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 September 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 shell 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

<TABLE>
<CAPTION>

Part I - Financial Information

           <S>          <C>                                                                    <C>
           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                                                               24

           Signatures                                                                          24

</TABLE>

                                      -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 Sheet (Unaudited)
                               September 30, 2006

<TABLE>
<CAPTION>

                                     ASSETS

<S>                                                                                    <C>
      Cash in bank (Note 5)`                                                           $ 1,478,584
      Loan interest reserve (restricted)                                                   285,659
      Accrued interest receivable                                                          145,418
      Notes receivable - related parties (Notes 3 and 4)                                   724,390
      Notes receivable - non related parties, net of allowance for
           bad debts:  $118,710 and  $45,700 in 2006 and 2005, respectively (Note 3)    12,695,881
                                                                                       -----------

TOTAL ASSETS                                                                           $15,329,932
                                                                                       ===========

</TABLE>

                         LIABILITIES AND MEMBERS' EQUITY

      Accounts payable and other current liabilities                 $    92,788
      Uninvested subscriptions                                            73,247
      Deferred interest on notes receivable                              285,659
                                                                     -----------

Total liabilities                                                        451,694
                                                                     -----------

Members' equity (Note 4)
      Members' contributions, net                                     14,784,348
      Retained earnings                                                   93,890
                                                                     -----------

      Total members' equity                                           14,878,238
                                                                     -----------

TOTAL LIABILITIES AND MEMBERS' EQUITY                                $15,329,932
                                                                     ===========

      see accompanying notes


                                      -4-
<PAGE>

                           Lakeside Mortgage Fund, LLC
                    (A California Limited Liability Company)
                      Statements of Operations (Unaudited)
                       For the Periods Ended September 30,

<TABLE>
<CAPTION>

                                                          2006                       2005
                                                 -----------------------   ------------------------
                                                 July-Sept     Jan-Sept    July-Sept      Jan-Sept
                                                 ----------   ----------   ----------    ----------
Revenues
<S>                                              <C>          <C>          <C>           <C>
      Interest and other income                  $  401,401   $1,093,231   $  226,206    $  580,840
                                                 ----------   ----------   ----------    ----------
      Total revenues                                401,401    1,093,231      226,203       580,840
                                                 ----------   ----------   ----------    ----------

Operating Expenses
      Professional fees - accounting and taxes       10,200       34,600        6,300        18,883
      Advertising                                    11,750       13,250          750         2,500
      Provision for loan losses                         676       59,710       13,164        38,600
      Management fees (Notes 1 & 4)                  40,964       72,760       17,734        44,079
      Permits fees and licenses                         750        2,250          750         4,748
      Printing                                        5,400        7,800          600         3,159
      Legal                                           3,150        9,300          (10)        2,067
      Trailer commissions                            10,000       41,000        4,500        11,796
      Conference and seminars                         1,500        4,500           --         1,000
      Other operating expenses                        1,800        7,400        3,040         3,840
      Taxes                                             450        1,350          450         2,750
                                                 ----------   ----------   ----------    ----------

      Total operating expenses                       86,640      253,920       47,278       133,422
                                                 ----------   ----------   ----------    ----------

Net income                                       $  314,761   $  839,311   $  178,925    $  447,418
                                                 ==========   ==========   ==========    ==========

</TABLE>

      see accompanying notes


                                      -5-
<PAGE>

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

                          STATEMENTS OF MEMBERS' EQUITY
         For the nine-month period ended September 30, 2006 (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
      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
      Distribution                                          (245,157)          (245,157)
                                                     ---------------    ---------------    ---------------

Balance, June 30, 2006                               $    13,867,151    $        83,081    $    13,950,232

    Contributions                                            897,591            897,591
    Costs incurred in raising capital                        (37,540)           (37,540)
    Reinvestment of members' share of net income             191,785            191,785
    Investors' withdrawal                                   (134,639)          (134,639)
    Net income                                               314,761            314,761
    Distribution                                            (303,952)          (303,952)
                                                     ---------------    ---------------    ---------------

Balance, September 30, 2006                          $    14,784,348    $        93,890    $    14,878,238
                                                     ===============    ===============    ===============

</TABLE>

see accompanying notes


                                      -6-
<PAGE>

                           Lakeside Mortgage Fund, LLC
                    (A California Limited Liability Company)
                            Statements of Cash Flows
                       For the periods ended September 30,

<TABLE>
<CAPTION>

                                                                          2006                          2005
                                                               --------------------------    --------------------------
                                                                July-Sept      Jan-Sept       July-Sept      Jan-Sept
                                                               -----------    -----------    -----------    -----------

Cash Flows from Operating Activities:

<S>                                                            <C>            <C>            <C>            <C>
      Net income                                               $   314,761    $   839,311    $   178,925    $   447,418
      Provision for bad debts                                          676         59,710         13,164         38,600
      Accrued interest receivable                                  (91,196)      (126,349)       (30,855)       (31,966)
      Loan interest reserves (restricted)                           47,120          2,419         77,184        (10,063)
      Accounts payable and other liabilities                        26,387         61,834          9,865         11,873
      Deferred interest receivable                                 (47,120)        (2,419)       (77,184)        10,063
                                                               -----------    -----------    -----------    -----------

      Change                                                       250,628        834,506        171,099        465,925
                                                               -----------    -----------    -----------    -----------

Cash Flows from Investing Activities:

      Investment in related parties' notes receivable                   --        177,000             --             --
      Notes receivable-non related parties:
                Funding                                         (1,753,135)    (6,526,487)      (913,505)    (4,820,653)
                Payoff                                           2,003,010      2,442,320        309,756      1,392,456
                                                               -----------    -----------    -----------    -----------
      Change                                                       249,875     (3,907,167)      (603,749     (3,428,197)
                                                               -----------    -----------    -----------    -----------

Cash Flows from Financing Activities:

      Members' contributions                                       964,708      3,983,371      1,823,349      4,321,874

      Members' withdrawals                                        (134,639)      (293,495)      (418,019)      (438,019)
      Costs incurred in raising capital and commissions, net       (37,540)      (195,184)       (30,472)      (145,217)
      Distributions to members                                    (112,166)      (282,419)       (50,799)      (119,617)
                                                               -----------    -----------    -----------    -----------

      Change                                                       680,363      3,212,273      1,324,059      3,619,021
                                                               -----------    -----------    -----------    -----------

Net Change in Cash during the Period                             1,180,866        139,612        891,409        656,749

Cash in Bank, Beginning of Period                                  297,718      1,338,972        279,504        514,164
                                                               -----------    -----------    -----------    -----------

Cash in Bank, End of Period                                    $ 1,478,584    $ 1,478,584    $ 1,170,913    $ 1,170,913
                                                               ===========    ===========    ===========    ===========

</TABLE>

see accompanying notes


                                      -7-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 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 September 30, 2006 and 2005, the results of operations for the
nine and three months ended September 30, 2006 and 2005 and cash flows for the
nine and three months ended September 30, 2006 and 2005. Results of operations
for the nine months ended September 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)
                           September 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)
                           September 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.

(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. 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. The Fund will not recognize
      interest income on loans once they are determined to be impaired until the
      interest is collected in cash after principal is collected. 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. 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.


                                      -10-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 30, 2006 and 2005

      As of September 30, 2006, five (5) loans totaling $2,727,345 have matured
      and remained unpaid; four (4) loans for less than 30 days while one (1)
      loan ($380,000) has been delinquent since May, 2006. Delinquent interest
      amounted to $ 20,710 and was fully covered by an allowance for bad debts.
      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.

(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.

      The following shows the activities in the allowance for loan losses during
      the 9-month period ended September 30, 2006:

               Balance, December 31, 2005                $ 59,000
               Additions                                 $ 59,710
               Write offs                                $      0
                                                         --------

               Balance, September 30, 2006               $118,710
                                                         ========


                                      -11-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 30, 2006 and 2005

(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 September 30, 2006,
      the loan interest reserve and deferred interest were $285,658.

(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 paid by the Fund are currently 4.5%. The brokers are
      also entitled to receive "trailer commissions" equivalent to 0.5% of the
      average daily invested capital at the 1 year 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 $37,540 (YTD: $195,184) of syndication costs and
      brokers' fees during the quarters ended September 30, 2006.

(j)   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. 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 September 30, 2006, the uninvested funds in the subscription account
      was $73,247.


                                      -12-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 30, 2006 and 2005

Note 3 -   Loans Secured by Trust Deeds

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

                                                2006                 2005
                                             -----------         -----------

    Commercial                               $ 3,570,390         $ 1,188,000
    Construction                             $ 2,614,554         $ 1,022,734
    Unimproved Land                          $ 7,354,037         $ 6,233,951
                                             -----------         -----------

    Total                                    $13,538,981         $8,444,685__
                                             -----------         -----------

    First Mortgages                          $ 8,693,591         $ 4,412,635
    Second Mortgages                         $ 4,845,390         $ 4,032,050
                                             -----------         -----------


    Total                                    $13,538,981         $8,444,685__
                                             -----------         -----------

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

                                Fixed             Variable
                                Interest          Interest
                                Rate              Rate                Total
                               -----------       -----------       -----------
Year Ending December 31:
2006                           $ 6,944,246                 0       $ 6,944,246
2007                           $ 5,127,735                 0       $ 5,127,735
2008                           $ 1,467,000                 0       $ 1,467,000
                               -----------       -----------       -----------
Total                          $13,538,981                 0       $13,538,981
                               -----------       -----------       -----------

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

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

As of September 30, 2006, the Fund's loan portfolio consisted of twenty five
(25) real estate loans to unrelated parties totaling $ 12,814,591, and two (2)
loans receivable from related parties amounting to $ 724,390. These debt
securities are all secured by deeds of trust.


                                      -13-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 30, 2006 and 2005

1.         Loan 200408 amounting to $ 206,000, due in monthly installments of $
           1,871 interest only at 10.90% maturing on December 22, 2006. This
           loan is secured by a second trust deed on the underlying property.
2.         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.
3.         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.
4.         Loan 200411 amounting to $ 919,038, due in monthly installments of $
           8,273 interest only at 10.90% maturing on December 6, 2006. This loan
           is secured by a first trust deed on the underlying property.
5.         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.
6.         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.
7.         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.
8.         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.
9.         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.
10.        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.
11.        Loan 200511 amounting to $ 477,345 due in monthly installments of $
           4,773 interest only at 12.00% maturing on September 15, 2006. This
           loan is secured by a first trust deed on the underlying property.
12.        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.
13.        Loan 200513 amounting to $ 177,472 due in monthly installments of $
           1,775 interest only at 12.00% maturing on December 12, 2006. This
           loan is secured by a first trust deed on the underlying property.


                                      -14-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 30, 2006 and 2005

14.        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.
15.        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.
16.        Loan 200603 amounting to $ 1,040,699 due in monthly installments of $
           10,407 interest only at 12% maturing on February 2, 2007. This loan
           is secured by a first trust deed on the underlying property.
17.        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.
18.        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.
19.        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.
20.        Loan 200607 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.
21.        Loan 200608 amounting to $ 625,000 due in monthly installments of $
           6,198 interest only at 11.90% maturing on May 23, 2007. This loan is
           secured by a second trust deed on the underlying property.
22.        Loan 200609 amounting to $ 345,000 due in monthly installments of $
           3,134 interest only at 10.90% maturing on June 27, 2008. This loan is
           secured by a first trust deed on the underlying property.
23.        Loan 200610 amounting to $ 270,000 due in monthly installments of $
           3,150 interest only at 14.00% maturing on July 3, 2007. This loan is
           secured by a second trust deed on the underlying property.
24.        Loan 200611 amounting to $ 260,000 due in monthly installments of $
           2,600 interest only at 12.00% maturing on August 3, 2007. This loan
           is secured by a second trust deed on the underlying property.
25.        Loan 200612 amounting to $ 570,000 due in monthly installments of $
           5,653 interest only at 11.90% maturing on August 30, 2008. This loan
           is secured by a first trust deed on the underlying property.
26.        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.
27.        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.


                                      -15-
<PAGE>

                           LAKESIDE MORTGAGE FUND, LLC
                    (A CALIFORNIA LIMITED LIABILITY COMPANY)
                    Notes to Financial Statements (Unaudited)
                           September 30, 2006 and 2005

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 September 30, 2006, the Fund had an interest in two (2) loans
issued 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 11% per annum. For the quarters
ended September 30, 2006 and 2005, the Fund recognized interest income on loans
to related parties amounting to $20,629 (YTD: $70,256) and $27,891 (YTD:
$83,226), 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 September 30, 2006, the
Fund is in compliance with this restriction.

Contra Equity Costs
During the quarters ended September 30, 2006 and 2005 the Fund incurred $ 0 and
$11,778, 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 rate was 4.5% 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 September 30, 2006 and 2005
were $37,540 (YTD: $195,184) and $30,472 (YTD: $145,217), 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)
                           September 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 September 30, 2006 and 2005 amounting to $1,089,376
(YTD: $4,842,853) and $1,444,391 (YTD: $3,965,367) of which it realized
commissions totaling $37,540 (YTD: $195,184) and $30,472 (YTD: $145,217),
respectively. The brokers do not earn a commission until funds are transferred
from the subscription account to members' equity, at which time the funds become
contributed capital of the Fund.

Management and servicing fees
The Manager earned $40,964 (YTD: $72,760) and $17,734 (YTD: $44,079) during the
quarters ended September 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 September 30, 2006, the Fund had approximately $1,205,337 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)
                           September 30, 2006 and 2005

Notes receivable - non related parties
Seven (7) loans totaling $3,823,645 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 28% of the total loan portfolio and 36% of
total interest income. The loans 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 four (4) construction loans
totaling $1,487,886 which was undisbursed at September 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)
                           September 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 September 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 September 30, 2006, we have sold a total of 152,092.95 Units, at
$100 per Unit, for a total of $15,209,295. As of September 30, 2006, Fund
members electing to reinvest their monthly income distributions have reinvested
$1,105,420 back into the Fund. After deducting for broker commissions and
offering expenses ($727,352), the net proceeds to the Fund from these sales
(which includes reinvestment of earnings) have been $15,587,363. Members
withdrew a total of $803,015 through the period ended September 30, 2006. As of
September 30, 2006, the Fund has $ 13,538,981 invested in commercial mortgage
loans, with the remainder in the form of cash and other assets. As of September
30, 2006, the Fund has 348 members.

      To compare this with how the Fund was doing during the same period last
year, we had sold a total of 93,268.47 Units, for a total of $9,326,847 as of
September 30, 2005. Reinvested funds amounted to $451,079. After deducting for
broker commissions and offering expenses ($514,418), the net proceeds to the
Fund from these sales were $9,263,508. The Fund had $8,444,685 invested in
commercial mortgage loans, with the remainder in the form of cash and/or other
temporary investments. As of September 30, 2005, the Fund had 266 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 September
30, 2006, the Fund has capitalized $727,352 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 September 30, 2006, the Manager
accepted $40,964 (YTD: $72,760) in management fees and waived a total of $72,208
of these fees.

      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.


                                      -20-
<PAGE>


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 third fiscal quarter ended September 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 98% 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:


                                      -22-
<PAGE>

         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
    07/12/06                                         1,826.30    $   182,630.00
    07/19/06                                         1,507.83    $   150,782.87
    08/04/06                                         1,147.83    $   114,782.61
    08/16/06                                         2,464.79    $   246,478.87
    08/29/06                                           322.00    $    32,200.00
    09/08/06                                         1,707.17    $   170,716.61

    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
    07/31/06 (re investment)                           589.81    $    58,981.35
    08/31/06 (re investment)                           656.84    $    65,684.48
    09/30/06 (re investment)                           671.19    $    67,118.99

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


                                      -23-
<PAGE>

<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 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.

</TABLE>

* 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.

** Incorporated by reference to the Fund's Quarterly Report on Form 10-QSB for
the quarterly period ended June 30, 2006.

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:  November 13, 2006                  By: /S/ William F. Webster
                                              ----------------------
                                              William F. Webster, President


                                      -24-
<PAGE>