the Fund, will be deemed a "plan asset" of the ERISA  investor,  but
the underlying assets of the entity will not be deemed plan assets.  However, if
(i) the equity interests are not publicly-offered securities, (ii) the entity is
not one of several types of "operating  companies" defined in ERISA regulations,
and (iii) investment by ERISA investors exceeds 25% of the value of the class of
equity  interests,  then the underlying assets of the entity may be deemed "plan
assets,"  with the  entity  deemed  a  "fiduciary"  with  respect  to the  ERISA
investors.

SECURITIES LAWS
In offering the units of membership interest,  the Fund is subject to applicable
federal and state  securities  laws. On the federal level,  the Fund is offering
the  membership  interests  pursuant  to the  exemption  from  registration  for
intrastate  offerings  provided by Section  3(a) (11) of the  Securities  Act of
1933, as amended, and Rule 147 promulgated  thereunder.  In accordance with this
exemption,  the membership  interests are offered only in  California,  the Fund
restricts the amount of its assets which are located  outside of California  and
members are prohibited from transferring any part of their membership  interests
to out-of-state transferees for a period of nine (9) months.

                                      -18-

<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2006 AND 2005

On the  state  level,  the Fund is  offering  the units of  Membership  Interest
pursuant to a permit issued by the California  Department of  Corporations.  The
permit requires  annual renewal.  The original permit was issued on February 24,
2003. The permit was renewed on February 1, 2006.

As of June 30, 2006, the Fund was in compliance with all applicable  federal and
state securities laws.

                                      -19-

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         As of June 30, 2006, we have sold a total of 143,117.04  Units, at $100
per Unit, for a total of $14,311,704. As of June 30, 2006, Fund members electing
to reinvest their monthly income  distributions  have  reinvested  $913,635 back
into the Fund.  After  deducting for broker  commissions  and offering  expenses
($689,812),  the net  proceeds  to the Fund from  these  sales  (which  includes
reinvestment  of earnings) have been  $14,535,527.  Members  withdrew a total of
$668,376  through the period ended June 30, 2006. As of June 30, 2006,  the Fund
has $ 13,788,857  invested in commercial  mortgage loans,  with the remainder in
the  form of cash  and  other  assets.  As of June  30,  2006,  the Fund has 335
members.

         To compare this with how the Fund was doing during the same period last
year,  we had sold a total of 79,833.78  Units,  for a total of $7,983,378 as of
June 30, 2005. Reinvested funds amounted to $330,157. After deducting for broker
commissions and offering expenses ($456,774),  the net proceeds to the Fund from
these sales were  $7,856,761.  The Fund had  $7,839,100  invested in  commercial
mortgage  loans,  with the remainder in the form of cash and/or other  temporary
investments. As of June 30, 2005, the Fund had 248 members.

         Syndication costs incurred in connection with the raising of capital by
offering  units  of  membership  interest  in the Fund are  being  treated  as a
reduction of paid in capital.  Initial  marketing fees and broker's  commissions
paid to an outside  brokerage firm are treated as  contra-equity  accounts.  The
fees are currently 4.5% (4% commission,  0.5% marketing  fee).  Brokers are also
entitled to receive  "trailer  commissions,"  equivalent  to 0.5% of the average
daily  balance  of  invested  capital  for each  investor.  These  are  received
following each anniversary of the investor's initial investment.  As of June 30,
2006, the Fund has capitalized $689,812 of syndication costs since inception.

         During the next twelve months,  the Fund will continue to be managed by
Lakeside  Financial  Group,  Inc.,  which will continue to underwrite and select
loans for the Fund to  invest  in, as well as short  term  investments  for cash
between  loans.  The Fund will  continue to raise  capital  with its  intrastate
offering under a permit from the California  Department of  Corporations.  It is
anticipated  that,  at some  point in the  future,  we will  offer  the Units of
Membership  Interest in additional  states through a registered public offering,
but this is not anticipated to occur within the next twelve months.  The Manager
will continue to manage the Fund as described in the Fund's Operating Agreement.
The Fund will continue to pay the Manager,  on a monthly basis, a management fee
(annualized  at 2.75% of gross assets under  management)  and loan servicing fee
(annualized at 0.25% of loan principal amounts) to the extent these fees are not
waived by the  Manager.  During the  quarter  ended June 30,  2006,  the Manager
accepted $17,403 (YTD: $31,796) in management fees and waived a total of $87,285
of these fees.

                                      -20-

<PAGE>

         During  the next 12 months  the Fund  will  continue  to raise  capital
through the sale of  membership  interests and invest that capital in commercial
real estate  loans.  The Fund does not expect to make any  significant  plant or
equipment  purchases or sales in the next 12 months. The Fund has no off-balance
sheet arrangements.

ITEM 3.  CONTROLS AND PROCEDURES.

         As of the end of the period  covered by this  report,  the Fund carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Manager's  Principal  Executive  Officer and Principal  Financial Officer of the
effectiveness of the design and operation of the Fund's disclosure  controls and
procedures.  The Fund's  disclosure  controls  and  procedures  are  designed to
provide a  reasonable  level of assurance  of  achieving  the Fund's  disclosure
control  objectives.  The  Manager's  Principal  Executive  Officer  and  Acting
Principal  Financial Officer have concluded that the Fund's disclosure  controls
and procedures are, in fact,  effective at this reasonable assurance level as of
the period covered.  In addition,  the Fund reviewed its internal controls,  and
there have been no  significant  changes in its  internal  controls  or in other
factors that could significantly affect those controls subsequent to the date of
their last  evaluation  or from the end of the  reporting  period to the date of
this Form 10-QSB.  In  connection  with the  evaluation  of the Fund's  internal
controls  during the Fund's  second  fiscal  quarter  ended June 30,  2006,  the
Manager's  Principal  Executive  Officer and  Principal  Financial  Officer have
determined  that  there are no  changes to the  Fund's  internal  controls  over
financial  reporting that has materially  affected,  or is reasonably  likely to
materially  effect, the Fund's internal controls over financial  reporting.  The
Fund receives  subscriptions/investment  funds from the general investing public
through its designated brokers (primarily ePlanning Securities),  and uses those
funds to make loans secured by deeds of trust on real estate  located  primarily
in California.  The Fund's operations are managed by its fund manager,  Lakeside
Financial  Group,  Inc. The Manager  does not own a  membership  interest in the
Fund.

                                      -21-

<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None

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

         During  the  period  covered  by this  report  the Fund  made  sales of
unregistered securities set forth in the table below. All sales were of units of
membership  interest  in the Fund,  for the  purchase  price of $100 per unit of
membership  interest,  and all  sales  were  for  cash  consideration.  No sales
involved  any  underwriter,  but all sales  were  effected  through  a  licensed
securities broker, ePlanning Securities,  Inc., to whom a commission was paid of
up to 4.5% of the sales price.

         All sales were made under the exemption from  registration  provided by
Section  3(a)(11) of the Securities Act of 1933, as amended,  and under Rule 147
promulgated  thereunder.  The offering is limited to California  residents only.
The Fund  derives  at least  80% of its  revenues  from  loans  secured  by real
property located in California.  The Fund's Operating Agreement and Subscription
Agreement,  both  of  which  are  executed  by  the  investor,  contain  written
disclosures regarding the limitations on resale prescribed by Rule 147.

         With respect to applicable  state  securities laws, all sales were made
pursuant  to a  permit  issued  to the  Fund  by the  California  Department  of
Corporations  ("DOC")  pursuant  to Sections  25110 and 25113 of the  California
Corporations  Code.  The permit  must be  renewed  each year by filing a renewal
application  and an updated  Offering  Circular  for  approval  by the DOC.  The
renewed permit was issued by the DOC on February 1, 2006.

         During the period  covered by this  report the Fund made the  following
sales of  unregistered  securities,  to  various  investors  meeting  the Fund's
investor suitability standards, on the terms described above:

                  Date of Sale              Units Sold        Purchase Price
                  ------------              ----------        --------------
                  01/06/06                    789.71          $    78,971.37
                  01/13/06                  2,522.27          $   252,227.32
                  01/20/06                  2,582.65          $   258.264.95
                  01/30/06                  1,460.02          $   146,002.23
                  02/02/06                  5,712.93          $   571,293.06
                  02/21/06                  3,091.45          $   309,144.70
                  03/03/06                  2,677.08          $   267,708.00
                  03/08/06                  4,128.66          $   412,866.23
                  03/09/06                    485.56          $    48,555.61
                  03/24/06                  1,676.30          $   167,630.30
                  03/31/06                  1,254.94          $   125,494.17
                  04/07/06                  1,921.70          $   192,170.00
                  04/14/06                  1,002.16          $   100,215.80
                  04/28/06                  1,069.94          $   106,994.12
                  05/05/06                    511.54          $    51,154.00
                  05/19/06                  1,577.16          $   157,715.75
                  06/02/06                  1,671.71          $   167,171.00
                  06/23/06                  2,398.98          $   239,898.16
                  06/30/06                  1,000.00          $   100,000.00

                  01/05/06 (re investment)    500.48          $    50,048.17
                  02/03/06 (re investment)    504.82          $    50,482.08
                  03/31/06 (re investment)    497.30          $    49,729.71
                  04/30/06 (re investment)    589.41          $    58,941.37
                  05/31/06 (re investment)    592.85          $    59,284.70
                  06/30/06 (re investment)    592.80          $    59,280.40

                                      -22-

<PAGE>

ITEM 3.  DEFAULTS ON SENIOR SECURITIES

         None

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

         The Fund has held no regularly scheduled, called or special meetings of
members during the reporting period.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS

Exhibit No.       Description
-----------       -----------
2.1.*             Articles of Organization

3.1.*             Operating Agreement of Lakeside Mortgage Fund, LLC

6.1.*             Broker/Dealer Agreement

6.2.*             Amendment No. 1 to Broker Dealer Agreement

12.1.             Offering Circular dated February 1, 2006

31.1.             Certification  of Chief Executive  Officer Pursuant to Section
                  302 of the Sarbanes- Oxley Act of 2002.

31.2.             Certification  of Chief Financial  Officer Pursuant to Section
                  302 of the Sarbanes- Oxley Act of 2002.

32.1.             Certification  of Chief Executive  Officer Pursuant to Section
                  906 of the Sarbanes- Oxley Act of 2002.

32.2.             Certification  of Chief Financial  Officer Pursuant to Section
                  906 of the Sarbanes- Oxley Act of 2002.

*Incorporated by reference to the Fund's Registration Statement on Form 10-SB,
as amended, originally filed with the Commission under the Exchange Act on
August 6, 2004.

                                      -23-

<PAGE>

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                  LAKESIDE MORTGAGE FUND, LLC,
                                  A California Limited Liability Company

                                  By:      Lakeside Financial Group, Inc.,
                                           Manager

Date:  August 11, 2006            By:   /S/ William F. Webster
                                        --------------------------------
                                           William F. Webster, President

                                      -24-