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, 2005


             |_| 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 |_|


Transitional Small Business Disclosure Format (Check One):   Yes |X|   No |_|


                                      -1-
<PAGE>


                                TABLE OF CONTENTS



Part I - Financial Information

         Item 1     Financial Statements                                      3

         Item 2     Management's Discussion and Analysis or
                    Plan of Operation                                        18

         Item 3     Controls and Procedures                                  19


Part II - Other Information

         Item 1     Legal Proceedings                                        23

         Item 2     Changes in Securities                                    23

         Item 3     Defaults Upon Senior Securities                          23

         Item 4     Submission of Matters to a Vote of Security Holders      24

         Item 5     Other Information                                        24

         Item 6     Exhibits                                                 24

         Signatures 25


                                      -2-
<PAGE>

Item  1. Financial Statements and Notes

                           Lakeside Mortgage Fund, LLC
                    (A California Limited Liability Company)

                           BALANCE SHEETS (Unaudited)
                              June 30, 2005 & 2004

<TABLE>
<CAPTION>
                                                                                  2005             2004
                                         ASSETS

<S>                                                                           <C>            <C>
Cash and cash items                                                           $    279,504   $    409,829

Loan interest reserve (restricted)                                                 322,869         57,038

Accrued interest receivable                                                         15,291         12,009
Loans secured by trust deeds - related parties (Notes 3 and 4)                     982,000        482,000
Loans secured by trust deeds - others, net of allowance for bad debts
amounting to $ 32,535 and $ 0 (Notes 3 and 5)                                    6,826,401      2,004,415
                                                                              ------------   ------------


TOTAL ASSETS                                                                  $  8,426,065   $  2,965,291
                                                                              ------------   ------------

                            LIABILITIES AND MEMBERS' EQUITY


Accounts payable and accrued liabilities                                      $     17,529   $          0

Uninvested subscriptions                                                           192,289        367,476

Deferred interest on loans secured by trust deeds                                  322,869         57,038
                                                                              ------------   ------------


Total liabilities                                                                  532,687        424,514
                                                                              ------------   ------------


Members' contributions, net                                                      7,856,762      2,523,545

Retained earnings                                                                   36,616         17,232
                                                                              ------------   ------------

Total members' equity (Note 4)                                                   7,893,378      2,540,777
                                                                              ------------   ------------

TOTAL LIABILITIES AND MEMBERS' EQUITY                                         $  8,426,065   $  2,965,291
                                                                              ------------   ------------
</TABLE>

See accompanying notes

                                      -3-
<PAGE>

                           Lakeside Mortgage Fund, LLC
                    (A California Limited Liability Company)

                      STATEMENTS OF OPERATIONS (Unaudited)
                   For the quarters ended June 30, 2005 & 2004


<TABLE>
<CAPTION>
                                                  2005                       2004
                                         -----------------------   -----------------------
                                          Apr-June     Jan-June     Apr-June     Jan-June
<S>                                      <C>          <C>          <C>          <C>
Revenues
  Interest income                        $  199,002   $  354,637   $   56,631   $   83,611
                                         -----------------------   -----------------------


  Total revenues                            199,002      354,637       56,631       83,611
                                         -----------------------   -----------------------

Operating Expenses

  Professional fees - accounting & taxes      6,300       12,583           --           --

  Advertising                                   750        1,750           --           --

  Provision for loan losses                  16,836       25,436           --           --

  Management fees (Note 4)                   17,348       26,345       10,311       12,365

  Permits fees & licenses                       750        3,998           --           --

  Printing                                    1,010        2,559           --           --

  Legal                                         750        2,077           --           --

  Trailer commissions                         4,296        7,296           --           --

  Conference & seminars                       1,800        1,800           --           --

  Other operating expenses                       --           --           --            20

  Taxes                                         450        2,300           --           --
                                         -----------------------   -----------------------

  Total operating expenses                   50,290       86,144       10,311       12,385
                                         -----------------------   -----------------------

Net income                               $  148,712   $  268,493   $   46,320   $   71,226
                                         =======================   =======================
</TABLE>

                                      -4-
<PAGE>

                           Lakeside Mortgage Fund, LLC
                    (A California Limited Liability Company)

                    STATEMENTS OF MEMBERS' EQUITY (Unaudited)
                   For the quarters ended June 30, 2005 & 2004

<TABLE>
<CAPTION>
                                                               Members'         Retained
                                                            Contributions       Earnings             TOTAL
<S>              <C>                                       <C>                 <C>              <C>
Balance, January 1, 2004                                   $      836,080      $     5,358      $   841,438

          Contributions                                           762,819                           762,819

          Costs incurred in raising capital                       (51,699)                          (51,699)

          Reinvestment of members' share of net income             12,505                            12,505

          Net income                                                                24,906           24,906

          Cash distribution                                                        (22,230)         (22,230)
                                                           ------------------------------------------------

          Balance, March 31, 2004                               1,559,705            8,034        1,567,739

          Contributions                                           980,264                           980,264
          Costs incurred in raising capital                       (45,484)                          (45,484)
          Reinvestment of members' share of net income             29,060                            29,060
          Net income                                                                46,320           46,320
          Cash distribution                                                        (37,122)         (37,122)

Balance, June 30, 2004                                     $    2,523,545      $    17,232      $ 2,540,777
                                                           ==============      ===========      ===========

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
          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

          Net income                                                               148,712          148,712

          Cash distribution                                                       (140,026)        (140,026)

Balance, June 30, 2005                                     $    7,856,762      $    36,616      $ 7,893,378
                                                           ==============      ===========      ===========
</TABLE>


See accompanying notes

                                      -5-
<PAGE>

                           Lakeside Mortgage Fund, LLC
                    (A California Limited Liability Company)

                            Statements of Cash Flows
                         For the quarters ended June 30,

<TABLE>
<CAPTION>
                                                                     2004                            2005
                                                          --------------------------      --------------------------
                                                           Apr-June         Jan-June       Apr-June        Jan-June

Cash Flows from Operating
Activities:
<S>                                                       <C>             <C>             <C>             <C>
  Net income from operations                              $  148,712      $  268,493      $   46,320      $   71,226
  Provision for bad debts                                     16,836          25,436              --              --
  Accrued interest receivable                                 (6,447)         (1,111)         (7,612)        (10,171)
  Loan interest reserves (restricted)                         (5,922)        (87,248)        (36,417)        (49,834)
  Accounts payable and other liabilities                      (3,763)          2,007              --            (600)
  Deferred interest receivable                                 5,922          87,248          36,417          49,834
                                                          --------------------------      --------------------------

  Sub total                                                  155,338         294,825          38,708          60,455
                                                          --------------------------      --------------------------

Cash Flows from Investing
Activities:
  Investment in related parties' notes receivable                 --              --        (177,000)       (307,000)
  Notes receivable secured by real estate-
    non related parties                                   (1,594,512)     (2,824,448)       (792,700)     (1,624,415)
  Short term commercial papers                                    --              --              --         100,000
                                                          --------------------------      --------------------------

  Sub total                                               (1,594,512)     (2,824,448)       (969,700)     (1,831,415)
                                                          --------------------------      --------------------------

Cash Flows from Financing
Activities:
  Investors' subscriptions                                   (95,919)        (42,451)        (13,192)        196,122
  Members' contributions                                   1,609,827       2,703,797       1,009,324       1,784,649
  Costs incurred in raising capital & commissions, net       (71,882)       (114,745)        (45,484)       (122,183)
  Cash distributions to members                             (140,026)       (251,638)        (37,122)        (59,353)
                                                          --------------------------      --------------------------

  Sub total                                                1,302,000       2,294,962         913,526       1,799,235
                                                          --------------------------      --------------------------

Net Change in Cash during the Period                        (137,175)       (234,660)        (17,466)         28,275

Cash in Bank, Beginning of Period                            416,679         514,164         427,295         381,554
                                                          --------------------------      --------------------------

Cash in Bank, End of Period                               $  279,504      $  279,504      $  409,829         409,829
                                                          ==========================      ==========================
</TABLE>

                                      -6-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

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 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 began operations on September 26, 2003.  Fiscal year 2003 was the first
year  during  which  the  Fund is  considered  an  operating  company.  Prior to
September 26, 2003, the Company had been in the  development  stage.  The fiscal
year of the Fund ends on December 31.

The  Fund's  operation  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.  ("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.

Cash available for distribution  will be the equivalent of net income during the
calendar month using the accrual method of accounting and in accordance  with US
generally  accepted  accounting  principles.  Monthly,  the  Fund  will  provide
statements of account to Members and distribute or reinvest amounts equal to the
Members' proportionate share of the Fund's accrued net income during such month.
Accrued  net income  means the  excess of accrued  income  from  operations  and
investment  of, or sale or  refinancing  or other  disposition  of,  Fund assets
during  such  calendar  month over the  accrued  operating  expenses of the Fund
during such month,  including any  adjustments  for bad debt  reserves,  accrued
Fund's  operating  expenses or other  reserves  for  expenses  and losses as the
Manager may deem  appropriate or for which the Manager  believes it to be in the
best interests of the Fund, all determined in accordance with generally accepted
accounting  principles.  The Manager is  required to allocate  funds only to the
extent that funds are available.  Cash available for  distributions in an amount
equal to their  respective  allocable  shares of Fund net  profits  during  such
month,  and the  balance  of Fund net income  will be  credited  to the  capital
accounts of Members who elected to compound earnings.

                                      -7-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

Fund  Members are  allowed to withdraw  from the Fund and to 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 Note 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.

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  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  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  generally  accepted  accounting
      principles.

                                      -8-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

(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;  all loans have
      been originated by the Fund. 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  generally  accepted
      accounting  principles.  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 or
      when the  payment of  principal  or  interest  is 90 days past due,  and a
      specific reserve is recorded.  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.

      As of June 30, 2005,  two (2) loans were  delinquent for less than 30 days
      and one (1) loan was delinquent between 30-60 days.

(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  allowance.  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.

                                      -9-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

      As of June 30,  2005 and 2004,  the balance of the reserve for loan losses
      amounted to $32,535.00 and $ 0.00, respectively.

(h)   Interest Reserve Account
      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 loan/s 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 a Deferred  Interest  Reserve
      Account in the  liabilities  section of the balance sheet.  As of June 30,
      2005 and 2004, the interest reserve and deferred interest reserve accounts
      carried balance amounting to $ 322,869.00 and $ 57,038.00, respectively.

(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 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 will be treated as period costs and will be 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  will be shown in the
      Statement of Operations,  when incurred. The Fund has capitalized $ 71,882
      and $ 45,484 of  syndication  costs and  brokers'  fees  during the second
      quarter of 2005 and 2004, 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 expensed and
      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.

                                      -10-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

      As of June 30, 2005 and 2004,  the  uninvested  funds in the  Subscription
      Account amounted to $192,289.00 and $ 367,476.00, respectively.

(l)   New Accounting Pronouncements

      SFAS 149

      In April 2003, the FASB issued Statement No. 149,  "amendment of Statement
      133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends
      SFAS No. 133 to provide  clarification  on the  financial  accounting  and
      reporting of derivative  instruments  and hedging  activities and requires
      that  contracts  with  similar  characteristics  be  accounted  for  on  a
      comparable  basis. The standard is effective for contracts entered into or
      modified  after June 30,  2003.  The adoption of SFAS No. 149 did not have
      any impact on our financial position or results of operations.

      SFAS 150

      In May 2003, the FASB issued SFAS 150,  Accounting  for Certain  Financial
      Instruments with  Characteristics of Both Liabilities and Equity. SFAS 150
      specifies  that  instruments  within its scope embody  obligations  of the
      issuer and that, therefore,  the issuer must classify them as liabilities.
      SFAS 150 did not have a  material  impact  on our  financial  position  or
      results of operations.

      Interpretation No. 46

      In January 2003, the FASB issued  Interpretation No. 46, "Consolidation of
      Variable Interest Entities"  ("Interpretation  46") which was then revised
      in  December  2003.   Interpretation   46  clarifies  the  application  of
      Accounting Research Bulletin No. 51, "Consolidated  Financial Statements,"
      to  certain   entities  in  which   equity   investors  do  not  have  the
      characteristics  of a  controlling  financial  interest  or  do  not  have
      sufficient equity at risk for the entity to finance its activities without
      additional   subordinated   financial  support  from  other  parties.  The
      recognition and measurement  provisions of Interpretation 46 are effective
      for newly  created  variable  interest  entities  formed after January 31,
      2003, and for existing variable interest entities, on the first interim or
      annual  reporting  period  beginning after March 31, 2004. The adoption of
      FIN 46 did not impact our financial position or results of operations.

      SOP 03-3

      In October 2003, the AICPA issued SOP 03-3 Accounting for Loans or Certain
      Debt  Securities  Acquired in a Transfer.  SOP 03-3 applies to a loan with
      the evidence of deterioration of credit quality since origination acquired
      by completion of a transfer for which it is probable at acquisition,  that
      the  Partnership  will be unable to  collect  all  contractually  required
      payments  receivable.  SOP 03-3 is effective for loans  acquired in fiscal
      years beginning after December 31, 2004. We do not expect SOP 03-3 to have
      a material impact on our financial position or results of operations.


                                      -11-
<PAGE>
                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

      EITF 00-21

      Emerging  Issue Task Force 00-21 ("EITF  00-21"),  Accounting  for Revenue
      Arrangements with Multiple Deliverables,  issued during the fourth quarter
      of 2003,  provides  guidance on revenue  recognition for revenues  derived
      from a single contract that contains multiple  products or services.  EITF
      00-21  also  provides  additional  requirements  to  determine  when these
      revenues may be recorded  separately for accounting  purposes.  EITF 00-21
      did not impact our financial statements.

      SAB 104

      In December 2003, the SEC issued Staff  Accounting  Bulletin No. 104 ("SAB
      104"), Revenue Recognition,  which supercedes SAB 101, Revenue Recognition
      in  Financial  Statements.  SAB 104's  primary  purpose is to rescind  the
      accounting  guidance  contained  in SAB 101  related to  multiple  element
      revenue  arrangements,  superceded  as a result  of the  issuance  of EITF
      00-21. SAB 104 did not impact our financial statements.


Note 3 - Loans Secured by Trust Deeds

      At June 30, 2005 and 2004, the Fund held the following types of mortgages:

                                  2005          2004
                                  ----          ----

Commercial                    $1,497,757     $2,106,415
Construction                  $1,009,180              0
Unimproved Land               $5,334,000     $  380,000
Residential                   $        0     $        0
                              -------------------------

Total                         $7,840,937     $2,486,415
                              -------------------------



First Mortgages               $3,692,680     $1,491,415
Second Mortgages              $4,148,257     $  995,000
Third Mortgages               $        0     $        0
                              -------------------------

Total                         $7,840,937     $2,486,415
                              -------------------------

                                      -12-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

Scheduled maturities of loans secured by trust deeds as of June 30, 2005 and the
interest sensitivity of such loans is as follows:

                               Fixed             Variable
                               Interest          Interest
                               Rate              Rate              Total
                               -----------------------------------------

Year Ending December 31:
2005                           $3,876,937         0           $3,876,937
2006                           $3,494,000         0           $3,494,000
2007                           $  470,000         0           $  470,000
2008                                    0         0                    0
2009                                    0         0                    0
                               -----------------------------------------


Total                          $7,840,937         0           $7,840,937
                               -----------------------------------------

The Fund has no variable interest rate loans at June 30, 2005.

At June 30,  2005,  96% of the Fund's Loans  Receivable  was  collateralized  by
properties located in California.

As of June 30, 2005, the Fund's loan portfolio  consisted of seventeen (17) real
estate  loans to  unrelated  parties  totaling $  6,858,937  and three (3) loans
receivable  from related parties  amounting to $ 982,000.  These debt securities
are all secured by deeds of trust.

1.    Loan 200301 amounting to $ 444,000, due in monthly installments of $ 4,033
      interest only at 10.90% maturing on November 1, 2005. This loan is secured
      by a first trust deed on the underlying property.
2.    Loan 200402 amounting to $ 220,485, due in monthly installments of $ 2,003
      interest only at 10.90%  maturing on May 18, 2005. This loan is secured by
      a first trust deed on the underlying property. The note was fully paid off
      in April 2005.
3.    Loan 200406 amounting to $ 154,257, due in monthly installments of $ 1,363
      interest only at 10.90%  maturing on May 21, 2005. This loan is secured by
      a  second  trust  deed on the  underlying  property.  The  note  has  been
      delinquent for two (2) months.
4.    Loan 200407 amounting to $ 155,500, due in monthly installments of $ 1,425
      interest only at 11.00% maturing on June 15, 2005. This loan is secured by
      a first trust deed on the underlying property.
5.    Loan 200408 amounting to $ 206,000, due in monthly installments of $ 1,871
      interest only at 10.90% maturing on June 22, 2005. This loan is secured by
      a second trust deed on the underlying property.
6.    Loan 200410 amounting to $ 890,000, due in monthly installments of $ 8,900
      interest  only at 12.00%  maturing on  September  14,  2005.  This loan is
      secured by a second trust deed on the underlying property.

                                      -13-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

7.    Loan 200409 amounting to $ 450,000, due in monthly installments of $ 4,088
      interest only at 10.90% maturing on October 12, 2005. This loan is secured
      by a first trust deed on the underlying property.
8.    Loan 200411 amounting to $ 730,180, due in monthly installments of $ 6,632
      interest only at 10.90% maturing on December 6, 2005. This loan is secured
      by a first trust deed on the underlying property.
9.    Loan 200501 amounting to $ 160,000, due in monthly installments of $ 1,453
      interest only at 10.90% maturing on January 11, 2006. This loan is secured
      by a first trust deed on the underlying property.
10.   Loan 200502 amounting to $ 470,000, due in monthly installments of $ 4,269
      interest only at 10.90% maturing on January 18, 2007. This loan is secured
      by a first trust deed on the underlying property.
11.   Loan 200503 amounting to $ 670,000, due in monthly installments of $ 6,086
      interest only at 10.90%  maturing on August 1, 2005.  This loan is secured
      by a second trust deed on the underlying property.
12.   Loan 200504 amounting to $ 750,000 due in monthly  installments of $ 7,500
      interest only at 12.00% maturing on March 8, 2006. This loan is secured by
      a first trust deed on the underlying property.
13.   Loan 200505 amounting to $ 153,000 due in monthly  installments of $ 1,390
      interest only at 10.90%  maturing on March 11, 2006.  This loan is secured
      by a first trust deed on the underlying property.
14.   Loan 200506 amounting to $ 126,000 due in monthly  installments of $ 1,272
      interest only at 10.90%  maturing on March 11, 2006.  This loan is secured
      by a second trust deed on the underlying property.
15.   Loan 200507 amounting to $ 230,000 due in monthly  installments of $ 2,300
      interest only at 12.00%  maturing on March 25, 2006.  This loan is secured
      by a second trust deed on the underlying property.
16.   Loan 200508 amounting to $ 490,000 due in monthly  installments of $ 4,900
      interest only at 12.00%  maturing on April 11, 2006.  This loan is secured
      by a second trust deed on the underlying property.
17.   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.
18.   Loan 200510 amounting to $ 400,000 due in monthly  installments of $ 4,000
      interest only at 12.00% maturing on May 8, 2006. This loan is secured by a
      second trust deed on the underlying property.
19.   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, 2005.
      This loan is secured by a second trust deed on the underlying property.
20.   Investment in 2003 Combined Note  Participation  amounting to $305,000 and
      maturing at various  dates from  September  2006  through  December  2006.
      Interest is payable monthly at 12% per annum.
21.   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.

                                      -14-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

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, 2005,  the Fund had an interest in two (2)  participating
notes issued by affiliated  entities.  One note 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.  The  second  participation  note  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
the principal  amount is due in full on June 11, 2005.  The note was extended to
mature on June 11,  2006.  For the 3-month  period ended June 30, 2005 and 2004,
the Fund  recognized  interest  income on notes and loan  receivable  to related
parties amounting to $ 27,891 and $ 10,124, 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, 2005, the Fund is
in compliance with this restriction.

Contra Equity Costs
The Fund  incurred $ 0.00  during the  3-month  periods  ended June 30, 2005 and
2004,  respectively as 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 brokers commissions paid during the 3-month period ended June 30, 2005
and 2004 was $ 71,882 and $ 45,484,  respectively.  These costs are  recorded as
"Costs incurred in raising  capital" and included in the Balance Sheet under the
heading "Members' Contributions, Net".

The Manager  received $ 17,349 and $ 10,290 during the 3-month period ended June
30, 2005 and 2004,  respectively,  representing management and servicing fees it
was entitled to receive from the Fund.

                                      -15-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

Borrower's Costs
The Manager acts as a loan broker in the initial placement of the Fund loans and
performs a loan  servicing  function 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 FASB's SFAS # 91. 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 3-month  period ended June 30, 2005 and 2004 amounting to $ 1,629,827
and $1,009,324 of which it realized  commissions totaling $ 71,882 and $ 45,484,
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.

Note 5 - Concentrations

Cash and Cash Items
Cash and cash items are maintained with several financial institutions. Deposits
held with banks may exceed the amount of insurance provided on such deposits. At
June 30, 2005, the Fund had  approximately  $ 315,158 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

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  man  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.

                                      -16-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                              June 30, 2005 & 2004

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.

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 March 2, 2005

As of June 30, 2005, the Fund was in compliance with all applicable  federal and
state securities laws.

                                      -17-
<PAGE>

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

      As of June 30, 2005, we have sold a total of 79,833.78  Units,  at $100.00
per Unit, for a total of $  7,983,378.00.  As of June 30, 2005,  Company members
electing to reinvest  their  monthly  income  distributions  have  reinvested  $
330,157.00  back into the Company.  After  deducting for broker  commissions and
offering  expenses ($  456,774.00),  the net  proceeds to the Company from these
sales have been $ 7,856,761.  As of June 30,  2005,  the Company has $ 7,840,936
invested in commercial  mortgage loans,  with the remainder in the form of cash,
other  temporary  investments  such as short  term  commercial  paper  and other
assets. As of June 30, 2005, the Company has 248 Members.

      To compare this with how the Company was doing at our last year end, as of
December  31,  2004,  we had  sold a total  of  56,097  Units,  for a  total  of
$5,609,740.00. After deducting for broker commissions and offering expenses, the
net proceeds to the Company from these sales were $5,267,710.00. The Company had
$5,016,489.00  invested in commercial  mortgage loans, with the remainder in the
form of cash and/or other  temporary  investments  such as short term commercial
paper. As of December 31, 2004, the Company had 173 Members.

      To compare  this with how the  Company  was doing one year ago, as of June
30, 2004, we had sold a total of 27,286.64 Units, for a total of  $2,728,664.00.
After deducting for broker commissions and offering  expenses,  the net proceeds
to  the  Company   from  these  sales  were   $2,523,545.00.   The  Company  had
$2,486,415.00  invested in commercial  mortgage loans, with the remainder in the
form of cash and/or other  temporary  investments  such as short term commercial
paper. As of June 30, 2004, the Company had 117 Members.

      Syndication  costs  incurred in connection  with the raising of capital by
offering  units of  membership  interest in the  Company 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. Under certain commission plans 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. As of June 30, 2005,
the Company has capitalized $456,774 of syndication costs since inception.

      During the next twelve months,  the Company will continue to be managed by
Lakeside  Financial  Group,  Inc.  (the  "Manager"),   which  will  continue  to
underwrite  and select loans for the Company to invest in, as well as short term
investments  for cash between loans.  The Company 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 Company as  described  in the
Company's Operating Agreement.  The Company 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, 2005,  the Manager  accepted $ 17,349 of these fees,  and
waived a total of $ 42,354.00 of these fees.

      The Company does not expect to conduct  product  research and  development
during the next 12 months,  but will continue to raise capital  through the sale
of membership interests and invest that capital in commercial real estate loans.
The Company does not expect to make any significant plant or equipment purchases
or sales in the next 12 months.  The Company expects to add one or two employees
in the next 12 months. The Company has no off-balance sheet arrangements.

                                      -18-
<PAGE>

Item 3. Controls and Procedures.

      The  Company  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  Company's  operations  are
managed by its fund manager, Lakeside Financial Group, Inc. The Manager does not
own any membership interests in the Company.

      The Company maintains a banking  relationship  with Bank of America,  and,
prior to June 15, 2005,  with Morgan Stanley Dean Witter.  The following are the
cash in bank accounts established for the Company:

      Subscription   Account  -  Bank  of  America.   Upon  receipt  of  initial
subscriptions  from potential  investors,  the funds are deposited directly into
the BofA Subscription Account. This is a non-interest bearing account. The funds
are held for a maximum  period of sixty (60) days,  until  needed by the Company
for loans or other  purposes.  The funds are then  contributed to the capital of
the Company in exchange for a membership interest. The Manager may hold funds in
this account for longer than 60 days upon written consent of the subscriber. The
Manager  maintains a detailed record of the details of the Subscription  Account
by each  subscriber.  The balance in this account is reconciled  monthly between
the general ledger and the bank statement.

      General   Operating/Disbursement   Account  -  Bank  of  America.  Monthly
distributions  to  investors  are  drawn  against  this  account.  This  account
typically  has a zero balance.  Funds are  deposited  into this account from the
interest  reserve  account and the Morgan Stanley Money Market account where the
Company's income is recognized and accrued.  Disbursements  are processed at the
beginning of each month for income  distributions to each member. The balance in
this  account is  reconciled  monthly  between the  general  ledger and the bank
statement.

      Interest Reserve Account - Bank of America. Certain borrowers are required
to set up an interest reserve account for the benefit of the Company. Typically,
the reserve is  equivalent to the interest  income that would accrue  throughout
the life of the loan. This ensures that the interest is collected on time by the
Company.  The Manager  maintains a detailed record of the details of the reserve
account by  loan/borrower.  The balance in this  account is  reconciled  monthly
between the general ledger and the bank statement.

      Money  Market  Account - Morgan  Stanley/Bank  of America.  When funds are
swept from the Subscription  Account, the money is transferred to Morgan Stanley
Money Market Account.  This account bears a nominal  interest rate that is based
on the existing Fed Funds rate.  When  excess/unrestricted  funds  accumulate in
this account,  the Manager makes a determination of whether to invest the excess
funds in short term  commercial  papers,  generally 30 days, 60 days or 90 days.
Loans  are  funded  through  this  account.  Other  expenses  such  as  brokers'
commissions  are also paid out of this  account  directly.  The  balance in this
account is reconciled  monthly between the general ledger and the bank statement
In order to consolidate the Fund accounts under one financial institution,  this
account  was  closed  on  June  15,  2005  and  was  replaced  by a new  account
established with Bank of America.

                                      -19-
<PAGE>

INTERNAL ACCOUNTING CONTROL & PROCEDURES

      Cash Receipts and Subscriptions.

      Funds are generally  received through the mail (in the form of checks from
investors  or  directly  from  investors'  pension  manager)  or  through a wire
transfer.  The  mail  is  opened  by  either  P H  Canta  (CFO)  or W F  Webster
(President).  Checks are generally received with a signed subscription agreement
from the  investor.  This is processed by W F Webster and a copy of the investor
info summary  along with the actual  check is forwarded to P H Canta.  P H Canta
endorses the checks, completes a deposit slip and deposits the funds on the same
day or  the  following  business  day to  Bank  of  America.  The  cash  receipt
transaction  is recorded into the  accounting  system  (PeachTree) by P H Canta.
Wire  transfer  advice is generally  received via fax;  this goes  directly to W
Webster  who  forwards  a copy to P H Canta for  recording  into the  accounting
system.

      P H Canta prepares a weekly subscription  report for W F Webster.  This is
reconciled to the general  ledger balance of both the  Subscription  Account and
the uninvested  Subscription Account. The uninvested Subscription Account is the
corresponding  credit account that is used to monitor and hold all subscriptions
that have not been swept into the  invested  funds  category.  The  Subscription
Account is reconciled monthly and the bank reconciliation  statement is reviewed
by W F Webster.

      The cash receipts are also  disclosed in the monthly  statement of account
to the investors.  Any discrepancies between the investors' personal records and
such statement of accounts are reported to the  investors'  broker of record and
followed up by either P H Canta or W F Webster for resolution.

      Interest income is credited directly into the bank account.  Maturities of
short term  commercial  papers  and notes are also  credited  directly  into the
Morgan Stanley account (now replaced with Bank of America-Investment account).

      Cash Disbursements

      All payments are made either  through  company checks drawn against one of
the  Company's  bank  accounts  or via  wire  transfer.  All  disbursements  are
authorized by W F Webster.  Checks and wire instructions are signed and approved
by W F Webster.  Disbursements are generally for the monthly income distribution
to members.  Check  disbursements are  automatically  posted into the accounting
system via the accounts  payable  system.  Wire  transfers  are entered into the
system via  journal  entry  prepared  by P H Canta.  Disbursements  for  monthly
distribution   are  disclosed  in  the   statement  of  accounts   furnished  to
investors-members at the beginning of each month. Any discrepancies are reported
to the brokers, then to W F Webster for final resolution.

      Real Estate Loans and Reserve for loan losses

      The Company was  organized to make various types of real estate loans such
as acquisition and development loans,  construction  loans, bridge and mezzanine
loans and  refinancing  loans.  The loans are  secured by various  types of real
property  such as office,  industrial,  mobile home parks,  retail,  apartments,
assisted living facilities, mini-storage and other special purpose facilities on
a case-by-case basis,  entertainment and recreational  facilities on a selective
basis.  The loans will  generally be short term (1-3 years) and generally in the
amounts ranging from $ 100,000 to $ 5 million.

                                      -20-
<PAGE>

      Prospective  borrowers are generally referred to the Company by a mortgage
loan broker. Initial evaluation of the borrower's credit standing and ability to
pay is  assessed  by the  President,  W F Webster.  The  borrower  completes  an
application  form and is given a  checklist  of  items  to be  furnished  (title
reports, appraisals,  credit reports, financial statements, etc.). The resulting
loan  package is reviewed by W F Webster.  Following  his review and write-up of
the loan in a Loan Review  Summary,  the loan is presented to the loan committee
for review and approval. If the loan is approved by the loan committee, the loan
documents (promissory notes,  contracts,  etc.) are ordered and signed, then the
loan is funded. The CFO disburses the funds,  either directly to the borrower or
the escrow company for final accounting and disbursement of the funds.

      The original promissory notes, contracts and other critical loan documents
are maintained in a fire proof safe located in the corporate headquarters of the
Manager.  Each loan  transaction is also supported by a loan  application  form,
copies of credit evaluation documents of the borrower,  collateral filing, title
and  insurance  documents,  loan  approval  documents  and other  correspondence
pertaining to the real estate loan.  These documents are contained in a separate
loan folder maintained for each borrower.

      If an interest  reserve  account was stipulated in the agreement,  a check
corresponding to the amount of the required reserve is issued and deposited into
the Interest Reserve account with Bank of America.  Subsequently,  at the end of
each month,  the  interest on such loan is  calculated  and  transferred  to the
General    Operating   Account   via   Company   check   for   distribution   to
members-investors at the beginning of the following month

      The reserve for loan losses is established as losses are estimated to have
occurred  through a provision  for loan losses that will be charged  against the
company's  earnings.  Loan losses will be charged  against  the  allowance  when
management  believes the  uncollectibility  of a loan is  confirmed.  Subsequent
recoveries,  if any,  will be credited to the reserve  account.  The reserve 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.
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.

      Rollovers of investments from Affiliates

      An  investor-member  may invest its monthly income from other  investments
into the Company.  In such cases,  the  administrator  of the other  investments
issues  checks in favor of the  Company.  These  checks are  handled in the same
manner  as any  other  cash  receipts,  i.e.  endorsed,  deposited  into  BofA's
Subscription  Account  and  entered  into the  accounting  system.  Again,  such
receipts for each  investor-member  are  disclosed  in the monthly  statement of
account furnished to each investor-member.

      Reinvestments of monthly earnings

      Investor-members may choose to re-invest their respective share of company
profits back into the Company.  This is  accomplished  through an instruction to
Lakeside Mortgage Fund in the original subscription  agreement.  Each month, the
total of such  re-invested  funds is summarized and a single check is written to
be reinvested on behalf of those investors-members.  The check is deposited into
the  Morgan  Stanley  money  market  account  (now  Bank of  America  Investment
account);  such amount  then  becomes  capital of the  Company.  Similarly,  the
re-invested amounts are disclosed in the monthly statement of accounts furnished
to  investor-members  for review and reconciliation with their personal records.
Any discrepancies are treated the same way as described above.

                                      -21-
<PAGE>

      Members' Equity and Percentage Ownership

      The Manager,  at its  discretion,  may transfer the  Subscription  Account
funds into the Invested Fund  category  within 60 days of the date of receipt of
the funds. The  determination to transfer the subscription  funds depends on the
needs of the  Company to fund a loan or a mortgage.  The  Manager  will obtain a
subscriber's  consent if the funds cannot be invested  within the 60-day period,
as stipulated in the Offering  Circular.  Each subscriber is credited with units
of  membership  interest  in the  Company  depending  on the  amount of  his/her
subscription that was invested into the Company.  Each unit is priced at a fixed
dollar amount of $100.00.  The minimum amount of initial investment is 20 units,
or $2,000.00.

      Financial Reporting

      Monthly  financial  statements are provided to the members of the board of
the Manager (W F Webster,  J Koenig,  G Armitage and J Guidi).  Annual financial
statements are also furnished to the board members. The President of the Manager
(W F Webster) issues an annual report to all  investors-members at the beginning
of each year summarizing the operating  results of the Company and its financial
condition and other significant events affecting the Company's operations.

      Effectiveness of Disclosure Controls and Procedures

      The  principal  executive  officer and  principal  financial  officer have
evaluated the  disclosure  controls and  procedures and have concluded that they
are effective as of the end of the period ending June 30, 2005.

                                      -22-
<PAGE>

PART II - OTHER INFORMATION


Item 1. Legal Proceedings

      None


Item 2. Changes in Securities

      (c) During the period  covered by this  report the  Company  made sales of
unregistered securities set forth in the table below. All sales were of Units of
Membership  Interest in the Company,  for the purchase price of $100.00 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  Company  derives at least 80% of its  revenues  from loans  secured by real
property  located  in  California.   The  Company'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  Company 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 March 2, 2005.

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

                Date of Sale         Units Sold       Purchase Price
                ------------         ----------       --------------
                  04/08/05            1,233.79          $ 123,379.00
                  04/22/05            1,657.60          $ 165,759.85
                  05/06/05            2,047.30          $ 204,729.92
                  05/12/05            2,792.34          $ 279,234.08
                  05/20/05            3,428.15          $ 342,814.98
                  05/24/05              283.62          $  28,361.69
                  06/10/05            3,635.50          $ 363,549.68


Item 3. Defaults on Senior Securities

      None


                                      -23-
<PAGE>

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

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


Item 5. Other Information

      None.


Item 6. Exhibits

<TABLE>
<CAPTION>
Exhibit No.      Description
-----------      -----------
<S>               <C>
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 March 2, 2005
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.
</TABLE>


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

**Incorporated by reference to the Company's Quarterly Report on Form 10-QSB for
the period ended March 31, 2005,  filed with the  Commission  under the Exchange
Act on May 13, 2005.


                                      -24-
<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:  July 25, 2005                     By: /S/ William F. Webster
                                             ----------------------
                                             William F. Webster, President