U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE TRANSITION PERIOD FROM TO

Commission File Number 333-63656

CORNERSTONE REALTY FUND, LLC

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

California		33-0827161
(State or other jurisdiction		(IRS Employer
of incorporation or organization)		Identification No.)

4590 MACARTHUR BLVD., SUITE 610, NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

949-852-1007
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Not Applicable
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 ý NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). o Yes ý No

As of August 4, 2005, the Fund had 96,518 units of membership interest issued and outstanding.

CORNERSTONE REALTY FUND, LLC

(a California limited liability company)

CONDENSED BALANCE SHEETS

	June 30, 2005		December 31, 2004(A)
	(unaudited)
ASSETS

Assets
Cash and cash equivalents	$	15,514,957	$	11,793,822

Investments in real estate
Land	6,547,490		4,539,400
Buildings and improvements, less accumulated depreciation of $509,621 in 2005 and $342,697 in 2004	13,106,715		7,628,745
Intangible lease value, less accumulated amortization of $20,956 in 2005	529,044		—
Intangible asset – in place leases, less accumulated amortization of $224,209 in 2005 and $118,911 in 2004	196,575		48,503
	20,379,824		12,216,648
Other assets
Escrow deposit and other costs	7,581		275,052
Tenant and other receivables	72,981		31,876
Prepaid insurance	23,274		30,737
Leasing commissions, less accumulated amortization of $29,618 in 2005 and $15,282 in 2004	82,903		47,477

Total assets	$	36,081,520	$	24,395,612

LIABILITIES AND MEMBERS’ CAPITAL

Liabilities
Accounts payable and accrued liabilities	$	254,798	$	173,535
Tenant security deposits	231,071		135,294
Total liabilities	485,869		308,829

Members’ capital (100,000 units authorized, 86,587 units issued and outstanding at 2005 and 59,097 units issued and outstanding at 2004)	35,595,651		24,086,783
Total liabilities and members’ capital	$	36,081,520	$	24,395,612

(A) Derived from the audited financial statements as of December 31, 2004.

The accompanying notes are an integral part of these interim financial statements.

CORNERSTONE REALTY FUND, LLC

(a California limited liability company)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004

Revenues
Rental revenues	$	505,780		$	285,583		$	922,995		$	587,375
Amortization of in-place leases	(60,415		)	(32,852		)	(105,298		)	(70,404		)
Tenant reimbursements and other income	82,536			85,814			143,271			123,076
	527,901			338,545			960,968			640,047

Expenses
Property operating and maintenance	131,031			80,604			225,452			151,262
Property taxes	96,997			61,284			177,101			120,576
General and administrative	120,171			84,212			154,936			117,751
Depreciation and amortization	106,114			51,389			200,742			102,900
	454,313			277,489			758,231			492,489

Operating income	73,588			61,056			202,737			147,558

Interest, dividends and other income	48,300			1,863			80,950			2,206

Net income	$	121,888		$	62,919		$	283,687		$	149,764

Net income allocable to managing member	$	12,189		$	6,292		$	28,369		$	14,976

Net income allocable to unitholders	$	109,699		$	56,627		$	255,318		$	134,788

Per unit amounts:
Basic and diluted income allocable to unitholders	$	1.45		$	1.40		$	3.66		$	3.58

Basic and diluted weighted average units outstanding	75,745			40,399			69,714			37,606

The accompanying notes are an integral part of these interim financial statements.

CORNERSTONE REALTY FUND, LLC

(a California limited liability company)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
	2005			2004

OPERATING ACTIVITIES
Net income	$	283,687		$	149,764
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	306,039			173,304
Changes in operating assets and liabilities:
Other assets	184,067			(58,981		)
Accounts payable, accrued liabilities and security deposits	177,040			(7,468		)

Net cash provided by operating activities	950,833			256,619

INVESTING ACTIVITIES
Real estate additions	(8,454,879		)	(126,731		)

Net cash used in investing activities	(8,454,879		)	(126,731		)

FINANCING ACTIVITIES
Advances from managing member	216,711			—
Net proceeds from offering	12,289,145			4,527,670
Distributions to members	(731,635		)	(404,873		)
Deferred offering costs repaid to managing member	(549,040		)	(202,540		)

Net cash provided by financing activities	11,225,181			3,920,257

Net increase in cash	3,721,135			4,050,145

Cash and cash equivalents at beginning of period	11,793,822			1,464,206

Cash and cash equivalents at end of period	$	15,514,957		$	5,514,351

The accompanying notes are an integral part of these interim financial statements.

CORNERSTONE REALTY FUND, LLC

(a California Limited Liability Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Business

Cornerstone Realty Fund, LLC, a California limited liability company (the “Fund”) (formerly Cornerstone Multi-Tenant Industrial Business Parks Fund, LLC and Cornerstone Industrial Properties Income and Growth Fund I, LLC), was formed on October 28, 1998. The members of the Fund are Cornerstone Industrial Properties, LLC, a California limited liability company, as the Managing Member (“Managing Member”), Terry G. Roussel, an individual, and other various unitholders as described below. The purpose of the Fund is to acquire, operate and sell multi-tenant industrial properties. The Fund currently is issuing and selling in a public offering equity interests (“units”) in the Fund, and is admitting the new unitholders as members of the Fund. As of August 4, 2005, the Fund has issued 96,518 units to unitholders for gross offering proceeds of $48,244,900.

The interim unaudited condensed financial statements of the Fund have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. As permitted by the Securities and Exchange Commission filing requirements for Form 10-Q, the condensed financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The condensed financial statements included herein should be read in conjunction with the Fund’s Annual Report on Form 10-K for the year ended December 31, 2004.

The interim unaudited condensed financial statements have been prepared in accordance with the Fund’s customary accounting practices. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a presentation in accordance with accounting principles generally accepted in the United States have been included. Operating results for the three and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

Each member’s liability is limited pursuant to the provisions of the Beverly-Killea Limited Liability Company Act. The term of the Fund shall continue until December 31, 2010, unless terminated sooner pursuant to the operating agreement.

The operating agreement, as amended and restated, provides, among other things, for the following:

The Managing Member generally has complete and exclusive discretion in the management and control of the Fund; however, unitholders holding the majority of all outstanding and issued units have certain specified voting rights which include the removal and replacement of the Managing Member.

Net Cash Flow from Operations, as defined, will be distributed 90% to the unitholders and 10% to the Managing Member until the unitholders have received either an 8% or 12% cumulative, non-compounded annual return on their Invested Capital Contributions, as defined. The 12% return applies to specified early investors for the twelve-month period subsequent to the date of their Invested Capital Contributions and is in lieu of the 8% return during that period.

Net Sales Proceeds, as defined, will be distributed first, 100% to the unitholders in an amount equal to their Invested Capital Contributions; then, 90% to the unitholders and 10% to the Managing Member until the unitholders have received an amount equal to the unpaid balance of their aggregate cumulative, non-compounded annual return on their Invested Capital Contributions; and thereafter, 50% to the unitholders and 50% to the Managing Member.

Net Income, as defined, is allocated first, 10% to the Managing Member and 90% to the unitholders until Net Income allocated equals cumulative Net Losses, as defined, previously allocated in such proportions; second, in proportion to and to the extent of Net Cash Flow from Operations and Net Sales Proceeds previously distributed to the members, exclusive of distributions representing a return of Invested Capital Contributions; and then 50% to the Managing Member and 50% to the unitholders.

Net Loss is allocated first, 50% to the Managing Member and 50% to the unitholders, until Net Loss allocated equals cumulative Net Income previously allocated in such proportions; then remaining Net Loss is allocated 10% to the Managing Member and 90% to the unitholders.

All allocations and distributions to the unitholders are to be pro rata in proportion to their share of the allocations and distributions.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting periods. Actual results could materially differ materially from the estimates in the near term.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of interest-bearing investments with original maturities of 90 days or less at the date of purchase. Included in cash and cash equivalents at June 30, 2005 is $231,071 related to tenant security deposits. The Fund places its cash with major financial institutions. Approximately $14.9 million in cash balances was in excess of federally insured limits as of June 30, 2005.

Investments in Real Estate

Investments in real estate are stated at cost and include land, buildings and building improvements. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Significant replacements, betterments and tenant improvements which improve or extend the useful lives of the buildings are capitalized. Depreciation of the buildings and building improvements is computed on a straight-line basis over their estimated useful lives of either 10 or 39 years. Tenant improvements are depreciated over the shorter of the useful asset life or the related lease term.

The Fund evaluates the carrying value for investments in real estate in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“FAS 144”). FAS 144 requires that when events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable, companies should evaluate the need for an impairment write-down. When an impairment write-down is required, the related assets are adjusted to their estimated fair value.

3. Investments in Real Estate

On September 27, 2002, the Fund acquired an existing multi-tenant industrial business park known as Normandie Business Center, located in Torrance, California for an investment of $3,901,696. Normandie Business Center consists of two single-story buildings containing a total of 48,711 leasable square feet.

On December 27, 2002, the Fund acquired an existing multi-tenant industrial business park known as the Sky Harbor Business Park, located in Northbrook, Illinois for an investment of $2,553,996. Sky Harbor Business Park consists of a single-story building containing a total of 41,422 leasable square feet.

On December 10, 2003, the Fund acquired an existing multi-tenant industrial park known as Arrow Business Center located in Irwindale, California for an investment of $5,910,579. The property consists of three single-story buildings containing a total of 69,592 leasable square feet.

On January 25, 2005, the Fund acquired an existing multi-tenant business park in Glenview, Illinois known as Zenith Drive Centre from an independent third party for an investment of $5,243,732. Zenith Drive Centre is a single-story three building property built in 1978 of approximately 38,088 square feet on approximately 2.54 acres of land.

Included in the acquisition and purchase price of Zenith Drive Centre were a billboard sign and cellular relay antenna located on the property leased to a large media company and communications company, respectively. Management separately valued these leases and the resulting amounts are included in intangible lease value. The value of these leases is amortized over the remaining respective terms.

On April 28, 2005, the Fund purchased an existing multi-tenant industrial park known as Paramount Business Center for an investment of $3,143,733. Paramount Business Center is a single-story two building property of approximately 30,157 square feet on approximately 1.66 acres of land located in Paramount, California.

Industrial space in the properties is generally leased to tenants under lease terms that provide for the tenants to pay increases in operating expenses in excess of specified amounts.

4. Related Party Transactions

The Managing Member incurs specific incremental costs in connection with the offering of membership units. Reimbursement of such offering costs is limited to 4% of the gross proceeds of the related offerings. Offering costs incurred by the Managing Member in excess of the 4% limitation are deferred, and will be reimbursed from future offering proceeds. Any offering costs incurred by the Managing Member that are not reimbursed by the Fund will be reflected as a capital contribution to the Fund by the Managing Member, with an offsetting expense recognized in the Fund’s statement of operations.

Unrecovered offering costs incurred by the Managing Member for the six months ending June 30, 2005 are as follows:

Balance, December 31, 2004	$	443,690
Costs incurred	348,330
Costs paid	(549,040		)

Balance, June 30, 2005	$	242,980

Currently the Fund is distributing a 5% annual return paid quarterly. During the six months ended June 30, 2005, the Managing Member funded $216,711 to subsidize the Fund’s distributions of $731,635 to the unitholders. This funding by the Managing Member will not be reimbursed to the Managing Member by the Fund.

The Managing Member and/or its affiliates are entitled to receive various fees, compensation and reimbursements as specified in the Fund’s operating agreement, including commissions of 7%, marketing fees of 2% of gross proceeds from the offering of units, and expense allowances of 1.5% of gross proceeds from the offering of units. During the six months ended June 30, 2005 and 2004, the total fees, compensation and reimbursements were $1,441,755 and $535,483, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Fund’s financial statements and notes thereto contained elsewhere in this report. Certain statements in this section and elsewhere contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to risks and other factors that may cause the Fund’s future results of operations to be materially different than those expressed or implied herein. Some of these risks and other factors include, but are not limited to: (i) no assurance that Fund properties will continue to experience the current level of occupancy; (ii) tenants may not be able to meet their financial obligations; (iii) rental revenues from the properties may not be sufficient to meet the Fund’s cash requirements for operations, capital requirements and distributions; (iv) suitable investment properties may not continue to be available; and (v) adverse changes to the general economy may disrupt operations.

Critical Accounting Policies

The Fund’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ materially from the estimates in the near term.

Revenue Recognition

Rental revenues are recorded on an accrual basis as they are earned over the lives of the respective tenant leases on a straight-line basis. Included in this calculation are contractual rent increases and amounts paid to tenants as tenant improvement allowances. Rental receivables are periodically evaluated for collectibility.

Investments in Real Estate

computed on a straight-line basis over their estimated useful lives of either 10 or 39 years. Tenant improvements are depreciated over the shorter of the useful asset life or the related lease term.

In June 2001 the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 and No. 142 require the Fund to record at acquisition an intangible asset or liability for the value attributable to in-place leases. The requirements are applicable to all acquisitions subsequent to July 1, 2001. As of June 30, 2005, the Fund has recorded $420,784, as an intangible asset attributable to the value of the leases in place as of the date of acquisition. Accumulated amortization was $224,209 as of June 30, 2005. As of June 30, 2005, the Fund has recorded $550,000 as an intangible asset attributable to the current value of billboard and cell site leases as of the date of acquisition. Accumulated amortization was $20,956 as of June 30, 2005.

Off-balance Sheet Financings and Liabilities

Other than lease commitments and legal contingencies incurred in the normal course of business, the Fund does not have any off-balance sheet financing arrangements or liabilities. The Fund does not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities.

Results of Operations

As of June 30, 2005, the Fund has purchased five multi-tenant industrial business park properties in two major metropolitan areas. The properties were purchased from the proceeds from the sale of membership units, without debt financing. The properties were purchased in September 2002, December 2002, December 2003, January 2005, and April 2005. As a result of the dates of purchase, Fund operations for 2004 reflect the net income from only three properties for all six months of the prior period.

For the three months ended June 30, 2005, Fund operations reflect operations for the five properties purchased for all three months except for the property that was recently purchased in April 2005. The results of operations for this property are included from the acquisition date of April 28, 2005.

For the six months ended June 30, 2005, Fund operations reflect operations for the four properties purchased prior to April 1, 2005 for all three months except for the property that was purchased in January 2005. The results of operations for this property are included from the acquisition date of January 25, 2005.

Three months ended June 30, 2005 and 2004

The Fund’s net income for the three months ended June 30, 2005 and 2004 was $121,888 and $62,919, respectively. Revenue increased from $338,545 to $527,901. This increase primarily reflects the additions of Zenith Centre Drive and Paramount Business Center. Property operating and maintenance expenses, and property taxes increased from $141,888 in 2004 to $228,028 in 2005 due to the addition of the aforementioned two properties. Depreciation and amortization increased from $51,389 to $106,114 due to the addition of properties. General and administrative costs increased from $84,212 to $120,171. The majority of this increase is attributable to the additional accounting effort related to the Sarbanes-Oxley Act of 2002. Most of these costs are considered recurring as the Fund will be performing a formal assessment of its internal control structure in preparation for an audit of internal control over financial reporting for the year ended December 31, 2006.

Interest and other income increased to $48,300 for the three months ended June 30, 2005 from $1,863 for the same period in 2004. The increase was primarily due to a significant increase in invested cash balances and the rise in short-term interest rates.

Six months ended June 30, 2005 and 2004

The Fund’s net income for the six months ended June 30, 2005 and 2004 was $283,687 and $149,764, respectively. Revenue increased from $640,047 to $960,968. This increase primarily reflects the additions of Zenith Center Drive and Paramount Business Park. Property operating and maintenance expenses, and property taxes increased from $271,838 in 2004 to $402,553 in 2005 due to the addition of the aforementioned two properties. Depreciation and amortization increased from $102,900 to $200,742 due to the addition of properties. General and administrative costs increased from $117,751 to $154,936. The majority of this increase is attributable to the additional accounting effort related to the Sarbanes-Oxley Act of 2002. Most of these costs are considered recurring as the Fund will be performing a formal assessment of its internal control structure in preparation for an audit of internal control over financial reporting for the year ended December 31, 2006.

Interest and other income increased to $80,950 for the six months ended June 30, 2005 from $2,206 for the same period in 2004. The increase was primarily due to a significant increase in invested cash balances and the rise in short-term interest rates.

Liquidity and Capital Resources

As of June 30, 2005, the Fund has received $43,279,400 ($48,244,900 as of August 4, 2005) of gross proceeds from the sale of membership units, and $701,150 as a capital contribution from the Managing Member. As of June 30, 2005, the Fund has $15.5 million ($19.8 at August 4, 2005) in cash and cash equivalents.

The Fund intends to continue offering membership units for sale and use the existing cash balance and net proceeds from the sale of units for the acquisition of additional multi-tenant industrial business park properties, capital improvements to the properties, and for operating expenses and reserves.

The Fund expects to meet its short-term liquidity requirements from net cash generated by operations exclusive of any expected distributions.

The Managing Member has financed the Fund’s offering and organizational activities. A portion of those costs have been reimbursed to the Managing Member at the rate of 4% of gross proceeds of the Fund’s unit sales pursuant to the prospectus for the offering. The Fund will continue to incur organizational and offering expenses and the Managing Member, although not obligated, intends to continue providing advances for offering and organizational expenses until the sale of membership units is completed. The Managing Member must raise funds through the sale of its own debt or equity securities to obtain the cash necessary to provide these advances. There can be no assurance as to the amount or timing of the Managing Member’s receipt of funds. The Fund will not reimburse the Managing Member for any amounts advanced by it for offering and organizational expenses, which exceed the amounts and percentages, set forth in the prospectus for the offering. Any such expenses incurred by the Managing Member on behalf of the Fund that are not reimbursed by the Fund will be reflected as a capital contribution to the Fund by the Managing Member with an offsetting expense recognized in the Fund’s statement of operations.

Contractual Obligations

As of June 30, 2005, the Fund had no significant contractual obligations or commercial commitments, other than its operating leases with tenants in its commercial properties.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Fund invests its cash and cash equivalents in FDIC insured savings and money market accounts which, by their nature, are subject to interest rate fluctuations.

Item 4. Controls and Procedures

Since March 2005, the Company has hired additional accounting personnel and believes that due to the increased number of personnel and the implementation of several new procedures, that the previously identified material weaknesses have been substantially mitigated to a lower risk level. The Fund has not undergone an audit of its internal control over financial reporting as it is not an accelerated filer, however, expects to undergo an examination for the year ended December 31, 2006, or the expected due date of compliance with the Sarbanes-Oxley Act of 2002.

The Fund’s disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that the Fund files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to the Fund’s management, as appropriate, to allow timely decisions regarding required disclosure. The Chief Executive Officer and the Chief Financial Officer of Cornerstone Ventures, Inc., the manager of the Managing Member of the Fund, have reviewed the effectiveness of the Fund’s disclosure controls and procedures and have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

We are in the process of developing and implementing a formal set of internal controls and procedures for financial reporting as required by the Sarbanes-Oxley Act of 2002, the efficacy of the steps we have taken to date and steps we are still in the process of completing is subject to continued management review supported by confirmation and testing by management and by our auditors. We anticipate that additional changes may be made to our internal controls and procedures. Other than the foregoing initiatives, no change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

PART II - OTHER INFORMATION

Item 6. Exhibits

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		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized this 12th day of August 2005.

CORNERSTONE REALTY FUND, LLC

By:	CORNERSTONE INDUSTRIAL PROPERTIES, LLC its Managing Member

	By:	CORNERSTONE VENTURES, INC. its Manager

		By:	/s/ TERRY G. ROUSSEL
			Terry G. Roussel, President
			(Principal Executive Officer)


		By:	/s/ GARY W. NIELSON
			Gary W. Nielson,
			Chief Financial Officer
			(Principal Financial Officer and
			Principal Accounting Officer)

Condensed Balance Sheets at June 30, 2005 (unaudited) and December 31, 2004

Condensed Statements of Operations for the Three Months and Six Months ended June 30, 2005 (unaudited) and June 30, 2004 (unaudited)

Condensed Statements of Members’ Capital for the Six Months ended June 30, 2005 (unaudited)

Condensed Statements of Cash Flows for the Six Months ended June 30, 2005 (unaudited) and June 30, 2004 (unaudited)

Notes to Condensed Financial Statements (unaudited)