##### Table of Contents









U.S. SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-Q

|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004                                            
|Or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | Transition Period
    From           To                                                     

COMMISSION FILE
NUMBER 333-32800

VESTIN FUND I, LLC

(Exact Name of Registrant as Specified in Its
Charter)


|                                                                                         |  |                                         
|---------------------------------------------------------------------------------------- |  | ----------------------------------------
|Nevada                                                                                   |  | 88-0446244                              
|(State or Other Jurisdiction of
    Incorporation or Organization)                       |  | (I.R.S. Employer
    Identification No.)
|                                                                                        
|8379 West Sunset Road,
    Las Vegas, Nevada(Address of Principal Executive
    Offices) |  | 89113(Zip Code)                         

Registrants Telephone Number:

702.227.0965


Indicate by check whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

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

As of January 31, 2005, the Issuer had
7,619,193 of its Units outstanding.





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TABLE OF CONTENTS

|                                  |         |                                                                                           |  |                                                                                                    |    |  |   | 
|--------------------------------- | ------- | ----------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- | -- |  | - | 
|                                  |         |                                                                                           |  | Page                                                                                               |   
|                                  |         |                                                                                           |  |                                                                                                    |   
|PART I  FINANCIAL
    INFORMATION
|                                  | Item 1. |                                                                                           |  | Financial Statements                                                                               |    |  |   | 
|                                  |         |                                                                                           |  | Balance sheets as of
    December 31, 2004 (unaudited), and September 30,
    2004                 |    |  | 3 | 
|                                  |         |                                                                                           |  | Statements of income for the
    three months ended December 31, 2004 and 2003
    (unaudited)     |    |  | 4 | 
|                                  |         |                                                                                           |  | Statement of members
    equity for the three months ended December 31, 2004
    (unaudited)      |    |  | 5 | 
|                                  |         |                                                                                           |  | Statements of cash flows for
    the three months ended December 31, 2004 and 2003
    (unaudited) |    |  | 6 | 
|                                  |         |                                                                                           |  | Notes to financial
    statements (unaudited)                                                      |    |  | 7 | 
|Item 2.                           |         | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |  |                                                                                                    | 18 | 
|Item 3.                           |         | Quantitative and Qualitative
    Disclosures about Market Risk                            |  |                                                                                                    | 26 | 
|Item 4.                           |         | Controls and Procedures                                                                   |  |                                                                                                    | 27 | 
|                                 
|PART II  OTHER
    INFORMATION   
|Item 1.                           |         | Legal Proceedings                                                                         |  |                                                                                                    | 28 | 
|Item 2.                           |         | Changes in Securities and
    Use of Proceeds                                             |  |                                                                                                    | 28 | 
|Item 3.                           |         | Defaults Upon Senior
    Securities                                                       |  |                                                                                                    | 28 | 
|Item 4.                           |         | Submission of Matters to a
    Vote of Security Holders                                   |  |                                                                                                    | 28 | 
|Item 5.                           |         | Other Information                                                                         |  |                                                                                                    | 28 | 
|Item 6.                           |         | Exhibits                                                                                  |  |                                                                                                    | 28 | 
|SIGNATURES                        |         |                                                                                           |  |                                                                                                    | 29 | 
|Exhibit 31.1                     
|Exhibit 31.2                     
|Exhibit 32                       



2



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##### Table of Contents



Vestin Fund I, LLC



BALANCE SHEETS


|                                                                                                                                                                                                     |                       |                                       |            |           |               |   |            |           |            | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ------------------------------------- | ---------- | --------- | ------------- | - | ---------- | --------- | ---------- | 
|                                                                                                                                                                                                     |                       | December 31,                          |            |           | September 30, |  
|                                                                                                                                                                                                     |                       | 2004                                  |            |           | 2004          |  
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|                                                                                                                                                                                                     |                       | (Unaudited)                           |            |           |              
|ASSETS                                                                                                                                                                                              
|Cash                                                                                                                                                                                                 |                       | $                                     | 20,210,097 |           |               | $ | 9,829,496  |          
|Certificates of deposit                                                                                                                                                                              |                       |                                       | 300,000    |           |               |   | 300,000    |          
|Interest and other receivables                                                                                                                                                                       |                       |                                       | 601,803    |           |               |   | 1,327,089  |          
|Note receivable                                                                                                                                                                                      |                       |                                       | 119,299    |           |               |   | 119,299    |          
|Real estate held for sale                                                                                                                                                                            |                       |                                       | 11,645,181 |           |               |   | 15,286,848 |          
|Real estate held for sale  seller
    financed                                                                                                                                                      |                       |                                       | 10,801,448 |           |               |   | 10,801,448 |          
|Investment in mortgage loans, net of allowance
    for loan losses of $600,000 at December 31, 2004, and
    September 30, 2004                                                                      |                       |                                       | 41,027,038 |           |               |   | 47,344,198 |          
|Assets under secured borrowings                                                                                                                                                                      |                       |                                       | 3,176,808  |           |               |   | 6,134,410  |          
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|                                                                                                                                                                                                     |                       | $                                     | 87,881,674 |           |               | $ | 91,142,788 |          
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|                                                                                                                                                                                                    
|LIABILITIES AND MEMBERS EQUITY                                                                                                                                                                     
|Liabilities                                                                                                                                                                                          |                       |                                       |            |           |               |   |            |          
|                                                                                                                                                                                                     | Accounts payable      |                                       | $          |          |               |   | $          | 351,205   |           
|                                                                                                                                                                                                     | Due to Manager        |                                       |            | 778,247   |               |   |            | 652,312   |           
|                                                                                                                                                                                                     | Due to Vestin Group   |                                       |            |          |               |   |            | 4,822     |           
|                                                                                                                                                                                                     | Due to Vestin Fund II |                                       |            | 1,504,169 |               |   |            | 1,469,743 |           
|                                                                                                                                                                                                     | Secured borrowings    |                                       |            | 3,176,808 |               |   |            | 6,134,410 |           
|                                                                                                                                                                                                     | Deferred income       |                                       |            | 426,737   |               |   |            | 251,742   |           
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|                                                                                                                                                                                                     |                       | Total liabilities                     |            |           | 5,885,961     |   |            |           | 8,864,234  | 
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|Members equity  authorized
    10,000,000 units, 8,293,352 units and
    8,354,057 units issued at $10 per unit and outstanding
    at December 31, 2004, and September 30, 2004,
    respectively |                       |                                       | 81,995,713 |           |               |   | 82,278,554 |          
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|                                                                                                                                                                                                     |                       | Total members equity                 |            |           | 81,995,713    |   |            |           | 82,278,554 | 
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  
|                                                                                                                                                                                                     |                       | Total liabilities and members equity |            | $         | 87,881,674    |   |            | $         | 91,142,788 | 
|                                                                                                                                                                                                     |                       |                                       |            |           |               |  

The accompanying notes are an integral part of
these statements.

3



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##### Table of Contents



VESTIN FUND I, LLC



STATEMENTS OF INCOME


|                                                                          |                                                   |                            |           |           |              |   |           |           |           | 
|------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------- | --------- | --------- | ------------ | - | --------- | --------- | --------- | 
|                                                                          |                                                   |                           
|                                                                          |                                                   | For the Three Months Ended |          
|                                                                          |                                                   |                            |          
|                                                                          |                                                   | December 31,               |           |           | December 31, |  
|                                                                          |                                                   | 2004                       |           |           | 2003         |  
|                                                                          |                                                   |                            |           |           |              |  
|                                                                          |                                                   |                           
|                                                                          |                                                   | (Unaudited)                |          
|Revenues                                                                  |                                                   |                            |           |           |              |   |           |          
|                                                                          | Interest income from investment in mortgage loans |                            | $         | 1,174,907 |              |   | $         | 1,818,890 |          
|                                                                          | Loan fees                                         |                            |           |          |              |   |           | 72,233    |          
|                                                                          | Gain on sale of real estate held for sale         |                            |           | 1,049,031 |              |   |           |          |          
|                                                                          | Other income                                      |                            |           | 86,096    |              |   |           | 157,025   |          
|                                                                          |                                                   |                            |           |           |              |  
|                                                                          |                                                   | Total revenues             |           |           | 2,310,034    |   |           |           | 2,048,148 | 
|Operating expenses                                                        |                                                   |                            |           |           |              |   |           |          
|                                                                          | Management fees                                   |                            |           | 63,796    |              |   |           | 63,796    |          
|                                                                          | Provision for loan losses                         |                            |           |          |              |   |           | 100,000   |          
|                                                                          | Interest expense                                  |                            |           | 131,740   |              |   |           | 495,072   |          
|                                                                          | Loss on sale of real estate held for sale         |                            |           | 11,121    |              |   |           |          |          
|                                                                          | Write down on real estate held for sale           |                            |           | 277,992   |              |   |           | 521,378   |          
|                                                                          | Expenses related to real estate held for sale     |                            |           | 149,471   |              |   |           | 57,725    |          
|                                                                          | Professional fees                                 |                            |           | 100,954   |              |   |           | 21,215    |          
|                                                                          | Other                                             |                            |           | 707       |              |   |           | 1,355     |          
|                                                                          |                                                   |                            |           |           |              |  
|                                                                          |                                                   | Total operating expenses   |           |           | 735,781      |   |           |           | 1,260,541 | 
|                                                                          |                                                   |                            |           |           |              |  
|                                                                          |                                                   | NET INCOME                 |           | $         | 1,574,253    |   |           | $         | 787,607   | 
|Net income allocated to members                                           |                                                   | $                          | 1,574,253 |           |              | $ | 787,607   |          
|                                                                          |                                                   |                            |           |           |              |  
|Net income allocated to members per weighted
    average membership units |                                                   | $                          | 0.19      |           |              | $ | 0.09      |          
|                                                                          |                                                   |                            |           |           |              |  
|Weighted average membership units                                         |                                                   |                            | 8,332,817 |           |              |   | 9,110,711 |          
|                                                                          |                                                   |                            |           |           |              |  

The accompanying notes are an integral part of
these statements.

4



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##### Table of Contents



VESTIN FUND I, LLC



STATEMENT OF MEMBERS EQUITY


FOR THE THREE MONTHS ENDED DECEMBER 31,
2004


|                                      |  |             |           |   |        |   |            |  
|------------------------------------- |  | ----------- | --------- | - | ------ | - | ---------- | -
|                                      |  | Units       |           |   | Amount |  
|                                      |  |             |           |   |        |  
|                                      |  |            
|                                      |  | (Unaudited) |          
|Members equity at September 30, 2004 |  |             | 8,354,057 |   |        | $ | 82,278,554 |  
|Distributions                         |  |             |          |   |        |   | (1,250,041 | )
|Reinvestments of distributions        |  |             | 18,111    |   |        |   | 181,109    |  
|Members redemptions                  |  |             | (78,816   | ) |        |   | (788,162   | )
|Net income                            |  |             |          |   |        |   | 1,574,253  |  
|                                      |  |             |           |   |        |  
|Members equity at December 31, 2004  |  |             | 8,293,352 |   |        | $ | 81,995,713 |  
|                                      |  |             |           |   |        |  

The accompanying notes are an integral part of
these statements.

5



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##### Table of Contents



VESTIN FUND I, LLC



STATEMENTS OF CASH FLOWS


|                                                        |                                                                                       |                                                                 |                                           |            |              |            |            |             |           |            |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------------------- | ---------- | ------------ | ---------- | ---------- | ----------- | --------- | ---------- | -
|                                                        |                                                                                       |                                                                
|                                                        |                                                                                       | For the Three Months Ended                                      |                                          
|                                                        |                                                                                       |                                                                 |                                          
|                                                        |                                                                                       | December 31,                                                    |                                           |            | December 31, |           
|                                                        |                                                                                       | 2004                                                            |                                           |            | 2003         |           
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       |                                                                
|                                                        |                                                                                       | (Unaudited)                                                     |                                          
|Cash flows from operating
    activities:               |                                                                                       |                                                                 |                                           |            |              |            |            |            
|                                                        | Net income                                                                            |                                                                 | $                                         | 1,574,253  |              |            | $          | 787,607     |          
|                                                        | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                 |                                           |            |              |            |            |             |          
|                                                        |                                                                                       | Write down of real estate held for sale                         |                                           |            | 277,992      |            |            |             | 521,378   |           
|                                                        |                                                                                       | Loss on sale of real estate held for sale                       |                                           |            | 11,121       |            |            |             |          |           
|                                                        |                                                                                       | Gain on sale of real estate held for sale                       |                                           |            | (1,049,031   | )          |            |             |          |           
|                                                        |                                                                                       | Provision for loan losses                                       |                                           |            |             |            |            |             | 100,000   |           
|                                                        |                                                                                       | Change in operating assets and liabilities:                     |                                           |            |              |            |            |             |           |           
|                                                        |                                                                                       |                                                                 | Interest and other receivables            |            |              | 725,286    |            |             |           | 124,548    |  
|                                                        |                                                                                       |                                                                 | Due to Manager                            |            |              | 125,935    |            |             |           | (111,462   | )
|                                                        |                                                                                       |                                                                 | Due to related parties                    |            |              | 20,645     |            |             |           | (409,474   | )
|                                                        |                                                                                       |                                                                 | Accounts payable                          |            |              | (351,205   | )          |             |           | (21,734    | )
|                                                        |                                                                                       |                                                                 | Deferred income                           |            |              | 174,995    |            |             |           | 71,632     |  
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       |                                                                 | Net cash provided by operating activities |            |              | 1,509,991  |            |             |           | 1,062,495  |  
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|Cash flows from investing
    activities:               |                                                                                       |                                                                 |                                           |            |              |            |            |            
|                                                        | Purchase of investments in mortgage loans                                             |                                                                 |                                           | (459,219   | )            |            |            | (10,627,485 | )        
|                                                        | Purchase of investments in mortgage loans from
    other related party                |                                                                 |                                           |           |              |            |            | (350,000    | )        
|                                                        | Payments related to real estate held for sale                                         |                                                                 |                                           |           |              |            |            | (306,259    | )        
|                                                        | Proceeds from loan payoff                                                             |                                                                 |                                           | 5,503,792  |              |            |            | 11,808,547  |          
|                                                        | Proceeds from sale of investment in real estate                                       |                                                                 |                                           | 5,683,131  |              |            |            |            |          
|                                                        | Repayment of secured borrowing                                                        |                                                                 |                                           |           |              |            |            | (58,254     | )        
|                                                        | Purchase of certificates of deposit                                                   |                                                                 |                                           |           |              |            |            | (9,711      | )        
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       |                                                                 | Net cash provided by investing activities |            |              | 10,727,704 |            |             |           | 456,838    |  
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|Cash flows from financing
    activities:               |                                                                                       |                                                                 |                                           |            |              |            |            |            
|                                                        | Members distributions, net of reinvestments                                          |                                                                 |                                           | (1,068,932 | )            |            |            | (1,019,767  | )        
|                                                        | Members withdrawals                                                                  |                                                                 |                                           | (788,162   | )            |            |            | (839,964    | )        
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       |                                                                 | Net cash used in financing activities     |            |              | (1,857,094 | )          |             |           | (1,859,731 | )
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       |                                                                 | NET CHANGE IN CASH                        |            |              | 10,380,601 |            |             |           | (340,398   | )
|Cash, beginning of period                               |                                                                                       |                                                                 | 9,829,496                                 |            |              |            | 13,707,547 |            
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|Cash, ending of period                                  |                                                                                       | $                                                               | 20,210,097                                |            |              | $          | 13,367,149 |            
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|Supplemental disclosures of cash flows
    information: |                                                                                       |                                                                 |                                           |            |              |            |            |            
|                                                        | Non-cash investing and financing activities:                                          |                                                                 |                                           |            |              |            |            |             |          
|                                                        |                                                                                       | Change in loans funded through secured borrowing                |                                           | $          | 2,957,602    |            |            | $           | 13,125    |           
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       | Real estate held for sale acquired through
    foreclosure      |                                           | $          | 2,149,226    |            |            | $           | 4,080,687 |           
|                                                        |                                                                                       |                                                                 |                                           |            |              |           
|                                                        |                                                                                       | Loans rewritten with same or similar property as
    collateral |                                           | $          | 867,680      |            |            | $           | 559,457   |           
|                                                        |                                                                                       |                                                                 |                                           |            |              |           

The accompanying notes are an integral part of
these statements.

6



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##### Table of Contents



VESTIN FUND I, LLC



NOTES TO FINANCIAL STATEMENTS


DECEMBER 31, 2004


(Unaudited)


NOTE A  ORGANIZATION

We operate as a Nevada limited liability company
for the purpose of investing in mortgage loans. We invest in
loans secured by real estate through deeds of trust and
mortgages. We were organized in December 1999 and commenced our
business operations in June 2001. We will continue our
operations until December 31, 2019 unless dissolved prior
thereto or extended by vote of the members under the provisions
of the Companys operating agreement. Our manager is Vestin
Mortgage, Inc., a licensed mortgage company in the State of
Nevada (Vestin Mortgage, or Manager).
Vestin Mortgage is a wholly-owned subsidiary of Vestin Group,
Inc., a Delaware corporation (Vestin Group). In
January 2005, Vestin Group received notice from NASDAQ that it
no longer meets the minimum requirements for continued listing
on the Nasdaq SmallCap Market. On February 2, 2005, Vestin
Group was notified that the NASDs OTC Compliance Unit has
requested further information regarding the application to
include Vestin Groups common stock for quotation on the
OTC Bulletin Board (OTCBB). Accordingly, Vestin
Groups common stock has not started trading on the OTCBB,
and Vestin Group can give no assurance as to if and when the
application to the OTCBB will be approved. Vestin Groups
common stock has been delisted from The Nasdaq SmallCap Market.
Through its subsidiaries, Vestin Group is engaged in asset
management, real estate lending and other financial services. In
this quarterly report, from time to time, we will refer to our
company, Vestin Fund I, LLC, as the Company.

We invest in mortgage loans throughout the areas
in which Vestin Mortgage and its correspondents have experience,
primarily Arizona, California, Hawaii, New York, and Nevada. The
loans we invest in are selected for us by Vestin Mortgage from
among loans originated by Vestin Mortgage or non-affiliated
mortgage brokers. When Vestin Mortgage or a non-affiliated
mortgage broker originates a loan for us, that entity identifies
the borrower, processes the loan application, makes or invests
in the loan, and brokers or sells the loan to us. We believe
that our loans are attractive to borrowers because of the
expediency of Vestin Mortgages loan approval process,
which takes about ten to twenty days.

Vestin Mortgage, Inc. is also the manager of
Vestin Fund II, LLC, (Fund II), Vestin
Fund III, LLC (Fund III) and inVestin
Nevada, Inc., entities that are in a business similar to us.

The financial statements have been prepared in
accordance with Securities and Exchange Commission requirements
for interim financial statements. Therefore, they do not include
all of the information and footnotes required by accounting
principles generally accepted in the United States of America
(GAAP) for complete financial statements. The
financial statements should be read in conjunction with the
financial statements and notes thereto contained in our annual
report on Form 10-K for the year ended September 30,
2004.

The results of operations for the interim periods
shown in this report are not necessarily indicative of results
to be expected for the full year. In the opinion of management,
the information contained herein reflects all adjustments
necessary to make the results of operations for the interim
periods a fair statement of such operation. All such adjustments
are of a normal recurring nature.

Certain reclassifications have been made to the
prior years financial statements to conform with the
current year presentation.

NOTE B  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



|   |                     
|-- | --------------------
|1. | MANAGEMENT ESTIMATES

The preparation of financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of

7



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)

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 materially from those estimates.



|   |                              
|-- | -----------------------------
|2. | INVESTMENTS IN MORTGAGE LOANS

Investments in mortgage loans are secured by
trust deeds and mortgages. Generally, all of our mortgage loans
require interest only payments with a balloon payment of the
principal at maturity. We have both the intent and ability to
hold mortgage loans until maturity and therefore, mortgage loans
are classified and accounted for as held for investment and are
carried at amortized cost. Loans sold to or purchased from
affiliates are accounted for at the principal balance and no
gain or loss is recognized by us or any affiliate. Loan to value
ratios are based on appraisals obtained at the time of loan
origination and may not reflect subsequent changes in value
estimates. Such appraisals are generally dated within
12 months of the date of loan origination and may be
commissioned by the borrower. The appraisals may be for the
current estimate of the as-if developed value of the
property, which approximates the post-construction value of the
collateralized property assuming that such property is
developed. As-if developed values on raw land loans or
acquisition and development loans often dramatically exceed the
immediate sales value and may include anticipated zoning changes
and timely successful development by the purchaser. As most of
the appraisals will be prepared on an as-if developed basis, if
a loan goes into default prior to any development of a project,
the market value of the property may be substantially less than
the appraised value. As a result, there may be less security
than anticipated at the time the loan was originally made. If
there is less security and a default occurs, we may not recover
the full amount of the loan.



|   |                          
|-- | -------------------------
|3. | ALLOWANCE FOR LOAN LOSSES

We maintain an allowance for loan losses on our
investments in mortgage loans for estimated credit impairment in
our investment in mortgage loans portfolio. The Managers
estimate of losses is based on a number of factors including the
types and dollar amounts of loans in the portfolio, adverse
situations that may affect the borrowers ability to repay,
prevailing economic conditions and the underlying collateral
securing the loan. Additions to the allowance are provided
through a charge to earnings and are based on an assessment of
certain factors which may indicate estimated losses on the
loans. Actual losses on loans are recorded as a charge-off or a
reduction to the allowance for loan losses. Subsequent
recoveries of amounts previously charged off are added back to
the allowance or included in income when the asset is disposed
of.



|   |                          
|-- | -------------------------
|4. | REAL ESTATE HELD FOR SALE

Real estate held for sale includes real estate
acquired through foreclosure and is carried at the lower of cost
or the propertys estimated fair value, less estimated
costs to sell. We seek to sell properties acquired through
foreclosure as quickly as circumstances permit. The carrying
values of real estate held for sale are assessed on a regular
basis from updated appraisals, comparable sales values or
purchase offers.



|   |                                                
|-- | -----------------------------------------------
|5. | REAL ESTATE HELD FOR SALE  SELLER
    FINANCED

Seller financed real estate held for sale
includes real estate acquired through foreclosure and resold to
independent third parties where we have provided the financing
and the borrower has not met certain criteria in accordance with
Statement of Financial Accounting Standards
(FAS) No. 66. FAS 66 requires the borrower to
have a certain percentage equity ownership (typically 20%) to
allow us to record the sale of a property. In addition, the
borrower must maintain a minimum commitment in the property on a
continuing basis. Therefore, until the borrower meets these
requirements, the real estate is retained as real estate held
for sale.

8



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)



|   |                   
|-- | ------------------
|6. | SECURED BORROWINGS

Loans in which third party investors have
participated through inter-creditor agreements
(Inter-creditor Agreements) are accounted for as
secured borrowings in accordance with SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities(SFAS No. 140). The Inter-creditor
Agreements provide us additional funding sources for mortgage
loans whereby a third party investor (the Investor)
may participate in certain mortgage loans with us and/or
Fund II and/or Fund III (collectively, the Lead
Lenders). In the event of borrower non-performance, the
Intercreditor Agreements provide that the Lead Lenders must
repay the Investors loan amount either by
(i) continuing to remit to the Investor the interest due on
the participated loan amount; (ii) substituting an
alternative loan acceptable to the Investor; or
(iii) repurchasing the participation from the Investor for
the outstanding balance plus accrued interest.

Additionally, an Investor may participate in
certain loans with the Lead Lenders through participation
agreements. In the event of borrower non-performance, the
participation agreement allows the Investor to be repaid up to
the amount of the Investors investment prior to the Lead
Lenders being repaid. Mortgage loan financing under the
participation agreements are also accounted for as a secured
borrowing in accordance with SFAS No. 140.

NOTE C  INVESTMENTS IN MORTGAGE
LOANS

Investments in mortgage loans as of
December 31, 2004 are summarized below:

|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |        |   |  |  |       |  
|--------------------------- |  | ------ | -- |  | ---------- | - | ---------- | ------------- |  | --------- | ---------- | - | ------- | -------- | ------ | - |  |  | ----- | -
|                            |  | Number |    |  |            |   | Weighted   |               |  |           |            |  
|                            |  | of     |    |  |            |   | Average    |               |  | Portfolio |            |   | Loan to |         
|Loan Type                   |  | Loans  |    |  | Balance(1) |   |            | Interest Rate |  |           | Percentage |   |         | Value(2) |       
|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |       
|Acquisition and development |  |        | 11 |  |            | $ | 18,776,159 |               |  |           | 9.40       | % |         |          | 35.81  | % |  |  | 65.20 | %
|Bridge                      |  |        | 6  |  |            |   | 7,160,630  |               |  |           | 10.18      | % |         |          | 13.66  | % |  |  | 50.85 | %
|Commercial                  |  |        | 7  |  |            |   | 12,356,116 |               |  |           | 12.13      | % |         |          | 23.57  | % |  |  | 77.99 | %
|Construction                |  |        | 2  |  |            |   | 8,001,691  |               |  |           | 5.11       | % |         |          | 15.26  | % |  |  | 84.46 | %
|Land                        |  |        | 4  |  |            |   | 6,133,890  |               |  |           | 12.65      | % |         |          | 11.70  | % |  |  | 71.42 | %
|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |       
|                            |  |        | 30 |  |            | $ | 52,428,486 |               |  |           | 9.88       | % |         |          | 100.00 | % |  |  | 69.92 | %
|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |       

Investment in mortgage loans as of
September 30, 2004 are summarized below:

|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |        |   |  |  |       |  
|--------------------------- |  | ------ | -- |  | ---------- | - | ---------- | ------------- |  | --------- | ---------- | - | ------- | -------- | ------ | - |  |  | ----- | -
|                            |  | Number |    |  |            |   | Weighted   |               |  |           |            |  
|                            |  | of     |    |  |            |   | Average    |               |  | Portfolio |            |   | Loan to |         
|Loan Type                   |  | Loans  |    |  | Balance(1) |   |            | Interest Rate |  |           | Percentage |   |         | Value(2) |       
|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |       
|Acquisition and development |  |        | 10 |  |            | $ | 18,810,500 |               |  |           | 9.71       | % |         |          | 32.02  | % |  |  | 63.01 | %
|Bridge                      |  |        | 9  |  |            |   | 8,687,165  |               |  |           | 10.65      | % |         |          | 14.79  | % |  |  | 49.98 | %
|Commercial                  |  |        | 8  |  |            |   | 12,932,116 |               |  |           | 12.22      | % |         |          | 22.01  | % |  |  | 77.19 | %
|Construction                |  |        | 4  |  |            |   | 12,181,975 |               |  |           | 7.64       | % |         |          | 20.74  | % |  |  | 76.81 | %
|Land                        |  |        | 4  |  |            |   | 6,133,890  |               |  |           | 12.65      | % |         |          | 10.44  | % |  |  | 71.42 | %
|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |       
|                            |  |        | 35 |  |            | $ | 58,745,646 |               |  |           | 10.28      | % |         |          | 100.00 | % |  |  | 67.94 | %
|                            |  |        |    |  |            |   |            |               |  |           |            |   |         |          |       



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The following table reconciles the balance of the
    loan portfolio to the amount shown on the accompanying Balance
    Sheet. The contra accounts represent the amount of real estate
    held for sale sold to third parties where we provided financing.
    GAAP requires the borrower to have a certain percentage equity
    ownership (typically 20%) to allow us to record the sale of a
    property. In addition, the borrower must maintain a minimum
    commitment in the property on a continuing basis. Therefore,
    until the borrower

9



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | meets these requirements, the investment in the
    new loan is reduced by the amount originally invested in the
    real estate held for sale.

|                                                                |  |                   |             |   |                    |   |             |  
|--------------------------------------------------------------- |  | ----------------- | ----------- | - | ------------------ | - | ----------- | -
|                                                                |  | December 31, 2004 |             |   | September 30, 2004 |  
|                                                                |  | Balance           |             |   | Balance            |  
|                                                                |  |                   |             |   |                    |  
|Balance per loan portfolio                                      |  | $                 | 52,428,486  |   |                    | $ | 58,745,646  |  
|Less:                                                           |  |                   |             |   |                    |   |             |  
|Seller financed loans included in real estate
    held for sale |  |                   | (10,801,448 | ) |                    |   | (10,801,448 | )
|Allowance for loan losses                                       |  |                   | (600,000    | ) |                    |   | (600,000    | )
|                                                                |  |                   |             |   |                    |  
|Balance per Accompanying Balance Sheet                          |  | $                 | 41,027,038  |   |                    | $ | 47,344,198  |  
|                                                                |  |                   |             |   |                    |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Loan to value ratios are based on appraisals
    obtained at the time of loan origination and may not reflect
    subsequent changes in value estimates. Such appraisals, which
    may be commissioned by the borrower, are generally dated no
    greater than 12 months prior to the date of loan
    origination. The appraisals may be for the current estimate of
    the as-if developed value of the property, which
    approximates the post-construction value of the collateralized
    property assuming that such property is developed. As-if
    developed values on raw land loans or acquisition and
    development loans often dramatically exceed the immediate sales
    value and may include anticipated zoning changes, selection by a
    purchaser against multiple alternatives, and successful
    development by the purchaser; upon which development is
    dependent on availability of financing. As most of the
    appraisals will be prepared on an as-if developed basis, if a
    loan goes into default prior to any development of a project,
    the market value of the property may be substantially less than
    the appraised value. As a result, there may be less security
    than anticipated at the time the loan was originally made. If
    there is less security and a default occurs, we may not recover
    the full amount of the loan.

|                   |  |                   |            |  |            |  |        |                    |  |   |            |  |  |  |        |  
|------------------ |  | ----------------- | ---------- |  | ---------- |  | ------ | ------------------ |  | - | ---------- |  |  |  | ------ | -
|                   |  | December 31, 2004 |            |  | Portfolio  |  |        | September 30, 2004 |  |   | Portfolio  | 
|Loan Type          |  | Balance*          |            |  | Percentage |  |        | Balance*           |  |   | Percentage | 
|                   |  |                   |            |  |            |  |        |                    |  |   |            | 
|First mortgages    |  | $                 | 52,270,636 |  |            |  | 99.70  | %                  |  | $ | 57,830,608 |  |  |  | 98.44  | %
|Second mortgages** |  |                   | 157,850    |  |            |  | .30    | %                  |  |   | 915,038    |  |  |  | 1.56   | %
|                   |  |                   |            |  |            |  |        |                    |  |   |            | 
|                   |  | $                 | 52,428,486 |  |            |  | 100.00 | %                  |  | $ | 58,745,646 |  |  |  | 100.00 | %
|                   |  |                   |            |  |            |  |        |                    |  |   |            | 



---



|   |                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------
|** | Generally, our second mortgages are junior to a
    first trust deed position held by either us or our Manager.

The following is a schedule of contractual
maturities of investments in mortgage loans as of
December 31, 2004*:

|     |  |   |            | 
|---- |  | - | ---------- | 
|2005 |  |   | 29,161,872 | 
|2006 |  |   | 14,528,461 | 
|2007 |  |   | 8,738,153  | 
|     |  |   |           
|     |  | $ | 52,428,486 | 
|     |  |   |           

10



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The following is a schedule by geographic
location of investments in mortgage loans:

|               |  |                   |            |  |            |  |        |                    |  |   |            |  |  |  |        |  
|-------------- |  | ----------------- | ---------- |  | ---------- |  | ------ | ------------------ |  | - | ---------- |  |  |  | ------ | -
|               |  | December 31, 2004 |            |  | Portfolio  |  |        | September 30, 2004 |  |   | Portfolio  | 
|               |  | Balance*          |            |  | Percentage |  |        | Balance*           |  |   | Percentage | 
|               |  |                   |            |  |            |  |        |                    |  |   |            | 
|Arizona        |  | $                 | 12,549,587 |  |            |  | 23.94  | %                  |  | $ | 11,681,908 |  |  |  | 19.89  | %
|California     |  |                   | 11,457,751 |  |            |  | 21.85  | %                  |  |   | 11,475,286 |  |  |  | 19.53  | %
|Hawaii         |  |                   | 4,138,662  |  |            |  | 7.89   | %                  |  |   | 4,138,662  |  |  |  | 7.05   | %
|Nevada         |  |                   | 17,609,690 |  |            |  | 33.59  | %                  |  |   | 23,236,940 |  |  |  | 39.56  | %
|New York       |  |                   | 3,320,000  |  |            |  | 6.33   | %                  |  |   | 3,320,000  |  |  |  | 5.65   | %
|North Carolina |  |                   | 89,942     |  |            |  | 0.17   | %                  |  |   | 89,942     |  |  |  | 0.15   | %
|Oklahoma       |  |                   | 1,236,701  |  |            |  | 2.36   | %                  |  |   | 996,000    |  |  |  | 1.70   | %
|Texas          |  |                   | 1,665,557  |  |            |  | 3.18   | %                  |  |   | 1,727,592  |  |  |  | 2.94   | %
|Utah           |  |                   | 360,596    |  |            |  | .69    | %                  |  |   | 1,503,316  |  |  |  | 2.56   | %
|Washington     |  |                   |           |  |            |  |       | %                  |  |   | 576,000    |  |  |  | 0.97   | %
|               |  |                   |            |  |            |  |        |                    |  |   |            | 
|               |  | $                 | 52,428,486 |  |            |  | 100.00 | %                  |  | $ | 58,745,646 |  |  |  | 100.00 | %
|               |  |                   |            |  |            |  |        |                    |  |   |            | 



---



|  |                            
|- | ---------------------------
|* | Refer to footnote (1) above

We have six mortgage loan products consisting of
bridge, commercial, construction, acquisition and development,
land, and residential loans. The effective interest rates on all
product categories range from 5% to 14%. Revenue by product will
fluctuate based upon relative balances during the period.

At December 31, 2004, five of our loans
totaling $8.4 million were non-performing (more than
90 days past due on interest payments or past due on
principal). These loans have been placed on non-accrual of
interest status. We have commenced foreclosure proceedings on
these loans. Our Manager evaluated all of these loans and
concluded that the underlying collateral is sufficient to
protect us against a loss of principal or interest. Accordingly,
no specific allowance for loan losses was deemed necessary for
these loans which are summarized below:

|                                                                                                   |  |              |           |  |               |  |                  |                |  |  |    | 
|-------------------------------------------------------------------------------------------------- |  | ------------ | --------- |  | ------------- |  | ---------------- | -------------- |  |  | -- | 
|                                                                                                   |  | Balance at   |           |  |               |  |                 
|                                                                                                   |  | December 31, |           |  |               |  | Number of Months |               
|Description of Collateral                                                                          |  | 2004         |           |  | Maturity Date |  |                  | Non-Performing | 
|                                                                                                   |  |              |           |  |               |  |                  |                | 
|473 acres of residential and commercial land
    in Utah (1)                                       |  | $            | 360,596   |  |               |  | 11/02/2001       |                |  |  | 24 | 
|4 cemeteries and 8 mortuaries in Hawaii                                                            |  |              | 4,138,662 |  |               |  | 03/31/2004       |                |  |  | 9  | 
|Racetrack and hotel in Vernon, NY                                                                  |  |              | 3,320,000 |  |               |  | 06/30/2005       |                |  |  | 4  | 
|25 acres tentatively mapped for 104 single
    family residential lots in Palm Springs, California |  |              | 66,375    |  |               |  | 1/23/2006        |                |  |  | 2  | 
|Development of 400 single and multi-family
    residential lots in Cathedral City, California      |  |              | 503,333   |  |               |  | 04/20/2005       |                |  |  | 2  | 
|                                                                                                   |  |              |           |  |               |  |                  |                | 
|                                                                                                   |  | $            | 8,388,966 |  |               |  |                  |                |  |  |    | 
|                                                                                                   |  |              |           |  |               |  |                  |                | 



---



|    |                                                         
|--- | --------------------------------------------------------
|(1) | Non-performing loans sold subsequent to quarter
    end:



| |                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During February 2005, we received a payoff on
    the South Mountain, LLC property in Utah, including all
    delinquent interest, extension, and related fees. The borrowers
    had been making forbearance payments equal to 1% per month
    of the outstanding principal balance for 18 consecutive months
    on the property set for in an agreement by the courts.

11



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our Manager periodically reviews and makes a
    determination as to whether the allowance for loan losses is
    adequate to cover any potential losses. Additions to the
    allowance for loan losses are made by charges to the provision
    for loan losses. Recoveries of previously charged off amounts
    are credited to the allowance for loan losses or included as
    income when the asset is disposed of. As of December 31,
    2004, we have provided a general allowance for loan losses of
    approximately $0.6 million. Our Manager evaluated the loans
    and concluded that the underlying collateral was sufficient to
    protect us against further losses of principal or interest. Our
    Manager will continue to evaluate these loans in order to
    determine if any other allowance for loan losses should be
    recorded.
|
| | Because any decision regarding the allowance for
    loan losses reflects a judgment about the probability of future
    events, there is an inherent risk that such judgments will prove
    incorrect. In such event, actual losses may exceed (or be less
    than) the amount of any reserve. To the extent that we
    experience losses greater than the amount of our reserves, we
    may incur a charge to our earnings that will adversely affect
    our operating results and the amount of any distributions
    payable to our Members.                                                                                                                                                                                                                                                                                                            

The following is a roll-forward of the allowance
for loan losses for the three months ended December 31,
2004:

|                            |  |               |         |  |            |   |            |  |              |   |   |  |  |   |         | 
|--------------------------- |  | ------------- | ------- |  | ---------- | - | ---------- |  | ------------ | - | - |  |  | - | ------- | 
|                            |  | Balance at    |         |  |            |   |            |  | Balance at   |  
|                            |  | September 30, |         |  |            |   |            |  | December 31, |  
|Description                 |  | 2004          |         |  | Provisions |   | Deductions |  | 2004         |  
|                            |  |               |         |  |            |   |            |  |              |  
|General Valuation Allowance |  | $             | 600,000 |  |            | $ |           |  |              | $ |  |  |  | $ | 600,000 | 
|Specific allowance          |  |               |        |  |            |   |           |  |              |   |  |  |  |   |        | 
|                            |  |               |         |  |            |   |            |  |              |   |   | 
|Total                       |  | $             | 600,000 |  |            | $ |           |  |              | $ |  |  |  | $ | 600,000 | 
|                            |  |               |         |  |            |   |            |  |              |   |   | 

In addition, our Manager had granted extensions
on 10 loans pursuant to the terms of the original loan
agreements, which permit extensions by mutual consent. Such
extensions are generally provided on loans where the original
term was 12 months or less and where a borrower requires
additional time to complete a construction project or negotiate
take out financing. However, our Manager only grants extensions
when a borrower is in full compliance with the terms of the
loan, including, but not limited to the borrowers
obligation to make interest payments on the loan. The aggregate
amount due from borrowers whose loans had been extended as of
December 31, 2004 was approximately $4.9 million. Our
Manager concluded that no allowance for loan loss was necessary
with respect to these loans as of that date.

NOTE D  RELATED PARTY
TRANSACTIONS

For the three months ended December 31, 2004
and 2003, we recorded management fees to our Manager of
approximately $64,000 for both periods. Additionally, for the
three months ended December 31, 2004, we recorded pro rata
distributions owed to our Manager of approximately $15,000 based
upon the total of 100,000 units owned by our Manager.

As of December 31, 2004 we owed Fund II
approximately $1,504,000 primarily related to payments made on
our behalf for the maintenance of real estate owned.

As of December 31, 2004, we owed the Manager
approximately $778,000 related to unpaid management fees, our
Managers pro-rata share of distributions, and for expenses
paid on our behalf related to the maintenance of real estate
held for sale.

From time to time we may acquire or sell
investments in mortgage loans from/to the Manager or other
related parties pursuant to the terms of our Operating Agreement
provided the price does not exceed the original cost. No gain or
loss is recorded on these transactions as it is not our intent
to make a profit on the purchase or sale of such investments.
The purpose is to either free up capital to make new investments
or place excess capital in investments to maximize the use of
our capital.

12



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)

During the three months ended December 31,
2003, we purchased $350,000 in investments in mortgage loans
from a company wholly owned by our Chief Executive Officer.

NOTE E  REAL ESTATE HELD FOR
SALE

At December 31, 2004, we held 5 properties
with a total carrying value of $11.2 million, which were
acquired through foreclosure and recorded as investments in real
estate held for sale. The summary below includes our percentage
ownership in each property. These investments in real estate
held for sale are accounted for at the lower of cost or fair
value less costs to sell with fair value based on appraisals or
knowledge of local market conditions. It is not our intent to
invest in or own real estate as a long-term investment. We seek
to sell properties acquired through foreclosure as quickly as
circumstances permit. The following is a roll-forward of
investments in real estate held for sale for the three months
ended December 31, 2004:

|                                                                          |  |          |            |  |               |            |    |               |  |   |              |            |         |       |             |            |          |              |            |      |  |   |          |   |  |   |            | 
|------------------------------------------------------------------------- |  | -------- | ---------- |  | ------------- | ---------- | -- | ------------- |  | - | ------------ | ---------- | ------- | ----- | ----------- | ---------- | -------- | ------------ | ---------- | ---- |  | - | -------- | - |  | - | ---------- | 
|                                                                          |  |          |            |  |               |            |    |               |  |   |              | Write Down |         |       |            
|                                                                          |  |          |            |  |               | Balance at |    |               |  |   |              |            | on Real |       |             | Balance at |         
|                                                                          |  | Date     |            |  | Percentage of |            |    | September 30, |  |   |              |            |         |       | Estate Held |            |          | December 31, |           
|Description                                                               |  | Acquired |            |  | Ownership     |            |    | 2004          |  |   | Acquisitions |            |         | Sales |             |            | for Sale |              |            | 2004 | 
|                                                                          |  |          |            |  |               |            |    |               |  |   |              |            |         |       |             |            |          |              |            |      | 
|Custom residential property located in
    Santa Fe, New Mexico           |  |          | 3/4/2003   |  |               |            | 93 | %             |  | $ | 1,052,263    |            |         | $     |            |            |          | $            |           |      |  | $ | (277,992 | ) |  | $ | 774,271    | 
|40 acres of land containing 354 residential
    lots in Henderson, Nevada |  |          | 2/28/2003  |  |               |            | 66 | %             |  |   | 5,412,303    |            |         |       |            |            |          |              |           |      |  |   |         |   |  |   | 5,412,303  | 
|A 30-unit condominium complex in Las Vegas,
    Nevada(2)                 |  |          | 2/4/2003   |  |               |            | 17 | %             |  |   | 215,431      |            |         |       |            |            |          |              | (215,431   | )    |  |   |         |   |  |   |           | 
|126 unit assisted living facility in
    Phoenix, Arizona                 |  |          | 9/8/2004   |  |               |            | 10 | %             |  |   | 1,525,340    |            |         |       |            |            |          |              |           |      |  |   |         |   |  |   | 1,525,340  | 
|460 acre residential sub- division in Lake
    Travis, Texas              |  |          | 8/3/2004   |  |               |            | 34 | %             |  |   | 1,784,041    |            |         |       |            |            |          |              |           |      |  |   |         |   |  |   | 1,784,041  | 
|140 Unit/224 bed senior facility in Mesa,
    Arizona(2)                  |  |          | 05/26/04   |  |               |            | 14 | %             |  |   | 1,020,110    |            |         |       |            |            |          |              | (1,020,110 | )    |  |   |         |   |  |   |           | 
|29 acres of raw land in Mesquite,
    Nevada(2)                           |  |          | 11/27/2002 |  |               |            | 58 | %             |  |   | 2,159,130    |            |         |       |            |            |          |              | (2,159,130 | )    |  |   |         |   |  |   |           | 
|Hotel/ Casino in Las Vegas, Nevada(2)                                     |  |          | 2/02/2004  |  |               |            | 7  | %             |  |   | 2,118,230    |            |         |       |            |            |          |              | (2,118,230 | )    |  |   |         |   |  |   |           | 
|126 unit Hotel in Mesquite, Nevada(1)                                     |  |          | 10/04/2004 |  |               |            | 32 | %             |  |   |             |            |         |       | 2,149,226   |            |          |              |           |      |  |   |         |   |  |   | 2,149,226  | 
|                                                                          |  |          |            |  |               |            |    |               |  |   |              |            |         |       |             |            |          |              |            |      | 
|Total                                                                     |  |          |            |  |               |            |    |               |  | $ | 15,286,848   |            |         | $     | 2,149,226   |            |          | $            | (5,512,901 | )    |  | $ | (277,992 | ) |  | $ | 11,645,181 | 
|                                                                          |  |          |            |  |               |            |    |               |  |   |              |            |         |       |             |            |          |              |            |      | 



---



|    |                                                               
|--- | --------------------------------------------------------------
|(1) | Foreclosures for the three months ended
    December 31, 2004:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During October 2004, we foreclosed and took
    title to 32% of a 126 unit Ramada Inn Hotel in Mesquite,
    NV. Vestin Fund II owns the other 68%. In January 2005, we
    and Fund II entered into an agreement to sell the property
    for $5,750,000 of which we expect our consideration to be
    approximately $1.9 million. Additionally, in
    February 2005, we and Fund II received a settlement
    from the guarantors of the original loan in the amount of
    $2,500,000 of which our consideration will be approximately
    $800,000 which

13



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | consists of cash of $96,000 and a 3 year
    promissory note in the amount of approximately $704,000. The
    note is interest free and is payable in semi-annual principal
    installments. After imputing interest at a discount rate of 7%,
    the discounted present value of the note is approximately
    $625,000.



|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(2) | Sales of real estate held for sale for the three
    months ended December 31, 2004:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During October 2004, we and Fund II sold the
    Castaways Hotel/ Casino in Las Vegas, Nevada of which our
    portion of the net cash proceeds totaled approximately
    $2.1 million. We originally sold this property under a 100%
    seller financing arrangement. The borrowers then sold the
    property to an unrelated third party which resulted in a payoff
    of the note and also allowed us to record the sale and remove
    the asset from seller financed real estate held for sale. In
    addition, during September 2004, we received a promissory note
    from the guarantors of the loan in the amount of $160,000 in
    exchange for a release of their personal guarantees. Since
    payments on the note do not begin for 18 months from the
    date of the note, we discounted the face value of the note to
    $119,299 which is based on a discount rate of 8%. The
    transaction did not result in any gains or losses in the current
    period as we wrote down our investment in this property during
    the year ended September 30, 2004 to the expected net
    realizable value.
|
| | During November 2004, we and Fund II sold
    the 140 Unit/224 bed senior facility in Mesa, Arizona, of which
    consideration received totaled $1,009,989. We received cash of
    $141,309 and held back a promissory note and first deed of trust
    totaling $867,680. This transaction resulted in a loss of
    $11,121.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | During September 2004 we and Fund II entered
    into an agreement to sell the remaining 29 acres of raw
    land in Mesquite, Nevada for $6.2 million. Prior to
    September 2004, $145,000 was released from escrow representing
    an early release of funds. The transaction was finalized in
    December of 2004 and resulted in a gain of $1,049,031.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | During November 2004 we sold the 30 unit
    condominium complex in Las Vegas, NV. The transaction did not
    result in any gain or loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Events subsequent to quarter-end:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | As of February 9, 2005, this property is in
    escrow to be sold for $860,000 of which our proceeds are
    expected to be approximately $800,000 if the sale is finalized.
    We do not expect to have any further gains or losses on the sale
    of this property.

NOTE F  REAL ESTATE HELD FOR
SALE  SELLER FINANCED

At December 31, 2004, we held 5 properties
with a total carrying value of $10.8 million which have
been sold in transactions where we provided the financing to the
purchaser. GAAP requires us to include these properties in real
estate held for sale until the borrower has met and maintained a
certain percentage of equity ownership, which is typically 20%.
We may share ownership of such properties with Fund II, the
Manager, or other unrelated parties. The summary below includes
our percentage ownership in each property. These investments in
real estate held for sale are accounted for at the lower of cost
or fair value less costs to sell with

14



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)

fair value based on appraisals and knowledge of
local market conditions. The following is a roll-forward of
seller financed real estate held for sale for the three months
ended December 31, 2004:

|                                                                           |  |               |            |            |           |  |               |      |  |              |            |  |  |   |            | 
|-------------------------------------------------------------------------- |  | ------------- | ---------- | ---------- | --------- |  | ------------- | ---- |  | ------------ | ---------- |  |  | - | ---------- | 
|                                                                           |  |               |            | Percentage |           |  | Balance at    |      |  | Balance at   |           
|                                                                           |  |               |            | of         |           |  | September 30, |      |  | December 31, |           
|Description                                                                |  | Date Acquired |            |            | Ownership |  |               | 2004 |  |              | 2004       | 
|                                                                           |  |               |            |            |           |  |               |      |  |              |            | 
|An approximate 200-unit apartment complex located
    in Las Vegas, Nevada |  |               | 1/27/2003  |            |           |  | 1             | %    |  | $            | 170,565    |  |  | $ | 170,565    | 
|An uncompleted golf course in Mesquite, Nevada                             |  |               | 11/6/2002  |            |           |  | 55            | %    |  |              | 1,474,818  |  |  |   | 1,474,818  | 
|36 acres of raw land in Mesquite, Nevada                                   |  |               | 11/27/2002 |            |           |  | 48            | %    |  |              | 334,112    |  |  |   | 334,112    | 
|Assisted living facility in Las Vegas, Nevada                              |  |               | 9/23/2004  |            |           |  | 52            | %    |  |              | 7,910,491  |  |  |   | 7,910,491  | 
|Raw land in Mesquite, Nevada                                               |  |               | 11/27/2002 |            |           |  | 50            | %    |  |              | 911,462    |  |  |   | 911,462    | 
|                                                                           |  |               |            |            |           |  |               |      |  |              |            | 
|                                                                           |  |               |            |            |           |  |               |      |  | $            | 10,801,448 |  |  | $ | 10,801,448 | 
|                                                                           |  |               |            |            |           |  |               |      |  |              |            | 

NOTE G  NOTE RECEIVABLE

As of December 31, 2004, note receivable
consisted of a promissory note totaling $160,000 which is
discounted to a present value of $119,299 as further discussed
in Note E.

NOTE H  SECURED
BORROWINGS

Inter-creditor agreements (the
Inter-creditor Agreements) provide us additional
funding sources for mortgage loans whereby a third party
investor (the Investor) may participate in certain
mortgage loans with Vestin Mortgage, Fund II, Fund III
and the Company (collectively, the Lead Lenders). In
the event of borrower non-performance, the Inter-creditor
Agreements provide that the Lead Lenders must repay the
Investors loan amount either by (i) continuing to
remit to the Investor the interest due on the participated loan
amount; (ii) substituting an alternative loan acceptable to
the Investor; or (iii) repurchasing the participation from
the Investor for the outstanding balance plus accrued interest.

Additionally, an Investor may participate in
certain loans with Lead Lenders through participation
agreements. In the event of borrower non-performance, the
participation agreement allows the Investor to be repaid up to
the amount of the Investors investment prior to the Lead
Lenders being repaid.

As of December 31, 2004, funds being used
under intercreditor and participation agreements where we have
potential obligations as defined above totaled $3.2 million.

NOTE I  RECENT ACCOUNTING
PRONOUNCEMENTS

In November 2004, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 151,
Inventory Costs, an amendment of ARB No. 43,
Chapter 4. SFAS No. 151 clarifies the
accounting for abnormal amounts of idle facility expense,
freight, handling costs and wasted material and requires that
such items be recognized as current-period charges regardless of
whether they meet the so abnormal criterion outlined
in ARB No. 43. SFAS No. 151 also introduces the
concept of normal capacity and requires the
allocation of fixed production overheads to inventory based on
the normal capacity of the production facilities. Unallocated
overheads must be recognized as an expense in the period
incurred. SFAS No. 151 is effective for inventory
costs incurred during fiscal years beginning after June 15,
2005. While we are still evaluating the impact of this
statement, we do not currently believe it will have a material
impact on our consolidated financial statements.

15



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)

In December 2004, the FASB issued
SFAS No. 123 (revised 2004), Share-based
Payment which replaces the prior SFAS No. 123,
Accounting for Stock-Based Compensation, and
supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees. SFAS 123 (revised 2004) requires
compensation costs related to share-based payment transactions
to be recognized in the financial statements. With limited
exceptions, the amount of compensation cost will be measured
based on the grant-date fair value of the equity or liability
instruments issued. In addition, liability awards will be
re-measured each reporting period. Compensation cost will be
recognized over the period that an employee provides services in
exchange for the award. This new standard will become effective
for us July 8, 2005, and we are still evaluating the impact
of this statement.

NOTE J  LEGAL MATTERS INVOLVING THE
MANAGER

Vestin Group, Vestin Mortgage, and Del Mar
Mortgage, Inc., a company wholly owned by Michael Shustek, the
largest shareholder and CEO of Vestin Group are defendants in a
civil action entitled Desert Land, L.L.C. et al. v.
Owens Financial Group, Inc. et al (the Action).
The Action was initiated by Desert Land, L.L.C. (Desert
Land) on various loans arranged by Del Mar Mortgage, Inc.
and/or Vestin Mortgage. On April 10, 2003, the United
States District Court for the District of Nevada (the
Court) entered judgment jointly and severally in
favor of Desert Land against Vestin Group, Vestin Mortgage and
Del Mar Mortgage, Inc. Judgment was predicated upon the
Courts finding that Del Mar Mortgage, Inc. received an
unlawful penalty fee from the plaintiffs.

Defendants subsequently filed a motion for
reconsideration. The Court denied the motion and, on
August 13, 2003, held that Vestin Group, Vestin Mortgage,
and Del Mar Mortgage, Inc. are jointly and severally liable for
the judgment in the amount of $5,683,312 (which amount includes
prejudgment interest and attorneys fees). On
August 27, 2003, the Court stayed execution of the judgment
against Vestin Group and Vestin Mortgage based upon the posting
of a bond in the amount of $5,830,000. The bond was arranged by
Michael Shustek and was posted without any cost or obligation to
Vestin Group and Vestin Mortgage. Additionally, Del Mar
Mortgage, Inc. has indemnified Vestin Group and Vestin Mortgage
for any losses and expenses in connection with the Action, and
Mr. Shustek has guaranteed the indemnification. On
September 12, 2003, all of the defendants held liable to
Desert Land appealed the judgment to the Ninth Circuit United
States Court of Appeals. We are not a party to the Action.

Our Manager is involved in a number of legal
proceedings concerning matters arising in connection with the
conduct of their business activities. The Manager believes it
has meritorious defenses to each of these actions and intends to
defend them vigorously. The Manager believes that it is not a
party to any pending legal or arbitration proceedings that would
have a material adverse effect on the Managers financial
condition or results of operations or cash flows, although it is
possible that the outcome of any such proceedings could have a
material impact on the Managers net income in any
particular period.

NOTE J  LEGAL MATTERS INVOLVING THE
COMPANY

The staff of the Pacific Regional Office of the
Securities and Exchange Commission (SEC) has been
conducting an informal inquiry into certain matters related to
us, Vestin Group, Fund II and Fund III. We have fully
cooperated during the course of the informal inquiry. On
January 6, 2005, we received from the SEC an Order
Directing Private Investigation and Designating Officers to Take
Testimony which appears to focus on the financial
reporting of us, Fund II and Fund III. We intend to
continue to cooperate fully in this matter and believe that we
have complied with SEC disclosure requirements. We cannot at
this time predict the outcome of this matter.

We are involved in a number of legal proceedings
concerning matters arising in connection with the conduct of our
business activities. We believe we have meritorious defenses to
each of these actions and intend to defend them vigorously. We
believe that we are not a party to any pending legal or
arbitration proceedings

16



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##### Table of Contents



VESTIN FUND I, LLC


NOTES TO FINANCIAL
STATEMENTS  (Continued)

that would have a material adverse effect on the
our financial condition or results of operations or cash flows,
although it is possible that the outcome of any such proceedings
could have a material impact on our net income in any particular
period.

NOTE K  REDEMPTION
LIMITATION

In order to comply with our Operating Agreement
and Internal Revenue Code, we may redeem no more than 10% of the
members capital in any calendar year. As of
December 31, 2004, the total of redemptions made from
inception was $31.1 million. Balances in Members
capital accounts as of January 1, 2004 was
$85.4 million, which limited redemptions to
$8.5 million for calendar 2004. As of December 31,
2004, remaining requests to redeem approximately
$8.1 million in 2005, $7.2 million in 2006,
$6.5 million in 2007, $5.9 million in 2008,
$5.3 million in 2009, $4.8 million in 2010,
$4.3 million in 2011, $3.9 million in 2012, and
$1.3 million in 2013 had been logged.

During January 2005, we redeemed approximately
$5.5 million of the scheduled $8.1 million in
redemptions for the calendar year 2005.

17



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BACKGROUND

We operate as a Nevada limited liability company
for the purpose of investing in mortgage loans. We invest in
loans secured by real estate through deeds of trust and
mortgages. We commenced our business operations in June 2001. We
were organized in December 1999 and commenced our business
operations in June 2001. We will continue until
December 31, 2019 unless dissolved prior thereto or
extended by vote of the members under the provisions of the
Companys operating agreement. Our manager is Vestin
Mortgage, Inc., a licensed mortgage company in the State of
Nevada (Vestin Mortgage, or Manager).
Vestin Mortgage is a wholly-owned subsidiary of Vestin Group,
Inc., a Delaware corporation (Vestin Group). In
January 2005, Vestin Group received notice from NASDAQ that it
no longer meets the minimum requirements for continued listing
on the Nasdaq SmallCap Market. On February 2, 2005, Vestin
Group was notified that the NASDs OTC Compliance Unit has
requested further information regarding the application to
include Vestin Groups common stock for quotation on the
OTC Bulletin Board (OTCBB). Accordingly, Vestin
Groups common stock has not started trading on the OTCBB,
and Vestin Group can give no assurance as to if and when the
application to the OTCBB will be approved. Vestin Groups
common stock has been de-listed from The Nasdaq SmallCap Market.
Through its subsidiaries, Vestin Group is engaged in asset
management, real estate lending and other financial services. In
this quarterly report, from time to time, we will refer to our
company, Vestin Fund I, LLC, as the Company.

We invest in mortgage loans throughout the areas
in which Vestin Mortgage and its correspondents have experience,
primarily Arizona, California, Hawaii, New York, and Nevada. The
loans we invest in are selected for us by Vestin Mortgage from
among loans originated by Vestin Mortgage or non-affiliated
mortgage brokers. When Vestin Mortgage or a non-affiliated
mortgage broker originates a loan for us, that entity identifies
the borrower, processes the loan application, makes or invests
in the loan, and brokers or sells the loan to us. We believe
that our loans are attractive to borrowers because of the
expediency of Vestin Mortgages loan approval process,
which takes about ten to twenty days.

The following is a financial review and analysis
of our financial condition and results of operations for the
three month periods ended December 31, 2004 and 2003. This
discussion should be read in conjunction with our financial
statements and accompanying notes and other detailed information
appearing elsewhere in this Form 10-Q and our report on
Form 10-K for the year ended September 30, 2004.

OVERVIEW

Our operating results are affected primarily by
(i) the amount of capital we have to invest in mortgage
loans, (ii) the level of real estate lending activity in
the markets we service, (iii) our ability to identify and
work with suitable borrowers, (iv) the interest rates we
are able to charge on our loans and (v) the level of
non-performing assets and loan losses which we experience.

18



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##### Table of Contents



Summary of Financial Results

|                                                                          |  |                    |           |   |      |   |           |  
|------------------------------------------------------------------------- |  | ------------------ | --------- | - | ---- | - | --------- | -
|                                                                          |  |                   
|                                                                          |  | Three Months Ended |          
|                                                                          |  | December 31,       |          
|                                                                          |  |                    |          
|                                                                          |  | 2004               |           |   | 2003 |  
|                                                                          |  |                    |           |   |      |  
|Total revenues                                                            |  | $                  | 2,310,034 |   |      | $ | 2,048,148 |  
|Total expenses                                                            |  |                    | 735,781   |   |      |   | 1,260,541 |  
|                                                                          |  |                    |           |   |      |  
|Net income                                                                |  | $                  | 1,574,253 |   |      | $ | 787,607   |  
|                                                                          |  |                    |           |   |      |  
|Net income allocated to members per weighted
    average membership units |  | $                  | 0.19      |   |      | $ | 0.09      |  
|                                                                          |  |                    |           |   |      |  
|Annualized rate of return to members(a)                                   |  |                    | 7.6       | % |      |   | 3.5       | %
|                                                                          |  |                    |           |   |      |  
|Weighted average membership units                                         |  |                    | 8,332,817 |   |      |   | 9,110,711 |  
|                                                                          |  |                    |           |   |      |  
|Cash distributions                                                        |  | $                  | 1,250,041 |   |      | $ | 1,272,645 |  
|                                                                          |  |                    |           |   |      |  
|Cash distributions per weighted average
    membership unit               |  | $                  | 0.15      |   |      | $ | 0.14      |  
|                                                                          |  |                    |           |   |      |  



---



|    |                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The annualized rate of return to members is
    calculated based upon the net income allocated to members per
    weighted average units as of December 31, 2004 and 2003
    divided by the number of months during the period and multiplied
    by twelve (12) months, then divided by ten (the $10 cost
    per unit).



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Three Months Ended December 31, 2004
    Compared To Three Months Ended December 31,
    2003

Total Revenues.For
the three months ended December 31, 2004 and 2003, revenues
totaled $2.3 million and $2.0 million, respectively,
an increase of $0.3 million or 15%. The increase was
partially due to a gain on sale of real estate held for sale.
During September 2004 we and Vestin Fund II, LLC
(Fund II) entered into an agreement to sell the
remaining 29 acres of raw land in Mesquite, Nevada for
$6.2 million. Prior to September 2004, $145,000 was
released from escrow representing an early release of funds. The
transaction was finalized in December of 2004 and resulted in a
gain of approximately $1.0 million.

The increase in revenue was partially offset by
the declining amount of investments in mortgage loans from
approximately $50.8 million as of December 31, 2003 to
approximately $41.0 million at December 31, 2004, a
decrease of approximately $9.8 million or 13.3%. The
decrease is primarily related to member redemptions for the
calendar year ended December 31, 2004. In addition, the
average interest rate on our loans as of December 31, 2004
was 9.9%, compared to 12.5% at December 31, 2003. The total
decrease in interest income for the three months ended
December 31, 2004 compared to the same period in 2003 was
approximately $0.7 million. In addition, there has been an
increase in competition from more conventional mortgage lenders
and mortgage loan investors, such as commercial banks, thrifts,
and mortgage brokers, due to the overall decline in interest
rates. It is not clear yet if and when the recent, modest
increases in federal funds rates will enable us to charge higher
interest rates on our future loans.

During the past year, our Manager has experienced
less demand for loans. While we cannot be certain as to the
reason for the lower demand, our Manager believes that the
pending SEC inquiry has harmed our reputation among potential
borrowers. The continuation of the SEC inquiry, and any
resulting proceedings or penalties, could have a further adverse
impact upon our ability to compete for borrowers.

Approximately $0.4 million of our interest
revenue for the three months ended December 31, 2004 and
2003 was derived from interest reserves.

As of December 31, 2004, our Manager had
granted extensions on 10 loans pursuant to the terms of the
original loan agreements, which permit extensions by mutual
consent. Such extensions are generally provided on loans where
the original term was 12 months or less and where a
borrower requires additional time to complete a construction
project or negotiate take out financing. However, our Manager
only grants extensions when a borrower is in full compliance
with the terms of the loan, including, but not limited to the
borrowers

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##### Table of Contents



obligation to make interest payments on the loan.
The aggregate amount due from borrowers whose loans had been
extended as of December 31, 2004 was approximately
$4.9 million. Our Manager concluded that no allowance for
loan loss was necessary with respect to these loans as of that
date.


Total Expenses.For
the three months ended December 31, 2004, expenses totaled
$0.7 million compared to $1.3 million for the same
period in 2003, a decrease of $0.6 million which is
primarily related to the following:



| |   |                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We did not record any provisions for loan losses
    during the three months ended December 31, 2004 as our
    Manager has determined that the current allowance is sufficient
    to cover any inherent losses in our loan portfolio.
|
| |  | Interest expenses decreased by approximately
    $0.4 million due to a decrease in the amount of secured
    borrowings.                                                                                                               
|
| |  | Write down on the real estate held for sale
    decreased from $0.5 million to $0.3 million,
    respectively as of December 31, 2004 when compared to prior
    year.                                                                 

Net Income.Overall,
the net income for the three months ended December 31, 2004
totaled $1.6 million compared to $0.8 million for the
same period in 2003, an increase of $0.8 million or 100%.

Annualized Rate of Return to
Members.For the three months ended
December 31, 2004, annualized rate of return to members
totaled 7.6% as compared to 3.5% for the same period in 2003.

Distributions to
Members.For the three month period
ended December 31, 2004, members received distributions
totaling $1,250,041, as compared to distributions totaling
$1,272,645 for the three months ended December 31, 2003.
The foregoing distributions were paid entirely from Net Income
Available for Distribution as defined in the Companys
Operating Agreement. Net Income Available for Distribution is
based upon cash flow from operations, less certain reserves, and
may exceed net income as calculated in accordance with GAAP.

Redemptions.In
order to comply with our Operating Agreement and Internal
Revenue Code, we may redeem no more than 10% of the
members capital in any calendar year. As of
December 31, 2004, the total of redemptions made from
inception was $31.1 million. Balances in Members
capital accounts as of January 1, 2004 was
$85.4 million, which limited redemptions to
$8.5 million for calendar 2004. As of December 31,
2004, remaining requests to redeem approximately
$8.1 million in 2005, $7.2 million in 2006,
$6.5 million in 2007, $5.9 million in 2008,
$5.3 million in 2009, $4.8 million in 2010,
$4.3 million in 2011, $3.9 million in 2012, and
$1.3 million in 2013 had been logged.

During January 2005, we redeemed approximately
$5.5 million of the scheduled $8.1 million in
redemptions for the calendar year 2005.

INVESTMENTS IN MORTGAGE LOANS SECURED BY REAL
ESTATE PORTFOLIO

As of December 31, 2004, we had investments
in mortgage loans secured by real estate totaling $52,428,486,
including 30 loans of which 29 were secured by the first deed of
trust totaling $52,270,636, and 1 was secured by second deed of
trust totaling $157,850. If we hold a second mortgage,
generally, it is junior to a first trust deed position also held
by the Company or the Companys Manager.

As of December 31, 2004, the weighted
average interest rate on our investment in mortgage loans is
9.9%. These mortgage loans have contractual maturities within
the next 24 months.

Losses may occur from investing in mortgage
loans. The amount of losses will vary as the loan portfolio is
affected by changing economic conditions, the financial position
of borrowers, and changes in collateral values from time of loan
origination.

The conclusion that a mortgage loan is
uncollectible or that collectibility is doubtful is a matter of
judgment. On a quarterly basis, our Manager evaluates our
mortgage loan portfolio for impairment. The fact that a loan is
temporarily past due does not necessarily mean that the loan is
impaired. Rather, all relevant

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circumstances are considered by our Manager to
determine impairment and the need for specific reserves. This
evaluation considers among other matters:




| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | prevailing economic conditions;                                                                                 
|
| |  | historical experience;                                                                                          
|
| |  | the nature and volume of the loan portfolio;                                                                    
|
| |  | the borrowers financial condition and
    adverse situations that may affect the borrowers ability
    to pay;
|
| |  | evaluation of industry trends;                                                                                  
|
| |  | review and evaluation of loans identified as
    having loss potential; and                                     
|
| |  | estimated fair value of any underlying collateral.                                                              

Based upon this evaluation our Manager believes
that the allowance for loan losses totaling $600,000 included in
the accompanying balance sheet as of December 31, 2004 is
adequate to meet estimated credit losses.

Decisions regarding an allowance for loan losses
require judgment about the probability of future events. As a
result, there is an inherent risk that such judgment will prove
incorrect. In such event, actual losses may exceed (or be less
than) the amount of any allowance. To the extent that we
experience losses greater than the amount of the allowance, we
may incur a charge to earnings that will adversely affect our
operating results and the amount of any distributions payable to
our members.

CRITICAL ACCOUNTING ESTIMATES

Revenue Recognition

Interest income on loans is accrued by the
effective interest method. We do not recognize interest income
from loans once they are determined to be impaired. A loan is
impaired when, based on current information and events, it is
probable that we will be unable to collect all amounts due
according to the contractual terms of the loan agreement or when
the payment of interest is 90 days past due.

Real Estate Held For Sale

Real estate held for sale includes real estate
acquired through foreclosure and is carried at the lower of cost
or the propertys estimated fair value, less estimated
costs to sell. We seek to sell properties acquired through
foreclosure as quickly as circumstances permit. The carrying
values of real estate held for sale are assessed on a regular
basis from updated appraisals, comparable sales values or
purchase offers.

Real Estate Held For Sale  Seller
Financed

Seller financed real estate held for sale
includes real estate acquired through foreclosure and resold to
independent third parties where we have provided the financing
and the borrower has not met certain criteria in accordance with
Statement of Financial Accounting Standards
(FAS) No. 66 (FAS 66). FAS 66
requires the borrower to have a certain percentage equity
ownership (typically 20%) to allow us to record the sale of a
property. In addition, the borrower must maintain a minimum
commitment in the property on a continuing basis. Therefore,
until the borrower meets these requirements, the real estate is
retained as real estate held for sale.

Investments in Mortgage Loans

Investments in mortgage loans are secured by
trust deeds and mortgages. Generally, all of our mortgage loans
require interest only payments with a balloon payment of the
principal at maturity. We have both the intent and ability to
hold mortgage loans until maturity and therefore, mortgage loans
are classified and accounted for as held for investment and are
carried at amortized cost. Loans sold to or purchased from
affiliates are accounted for at the principal balance and no
gain or loss is recognized by us or any affiliate. Loan

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to value ratios are based on appraisals obtained
at the time of loan origination and may not reflect subsequent
changes in value estimates. Such appraisals are generally dated
within 12 months of the date of loan origination and may be
commissioned by the borrower. The appraisals may be for the
current estimate of the as-if developed value of the
property, which approximates the post-construction value of the
collateralized property assuming that such property is
developed. As-if developed values on raw land loans or
acquisition and development loans often dramatically exceed the
immediate sales value and may include anticipated zoning changes
and timely successful development by the purchaser. As most of
the appraisals will be prepared on an as-if developed basis, if
a loan goes into default prior to any development of a project,
the market value of the property may be substantially less than
the appraised value. As a result, there may be less security
than anticipated at the time the loan was originally made. If
there is less security and a default occurs, we may not recover
the full amount of the loan.


Allowance for Loan Losses

We maintain an allowance for loan losses on our
investments in mortgage loans for estimated credit impairment in
our investment in mortgage loans portfolio. The Managers
estimate of losses is based on a number of factors including the
types and dollar amounts of loans in the portfolio, adverse
situations that may affect the borrowers ability to repay,
prevailing economic conditions and the underlying collateral
securing the loan. Additions to the allowance are provided
through a charge to earnings and are based on an assessment of
certain factors which may indicate estimated losses on the
loans. Actual losses on loans are recorded as a charge-off or a
reduction to the allowance for loan losses. Subsequent
recoveries of amounts previously charged off are added back to
the allowance or included as income when the asset is disposed
of.

Secured Borrowings

Loans in which third party investors have
participated through inter-creditor agreements
(Inter-creditor Agreements) are accounted for as
secured borrowings in accordance with SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities(SFAS No. 140). The Inter-creditor
Agreements provide us additional funding sources for mortgage
loans whereby a third party investor (the Investor)
may participate in certain mortgage loans with us and/or
Fund II and/or Fund III (collectively, the Lead
Lenders). In the event of borrower non-performance, the
Inter-creditor Agreements provide that the Lead Lenders must
repay the Investors loan amount either by
(i) continuing to remit to the Investor the interest due on
the participated loan amount; (ii) substituting an
alternative loan acceptable to the Investor; or
(iii) repurchasing the participation from the Investor for
the outstanding balance plus accrued interest.

Additionally, an Investor may participate in
certain loans with the Lead Lenders through participation
agreements. In the event of borrower non-performance, the
participation agreement allows the Investor to be repaid up to
the amount of the Investors investment prior to the Lead
Lender being repaid. Mortgage loan financing under the
participation agreements are also accounted for as a secured
borrowing in accordance with SFAS No. 140.

CAPITAL AND LIQUIDITY

Liquidity is a measure of a companys
ability to meet potential cash requirements, including ongoing
commitments to fund lending activities and for general operating
purposes. Subject to a 3% reserve, we generally use all of our
available funds to invest in mortgage loans or satisfy
redemption requests. Distributable cash flow generated from such
loans is paid out to our members unless they have elected to
reinvest their dividends. We do not anticipate the need for
hiring any employees, acquiring fixed assets such as office
equipment or furniture, or incurring material office expenses
during the next twelve months because Vestin Mortgage will
manage our affairs. We may pay Vestin Mortgage a monthly
management fee of up to 0.25% of our aggregate capital
contributions.

During the three months ended December 31,
2004, cash flows provided by operating activities approximated
$1.5 million. Investing activities consisted of cash
provided by loan sales and payoffs of

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approximately $11.2 million. Financing
activities consisted of members redemptions in the amount
of $0.8 million and distributions of $1.1 million (net
of reinvestments).


At December 31, 2004, we had
$20.2 million in cash, $0.3 million in certificates of
deposit, and $87.9 million in total assets. It appears we
have sufficient working capital to meet our operating needs in
the near term.

Since we distribute most or all of our
distributable cash generated by operations, our sources of
liquidity include: repayments of outstanding loans, distribution
reinvestments by our members and arrangements with third parties
to participate in our loans.

As of December 31, 2004, members holding
approximately 20% of our outstanding units have elected to
reinvest their distributions. We no longer accept new
investments. Only members who have previously reinvested their
distributions are permitted to reinvest. The level of
distribution reinvestment will depend upon our performance as
well as the number of our members who prefer to reinvest rather
than receive current distributions of their income.

Any significant level of defaults on our
outstanding loans could reduce the funds we have available for
investment in new loans. Foreclosure proceedings may not
generate full repayment of our loans and may result in
significant delays in the return of invested funds. This would
diminish our capital resources and would impair our ability to
invest in new loans. In addition, any significant level of
redemptions by our members would reduce the capital we have
available for investment. In order to comply with our Operating
Agreement and Internal Revenue Code, we may redeem no more than
10% of the members capital in any calendar year. As of
December 31, 2004, the total of redemptions made from
inception was $31.1 million. Balances in Members
capital accounts as of January 1, 2004 was
$85.4 million, which limited redemptions to
$8.5 million for calendar 2004. As of December 31,
2004, remaining requests to redeem approximately
$8.1 million in 2005, $7.2 million in 2006,
$6.5 million in 2007, $5.9 million in 2008,
$5.3 million in 2009, $4.8 million in 2010,
$4.3 million in 2011, $3.9 million in 2012, and
$1.3 million in 2013 had been logged.

During January 2005, we redeemed approximately
$5.5 million of the scheduled $8.1 million in
redemptions for the calendar year 2005.

Inter-creditor Agreements provide us additional
funding sources for mortgage loans whereby a third party
investor (the Investor) may participate in certain
mortgage loans with us, Vestin Mortgage, Fund I and
Fund III (collectively, the Lead Lenders). In
the event of borrower non-performance, the Agreements provide
that the Lead Lenders must repay the Investors loan amount
either by (i) continuing to remit to the Investor the
interest due on the participated loan amount;
(ii) substituting an alternative loan acceptable to the
Investor; or (iii) repurchasing the participation from the
Investor for the outstanding balance plus accrued interest.

Additionally, an Investor may participate in
certain loans with Lead Lenders through participation
agreements. In the event of borrower non-performance, the
participation agreement allows the Investor to be repaid up to
the amount of the Investors investment prior to the Lead
Lenders being repaid.

As of December 31, 2004, funds being used
under intercreditor and participation agreements where we have
potential obligations as defined above totaled $3.2 million
compared to $6.1 million at September 30, 2004. The
decrease is related to payoffs received on loans funded through
intercreditor agreements.

We maintain working capital reserves of
approximately 3% of aggregate members capital accounts in
cash and cash equivalents, certificates of deposits and
short-term investments or liquid marketable securities. This
reserve is available to pay expenses in excess of revenues,
satisfy obligations of underlying security properties, expend
money to satisfy our unforeseen obligations and for other
permitted uses of the working capital.

We rely primarily upon repayment of outstanding
loans to provide capital for investment in new loans. Any
significant level of defaults on outstanding loans could reduce
the funds we have available for investment in new loans.
Resulting foreclosure proceedings may not generate full
repayment of our loans and may result in significant delays in
the return of invested funds. This would diminish our capital
resources and would impair

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our ability to invest in new loans.
Non-performing assets include loans in non-accrual status
totaling $8.4 million as of December 31, 2004 compared
to $8.3 million as of December 31, 2003 and real
estate held for sale not resold through seller financing
totaling $11.6 million as of December 31, 2004
compared to $22.2 million as of December 31, 2003. It
is possible that no earnings will be recognized from these
assets until they are disposed of, or that no earnings will be
recognized at all, and the time it will take to dispose of these
assets cannot be predicted. Our Manager believes that
non-performing assets at exist as a result of factors unique to
specific borrowers and properties. Because of the estimated
value of the underlying properties, we do not believe that any
losses beyond those already recognized will be incurred from
these assets upon final disposition. However, it is possible
that we will not be able to realize the full estimated carrying
values upon disposition.


Off Balance Sheet Arrangements

We do not have any interests in off-balance sheet
special purpose entities nor do we have any interests in
non-exchange traded commodity contracts.

The following summarizes our contractual
obligations as of December 31, 2004.

|                       |  |                       |           |           |        |   |           |           |           |           |   |         |  |   |   |  |  |   |   | 
|---------------------- |  | --------------------- | --------- | --------- | ------ | - | --------- | --------- | --------- | --------- | - | ------- |  | - | - |  |  | - | - | 
|                       |  |                      
|                       |  | Payment Due by Period
|                       |  |                      
|                       |  |                       |           | Less than |        |   |           |           | More than
|Contractual Obligation |  | Total                 |           |           | 1 Year |   |           | 1-3 Years |           | 3-5 Years |   | 5 Years
|                       |  |                       |           |           |        |   |           |           |           |           |   |        
|Secured borrowings     |  | $                     | 3,177,000 |           |        | $ | 3,177,000 |           |           | $         |  |         |  | $ |  |  |  | $ |  | 

RELATED PARTY TRANSACTIONS

For the three months ended December 31, 2004
and 2003, we recorded management fees to our Manager of
approximately $64,000. Additionally, for the three months ended
December 31, 2004, we recorded pro rata distributions owed
to our Manager of approximately $15,000 based upon the total of
100,000 units owned by our Manager.

As of December 31, 2004 we owed Fund II
approximately $1,504,000 primarily related to payments made on
our behalf for the maintenance of real estate owned.

As of December 31, 2004, we owed the Manager
approximately $778,000 related to unpaid management fees, our
Managers pro-rata share of distributions, and for expenses
paid on our behalf related to the maintenance of real estate
held for sale.

From time to time we may acquire or sell
investments in mortgage loans from/to the Manager or other
related parties pursuant to the terms of our Operating Agreement
provided the price does not exceed the original cost. No gain or
loss is recorded on these transactions as it is not our intent
to make a profit on the purchase or sale of such investments.
The purpose is to either free up capital to make new investments
or place excess capital in investments to maximize the use of
our capital.

During the three months ended December 31,
2003, we purchased $350,000 in investments in mortgage loans
from other related parties.

FACTORS AFFECTING OUR OPERATING
RESULTS

Our business is subject to numerous factors
affecting our operating results. In addition to the factors
discussed above, our operating results may be affected by:

Risks of Investing in Mortgage Loans



| |   |                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our underwriting standards and procedures are
    more lenient than conventional lenders in that we will invest in
    loans to borrowers who will not be required to meet the credit
    standards of conventional mortgage lenders. This may result in a
    higher rate of non-performing loans.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We approve mortgage loans more quickly than other
    mortgage lenders. Due to the nature of loan approvals, there is
    a risk that the credit inquiry our Manager performs will not
    reveal all material facts pertaining to the borrower and the
    security.                                                                                                                                                                                                                                                                                                                                   
|
| |  | Our results of operations will vary with changes
    in interest rates and with the performance of the relevant real
    estate markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | If the economy is healthy, we expect that more
    people will borrow money to acquire, develop or renovate real
    property. However, if the economy grows too fast, interest rates
    may increase too much and the cost of borrowing may become too
    expensive. This could result in a slowdown in real estate
    lending which may mean we will have fewer loans to acquire, thus
    reducing the revenues and the distributions to our members.                                                                                                                                             
|
| |  | If, at a time of relatively low interest rates, a
    borrower should prepay obligations that have a higher interest
    rate from an earlier period, investors will likely not be able
    to reinvest the funds in mortgage loans earning that higher rate
    of interest. In the absence of a prepayment fee, the investors
    will receive neither the anticipated revenue stream at the
    higher rate nor any compensation for their loss. This in turn
    could harm our reputation and make it more difficult for us to
    attract investors willing to acquire interest in mortgage loans.

Risk of Defaults

Our performance will be directly impacted by any
defaults on the loans in our portfolio. As noted above, we may
experience a higher rate of defaults than conventional mortgage
lenders. We seek to mitigate the risk by estimating the value of
the underlying collateral and insisting on low loan to value
ratios. However, no assurance can be given that these efforts
will fully protect us against losses on defaulted loans.
Moreover, during the period of time when a defaulted loan is the
subject of foreclosure proceedings, it is likely that we will
earn less (if any) income from such loans, thereby reducing our
earnings.

Risks of Interest Rate Changes

Our results of operations will vary with changes
in interest rates and with the performance of the relevant real
estate markets.

If the economy is healthy, we expect that more
people will be borrowing money to acquire, develop or renovate
real property. However, if the economy grows too fast, interest
rates may increase too much and the cost of borrowing may become
too expensive. This could result in a slowdown in real estate
lending which may mean we will have fewer loans to acquire, thus
reducing its revenues and the distributions to members.

One of the results of interest rate fluctuations
is that borrowers may seek to extend their low-interest-rate
mortgage loans after market interest rates have increased.
Generally, our loan documents permit it to raise the interest
rate it charges on extended loans anywhere from between 3/4% to
3% from the then-current rate on the loan. This creates three
risks for us:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) There can be no assurance that this
    permitted rate increase will be adequate if interest rates have
    increased beyond the range contemplated by our loan documents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (ii) If interest rates rise, borrowers under
    loans with monthly or quarterly principal payments may be
    compelled to extend their loans to decrease the principal paid
    with each payment because the interest component has increased.
    If this happens, there is a higher risk that the borrower may
    default on the extended loan, and the increase in the interest
    rate on the loan may not be adequate compensation for the
    increased risk. Distributions on mortgage loans we place may
    decline if lenders are unable to reinvest at higher rates or if
    an increasing number of borrowers default on their loans.
|
| | (iii) If, at a time of relatively low
    interest rates, a borrower prepays obligations that have a
    higher interest rate from an earlier period, investors will
    likely not be able to reinvest the funds in mortgage loans
    earning that higher rate of interest. In the absence of a
    prepayment fee, the investors will receive neither                                                                                                                                                                                                                                                                                               

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| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | the anticipated revenue stream at the higher rate
    nor compensation for their loss. This in turn could harm our
    business reputation.

Competition for Borrowers

We consider our competitors for borrowers to be
the providers of non-conventional mortgage loans, that is,
lenders who offer short-term, equity-based loans on an expedited
basis for higher fees and rates than those charged by
conventional lenders and mortgage loans investors, such as
commercial banks, thrifts, conduit lenders, insurance companies,
mortgage brokers, pension funds and other financial institutions
that offer conventional mortgage loans. Many of the companies
against which we compete have substantially greater financial,
technical and other resources than we do. Competition in our
market niche depends upon a number of factors including price
and interest rates of the loan, speed of loan processing, cost
of capital, reliability, quality of service and support services.

Effect of Fluctuations in the
Economy

Our sole business, making loans secured by real
estate, is particularly vulnerable to changes in macroeconomic
conditions. Any significant decline in economic activity,
particularly in the geographical markets in which we concentrate
our loans, could result in a decline in the demand for real
estate development loans. In order to stay fully invested during
a period of declining demand for real estate loans, we may be
required to make loans on terms less favorable to us or to make
loans involving greater risk to us. Declines in economic
activity are often accompanied by a decline in prevailing
interest rates. Although our lending rates are not directly tied
to the Federal Reserve Boards discount rate, a sustained
and widespread decline in interest rates will impact the
interest we are able to earn on our loans. Since our loans
generally do not have prepayment penalties, declining interest
rates may also cause our borrowers to prepay their loans and we
may not be able to reinvest the amounts prepaid in loans
generating a comparable yield. Moreover, any significant decline
in economic activity could adversely impact the ability of our
borrowers to complete their projects and obtain take out
financing. This in turn could increase the level of defaults we
may experience.

FORWARD LOOKING STATEMENTS

When used in this Quarterly Report on
Form 10-Q the words or phrases will likely
result, are expected to, is
anticipated, or similar expressions are intended to
identify forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties,
including but not limited to changes in interest rates, and
fluctuations in operating results. Such factors which are
discussed in Managements Discussion and Analysis of
Financial Condition and Results of Operations, could affect our
financial performance and could cause our actual results for
future periods to differ materially from any opinion or
statements expressed herein with respect to future periods. As a
result, we wish to caution readers not to place undue reliance
on any such forward looking statements, which speak only as of
the date made.






|        |                                                               
|------- | --------------------------------------------------------------
|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK

We are exposed to market risk, primarily from
changes in interest rates. We do not deal in any foreign
currencies and do not own any options, futures or other
derivative instruments. We do not have a significant amount of
debt. Most of our assets consist of mortgage loans, including
those that are financed under Intercreditor Agreements. At
December 31, 2004, our aggregate investment in mortgage
loans was $52,428,486 with a weighted average yield of 9.9%.
Loans financed under Intercreditor Agreements totaled $3,176,808
at December 31, 2004 and are classified as assets under
secured borrowings. Such financing is at a weighted average
interest rate of 10.8%. These mortgage loans mature within the
next 24 months. Most of the mortgage loans have a term of
12 months. The weighted average term of outstanding loans
at December 31, 2004 has increased to 26 months due to
a loan totaling $7.9 million having a contractual term of
72 months. All of the outstanding mortgage loans at
December 31, 2004 are fixed rate loans. All of the mortgage
loans are held for investment purposes and are intended to be
held to their maturity date. None of the mortgage loans have
prepayment penalties.

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Market fluctuations in interest rates generally
do not affect the carrying value of our investment in mortgage
loans. However, significant and sustained changes in interest
rates could affect our operating results. If interest rates
decline significantly, some of the borrowers could prepay their
loans with the proceeds of a refinancing at lower interest
rates. This would reduce our earnings and funds available for
distribution to Members. On the other hand, a significant
increase in interest rates could result in a slowdown in real
estate development activity which would reduce the demand for
commercial mortgage loans. As a result, we might encounter
greater difficulty in identifying appropriate borrowers. We are
not in a position to quantify the potential impact on our
operating results from a material change in interest rates.

As of December 31, 2004, we had cash and
investments in certificates of deposit and other short-term
deposit accounts totaling $20.5 million. We anticipate that
approximately 3% of our assets will be held in such accounts as
cash reserves. Additional deposits in such accounts will be made
as funds are received from the repayment of loans pending the
reinvestment of such funds in new mortgage loans or held for
member redemptions. We believe that these financial assets do
not give rise to significant interest rate risk due to their
short-term nature.






|        |                        
|------- | -----------------------
|ITEM 4. | CONTROLS AND PROCEDURES

The Companys management has evaluated the
effectiveness of the design and operation of its disclosure
controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the Exchange Act)) as of
the end of the period covered by this report. Such evaluation
was conducted under the supervision and with the participation
of the Chief Executive Officer (CEO) and the Chief
Financial Officer (CFO) of Vestin Mortgage, Inc.,
the Companys Manager, who function as the equivalent of
the CEO and CFO of the Company. Based upon such evaluation, CEO
and CFO have concluded that, as of the end of the period, the
Companys disclosure controls and procedures were effective.

There has been no changes in the Companys
internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that occurred during the Companys most recent fiscal
quarter, that have materially affected, or are reasonable likely
to materially affect, the Companys internal controls over
financial reporting.

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PART II

OTHER INFORMATION






|        |                  
|------- | -----------------
|ITEM 1. | LEGAL PROCEEDINGS

The staff of the Pacific Regional Office of the
Securities and Exchange Commission (SEC) has been
conducting an informal inquiry into certain matters related to
us, Vestin Group, Fund II and Vestin Fund III, LLC. We
have fully cooperated during the course of the informal inquiry.
On January 6, 2005, we received from the SEC an Order
Directing Private Investigation and Designating Officers to Take
Testimony which appears to focus upon the financial
reporting of us, Fund II and Fund III. We intend to
continue to cooperate fully in this matter and believe that we
have complied with SEC disclosure requirements. We cannot at
this time predict the outcome of this matter.

We are involved in a number of legal proceedings
concerning matters arising in connection with the conduct of our
business activities. We believe we have meritorious defenses to
each of these actions and intend to defend them vigorously. We
believe that we are not a party to any pending legal or
arbitration proceedings that would have a material adverse
effect on the our financial condition or results of operations
or cash flows, although it is possible that the outcome of any
such proceedings could have a material impact on our net income
in any particular period.






|        |                                              
|------- | ---------------------------------------------
|ITEM 2. | CHANGES IN SECURITIES AND USE OF
    PROCEEDS

During the three months ended December 31,
2004 Members redeemed $788,162 in membership units.






|        |                                    
|------- | -----------------------------------
|ITEM 3. | DEFAULTS UPON SENIOR
    SECURITIES

Not Applicable.






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

No matter was submitted to a vote of security
holders, through the solicitation of proxies or otherwise,
during the first quarter ended December 31, 2004.






|        |                  
|------- | -----------------
|ITEM 5. | OTHER INFORMATION

None.






|        |         
|------- | --------
|ITEM 6. | EXHIBITS

Exhibits

| |    |       |  |                                                                                             
| | -- | ----- |  | --------------------------------------------------------------------------------------------
| | 3  | .1(1) |  | Articles of Organization, as amended                                                        
|
| | 4  | .1(2) |  | Third Amended and Restated Operating Agreement
    (included as Exhibit A to the prospectus)
|
| | 4  | .2(2) |  | Subscription Agreement and Power of Attorney
    (included as Exhibit B to the prospectus)  
|
| | 31 | .1    |  | Section 302 Certification of Michael V.
    Shustek                                         
|
| | 31 | .2    |  | Section 302 Certification of John W.
    Alderfer                                           
|
| | 32 |       |  | Certification Pursuant to U.S.C. 18
    Section 1350                                        



---



|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated herein by reference to our
    Form S-11 Registration Statement filed on March 17,
    2000.                                  
|   
|(2) | Incorporated herein by reference to
    Post-Effective Amendment No. 2 to our Form S-11
    Registration Statement filed on April 16, 2001.

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SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.



| |                                            
| | -------------------------------------------
| | VESTIN FUND I, LLC                         
|
| | By: Vestin Mortgage, Inc., its sole manager



| |     |                     
| | --- | --------------------
| | By: | /s/ John W. Alderfer

| |                                               
| | ----------------------------------------------
| |                                               
| | John W. Alderfer                              
| | Chief Financial Officer of the Manager
    and
| | Duly Authorized Officer                       

Dated: February 9, 2005

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VESTIN FUND I, LLC

A Nevada Limited Liability Company



INDEX TO EXHIBITS


|        |    |       |                         |                                                                                             
|------- | -- | ----- | ----------------------- | --------------------------------------------------------------------------------------------
|Exhibit |    |       |                        
|No.     |    |       | Description of Exhibits
|        |    |       |                        
|        | 3  | .1(1) |                         | Articles of Organization, as amended                                                        
|       
|        | 4  | .1(2) |                         | Third Amended and Restated Operating Agreement
    (included as Exhibit A to the prospectus)
|       
|        | 4  | .2(2) |                         | Subscription Agreement and Power of Attorney
    (included as Exhibit B to the prospectus)  
|       
|        | 31 | .1    |                         | Section 302 Certification of Michael V.
    Shustek                                         
|       
|        | 31 | .2    |                         | Section 302 Certification of John W.
    Alderfer                                           
|       
|        | 32 |       |                         | Certification Pursuant to U.S.C. 18
    Section 1350                                        



---



|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated herein by reference to our
    Form S-11 Registration Statement filed on March 17,
    2000.                                  
|   
|(2) | Incorporated herein by reference to
    Post-Effective Amendment No. 2 to our Form S-11
    Registration Statement filed on April 16, 2001.

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