##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K/


(Amendment No. 1)


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended June 30, 2005                                                     
|          
|Or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                             

Commission File
Number 333-52484


VESTIN FUND II, LLC


(Exact name of registrant as specified in its charter)


|                                                                                    |  |                                         
|----------------------------------------------------------------------------------- |  | ----------------------------------------
|NEVADA                                                                              |  | 88-0481336                              
|(State or other jurisdiction of
    Incorporation or organization)                  |  | (I.R.S. Employer
    Identification No.)
|                                                                                   
|8379 WEST SUNSET RD.,
    LAS VEGAS, NEVADA(Address of principal executive offices) |  | 89113(Zip Code)                         

Registrants telephone number, including area code


702.227.0965


Securities registered pursuant to Section 12(b) of the
Act:


NONE


Securities registered pursuant to Section 12(g) of the
Act:


NONE


o þ


o þ


þ o


Regulation S-K Form 10-K Form 10-K. þ


Rule 12b-2 þ o


Rule 12b-2 o þ
















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EXPLANATORY NOTE






Form 10-K/ Form 10-K




2



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##### 










TABLE OF CONTENTS


|              |  |                                                                                                |    |      |    | 
|------------- |  | ---------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|              |  |                                                                                                |    | Page |   
|              |  |                                                                                                |    |      |   
|PART I       
|ITEM 1.       |  | BUSINESS                                                                                       |    |      | 4  | 
|ITEM 2.       |  | PROPERTIES                                                                                     |    |      | 14 | 
|ITEM 3.       |  | LEGAL PROCEEDINGS                                                                              |    |      | 14 | 
|ITEM 4.       |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS                                        |    |      | 15 | 
|             
|PART II      
|ITEM 5.       |  | MARKET FOR REGISTRANTS COMMON EQUITY
    AND RELATED STOCKHOLDER MATTERS                      |    |      | 15 | 
|ITEM 6.       |  | SELECTED FINANCIAL DATA                                                                        |    |      | 17 | 
|ITEM 7.       |  | MANAGEMENTS DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      |    |      | 18 | 
|ITEM 7A.      |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK                                 |    |      | 42 | 
|ITEM 8.       |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA                                                |    |      | 43 | 
|ITEM 9.       |  | CHANGES IN AND DISAGREEMENTS WITH
    ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE       |    |      | 43 | 
|ITEM 9A.      |  | CONTROLS AND PROCEDURES                                                                        |    |      | 43 | 
|ITEM 9B.      |  | OTHER INFORMATION                                                                              |    |      | 48 | 
|             
|PART III     
|ITEM 10.      |  | DIRECTORS AND EXECUTIVE OFFICERS OF
    REGISTRANT                                             |    |      | 48 | 
|ITEM 11.      |  | EXECUTIVE COMPENSATION                                                                         |    |      | 50 | 
|ITEM 12.      |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERS |    |      | 50 | 
|ITEM 13.      |  | CERTAIN RELATIONSHIPS AND RELATED
    TRANSACTIONS                                             |    |      | 51 | 
|ITEM 14.      |  | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                         |    |      | 52 | 
|             
|PART IV      
|ITEM 15.      |  | EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES                                                 |    |      | 52 | 
|EXHIBIT INDEX |  |                                                                                                | 52 |     
|SIGNATURES    |  |                                                                                                | 53 |     
|Exhibit 31.1 
|Exhibit 31.2 
|Exhibit 32   



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PART I


Note Regarding Forward Looking Statements









|        |         
|------- | --------
|ITEM 1. | BUSINESS

General














4



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| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | Produce revenues from the interest income on our real estate
    loans;                    
|
| |  | Provide monthly cash distributions from the net income earned on
    our real estate loans;
|
| |  | Preserve capital contributions; and                                                        
|
| |  | Reinvest, to the extent permissible, payments of principal and
    sales (net of expenses).

Acquisition and Investment Policies












| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | The ratio of the amount of the investment to the value of the
    property by which it is secured, or the
    loan-to-value ratio;
|
| |  | The potential for capital appreciation or depreciation of the
    property securing the investment;                               
|
| |  | Expected levels of rental and occupancy rates, if applicable;                                                                     
|
| |  | Potential for rental increases, if applicable;                                                                                    
|
| |  | Current and projected revenues from the property if applicable;                                                                   
|
| |  | The status and condition of the record title of the property
    securing the investment;                                         
|
| |  | Geographic location of the property securing the
    investment; and                                                              
|
| |  | The financial condition of the borrowers and their principals,
    if any, who guarantee the loan.                                



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Priority of Loans. Generally, our assets are
    secured by first deeds of trust. First deeds of trust are loans
    secured by a full or divided interest in a first deed of trust
    secured by the property. Other loans that we invest in on the
    security property will not be junior to more than one other
    loan. As of June 30, 2005, approximately 97% of the
    principal amount of our outstanding interest in loans was
    secured by first deeds of trust.
|
| | 2. Loan-to-Value
    Ratio. The amount of our loan combined with the outstanding
    debt secured by a senior loan on a security property generally
    does not exceed the following percentage of the appraised value
    of the security property at origination:                                                                                                                                                                                                               

|                            |  |                                             
|--------------------------- |  | --------------------------------------------
|Type of Secured Property    |  | Loan-to-Value Ratio                         
|                            |  |                                             
|Residential                 |  | 75%                                         
|Unimproved Land             |  | 60% (of anticipated as-if development value)
|Acquisition and Development |  | 60% (of anticipated as-if development value)
|Commercial Property         |  | 75% (of anticipated as-if development value)
|Construction                |  | 75% (of anticipated post-development value) 
|Bridge                      |  | 75% (of anticipated as-if development value)
|Leasehold Interest          |  | 75% (of value of leasehold interest)        



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bridge loans are a subcategory of commercial loans in which we
    provide interim financing for borrowers seeking long-term,
    permanent financing. Going forward, we expect to report bridge
    loans within the commercial category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | The target
    loan-to-value ratio for
    our loan portfolio as a whole is approximately 70%. However, we
    may deviate from these guidelines under certain circumstances.
    For example, Vestin Mortgage, in its discretion, may increase
    any of the above
    loan-to-value ratios if
    a given loan is supported by credit adequate to justify a higher
    loan-to-value ratio,
    including personal guarantees. Occasionally, our collateral may
    include personal property attached to the real property as well
    as real property. We do not have specific requirements with
    respect to the projected income or occupancy levels of a
    property securing our investment in a particular loan. These
    loan-to-value ratios
    will not apply to financing offered by us to the purchaser of
    any real estate acquired through foreclosure, or to refinance an
    existing loan that is in default when it matures. In those
    cases, Vestin Mortgage, in its sole discretion, shall be free to
    accept any reasonable financing terms it deems to be in our best
    interest.                                                                                                                                  
|
| | Loan to value ratios are based on appraisals that the Manager
    receives at the time of loan underwriting and may not reflect
    subsequent changes in value estimates. Such appraisals, which
    may have been commissioned by the borrower and also may precede
    the placement of the loan with us, 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, 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

6



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | We or the borrower retain appraisers who are licensed or
    qualified as independent appraisers and certified by or hold
    designations from one or more of the following organizations:
    the Federal National Mortgage Association, the Federal Home Loan
    Mortgage Corporation, the National Association of Review
    Appraisers, the Appraisal Institute, the Society of Real Estate
    Appraisers, M.A.I., Class IV Savings and Loan appraisers or
    from among appraisers with other qualifications acceptable to
    Vestin Mortgage. However, appraisals are only estimates of value
    and cannot be relied on as measures of realizable value. An
    employee or agent of Vestin Mortgage will review each appraisal
    report and will conduct a physical inspection for each property.
    A physical inspection includes an assessment of the subject
    property, the adjacent properties and the neighborhood, but
    generally does not include entering any structures on the
    property.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3. Construction Real estate Loans. We invest in
    construction loans other than home improvement loans on
    residential property, when the
    loan-to-value ratio
    does not exceed 75% of the appraised, completed value of the
    security property at origination.                                                                                                                                                                                                                                                                          
|
| | 4. Terms of Real estate Loans. Our loans as of
    June 30, 2005 range from a six month term to a sixty-eight
    month term, including approved extensions. Most of our loans are
    for a term of 12 months. Our original loan agreements,
    however, permit extensions to the term of the loan 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.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of June 30, 2005, all but two of our loans provided for
    payments of interest only with a balloon payment of
    principal payable in full at the end of the term. As of
    June 30, 2005, two of our loans were amortizing loans with
    a total balance of approximately $18,686,000 and had terms
    ranging from twelve to sixty-eight months. In addition, we
    invest in real estate loans which require borrowers to maintain
    interest reserves funded from the principal amount of the loan
    for a period of time. At June 30, 2005, we had
    $48 million in investments in real estate loans that had
    interest reserves where the total outstanding principal was
    approximately $67.8 million, including participating
    lenders. These loans had interest reserves of approximately
    $3.7 million, of which our portion is $1.8 million. At
    June 30, 2004, we had $112.0 million in investments in
    real estate loans that had interest reserves where the total
    outstanding principal was approximately $137.0 million,
    including participating lenders. These loans had interest
    reserves of approximately $7.3 million, of which our
    portion was $6.0 million.



| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. Escrow Conditions. Our loans will often be funded
    by us through an escrow account held by a title insurance
    company, subject to the following conditions:



| |   |                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Borrowers will obtain title insurance coverage for all loans,
    providing title insurance in an amount at least equal to the
    principal amount of the loan. Title insurance insures only the
    validity and priority of our deed of trust, and does not insure
    us against loss by other causes, such as diminution in the value
    of the security property.
|
| |  | Borrowers will obtain fire and casualty insurance for all loans
    secured by improved real property, covering us in an amount
    sufficient to cover the replacement cost of improvements.                                                                                                                                                                           
|
| |  | All insurance policies, notes, deeds of trust or loans, escrow
    agreements, and any other loan documents for a particular
    transaction will cover us as a beneficiary.                                                                                                                                                                                            



| |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. Purchase of Real estate Investments from
    Affiliates. We may acquire real estate loans from our
    affiliates, including Vestin Mortgage, for a price not in excess
    of the par value of the note, plus allowable fees and expenses,
    but without the allowance of any other compensation for the
    loans.                                                                                                                  
|
| | 7. Note Hypothecation. We may also acquire real
    estate loans secured by assignments of secured promissory notes.
    These real estate loans must satisfy our stated investment
    standards, including our
    loan-to-value ratios,
    and also may not exceed 80% of the principal amount of the
    assigned note upon acquisition. For example, if the property
    securing a note we acquire is commercial property, the total

7



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | amount of outstanding debts secured by the property must not
    exceed 75% of the appraised value of the property, and the real
    estate loan will not exceed 80% of the principal amount of the
    assigned note. For real estate loans secured by promissory
    notes, we will rely on the appraised value of the underlying
    property, as determined by an independent written appraisal
    which was conducted within the then-preceding twelve months. If
    an appraisal was not conducted within that period, then we will
    arrange for a new appraisal to be prepared for the property
    prior to acquisition of the loan.
|
| | 8. Participation. We participate in loans with other
    lenders, including affiliates as permitted by the NASAA
    Guidelines, by providing funds for or purchasing an undivided
    interest in a loan meeting our investment guidelines described
    above. Typically, we participate in loans if:                                                                                                                                                                                                                                                                                                                                          



| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We did not have sufficient funds to invest in an entire loan;                                                                                                                                                                                    
|
| |  | We are seeking to increase the diversification of our loan
    portfolio; or                                                                                                                                                                     
|
| |  | Vestin Mortgage originated a loan that fit within our investment
    guidelines but it would constitute more than 20% of our
    anticipated capital contribution or otherwise be
    disproportionately large given our then existing portfolio.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 real estate loans whereby a third party investor (the
    Investor) may participate on a non-pari passu basis
    in certain real estate loans with us and/or Fund I and/or
    Fund III (collectively, the Lead Lenders). In
    the event of borrower non-performance, the Inter-creditor
    Agreements generally 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.
|
| | An Investor may participate in certain loans with the Lead
    Lenders through participation agreements. In the event of
    borrower non-performance, the participation agreement may allow
    the Investor to be repaid up to the amount of the
    Investors investment prior to the lead lenders being
    repaid.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | As of June 30, 2005, 89% of our loans were loans in which
    we participated with other lenders, most of whom are our
    affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 9. Diversification. The NASAA Guidelines provide
    that we neither invest in or make real estate loans on any one
    property which would exceed, in the aggregate, an amount equal
    to 20% of our capital nor may we invest in or make real estate
    loans to or from any one borrower which would exceed, in the
    aggregate, an amount greater than 20% of our capital As of
    June 30, 2005, our single largest loan accounted for 9% of
    our members equity. The loan yields interest at
    9% per annum and, as of June 30, 2005, the outstanding
    balance of the loan was approximately $27.6 million. The
    loan was paid off in September 2005.
|
| | 10. Reserve Fund. We have established contingency
    working capital reserves of approximately 3% of our capital to
    cover our unexpected cash needs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | 11. Credit Evaluations. When reviewing a loan
    proposal, Vestin Mortgage determines whether a borrower has
    sufficient equity in the security property. Vestin Mortgage may
    also consider the income level and creditworthiness of a
    borrower to determine its ability to repay the real estate loan.                                                                                                                                                                                                                                                                                                                                                           
|
| | 12. Sale of Real Estate Loan Investments. Although
    Vestin Mortgage has no plans to do so, Vestin Mortgage may sell
    our real estate loans or interest in our loans to either
    affiliates or non-affiliated parties when Vestin Mortgage
    believes that it is advantageous to us to do so. However, we do
    not expect that the loans will be marketable or that a secondary
    market will ever develop for them.                                                                                                                                                                                                                                             

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Real Estate Loans to Affiliates




Purchase of Loans from Vestin Mortgage and Its Affiliates




Types of Loans We Invest In






| |                              
| | -----------------------------
| | Raw and Unimproved Land Loans





| |                                  
| | ---------------------------------
| | Acquisition and Development Loans





| |                   
| | ------------------
| | Construction Loans



9



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| |                          
| | -------------------------
| | Commercial Property Loans





| |                  
| | -----------------
| | Residential Loans





| |             
| | ------------
| | Bridge Loans







| |                   
| | ------------------
| | Local Agency Bonds



Collateral






| |                    
| | -------------------
| | First Deed of Trust



10



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| |                     
| | --------------------
| | Second Deed of Trust





| |                   
| | ------------------
| | Leasehold Interest



Prepayment Penalties and Exit Fees




Extensions to Term of Loan




Interest Reserves




Balloon Payment




11



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Repayment of Loans on Sale of Properties




Variable Rate Loans










Borrowing






| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | Finance our investments in real estate loans,                                                                      
|
| |  | Prevent a default under real estate loans that are senior to our
    real estate loans,                            
|
| |  | Discharge senior real estate loans if this becomes necessary to
    protect our investment in real estate loans, or
|
| |  | Operate or develop a property that we acquired under a defaulted
    loan.                                         





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Competition






Regulation










Employees




13



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Available Information


Form 10-K, Form 10-Q, Form 8-K Form 10-K.







|        |           
|------- | ----------
|ITEM 2. | PROPERTIES










|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS

Legal Matters Involving Our Manager








Legal Matters Involving the Company




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Rule 10b-5









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






PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
    STOCKHOLDER MATTERS

Market Information




Holders




Dividend Policy




Recent Sales of Unregistered Securities




Equity Compensation Plan Information




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Purchases of Equity Securities by the Issuer and Affiliated
Purchasers


|           |  |                 |    |  |                    |                    |      |                 |                    |  |                       |  |  |  |      | 
|---------- |  | --------------- | -- |  | ------------------ | ------------------ | ---- | --------------- | ------------------ |  | --------------------- |  |  |  | ---- | 
|           |  |                 |    |  |                    |                    |      | Maximum Number  |                   
|           |  |                 |    |  |                    | Total Number of    |      |                 | (or Approximate    | 
|           |  |                 |    |  |                    | Units Purchased as |      |                 | Dollar Value) of   | 
|           |  |                 |    |  |                    | Part of Publicly   |      |                 | Units That May Yet | 
|           |  | Total Number of |    |  | Average Price Paid |                    |      | Announced Plans |                    |  | be Purchased Under    | 
|Period     |  | Units Purchased |    |  | per Unit           |                    |      | or Programs     |                    |  | the Plans or Programs | 
|           |  |                 |    |  |                    |                    |      |                 |                    |  |                       | 
|April 2005 |  |                 | 0  |  |                    |                    | N/A  |                 |                    |  | None                  |  |  |  | None | 
|May 2005   |  |                 | 0  |  |                    |                    | N/A  |                 |                    |  | None                  |  |  |  | None | 
|June 2005  |  |                 | 52 |  |                    | $                  | 9.60 |                 |                    |  | None                  |  |  |  | None | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Pursuant to our Operating Agreement, members may request to have
    their units redeemed. However, 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.
    Balances in Members capital accounts as of January 1,
    2005 was approximately $357 million, which limited
    redemptions to approximately $35.7 million for calendar
    2005. As of June 30, 2005, we had approximately
    $0.1 million in redemptions that remain to be fulfilled in
    2005.

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|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA

|                                                                                |  |               |             |  |               |   |             |               |  |   |               |  |  |   |             | 
|------------------------------------------------------------------------------- |  | ------------- | ----------- |  | ------------- | - | ----------- | ------------- |  | - | ------------- |  |  | - | ----------- | 
|Vestin Fund II, LLC                                                             |  | June 30, 2005 |             |  | June 30, 2004 |   |             | June 30, 2003 |  |   | June 30, 2002 | 
|                                                                                |  |               |             |  |               |   |             |               |  |   |               | 
|Balance Sheet Data:                                                             |  |               |             |  |               |   |             |               |  |   |               |  |  |   |             | 
|Investments in real estate loans (net of allowance)                             |  | $             | 217,553,000 |  |               | $ | 303,853,000 |               |  | $ | 338,681,000   |  |  | $ | 222,058,000 | 
|Cash, cash equivalents, certificates of deposits and short-term
    investments |  | $             | 11,566,000  |  |               | $ | 14,362,000  |               |  | $ | 16,816,000    |  |  | $ | 8,624,000   | 
|Interest and other receivables                                                  |  | $             | 3,234,000   |  |               | $ | 4,224,000   |               |  | $ | 3,898,000     |  |  | $ | 2,190,000   | 
|Investment in Local Agency Bonds                                                |  | $             | 15,701,000  |  |               | $ |            |               |  | $ |              |  |  | $ |            | 
|Due from Vestin Fund I                                                          |  | $             | 1,560,000   |  |               | $ | 2,987,000   |               |  | $ | 216,000       |  |  | $ |            | 
|Real estate held for sale                                                       |  | $             | 51,215,000  |  |               | $ | 28,264,000  |               |  | $ | 13,696,000    |  |  | $ |            | 
|Real estate held for sale-seller financed                                       |  | $             | 12,631,000  |  |               | $ | 5,708,000   |               |  | $ | 2,137,000     |  |  | $ |            | 
|Note receivable                                                                 |  | $             | 328,000     |  |               | $ |            |               |  | $ |              |  |  | $ |            | 
|Note receivable Vestin Fund I                                                   |  | $             |            |  |               | $ | 4,278,000   |               |  | $ | 4,599,000     |  |  | $ |            | 
|Assets under secured borrowing                                                  |  | $             | 25,655,000  |  |               | $ | 61,924,000  |               |  | $ | 26,730,000    |  |  | $ |            | 
|Other assets                                                                    |  | $             | 27,000      |  |               | $ |            |               |  | $ |              |  |  | $ | 255,000     | 
|Total assets                                                                    |  | $             | 339,470,000 |  |               | $ | 425,600,000 |               |  | $ | 406,773,000   |  |  | $ | 233,127,000 | 
|Liabilities                                                                     |  | $             | 28,390,000  |  |               | $ | 64,531,000  |               |  | $ | 31,583,000    |  |  | $ | 651,000     | 
|Members equity                                                                 |  | $             | 311,080,000 |  |               | $ | 361,069,000 |               |  | $ | 375,190,000   |  |  | $ | 232,476,000 | 
|Total liabilities and Members equity                                           |  | $             | 339,470,000 |  |               | $ | 425,600,000 |               |  | $ | 406,773,000   |  |  | $ | 233,127,000 | 

|                                                                          |  |               |            |  |               |   |            |               |  |   |               |  |  |   |            | 
|------------------------------------------------------------------------- |  | ------------- | ---------- |  | ------------- | - | ---------- | ------------- |  | - | ------------- |  |  | - | ---------- | 
|                                                                          |  | 12 Months     |            |  | 12 Months     |   |            | 12 Months     |  |   | 12 Months     | 
|                                                                          |  | Ended         |            |  | Ended         |   |            | Ended         |  |   | Ended         | 
|                                                                          |  | June 30, 2005 |            |  | June 30, 2004 |   |            | June 30, 2003 |  |   | June 30, 2002 | 
|                                                                          |  |               |            |  |               |   |            |               |  |   |               | 
|                                                                          |  |               |            |  |               |   |            | (Unaudited)   | 
|Income Statement Data:                                                    |  |               |            |  |               |   |            |               |  |   |               |  |  |   |            | 
|Revenues                                                                  |  | $             | 28,717,000 |  |               | $ | 43,469,000 |               |  | $ | 40,313,000    |  |  | $ | 15,290,000 | 
|Expenses                                                                  |  | $             | 19,829,000 |  |               | $ | 11,738,000 |               |  | $ | 16,541,000    |  |  | $ | 868,000    | 
|Net income                                                                |  | $             | 8,888,000  |  |               | $ | 31,731,000 |               |  | $ | 23,772,000    |  |  | $ | 14,422,000 | 
|Net income allocated to Members                                           |  | $             | 8,888,000  |  |               | $ | 31,731,000 |               |  | $ | 23,772,000    |  |  | $ | 14,422,000 | 
|Net income allocated to Members per weighted average membership
    units |  | $             | 0.26       |  |               | $ | 0.86       |               |  | $ | 0.76          |  |  | $ | 1.19       | 
|Cash distributions                                                        |  | $             | 20,113,000 |  |               | $ | 29,097,000 |               |  | $ | 34,688,000    |  |  | $ | 15,740,000 | 
|Cash distributions per weighted average membership units                  |  | $             | 0.58       |  |               | $ | 0.79       |               |  | $ | 1.10          |  |  | $ | 1.30       | 
|Weighted average membership units                                         |  | $             | 34,769,757 |  |               | $ | 36,714,812 |               |  | $ | 31,430,793    |  |  | $ | 12,114,955 | 



17



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

Form 10-K.


RESULTS OF OPERATIONS


OVERVIEW






40-year


18



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##### Table of Contents





loan-to








| |                                                              
| | -------------------------------------------------------------
| | Fiscal Year Ended June 30, 2005 Compared To
    June 30, 2004

|                                                                          |  |                    |            |   |                    |   |            |  
|------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | - | ---------- | -
|                                                                          |  | For the Year Ended |            |   | For the Year Ended |  
|                                                                          |  | June 30,           |            |   | June 30,           |  
|                                                                          |  |                    |            |   |                    |  
|                                                                          |  | 2005               |            |   | 2004               |  
|                                                                          |  |                    |            |   |                    |  
|Total revenues                                                            |  | $                  | 28,717,000 |   |                    | $ | 43,469,000 |  
|Total expenses                                                            |  |                    | 19,829,000 |   |                    |   | 11,738,000 |  
|                                                                          |  |                    |            |   |                    |  
|Net income                                                                |  | $                  | 8,888,000  |   |                    | $ | 31,731,000 |  
|                                                                          |  |                    |            |   |                    |  
|Net income allocated to members per weighted average membership
    units |  | $                  | 8,888,000  |   |                    | $ | 31,731,000 |  
|                                                                          |  |                    |            |   |                    |  
|Net income allocated to members per weighted average membership
    units |  | $                  | 0.26       |   |                    | $ | 0.86       |  
|                                                                          |  |                    |            |   |                    |  
|Annualized rate of return to members(a)                                   |  |                    | 2.6        | % |                    |   | 8.6        | %
|                                                                          |  |                    |            |   |                    |  
|Weighted average membership units                                         |  |                    | 34,769,757 |   |                    |   | 36,714,812 |  
|                                                                          |  |                    |            |   |                    |  
|Cash distributions                                                        |  | $                  | 20,113,000 |   |                    | $ | 29,097,000 |  
|                                                                          |  |                    |            |   |                    |  
|Cash distributions per weighted average membership unit                   |  | $                  | 0.58       |   |                    | $ | 0.79       |  
|                                                                          |  |                    |            |   |                    |  






|    |  |                                                                                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The annualized rate of return to members is calculated based
    upon the net GAAP income allocated to members per weighted
    average units as of June 30, 2005 and 2004 divided by ten
    (the $10 cost per unit).

Total Revenues.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A decrease in interest income of approximately
    $13.5 million related to a decrease in investments in real
    estate loans and secured borrowings of approximately
    $83.7 million and $36.3 million, respectively, as of
    June 30, 2005. The decrease is primarily related to
    non-performing assets and member redemptions for the year ended
    June 30, 2005. In addition, the average interest rate on
    our loans as of

19



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | June 30, 2005 was 9.95%, compared to 10.9% at June 30,
    2004. While there has been some movement in the economy towards
    higher interest rates, it is not clear if or when any such rate
    increases will impact our business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | We recognized $2.3 million in revenue related to a
    finders fee on the sale of real estate in the City of
    Mesquite, Nevada during the fiscal year ended June 30,
    2004. We had no such comparable revenue for the fiscal year
    ended June 30, 2005. Our company and Fund I were
    presented with an opportunity to purchase the property but were
    prohibited by their respective operating agreements from
    purchasing the property. Instead, Vestin Mortgage facilitated
    the purchase and subsequent sale of the property. The subsequent
    sale of the property was made possible due to buyer financing
    provided by our company and Fund I. Vestin Mortgage
    negotiated that the buyer (an unaffiliated third party) pay a
    finders fee in the form of a $2.3 million promissory
    note to our company and a $4.7 million promissory note to
    Fund I to reflect the fact that the transaction was made
    possible by financing provided by our company and Fund I.
    The total $7.0 million finders fee was allocated to
    our company and Fund I based on the same ratio of the
    financing that each provided in the transaction. We received a
    promissory note in lieu of cash from an unaffiliated party in
    connection with the sale. The note required monthly interest
    payments at a rate of 8.5% per annum and had an original
    maturity date of June 13, 2005. We were using the cost
    recovery method of accounting for the transaction. Accordingly,
    we did not recognize any income on the $2.3 million note
    until the principal balance of both notes were paid in full.
    Under the cost recovery method, interest payments received by
    our company in excess of the principal balance are not recorded
    as income until such time as the note is paid off, which
    occurred in the first calendar quarter of 2004. In February
    2004, both notes were paid off and we recorded the
    $2.3 million as revenue related to the sale of real estate
    related to the original note and $0.3 million in interest
    income related to interest payments received prior to loan
    payoff.







20



---



##### Table of Contents



Total Expenses.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We wrote down the carrying value of a 126 unit assisted
    living facility located in Phoenix, Arizona by $5,852,000 during
    the year ended June 30, 2005.                                                                                                                                                                                                                                                                                                               
|
| |  | We wrote down the carrying value of the 166 residential lots
    located in Henderson, Nevada by $179,000 during the year ended
    June 30, 2005.                                                                                                                                                                                                                                                                                                                           
|
| |  | We wrote down the carrying value of two real estate parcels
    located in Austin and Cedar Park, Texas by $1,050,000 during the
    year ended June 30, 2005.                                                                                                                                                                                                                                                                                                               
|
| |  | We wrote down the carrying value of the 74 unit (90 bed)
    assisted living facility located in San Bernardino,
    California by $282,000 during the year ended June 30, 2005.                                                                                                                                                                                                                                                                                             
|
| |  | We have commenced a judicial foreclosure on a loan secured by 4
    cemeteries and 8 mortuaries in Hawaii. Upon completion of a
    valuation analysis it was deemed necessary to provide a
    valuation allowance of approximately $2,275,000 during the
    quarter ended June 30, 2005. See Rightstar
    Loan Allowance.                                                                                                                                              
|
| |  | We sold a 126 unit hotel in Mesquite, Nevada and sustained
    a loss of approximately $829,000 during the year ended
    June 30, 2005.                                                                                                                                                                                                                                                                                                                                     
|
| |  | We recognized an impairment value of $500,000 due to a
    restructured loan.                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | We recognized professional fees related to a restructured loan
    in the amount of $590,000.                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | For the year ended June 30, 2005 and 2004, we recognized
    expenses related to the maintenance of real estate held for sale
    of $2,784,000 and $1,559,000, respectively, which was an
    increase of approximately $1,225,000. The increase in these
    expenses is related to the increase in real estate held for sale
    at June 30, 2005 of approximately $51,215,000 compared to
    $28,264,000 at June 30, 2004, an increase of approximately
    $22,951,000.
|
| |  | The increase in expenses was partially offset by a decrease in
    interest expense of approximately $2,155,000 due to a decrease
    in the amount of secured borrowings as of June 30, 2005 and
    2004 of $25,655,000 and $61,924,000, respectively, a decrease of
    approximately $36,269,000.                                                                                                                                                                        

Net Income.


Annualized Rate of Return to Members.


Distributions to Members.


|                                                                                                 |  |                |            |  |                |   |            | 
|------------------------------------------------------------------------------------------------ |  | -------------- | ---------- |  | -------------- | - | ---------- | 
|                                                                                                 |  | For Year Ended |            |  | For Year Ended |  
|                                                                                                 |  | June 30,       |            |  | June 30,       |  
|                                                                                                 |  |                |            |  |                |  
|                                                                                                 |  | 2005           |            |  | 2004           |  
|                                                                                                 |  |                |            |  |                |  
|Distributions of Net Income Available for Distribution                                           |  | $              | 19,108,000 |  |                | $ | 29,097,000 | 
|Distributions in Excess of Net Income Available for Distribution
    Generated During the Period |  |                | 1,005,000  |  |                |   |           | 
|                                                                                                 |  |                |            |  |                |  
|Total Distributions                                                                              |  | $              | 20,113,000 |  |                | $ | 29,097,000 | 
|                                                                                                 |  |                |            |  |                |  



21



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##### Table of Contents







|                                                               |                                                        |                |            |           |                |   |             |            |  
|-------------------------------------------------------------- | ------------------------------------------------------ | -------------- | ---------- | --------- | -------------- | - | ----------- | ---------- | -
|                                                               |                                                        | For Year Ended |            |           | For Year Ended |  
|                                                               |                                                        | June 30,       |            |           | June 30,       |  
|                                                               |                                                        |                |            |           |                |  
|                                                               |                                                        | 2005           |            |           | 2004           |  
|                                                               |                                                        |                |            |           |                |  
|Distributions of Net Income Available for Distribution         |                                                        | $              | 19,108,000 |           |                | $ | 29,097,000  |           
|Additions to Working Capital Reserves (Amount Not Distributed) |                                                        |                |           |           |                |   | 5,249,000   |           
|                                                               |                                                        |                |            |           |                |  
|Gain on Sale of Real Estate Held for Sale                      |                                                        |                | (759,000   | )         |                |   |            |           
|                                                               |                                                        |                |            |           |                |  
|Loss on Sale of Real Estate Held for Sale                      |                                                        |                | 829,000    |           |                |   |            |           
|                                                               |                                                        |                |            |           |                |  
|Interest Income Accrued to Loan Balance                        |                                                        |                | 402,000    |           |                |   |            |           
|                                                               |                                                        |                |            |           |                |  
|Change in Operating Assets and Liabilities:                    |                                                        |                |            |           |                |   |             |           
|                                                               | Net Change in Amounts Due from Fund I                  |                |            | 5,705,000 |                |   |             | (2,771,000 | )
|                                                               |                                                        |                |            |           |                |  
|                                                               | Deferred Income                                        |                |            | 991,000   |                |   |             | 381,000    |  
|                                                               |                                                        |                |            |           |                |  
|                                                               | Net Change in Other Operating Assets                   |                |            | 196,000   |                |   |             | (444,000   | )
|                                                               |                                                        |                |            |           |                |  
|                                                               | Net Change in Accounts Payable and Accrued Liabilities |                |            | 811,000   |                |   |             | 219,000    |  
|                                                               |                                                        |                |            |           |                |  
|                                                               | Net Change in Amounts Due to Related Parties           |                |            | (673,000  | )              |   |             | (1,095,000 | )
|                                                               |                                                        |                |            |           |                |  
|Net Cash Provided by Operating Activities                      |                                                        | $              | 26,610,000 |           |                | $ | 30,636,000  |           
|                                                               |                                                        |                |            |           |                |  
|Net Cash Provided by Investing Activities                      |                                                        | $              | 32,076,000 |           |                | $ | 23,411,000  |           
|                                                               |                                                        |                |            |           |                |  
|Net Cash Used in Financing Activities                          |                                                        | $              | 60,057,000 |           |                | $ | (47,851,000 | )         
|                                                               |                                                        |                |            |           |                |  

Stated Unit Value Adjustment.


Redemptions.


22



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##### Table of Contents



Form S-4




| |                                                              
| | -------------------------------------------------------------
| | Fiscal Year Ended June 30, 2004 Compared To
    June 30, 2003

|                                                                          |  |                    |            |   |                    |   |            |  
|------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | - | ---------- | -
|                                                                          |  | For the Year Ended |            |   | For the Year Ended |  
|                                                                          |  | June 30,           |            |   | June 30,           |  
|                                                                          |  |                    |            |   |                    |  
|                                                                          |  | 2004               |            |   | 2003               |  
|                                                                          |  |                    |            |   |                    |  
|Total Revenues                                                            |  | $                  | 43,469,000 |   |                    | $ | 40,313,000 |  
|Total Expenses                                                            |  |                    | 11,738,000 |   |                    |   | 16,541,000 |  
|                                                                          |  |                    |            |   |                    |  
|Net Income                                                                |  | $                  | 31,731,000 |   |                    | $ | 23,772,000 |  
|                                                                          |  |                    |            |   |                    |  
|Net Income Allocated to Members Per Weighted Average Membership
    Units |  | $                  | 31,731,000 |   |                    | $ | 23,772,000 |  
|                                                                          |  |                    |            |   |                    |  
|Annualized Rate of Return to Members(a)                                   |  |                    | 8.6        | % |                    |   | 7.6        | %
|                                                                          |  |                    |            |   |                    |  
|Weighted Average Membership Units                                         |  |                    | 36,714,812 |   |                    |   | 31,430,793 |  
|                                                                          |  |                    |            |   |                    |  
|Cash Distributions                                                        |  | $                  | 29,097,000 |   |                    | $ | 34,688,196 |  
|                                                                          |  |                    |            |   |                    |  
|Cash Distributions Per Weighted Average Membership Unit                   |  | $                  | 0.79       |   |                    | $ | 1.10       |  






|    |  |                                                                                                                                                                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The annualized rate of return to members is calculated based
    upon the net income allocated to members per weighted average
    units as of June 30, 2004 and 2003 divided by ten (the $10
    cost per unit).

Total Revenues.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We recognized $2.3 million in revenue related to a
    finders fee on the sale of real estate in the City of
    Mesquite, Nevada during the fiscal year ended June 30,
    2004. We had no such comparable revenue for the fiscal year
    ended June 30, 2003. Our company and Fund I were
    presented with an opportunity to purchase the property but were
    prohibited by their respective operating agreements from
    purchasing the property. Instead, Vestin Mortgage facilitated
    the purchase and subsequent sale of the property. The subsequent
    sale of the property was made possible due to buyer financing
    provided by our company and Fund I. Vestin Mortgage
    negotiated that the buyer (an unaffiliated third party) pay a
    finders fee in the form of a $2.3 million promissory
    note to our company and a $4.7 million promissory note to
    Fund I to reflect the fact that the transaction was made
    possible by financing provided by our company and Fund I.
    The total $7.0 million finders fee was allocated to
    our company and Fund I based on the same ratio of the
    financing that each provided in the transaction. We received a
    promissory note in lieu of cash from an unaffiliated party in
    connection with the sale. The note required monthly interest
    payments at a rate of 8.5% per annum and had an original
    maturity date of June 13, 2005. We were using the cost
    recovery method of accounting for the transaction. Accordingly,
    we did not recognize any income on the $2.3 million note
    until the principal balance of both notes were paid in full.
    Under the cost recovery method, interest payments received by
    our company in excess of the principal balance are not recorded
    as income until such time as the note is paid off, which
    occurred in the first calendar quarter of 2004. In February
    2004, both notes were paid off and we recorded the

23



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##### Table of Contents



| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | $2.3 million as revenue related to the sale of real estate
    related to the original note and $0.3 million in interest
    income related to interest payments received prior to loan
    payoff.
|
| |  | An increase in interest income related to secured borrowings of
    approximately $1.5 million.                                                                                                    









Total Expenses.




| |   |                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Provisions for loan losses decreased by $6.1 million to
    $2.6 million for the year ended June 30, 2004 compared
    to $8.7 million for the same period in the prior year. The
    prior year expense included a $7.0 million provision on one
    loan.
|
| |  | Interest expense related to secured borrowing increased by
    $2.4 million to $5.7 million for the year ended
    June 30, 2004 compared to $3.3 million for the same
    period in the prior year.                                                       
|
| |  | We incurred legal fees of approximately $0.5 million for
    the year ended June 30, 2004 primarily related to various
    fees related to public filings as well as expenses related to
    foreclosure proceedings and loan maintenance.                 
|
| |  | During the year ended June 30, 2003 we elected to fully
    expense capitalized costs related to a bond offering. We did not
    incur such an expense during the year ended June 30, 2004.                                                                

24



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##### Table of Contents



Net Income.


Annualized Rate of Return to Members.


Distributions to Members.


|                                                                                                 |  |                |            |  |                |   |            | 
|------------------------------------------------------------------------------------------------ |  | -------------- | ---------- |  | -------------- | - | ---------- | 
|                                                                                                 |  | For Year Ended |            |  | For Year Ended |  
|                                                                                                 |  | June 30,       |            |  | June 30,       |  
|                                                                                                 |  |                |            |  |                |  
|                                                                                                 |  | 2004           |            |  | 2003           |  
|                                                                                                 |  |                |            |  |                |  
|Distributions of Net Income Available for Distribution                                           |  | $              | 29,097,000 |  |                | $ | 34,545,000 | 
|Distributions in Excess of Net Income Available for Distribution
    Generated During the Period |  |                |           |  |                |   | 143,000    | 
|                                                                                                 |  |                |            |  |                |  
|Total Distributions                                                                              |  | $              | 29,097,000 |  |                | $ | 34,688,000 | 
|                                                                                                 |  |                |            |  |                |  





|                                                               |                                                        |                |             |            |                |   |              |          |  
|-------------------------------------------------------------- | ------------------------------------------------------ | -------------- | ----------- | ---------- | -------------- | - | ------------ | -------- | -
|                                                               |                                                        | For Year Ended |             |            | For Year Ended |  
|                                                               |                                                        | June 30,       |             |            | June 30,       |  
|                                                               |                                                        |                |             |            |                |  
|                                                               |                                                        | 2004           |             |            | 2003           |  
|                                                               |                                                        |                |             |            |                |  
|Distributions of Net Income Available for Distribution         |                                                        | $              | 29,097,000  |            |                | $ | 34,545,000   |         
|Additions to Working Capital Reserves (Amount Not Distributed) |                                                        |                | 5,249,000   |            |                |   |             |         
|                                                               |                                                        |                |             |            |                |  
|Loss on Sale of Real Estate Held for Sale                      |                                                        |                |            |            |                |   | 109,000      |         
|                                                               |                                                        |                |             |            |                |  
|Change in Operating Assets and Liabilities:                    |                                                        |                |             |            |                |   |              |         
|                                                               | Net Change in Amounts Due from Fund I                  |                |             | (2,771,000 | )              |   |              | (838,000 | )
|                                                               |                                                        |                |             |            |                |  
|                                                               | Deferred Income                                        |                |             | 381,000    |                |   |              |         |  
|                                                               |                                                        |                |             |            |                |  
|                                                               | Net Change in Other Operating Assets                   |                |             | (444,000   | )              |   |              | (718,000 | )
|                                                               |                                                        |                |             |            |                |  
|                                                               | Net Change in Accounts Payable and Accrued Liabilities |                |             | (219,000   | )              |   |              | 118,000  |  
|                                                               |                                                        |                |             |            |                |  
|                                                               | Net Change in Amounts Due to Related Parties           |                |             | (1,095,000 | )              |   |              | 513,000  |  
|                                                               |                                                        |                |             |            |                |  
|Net Cash Provided by Operating Activities                      |                                                        | $              | 30,636,000  |            |                | $ | 33,729,000   |         
|                                                               |                                                        |                |             |            |                |  
|Net Cash Provided by Investing Activities                      |                                                        | $              | 23,411,000  |            |                | $ | (151,129,000 | )       
|                                                               |                                                        |                |             |            |                |  
|Net Cash Used in Investing Activities                          |                                                        | $              | (47,851,000 | )          |                | $ | 120,942,000  |         
|                                                               |                                                        |                |             |            |                |  

25



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##### Table of Contents



Redemptions.




| |                                                                      
| | ---------------------------------------------------------------------
| | Investments in Real estate loans Secured by Real Estate
    Portfolio





|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |        |   |  |  |       |  
|--------------------------- |  | --------- | -- |  | ---------- | -------- | ----------- | ------------- |  | --------- | ---------- | - | ------- | -------- | ------ | - |  |  | ----- | -
|                            |  |           |    |  |            | Weighted |             |               |  |           |           
|                            |  | Number of |    |  |            |          | Average     |               |  | Portfolio |            |   | Loan to |         
|Loan Type                   |  | Loans     |    |  | Balance(1) |          |             | Interest Rate |  |           | Percentage |   |         | Value(2) |       
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|Acquisition and development |  |           | 4  |  |            | $        | 57,313,000  |               |  |           | 8.69       | % |         |          | 24.35  | % |  |  | 67.58 | %
|Bridge(3)                   |  |           | 7  |  |            |          | 34,859,000  |               |  |           | 9.81       | % |         |          | 14.81  | % |  |  | 57.02 | %
|Commercial                  |  |           | 14 |  |            |          | 81,923,000  |               |  |           | 9.53       | % |         |          | 34.80  | % |  |  | 73.16 | %
|Construction                |  |           | 4  |  |            |          | 7,547,000   |               |  |           | 10.31      | % |         |          | 3.21   | % |  |  | 68.81 | %
|Land                        |  |           | 7  |  |            |          | 53,776,000  |               |  |           | 12.00      | % |         |          | 22.83  | % |  |  | 59.66 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|                            |  |           | 36 |  |            | $        | 235,418,000 |               |  |           | 9.95       | % |         |          | 100.00 | % |  |  | 66.23 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       



|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |        |   |  |  |       |  
|--------------------------- |  | --------- | -- |  | ---------- | -------- | ----------- | ------------- |  | --------- | ---------- | - | ------- | -------- | ------ | - |  |  | ----- | -
|                            |  |           |    |  |            | Weighted |             |               |  |           |           
|                            |  | Number of |    |  |            |          | Average     |               |  | Portfolio |            |   | Loan to |         
|Loan Type                   |  | Loans     |    |  | Balance(1) |          |             | Interest Rate |  |           | Percentage |   |         | Value(2) |       
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|Acquisition and development |  |           | 9  |  |            | $        | 70,320,000  |               |  |           | 9.48       | % |         |          | 22.04  | % |  |  | 64.22 | %
|Bridge(3)                   |  |           | 17 |  |            |          | 52,363,000  |               |  |           | 10.11      | % |         |          | 16.41  | % |  |  | 48.03 | %
|Commercial                  |  |           | 14 |  |            |          | 77,210,000  |               |  |           | 12.07      | % |         |          | 24.20  | % |  |  | 65.95 | %
|Construction                |  |           | 7  |  |            |          | 58,606,000  |               |  |           | 11.95      | % |         |          | 18.37  | % |  |  | 62.49 | %
|Land                        |  |           | 8  |  |            |          | 60,562,000  |               |  |           | 9.95       | % |         |          | 18.98  | % |  |  | 57.31 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|                            |  |           | 55 |  |            | $        | 319,061,000 |               |  |           | 10.90      | % |         |          | 100.00 | % |  |  | 60.55 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 the Company provided financing.
    GAAP requires the borrower to have a certain percentage equity
    ownership (typically 20%) to allow the Company 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 this requirement, the
    investment in the new loan is reduced by the amount originally
    invested in the real estate held for sale. Additionally, during
    the fiscal year ended June 30, 2005, we restructured a loan
    where we changed the interest rate on the loan from 12.5% to
    6.25%. The present value of the future cash flows from the
    restructured note using the effective interest rate yields an
    impaired balance of approximately $500.000. The impairment value
    is specifically reserved for in the allowance for loan losses.

|                                                            |  |               |             |   |               |   |             |  
|----------------------------------------------------------- |  | ------------- | ----------- | - | ------------- | - | ----------- | -
|                                                            |  | June 30, 2005 |             |   | June 30, 2004 |  
|                                                            |  | Balance       |             |   | Balance       |  
|                                                            |  |               |             |   |               |  
|Balance per Loan Portfolio                                  |  | $             | 235,418,000 |   |               | $ | 319,061,000 |  
|Less:                                                       |  |               |             |   |               |   |             |  
|Seller financed loans included in real estate held for sale |  |               | (12,631,000 | ) |               |   | (5,708,000  | )
|Allowance for loan losses                                   |  |               | (5,234,000  | ) |               |   | (9,500,000  | )
|                                                            |  |               |             |   |               |  
|Balance per Balance Sheet                                   |  | $             | 217,553,000 |   |               | $ | 303,853,000 |  
|                                                            |  |               |             |   |               |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 are generally dated no
    greater than 12 months prior to the date of loan
    origination and may have been commissioned by the borrower, and
    also may precede the placement of the loan with us. The
    appraisals may be for the current estimate of the
    as-if developed
    value of the property, and 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 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.
|   
|(3) | Bridge loans are a subcategory of commercial loans in which we
    provide interim financing for borrowers seeking long-term,
    permanent financing. Going forward, we expect to report bridge
    loans within the commercial category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|                     |  |               |             |  |            |  |        |               |  |   |             |  |  |  |        |  
|-------------------- |  | ------------- | ----------- |  | ---------- |  | ------ | ------------- |  | - | ----------- |  |  |  | ------ | -
|                     |  | June 30, 2005 |             |  | Portfolio  |  |        | June 30, 2004 |  |   | Portfolio   | 
|Loan Type            |  | Balance*      |             |  | Percentage |  |        | Balance*      |  |   | Percentage  | 
|                     |  |               |             |  |            |  |        |               |  |   |             | 
|First trust deeds    |  | $             | 228,668,000 |  |            |  | 97.14  | %             |  | $ | 311,178,000 |  |  |  | 97.53  | %
|Second trust deeds** |  |               | 6,750,000   |  |            |  | 2.86   | %             |  |   | 7,883,000   |  |  |  | 2.47   | %
|                     |  |               |             |  |            |  |        |               |  |   |             | 
|                     |  | $             | 235,418,000 |  |            |  | 100.00 | %             |  | $ | 319,061,000 |  |  |  | 100.00 | %
|                     |  |               |             |  |            |  |        |               |  |   |             | 






| |   |                               
| | - | ------------------------------
| | * | Please see footnote (1) above.



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

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|     |  |   |             | 
|---- |  | - | ----------- | 
|2005 |  | $ | 118,525,000 | 
|2006 |  |   | 93,588,000  | 
|2007 |  |   | 23,305,000  | 
|     |  |   |            
|     |  | $ | 235,418,000 | 
|     |  |   |            



|               |  |               |             |  |            |  |        |               |  |   |             |  |  |  |        |  
|-------------- |  | ------------- | ----------- |  | ---------- |  | ------ | ------------- |  | - | ----------- |  |  |  | ------ | -
|               |  | June 30, 2005 |             |  | Portfolio  |  |        | June 30, 2004 |  |   | Portfolio   | 
|               |  | Balance*      |             |  | Percentage |  |        | Balance*      |  |   | Percentage  | 
|               |  |               |             |  |            |  |        |               |  |   |             | 
|Arizona        |  | $             | 38,184,000  |  |            |  | 16.22  | %             |  | $ | 45,322,000  |  |  |  | 14.20  | %
|California     |  |               | 84,818,000  |  |            |  | 36.03  | %             |  |   | 80,869,000  |  |  |  | 25.35  | %
|Florida        |  |               |            |  |            |  |       |               |  |   | 656,000     |  |  |  | 0.21   | %
|Hawaii         |  |               | 25,704,000  |  |            |  | 10.91  | %             |  |   | 34,283,000  |  |  |  | 10.75  | %
|Nevada         |  |               | 45,051,000  |  |            |  | 19.14  | %             |  |   | 91,349,000  |  |  |  | 28.63  | %
|New York       |  |               | 20,000,000  |  |            |  | 8.50   | %             |  |   | 19,998,000  |  |  |  | 6.27   | %
|North Carolina |  |               |            |  |            |  |       |               |  |   | 1,610,000   |  |  |  | 0.50   | %
|Oklahoma       |  |               | 2,155,000   |  |            |  | 0.92   | %             |  |   |            |  |  |  |       |  
|Texas          |  |               | 19,506,000  |  |            |  | 8.28   | %             |  |   | 44,974,000  |  |  |  | 14.09  | %
|               |  |               |             |  |            |  |        |               |  |   |             | 
|               |  | $             | 235,418,000 |  |            |  | 100.00 | %             |  | $ | 319,061,000 |  |  |  | 100.00 | %
|               |  |               |             |  |            |  |        |               |  |   |             | 






|  |                               
|- | ------------------------------
|* | Please see footnote (1) above.



|                                                                                                   |  |               |            |  |               |           |             |            |               |       |              |  |  |  |    |  
|-------------------------------------------------------------------------------------------------- |  | ------------- | ---------- |  | ------------- | --------- | ----------- | ---------- | ------------- | ----- | ------------ |  |  |  | -- | -
|                                                                                                   |  |               |            |  |               | Number of |             |            | Percentage of |      
|                                                                                                   |  | Balance       |            |  |               |           | Months Non- |            |               | Total |             
|Description of Collateral                                                                          |  | June 30, 2005 |            |  | Maturity Date |           |             | Performing |               |       | Loan Balance | 
|                                                                                                   |  |               |            |  |               |           |             |            |               |       |              | 
|4 cemeteries and 8 mortuaries in Hawaii                                                            |  | $             | 7,704,000  |  |               |           | 03/31/2004  |            |               |       | 15           |  |  |  | 23 | %
|Racetrack and hotel in Vernon, NY                                                                  |  |               | 20,000,000 |  |               |           | 06/30/2005  |            |               |       | 11           |  |  |  | 77 | %
|25 acres tentatively mapped for 104 single family
    residential lots in Palm Springs, California |  |               | 1,195,000  |  |               |           | 01/23/2006  |            |               |       | 8            |  |  |  | 92 | %
|4 separate commercial parcels in Rancho Cucamonga, Palm Springs,
    and Cathedral City, CA        |  |               | 1,558,000  |  |               |           | 04/16/2005  |            |               |       | 3            |  |  |  | 22 | %
|Development of 400 single and multi-family residential lots in
    Cathedral City, California      |  |               | 5,539,000  |  |               |           | 04/20/2005  |            |               |       | 8            |  |  |  | 85 | %
|                                                                                                   |  |               |            |  |               |           |             |            |               |       |              | 
|                                                                                                   |  | $             | 35,996,000 |  |               |           |             |            |               |       |              |  |  |  |    |  
|                                                                                                   |  |               |            |  |               |           |             |            |               |       |              | 



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|                            |  |              |           |  |            |   |           |            |         |   |               |   |  |   |           | 
|--------------------------- |  | ------------ | --------- |  | ---------- | - | --------- | ---------- | ------- | - | ------------- | - |  | - | --------- | 
|                            |  | Balance      |           |  |            |   |           |            | Balance |  
|Description                 |  | July 1, 2004 |           |  | Provisions |   |           | Deductions |         |   | June 30, 2005 |  
|                            |  |              |           |  |            |   |           |            |         |   |               |  
|General Valuation Allowance |  | $            | 2,500,000 |  |            | $ |          |            |         | $ | (41,000       | ) |  | $ | 2,459,000 | 
|Specific Allowance(1)       |  |              | 7,000,000 |  |            |   | 2,775,000 |            |         |   | (7,000,000    | ) |  |   | 2,775,000 | 
|                            |  |              |           |  |            |   |           |            |         |   |               |  
|Total                       |  | $            | 9,500,000 |  |            | $ | 2,775,000 |            |         | $ | (7,041,000    | ) |  | $ | 5,234,000 | 
|                            |  |              |           |  |            |   |           |            |         |   |               |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Rightstar Loan Allowance  As of
    June 30, 2005, we had commenced a judicial foreclosure on a
    loan secured by 4 cemeteries and 8 mortuaries in Hawaii. The
    aggregate amount of the loan is approximately $32 million,
    of which our balance totals $7,704,000. Of the 4 lenders
    included in this loan, 1 lender has priority over the remaining
    3 lenders in the approximate amount of $14 million pursuant
    to an inter-creditor agreement. In exchange for expediting the
    foreclosure process, the lenders jointly agreed to release the
    guarantors from their guaranty of the loan. Foreclosure
    proceedings were delayed during the three months ended
    June 30, 2005 due to issues encountered in obtaining a
    license to operate the facilities. We cannot estimate when the
    foreclosure will be completed or when we may obtain title to the
    underlying properties. The cemeteries and mortuaries are
    operating businesses and, after obtaining title and pending
    disposition of these properties, we may have to include the
    operating results of these businesses in our financial
    statements on a consolidated basis. All significant intercompany
    balances and transactions will be eliminated in the
    consolidation. During the year ended June 30, 2005, the
    State of Hawaii notified the lenders of a potential trust fund
    deficit estimated at $19.5 million and claimed this balance
    has priority over all lenders. The lenders dispute the amount
    and priority of this deficit. However, we re-evaluated the
    underlying value of the collateral including this estimated
    trust fund deficit. Based on this estimate, we calculated our
    total specific reserve allowance of approximately $2,275,000.
    During July 2005, we and Fund I acquired the
    lenders position which held priority over the remaining 3
    lenders by acquiring its balance of the loan for approximately
    $15.5 million, including accrued interest of approximately
    $1.5 million, of which our portion is approximately
    $10.1 million, including accrued interest of approximately
    $1 million. We acquired this balance to expedite the
    foreclosure process and remove the lender from its priority
    position which had the potential to impair the value we may
    receive at the time the property is sold.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Impairment on Restructured Loan  During the
    fiscal year ended June 30, 2005, we restructured a loan
    where we changed the interest rate on the loan from 12.5% to
    6.25%. An impairment of $500,000 reflects the difference between
    the present value of the future cash flows to be received under
    the original loan and the present value of future cash flows to
    be received under the restructured loan discounted at the
    effective interest rate. The $500,000 impairment is specifically
    reserved for in the allowance for loan losses.



29



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| |                                
| | -------------------------------
| | Asset Quality and Loan Reserves







| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | 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; and                                                                          
|
| |  | Estimated net realizable value of any underlying collateral in
    relation to the loan amount.             





| |                                         
| | ----------------------------------------
| | Investments in Real Estate Held for Sale



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|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |   |  |   |            |   |  |   |            | 
|--------------------------------------------------------------------------- |  | -------- | -------- |  | ------------- |  | --- | ------------ |  | - | ------------ | --------- | ------------- | ---------- | ---------- | ------- | ----------- | ---------- | ----------- | -------- |  | -------- | -------- | - |  | - | ---------- | - |  | - | ---------- | 
|                                                                            |  |          |          |  |               |  |     |              |  |   |              | Gain      |               |            | Write Down |         |             |           
|                                                                            |  |          |          |  |               |  |     |              |  |   |              | (Loss) on |               |            | on Real    |         |             | Balance at |            
|                                                                            |  | Date     |          |  | Percentage of |  |     | Balance      |  |   |              |           | Consideration |            |            | Sale of |             |            | Estate Held |          |  | June 30, |         
|Description                                                                 |  | Acquired |          |  | Ownership     |  |     | July 1, 2004 |  |   | Acquisitions |           |               | from Sales |            |         | Real Estate |            |             | for Sale |  |          | 2005     |  
|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |  
|Custom residential property located in Santa Fe,
    NM(2)                  |  |          | 3/4/03   |  |               |  | 7   | %            |  | $ | 76,000       |           |               | $          |           |         |             | $          | (58,000     | )        |  | $        | 2,000    |   |  | $ | (20,000    | ) |  | $ |           | 
|140 Unit/224 bed senior facility in Mesa, AZ(2)                             |  |          | 5/26/04  |  |               |  | 86  | %            |  |   | 6,034,000    |           |               |            | 75,000     |         |             |            | (6,043,000  | )        |  |          | (66,000  | ) |  |   |           |   |  |   |           | 
|28 acres of raw land in Mesquite, NV(2)                                     |  |          | 11/27/02 |  |               |  | 42  | %            |  |   | 1,671,000    |           |               |            |           |         |             |            | (2,429,000  | )        |  |          | 758,000  |   |  |   |           |   |  |   |           | 
|Hotel/ Casino in Las Vegas, NV(2)                                           |  |          | 2/2/04   |  |               |  | 21  | %            |  |   | 6,190,000    |           |               |            |           |         |             |            | (6,153,000  | )        |  |          | (37,000  | ) |  |   |           |   |  |   |           | 
|40 acres of land containing 354 residential lots in
    Henderson, NV(2)    |  |          | 2/28/03  |  |               |  | 34  | %            |  |   | 3,511,000    |           |               |            |           |         |             |            | (775,000    | )        |  |          |         |   |  |   | (179,000   | ) |  |   | 2,557,000  | 
|460 acre residential sub-division in Lake Travis,
    TX(1)                 |  |          | 8/3/04   |  |               |  | 66  | %            |  |   |             |           |               |            | 3,478,000  |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 3,478,000  | 
|Two real estate parcels in Cedar Park and Austin, TX(3)                     |  |          | 3/2/04   |  |               |  | 100 | %            |  |   | 3,232,000    |           |               |            | 1,984,000  |         |             |            | (3,566,000  | )        |  |          |         |   |  |   | (1,050,000 | ) |  |   | 600,000    | 
|Partially completed golf course on 570 acres of land near
    Austin, TX(1) |  |          | 8/3/04   |  |               |  | 100 | %            |  |   |             |           |               |            | 5,633,000  |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 5,633,000  | 
|126 unit, (207 bed) assisted living facility in Phoenix,
    AZ(1)          |  |          | 9/8/04   |  |               |  | 90  | %            |  |   |             |           |               |            | 13,965,000 |         |             |            |            |          |  |          |         |   |  |   | (5,852,000 | ) |  |   | 8,113,000  | 
|126 unit Hotel in Mesquite, NV(1)(2)                                        |  |          | 10/04/04 |  |               |  | 68  | %            |  |   |             |           |               |            | 4,588,000  |         |             |            | (3,759,000  | )        |  |          | (829,000 | ) |  |   |           |   |  |   |           | 
|150-unit condominium conversion of The Club at
    Stablechase(1)         |  |          | 6/15/05  |  |               |  | 100 | %            |  |   |             |           |               |            | 9,058,000  |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 9,058,000  | 
|504 unit apartments in Austin, TX(1)                                        |  |          | 6/7/05   |  |               |  | 100 | %            |  |   |             |           |               |            | 14,426,000 |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 14,426,000 | 
|74 unit, (90 bed) assisted living facility in
    San Bernardino, CA(4)     |  |          | 4/6/04   |  |               |  | 100 | %            |  |   | 7,550,000    |           |               |            | 282,000    |         |             |            | (200,000    | )        |  |          |         |   |  |   | (282,000   | ) |  |   | 7,350,000  | 
|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |  
|                                                                            |  |          |          |  |               |  |     |              |  | $ | 28,264,000   |           |               | $          | 53,489,000 |         |             | $          | (22,983,000 | )        |  | $        | (172,000 | ) |  | $ | (7,383,000 | ) |  | $ | 51,215,000 | 
|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |  






| |                                                       
| | ------------------------------------------------------
| | (1) Foreclosures for the year ended June 30,
    2005:





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|    |                                                                         
|--- | ------------------------------------------------------------------------
|(2) | Sales of real estate held for sale for the year ended
    June 30, 2005:







32



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | During March 2004, we foreclosed on two loans and took title to
    the related properties, which consisted of two undeveloped
    parcels of land in Austin and Cedar Park, Texas totaling
    $5,216,000. During September 2004, our Manager estimated the
    current value of the properties to be $1,650,000 based on
    updated appraisals. We have assigned the rights to any future
    judgments related to the personal guarantees associated with the
    loans to the Manager in exchange for $3,566,000 which is the
    estimated deficiency on the value of the properties. We received
    $2,566,000 in cash and a note receivable from Vestin Mortgage of
    $1,000,000. This transaction results in recovery net of legal
    and collection costs of the $1,984,000 which is shown as a
    capital contribution from our Manager. During the year ended
    June 30, 2005, our Manager estimated the combined current
    value on the two properties to be $600,000, resulting in a write
    down of approximately $1.0 million.
|   
|(4) | During April 2004, we foreclosed on a loan secured by a 74
    Unit/90 bed assisted living facility in San Bernardino,
    California. The business has continued operations. The property
    was listed for sale. During the year ended June 30, 2005,
    we wrote down the carrying value of the facility located in
    San Bernardino, California by $282,000. During April 2005,
    we entered into a purchase and sale agreement for the sale of
    the facility through 97% financing of which the terms include: a
    payment of $200,000; a $7,150,000 loan; a scheduled closing date
    during October 2005; bearing an interest rate of 8.5%; quarterly
    payments of interest of approximately $152,000; maturing during
    November 2006. Upon the closing of the transaction, the balance
    will be accounted for as an investment in real estate held for
    sale  seller financed.                                                                                                                                          

33



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| |                                                               
| | --------------------------------------------------------------
| | Investments in real estate held for sale 
    seller financed



|                                                                           |  |          |            |  |               |  |     |              |  |           |              |  |               |          |           |       |             |            |               |   |  |   |   |  |  |   |            | 
|-------------------------------------------------------------------------- |  | -------- | ---------- |  | ------------- |  | --- | ------------ |  | --------- | ------------ |  | ------------- | -------- | --------- | ----- | ----------- | ---------- | ------------- | - |  | - | - |  |  | - | ---------- | 
|                                                                           |  |          |            |  |               |  |     |              |  | Principal |              |  |               |          |          
|                                                                           |  |          |            |  |               |  |     |              |  | Payments  |              |  | Valuation/    |          |          
|                                                                           |  | Date     |            |  | Percentage of |  |     | Balance at   |  |           |              |  | Received from |          |           | Other |             | Balance at |              
|Description                                                                |  | Acquired |            |  | Ownership     |  |     | July 1, 2004 |  |           | Acquisitions |  |               | Borrower |           |       | Adjustments |            | June 30, 2005 |  
|                                                                           |  |          |            |  |               |  |     |              |  |           |              |  |               |          |           |       |             |            |               |  
|An approximate 200-unit apartment complex located in Las Vegas,
    Nevada |  |          | 1/27/2003  |  |               |  | 95% |              |  | $         | 3,214,000    |  |               | $        |          |       |             | $          |              |   |  | $ |  |  |  | $ | 3,214,000  | 
|A completed golf course and raw land in Mesquite, Nevada                   |  |          | 11/6/2002  |  |               |  | 45% |              |  |           | 1,209,000    |  |               |          |          |       |             |            |              |   |  |   |  |  |  |   | 1,209,000  | 
|36 acres of raw land in Mesquite, Nevada                                   |  |          | 11/27/2002 |  |               |  | 52% |              |  |           | 357,000      |  |               |          |          |       |             |            |              |   |  |   |  |  |  |   | 357,000    | 
|Assisted living facility in Las Vegas, Nevada                              |  |          | 9/23/2004  |  |               |  | 48% |              |  |           |             |  |               |          | 7,424,000 |       |             |            | (115,000      | ) |  |   |  |  |  |   | 7,309,000  | 
|Raw land in Mesquite, Nevada                                               |  |          | 11/27/2002 |  |               |  | 47% |              |  |           | 928,000      |  |               |          |          |       |             |            | (386,000      | ) |  |   |  |  |  |   | 542,000    | 
|                                                                           |  |          |            |  |               |  |     |              |  |           |              |  |               |          |           |       |             |            |               |   | 
|                                                                           |  |          |            |  |               |  |     |              |  | $         | 5,708,000    |  |               | $        | 7,424,000 |       |             | $          | (501,000      | ) |  | $ |  |  |  | $ | 12,631,000 | 
|                                                                           |  |          |            |  |               |  |     |              |  |           |              |  |               |          |           |       |             |            |               |   | 



OFF-BALANCE SHEET ARRANGEMENTS




CONTRACTUAL OBLIGATIONS




|                       |  |                       |            |           |        |   |            |           |           |           |   |         |  |   |   |  |  |   |   | 
|---------------------- |  | --------------------- | ---------- | --------- | ------ | - | ---------- | --------- | --------- | --------- | - | ------- |  | - | - |  |  | - | - | 
|                       |  | Payment Due by Period
|                       |  |                      
|                       |  |                       |            | Less Than |        |   |            |           | More Than
|Contractual Obligation |  | Total                 |            |           | 1 Year |   |            | 1-3 Years |           | 3-5 Years |   | 5 Years
|                       |  |                       |            |           |        |   |            |           |           |           |   |        
|Secured borrowings     |  | $                     | 25,655,000 |           |        | $ | 25,655,000 |           |           | $         |  |         |  | $ |  |  |  | $ |  | 

CRITICAL ACCOUNTING ESTIMATES




| |                    
| | -------------------
| | Revenue Recognition



34



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|                                                                                  |  |                     |             |  
|--------------------------------------------------------------------------------- |  | ------------------- | ----------- | -
|                                                                                  |  | Increase (Decrease) |            
|Changed Assumption                                                                |  | in Interest Income  |            
|                                                                                  |  |                     |            
|Weighted average interest rate assumption increased by 1% or
    100 basis points |  | $                   | 2,420,000   |  
|Weighted average interest rate assumption increased by 5% or
    500 basis points |  | $                   | 12,102,000  |  
|Weighted average interest rate assumption decreased by 1% or
    100 basis points |  | $                   | (2,420,000  | )
|Weighted average interest rate assumption decreased by 5% or
    500 basis points |  | $                   | (12,102,000 | )





| |                                 
| | --------------------------------
| | Investments in Real estate loans







| |                          
| | -------------------------
| | Allowance for Loan Losses



35



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|                                                                             |  |                        |            |  
|---------------------------------------------------------------------------- |  | ---------------------- | ---------- | -
|                                                                             |  | Increase (Decrease) in |           
|                                                                             |  | Allowance for          |           
|Changed Assumption                                                           |  | Loan Losses            |           
|                                                                             |  |                        |           
|Allowance for loan losses assumption increased by 1.0% of loan
    portfolio |  | $                      | 2,354,000  |  
|Allowance for loan losses assumption increased by 5.0% of loan
    portfolio |  | $                      | 11,771,000 |  
|Allowance for loan losses assumption decreased by 1.0% of loan
    portfolio |  | $                      | (2,354,000 | )
|Allowance for loan losses assumption decreased by 2.2% of loan
    portfolio |  | $                      | (5,234,000 | )







| |   |                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Declines in real estate market conditions which can cause a
    decrease in expected market value.                                                                                                                                                                                                                                                                                         
|
| |  | Discovery of undisclosed liens for community improvement bonds,
    easements and delinquent property taxes.                                                                                                                                                                                                                                                                               
|
| |  | Lack of progress on real estate developments after we advance
    funds. We customarily utilize disbursement agents to monitor the
    progress of real estate developments and approve loan advances.
    After further inspection of the related property, progress on
    construction occasionally does not substantiate an increase in
    value to support the related loan advances.
|
| |  | Unanticipated legal or business issues that may arise subsequent
    to loan origination or upon the sale of foreclosed upon property.                                                                                                                                                                                                                                                     
|
| |  | Appraisals which are only opinions of value at the time of the
    appraisal may not accurately reflect the value of the property.                                                                                                                                                                                                                                                         



| |                          
| | -------------------------
| | Real Estate Held For Sale

Accounting for the
Impairment or Disposal of Long Lived Assets


36



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| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | Management commits to a plan to sell the properties;                                                                         
|
| |  | The property is available for immediate sale in its present
    condition subject only to terms that are usual and customary;
|
| |  | An active program to locate a buyer and other actions required
    to complete a sale have been initiated;                   
|
| |  | The sale of the property is probable;                                                                                        
|
| |  | The property is being actively marketed for sale at a reasonable
    price; and                                              
|
| |  | Withdrawal or significant modification of the sale is not likely.                                                            



| |                                                
| | -----------------------------------------------
| | Real Estate Held For Sale  Seller
    Financed









| |                                                                       
| | ----------------------------------------------------------------------
| | Classification of Operating Results from Real Estate Held
    for Sale





| |                   
| | ------------------
| | Secured Borrowings

Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities


37



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FACTORS AFFECTING OUR OPERATING RESULTS






| |                                        
| | ---------------------------------------
| | Risks of Investing in Real estate 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 real estate lenders.                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | We approve real estate loans more quickly than other real estate
    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 real estate 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 real estate loans.



| |                 
| | ----------------
| | Risk of Defaults





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| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We may incur substantial legal fees and court costs in acquiring
    a mortgaged property through a foreclosure sale and/or
    bankruptcy proceedings.                                                                                                  
|
| |  | 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.                                                   
|
| |  | Properties foreclosed upon may not generate sufficient income
    from operations to meet expenses, such as property taxes,
    maintenance costs, mortgage payments, insurance cost and related
    charges.                                            
|
| |  | Operation of foreclosed properties my require us to spend
    substantial funds for an extended period until we are able to
    find a suitable buyer.                                                                                                   
|
| |  | We incur liability risks in owning and operating real property
    such as possible liability for injury to persons and property or
    for the cost involved in cleaning up any contamination by
    materials hazardous to the environment.            
|
| |  | Proceeds from the sale of foreclosed property may not generate
    full repayment of our loans and, in connection with such sale,
    we may be required to provide seller financing and incur the
    risk that the buyer may default on such financing.



| |                               
| | ------------------------------
| | Risks of Interest Rate Changes









| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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 real estate 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 real estate 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 compensation for their loss. This in turn could
    harm our business reputation.                                                                                                                                                   



| |                          
| | -------------------------
| | Competition for Borrowers



39



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| |                                      
| | -------------------------------------
| | Effect of Fluctuations in the Economy



CAPITAL AND LIQUIDITY














40



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Form S-4


Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities


41



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|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK









Interest Earning Assets Aggregated by Maturity Twelve Months
Ended June 30, 2005


|                                 |  |      |             |   |      |   |            |      |  |   |            |   |      |   |            |  |       |   |   |  |  |   |   |  |  |   |             |  
|-------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | ---- |  | - | ---------- | - | ---- | - | ---------- |  | ----- | - | - |  |  | - | - |  |  | - | ----------- | -
|                                 |  | 2005 |             |   | 2006 |   |            | 2007 |  |   | 2008       |   | 2009 |   | Thereafter |  | Total |  
|                                 |  |      |             |   |      |   |            |      |  |   |            |   |      |   |            |  |       |  
|Interest Earning Assets          |  |      |             |   |      |   |            |      |  |   |            |   |      |   |            |  |       |   |   |  |  |   |   |  |  |   |             |  
|Investments in real estate loans |  | $    | 118,525,000 |   |      | $ | 93,588,000 |      |  | $ | 23,305,000 |   |      | $ |           |  |       | $ |  |  |  | $ |  |  |  | $ | 235,418,000 |  
|Weighted Average interest rates  |  |      | 10.83       | % |      |   | 9.84       | %    |  |   | 6.21       | % |      |   |           |  |       |   |  |  |  |   |  |  |  |   | 9.95        | %

42



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|                               |  |                        |   |      |  |      |   |      |  |      |   |            |  |   |   |  |  |   |   |  |  |   |            |  
|------------------------------ |  | ---------------------- | - | ---- |  | ---- | - | ---- |  | ---- | - | ---------- |  | - | - |  |  | - | - |  |  | - | ---------- | -
|                               |  | Expected Maturity Date |  
|                               |  |                        |  
|Marketable Securities          |  | 2005                   |   | 2006 |  | 2007 |   | 2008 |  | 2009 |   | Thereafter | 
|                               |  |                        |   |      |  |      |   |      |  |      |   |            | 
|Fixed Rate bonds               |  | $                      |  |      |  | $    |  |      |  | $    |  |            |  | $ |  |  |  | $ |  |  |  | $ | 23,360,000 |  
|Weighted average interest rate |  |                        |  |      |  |      |  |      |  |      |  |            |  |   |  |  |  |   |  |  |  |   | 5.77       | %



|                                     |  |             |            |             |          |   |           |                 |  |   |               |  |  |   |            | 
|------------------------------------ |  | ----------- | ---------- | ----------- | -------- | - | --------- | --------------- |  | - | ------------- |  |  | - | ---------- | 
|                                     |  |             |            | Unamortized |          |   |           |                 | 
|Local Agency Bonds-Fair Market Value |  | Face Amount |            |             | Discount |   |           | Unrealized Loss |  |   | Balance Sheet | 
|                                     |  |             |            |             |          |   |           |                 |  |   |               | 
|Fixed rate bonds                     |  | $           | 23,360,000 |             |          | $ | 6,855,000 |                 |  | $ | 804,000       |  |  | $ | 15,701,000 | 










|        |                                            
|------- | -------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE








|         |                       
|-------- | ----------------------
|ITEM 9A. | CONTROL AND PROCEDURES



| |                                   
| | ----------------------------------
| | Disclosure Controls and Procedures

Rules 13a-15(e) 15d-15(e))


43



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| |                                                                     
| | --------------------------------------------------------------------
| | Managements Report on Internal Control Over Financial
    Reporting









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The first material weakness identified insufficient resources of
    technical accounting and reporting expertise. This weakness
    relates to the oversight and review of financial transactions,
    which affects our ability to prepare and properly review
    financial statements and accompanying footnote disclosures in
    accordance with United States generally accepted accounting
    principles and the rules and regulations of the SEC.
|
| |  | As a result of the foregoing material weakness, there has been
    ineffective oversight of documentation of authorizations to
    ensure that procedures are properly executed.                                                                                                                                                                                                                                                                           







| |                 
| | ----------------
| | Remediation Plan





| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hired a corporate controller with the requisite experience to
    assist and work directly with our Managers Chief Financial
    Officer;
|
| |  | Hired an accounting manager with the requisite experience to
    assist and work directly with our Managers corporate
    controller;    

44



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| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Created an additional position to assist with the financial
    reporting process and is in the process of identifying an
    individual for this position;                                                    
|
| |  | Implemented a mandatory weekly management meeting for all key
    personnel. This allows for financial reporting personnel to be
    consistently updated on significant matters affecting the
    Company; and
|
| |  | Implemented a Financial Reporting Review Committee, which
    reviews all periodic financial reporting documents prior to
    filing.                                                                          





| |                                                         
| | --------------------------------------------------------
| | Changes in Internal Control Over Financial
    Reporting

Rules 13a-15(f) 15d-15(f)


45



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##### Table of Contents



Report of Independent Registered Public Accounting Firm






Internal Control  Integrated Framework












| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The first material weakness identified insufficient resources of
    technical accounting and reporting expertise. This weakness
    relates to the oversight and review of financial transactions,
    which affects the Companys ability to prepare and properly
    review financial statements and accompanying footnote
    disclosures in accordance with U.S. generally accepted
    accounting principles and the rules and regulations of the
    Security and Exchange Commission.
|
| |  | As a result of the foregoing material weakness, there has been
    ineffective oversight of documentation of authorizations to
    ensure that procedures are properly executed.                                                                                                                                                                                                                                                                                                             

46



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Internal Control  Integrated Framework Internal Control 
Integrated Framework




| |                                                
| | -----------------------------------------------
| | /s/ Moore Stephens Wurth Frazer and Torbet, LLP





47



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|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION





Form 10-K/ Form 10-K







PART III







|         |                                               
|-------- | ----------------------------------------------
|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT





|                     |  |     |    |  |       |                                                                                         
|-------------------- |  | --- | -- |  | ----- | ----------------------------------------------------------------------------------------
|Name                 |  | Age |    |  | Title
|                     |  |     |    |  |      
|Michael V. Shustek   |  |     | 46 |  |       | Chairman of the Board, Chief Executive Officer, President and
    Director              
|John Alderfer        |  |     | 61 |  |       | Chief Financial Officer and Director, Treasurer                                         
|Michael J. Whiteaker |  |     | 55 |  |       | Vice President of Regulatory Affairs                                                    
|Daniel B. Stubbs     |  |     | 44 |  |       | Senior Vice President, Underwriting of Vestin Mortgage, a
    subsidiary of Vestin Group



|                              |  |     |    |  |       |  |          | 
|----------------------------- |  | --- | -- |  | ----- |  | -------- | 
|Name                          |  | Age |    |  | Title | 
|                              |  |     |    |  |       | 
|Robert J. Aalberts            |  |     | 54 |  |       |  | Director | 
|Fredrick J. Zaffarese Leavitt |  |     | 34 |  |       |  | Director | 
|Roland M. Sansone             |  |     | 50 |  |       |  | Director | 



48



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##### Table of Contents





Robert J. Aalberts th Editor-in


John W. Alderfer


Roland M. Sansone


Michael V. Shustek


Daniel B. Stubbs


49



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##### Table of Contents



Michael J. Whiteaker


Fredrick J. Zaffarese Leavitt


Audit Committee


Regulation S-K.


Code of Ethics


Form 10-KSB Form 8-K







|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION








|         |                                                                   
|-------- | ------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT



Equity Compensation Plan Information




50



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##### Table of Contents








|         |                                               
|-------- | ----------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with the Manager






start-up






Transactions with the Funds










Transactions with other related parties








51



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##### Table of Contents








|         |                                       
|-------- | --------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES



|                   |  |               |         |  |               |   |        | 
|------------------ |  | ------------- | ------- |  | ------------- | - | ------ | 
|                   |  | June 30, 2005 |         |  | June 30, 2004 |  
|                   |  |               |         |  |               |  
|Audit Fees         |  | $             | 328,000 |  |               | $ | 43,000 | 
|Audit Related Fees |  | $             |        |  |               | $ |       | 
|Tax Fees           |  | $             |        |  |               | $ |       | 
|All Other Fees     |  | $             |        |  |               | $ | 2,000  | 



de minimus





PART IV







|         |                                           
|-------- | ------------------------------------------
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Form 10-K,







EXHIBIT INDEX


|            |    |                         |  |                                                                                                 
|----------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------
|Exhibit No. |    | Description of Exhibits
|            |    |                        
|            | 3  | .1(1)                   |  | Articles of Organization                                                                        
|           
|            | 3  | .2(2)                   |  | Amended and Restated Operating Agreement (included as
    Exhibit A to the Companys prospectus)
|           
|            | 31 | .1                      |  | Section 302 Certification of Michael V. Shustek                                                 
|           
|            | 31 | .2                      |  | Section 302 Certification of John 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 December 21, 2000 (File
    No. 333-52484).                                 
|   
|(2) | Incorporated herein by reference to Post-Effective Amendment
    No. 4 to our Form S-11 Registration Statement filed on
    October 23, 2003 (File No. 333-52484).

52



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SIGNATURES






| |                                            
| | -------------------------------------------
| | Vestin Fund II, LLC                        
|
| | By: Vestin Mortgage, Inc., its sole manager



| |     |                       
| | --- | ----------------------
| | By: | /s/ Michael V. Shustek

| | 
| | 
| | 



| |                                         
| | ----------------------------------------
| | Michael V. Shustek                      
| | Chief Executive Officer and Director of 
| | the Manager                             
| | (Principal Executive Officer of Manager)



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

| | 
| | 
| | 



| |                                         
| | ----------------------------------------
| | John Alderfer                           
| | Director, Secretary and Treasurer       
| | (Chief Financial Officer of the Manager)



53



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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY
INFORMATION


|                                                            |                                   |                                                                  |     |     |      | 
|----------------------------------------------------------- | --------------------------------- | ---------------------------------------------------------------- | --- | --- | ---- | 
|                                                            |                                   | Page                                                             |    
|                                                            |                                   |                                                                  |    
|REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM |                                   |                                                                  | F-2 |    
|FINANCIAL STATEMENTS                                        |                                   |                                                                  |     |    
|                                                            | Balance Sheets                    |                                                                  |     | F-3 |     
|                                                            | Statements of Income              |                                                                  |     | F-4 |     
|                                                            | Statements of Members Equity     |                                                                  |     | F-5 |     
|                                                            | Statements of Cash Flows          |                                                                  |     | F-6 |     
|                                                            | Notes to Financial Statements     |                                                                  |     | F-8 |     
|SUPPLEMENTARY INFORMATION                                   |                                   |                                                                  |     |    
|                                                            | Real estate loans on Real Estate: |                                                                  |     |     |     
|                                                            |                                   | Real estate loan Rollforward                                     |     |     | F-33 | 
|                                                            |                                   | Real estate loans by Type of Property                            |     |     | F-34 | 
|                                                            |                                   | Real estate loans by Lien Position                               |     |     | F-35 | 
|                                                            |                                   | Real estate loans that Exceed Three Percent
    of the Portfolio |     |     | F-36 | 

F-1



---



##### Table of Contents






Report of Independent Registered Public Accounting Firm












Internal Control 
Integrated Framework




| |                                                
| | -----------------------------------------------
| | /s/ Moore Stephens Wurth Frazer and Torbet, LLP









F-2



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##### Table of Contents



VESTIN FUND II, LLC





BALANCE SHEETS


|                                                                                                                                                                                                     |                                          |                                       |             |            |               |   |             |            |             | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------------------- | ----------- | ---------- | ------------- | - | ----------- | ---------- | ----------- | 
|                                                                                                                                                                                                     |                                          | June 30, 2005(1)                      |             |            | June 30, 2004 |  
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|ASSETS                                                                                                                                                                                              
|Cash                                                                                                                                                                                                 |                                          | $                                     | 10,566,000  |            |               | $ | 11,937,000  |           
|Certificates of deposit                                                                                                                                                                              |                                          |                                       | 1,000,000   |            |               |   | 2,425,000   |           
|Investment in local agency bonds                                                                                                                                                                     |                                          |                                       | 15,701,000  |            |               |   |            |           
|Interest and other receivables                                                                                                                                                                       |                                          |                                       | 3,234,000   |            |               |   | 4,224,000   |           
|Due from Fund I                                                                                                                                                                                      |                                          |                                       | 1,560,000   |            |               |   | 2,987,000   |           
|Investment in real estate loans, net of allowance for loan
    losses of $5,234,000 and $9,500,000 at June 30, 2005 and
    June 30, 2004, respectively                                              |                                          |                                       | 217,553,000 |            |               |   | 303,853,000 |           
|Real estate held for sale                                                                                                                                                                            |                                          |                                       | 51,215,000  |            |               |   | 28,264,000  |           
|Real estate held for sale  seller financed                                                                                                                                                          |                                          |                                       | 12,631,000  |            |               |   | 5,708,000   |           
|Notes receivable, net of allowance of $2,247,000 at
    June 30, 2005 and $0 at September 30, 2004                                                                                                   |                                          |                                       | 328,000     |            |               |   |            |           
|Note receivable from Fund I                                                                                                                                                                          |                                          |                                       |            |            |               |   | 4,278,000   |           
|Prepaid expenses                                                                                                                                                                                     |                                          |                                       | 20,000      |            |               |   |            |           
|Assets under secured borrowings                                                                                                                                                                      |                                          |                                       | 25,655,000  |            |               |   | 61,924,000  |           
|Fixed assets, net                                                                                                                                                                                    |                                          |                                       | 7,000       |            |               |   |            |           
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|                                                                                                                                                                                                     |                                          | Total assets                          |             | $          | 339,470,000   |   |             | $          | 425,600,000 | 
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|                                                                                                                                                                                                    
|LIABILITIES AND MEMBERS EQUITY                                                                                                                                                                     
|Liabilities                                                                                                                                                                                          |                                          |                                       |             |            |               |   |             |           
|                                                                                                                                                                                                     | Accounts payable and accrued liabilities |                                       | $           | 1,148,000  |               |   | $           | 338,000    |            
|                                                                                                                                                                                                     | Due to Manager                           |                                       |             | 214,000    |               |   |             | 1,503,000  |            
|                                                                                                                                                                                                     | Due to Vestin Group                      |                                       |             | 1,000      |               |   |             | 385,000    |            
|                                                                                                                                                                                                     | Secured borrowings                       |                                       |             | 25,655,000 |               |   |             | 61,924,000 |            
|                                                                                                                                                                                                     | Deferred income                          |                                       |             | 1,372,000  |               |   |             | 381,000    |            
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|                                                                                                                                                                                                     |                                          | Total liabilities                     |             |            | 28,390,000    |   |             |            | 64,531,000  | 
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|Members equity  authorized
    50,000,000 units at $10 per unit,
    32,810,551 units issued and outstanding at June 30,
    2005 and 36,804,169 units issued and outstanding at
    June 30, 2004 |                                          |                                       | 311,080,000 |            |               |   | 361,069,000 |           
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|                                                                                                                                                                                                     |                                          | Total members equity                 |             |            | 311,080,000   |   |             |            | 361,069,000 | 
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  
|                                                                                                                                                                                                     |                                          | Total liabilities and members equity |             | $          | 339,470,000   |   |             | $          | 425,600,000 | 
|                                                                                                                                                                                                     |                                          |                                       |             |            |               |  






|    |                        
|--- | -----------------------
|(1) | As restated, see Note B



F-3



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##### Table of Contents



VESTIN FUND II, LLC





STATEMENTS OF INCOME


|                                                                          |                                                      |                          |            |            |               |   |            |               |            |   |            |            |            | 
|------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------ | ---------- | ---------- | ------------- | - | ---------- | ------------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                                                          |                                                      | For the Year Ended       |           
|                                                                          |                                                      |                          |           
|                                                                          |                                                      | June 30, 2005(1)         |            |            | June 30, 2004 |   |            | June 30, 2003 |           
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|Revenues                                                                  |                                                      |                          |            |            |               |   |            |               |            |   |            |           
|                                                                          | Interest income from investment in real estate loans |                          | $          | 25,301,000 |               |   | $          | 38,825,000    |            |   | $          | 39,541,000 |           
|                                                                          | Gain on sale of real estate held for sale            |                          |            | 759,000    |               |   |            |              |            |   |            |           |           
|                                                                          | Revenue related to the sale of real estate           |                          |            |           |               |   |            | 2,333,000     |            |   |            |           |           
|                                                                          | Adjustment to allowance for loan losses              |                          |            | 41,000     |               |   |            |              |            |   |            |           |           
|                                                                          | Other income                                         |                          |            | 2,616,000  |               |   |            | 2,311,000     |            |   |            | 772,000    |           
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|                                                                          |                                                      | Total revenues           |            |            | 28,717,000    |   |            |               | 43,469,000 |   |            |            | 40,313,000 | 
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|Operating expenses                                                        |                                                      |                          |            |            |               |   |            |               |            |   |            |           
|                                                                          | Management fees                                      |                          |            | 1,060,000  |               |   |            | 1,025,000     |            |   |            | 793,000    |           
|                                                                          | Provision for loan losses                            |                          |            | 2,775,000  |               |   |            | 2,605,000     |            |   |            | 8,700,000  |           
|                                                                          | Interest expense                                     |                          |            | 3,526,000  |               |   |            | 5,681,000     |            |   |            | 3,307,000  |           
|                                                                          | Write off of deferred offering costs                 |                          |            |           |               |   |            |              |            |   |            | 1,094,000  |           
|                                                                          | Loss on sale of real estate held for sale            |                          |            | 829,000    |               |   |            |              |            |   |            |           |           
|                                                                          | Write downs on real estate held for sale             |                          |            | 7,486,000  |               |   |            | 10,000        |            |   |            | 2,073,000  |           
|                                                                          | Expenses related to real estate held for sale        |                          |            | 2,784,000  |               |   |            | 1,559,000     |            |   |            |           |           
|                                                                          | Professional fees                                    |                          |            | 1,202,000  |               |   |            | 676,000       |            |   |            |           |           
|                                                                          | Other                                                |                          |            | 167,000    |               |   |            | 182,000       |            |   |            | 574,000    |           
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|                                                                          |                                                      | Total operating expenses |            |            | 19,829,000    |   |            |               | 11,738,000 |   |            |            | 16,541,000 | 
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|                                                                          |                                                      | NET INCOME               |            | $          | 8,888,000     |   |            | $             | 31,731,000 |   |            | $          | 23,772,000 | 
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|Net income allocated to members                                           |                                                      | $                        | 8,888,000  |            |               | $ | 31,731,000 |               |            | $ | 23,772,000 |           
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|Net income allocated to members per weighted average membership
    units |                                                      | $                        | 0.26       |            |               | $ | 0.86       |               |            | $ | 0.76       |           
|                                                                          |                                                      |                          |            |            |               |   |            |               |           
|Weighted average membership units                                         |                                                      |                          | 34,769,757 |            |               |   | 36,714,812 |               |            |   | 31,430,793 |           
|                                                                          |                                                      |                          |            |            |               |   |            |               |           






|    |                        
|--- | -----------------------
|(1) | As restated, see Note B



F-4



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##### Table of Contents



VESTIN FUND II, LLC





STATEMENTS OF MEMBERS EQUITY AND COMPREHENSIVE
INCOME


|                                                                                                 |                                                               |       |            |   |        |   |             |          |  
|------------------------------------------------------------------------------------------------ | ------------------------------------------------------------- | ----- | ---------- | - | ------ | - | ----------- | -------- | -
|                                                                                                 |                                                               | Units |            |   | Amount |  
|                                                                                                 |                                                               |       |            |   |        |  
|Members equity at June 30, 2002                                                                 |                                                               |       | 23,239,836 |   |        | $ | 232,476,000 |         
|Issuance of units                                                                                |                                                               |       | 15,698,394 |   |        |   | 156,984,000 |         
|Distributions                                                                                    |                                                               |       |           |   |        |   | (34,688,000 | )       
|Reinvestments of distributions                                                                   |                                                               |       | 941,883    |   |        |   | 9,419,000   |         
|Members redemptions                                                                             |                                                               |       | (1,277,265 | ) |        |   | (12,774,000 | )       
|Net income                                                                                       |                                                               |       |           |   |        |   | 23,772,000  |         
|                                                                                                 |                                                               |       |            |   |        |  
|Members equity at June 30, 2003                                                                 |                                                               |       | 38,602,848 |   |        |   | 375,189,000 |         
|Issuance of units                                                                                |                                                               |       | 2,667,700  |   |        |   | 26,677,000  |         
|Distributions                                                                                    |                                                               |       |           |   |        |   | (29,097,000 | )       
|Reinvestments of distributions                                                                   |                                                               |       | 782,300    |   |        |   | 7,823,000   |         
|Members redemptions                                                                             |                                                               |       | (5,248,679 | ) |        |   | (51,254,000 | )       
|Net income                                                                                       |                                                               |       |           |   |        |   | 31,731,000  |         
|                                                                                                 |                                                               |       |            |   |        |  
|Members equity at June 30, 2004                                                                 |                                                               |       | 36,804,169 |   |        |   | 361,069,000 |         
|Net income(1)                                                                                    |                                                               |       |           |   |        |   | 8,888,000   |         
|Comprehensive income:                                                                            |                                                               |       |            |   |        |   |             |         
|                                                                                                 | Unrealized (loss) on marketable securities available for sale |       |            |  |        |   |             | (804,000 | )
|                                                                                                 |                                                               |       |            |   |        |  
|Total comprehensive income                                                                       |                                                               |       |           |   |        |   | 8,084,000   |         
|Capital contribution from Manager related to sale of rights to
    receive proceeds of guarantee |                                                               |       |           |   |        |   | 1,984,000   |         
|Distributions                                                                                    |                                                               |       |           |   |        |   | (20,113,000 | )       
|Reinvestments of distributions                                                                   |                                                               |       | 396,616    |   |        |   | 3,966,000   |         
|Members redemptions                                                                             |                                                               |       | (4,390,234 | ) |        |   | (43,910,000 | )       
|                                                                                                 |                                                               |       |            |   |        |  
|Members equity at June 30, 2005(1)                                                              |                                                               |       | 32,810,551 |   |        | $ | 311,080,000 |         
|                                                                                                 |                                                               |       |            |   |        |  






|    |                        
|--- | -----------------------
|(1) | As restated, see Note B



F-5



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##### Table of Contents



VESTIN FUND II, LLC





STATEMENTS OF CASH FLOWS


|                                      |                                                                                       |                                             |                                                     |             |               |            |   |               |             |            |   |              |             |              |  
|------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------------------- | ----------- | ------------- | ---------- | - | ------------- | ----------- | ---------- | - | ------------ | ----------- | ------------ | -
|                                      |                                                                                       | For the Year Ended                          |                                                    
|                                      |                                                                                       |                                             |                                                    
|                                      |                                                                                       | June 30, 2005(1)                            |                                                     |             | June 30, 2004 |            |   | June 30, 2003 |            
|                                      |                                                                                       |                                             |                                                     |             |               |            |   |               |            
|Cash flows from operating activities: |                                                                                       |                                             |                                                     |             |               |            |   |               |             |            |   |             
|                                      | Net income                                                                            |                                             | $                                                   | 8,888,000   |               |            | $ | 31,731,000    |             |            | $ | 23,772,000   |            
|                                      | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                             |                                                     |             |               |            |   |               |             |            |   |              |            
|                                      |                                                                                       | Provision for loan losses                   |                                                     |             | 2,775,000     |            |   |               | 2,605,000   |            |   |              | 8,700,000   |             
|                                      |                                                                                       | Adjustment to allowance for loan losses     |                                                     |             | (41,000       | )          |   |               |            |            |   |              |            |             
|                                      |                                                                                       | Gain on sale of real estate held for sale   |                                                     |             | (759,000      | )          |   |               |            |            |   |              |            |             
|                                      |                                                                                       | Loss on sale of real estate held for sale   |                                                     |             | 829,000       |            |   |               |            |            |   |              | 109,000     |             
|                                      |                                                                                       | Write down of real estate held for sale     |                                                     |             | 7,486,000     |            |   |               | 10,000      |            |   |              | 2,073,000   |             
|                                      |                                                                                       | Write down on local agency bond             |                                                     |             |              |            |   |               |            |            |   |              |            |             
|                                      |                                                                                       | Interest income accrued to loan balance     |                                                     |             | 402,000       |            |   |               |            |            |   |              |            |             
|                                      |                                                                                       | Change in operating assets and liabilities: |                                                     |             |              |            |   |               |            |            |   |              |            |             
|                                      |                                                                                       |                                             | Interest and other receivables                      |             |               | 216,000    |   |               |             | (444,000   | ) |              |             | (2,070,000   | )
|                                      |                                                                                       |                                             | Due from Fund I                                     |             |               | 1,427,000  |   |               |             | (2,771,000 | ) |              |             |             |  
|                                      |                                                                                       |                                             | Due from related party                              |             |               |           |   |               |             |           |   |              |             | 258,000      |  
|                                      |                                                                                       |                                             | Deferred bond offering costs                        |             |               |           |   |               |             |           |   |              |             | 1,094,000    |  
|                                      |                                                                                       |                                             | Note receivable from Fund I                         |             |               | 4,278,000  |   |               |             |           |   |              |             | (838,000     | )
|                                      |                                                                                       |                                             | Prepaid expenses                                    |             |               | (20,000    | ) |               |             |           |   |              |             |             |  
|                                      |                                                                                       |                                             | Accounts payable and accrued liabilities            |             |               | 811,000    |   |               |             | 219,000    |   |              |             | 118,000      |  
|                                      |                                                                                       |                                             | Due to Manager                                      |             |               | (289,000   | ) |               |             | (1,072,000 | ) |              |             | 513,000      |  
|                                      |                                                                                       |                                             | Due to Vestin Group                                 |             |               | (384,000   | ) |               |             | (23,000    | ) |              |             |             |  
|                                      |                                                                                       |                                             | Deferred income                                     |             |               | 991,000    |   |               |             | 381,000    |   |              |             |             |  
|                                      |                                                                                       |                                             |                                                     |             |               |            |   |               |            
|                                      |                                                                                       |                                             | Net cash provided by operating activities           |             |               | 26,610,000 |   |               |             | 30,636,000 |   |              |             | 33,729,000   |  
|                                      |                                                                                       |                                             |                                                     |             |               |            |   |               |            
|Cash flows from investing activities: |                                                                                       |                                             |                                                     |             |               |            |   |               |             |            |   |             
|                                      | Investments in loans on real estate                                                   |                                             |                                                     | (77,218,000 | )             |            |   | (215,225,000  | )           |            |   | (273,392,000 | )          
|                                      | Purchase of investments in real estate loans                                          |                                             |                                                     | (27,058,000 | )             |            |   | (32,653,000   | )           |            |   | (44,304,000  | )          
|                                      | Purchase of real estate loans from:                                                   |                                             |                                                     |             |               |            |   |               |             |            |   |              |            
|                                      |                                                                                       | Vestin Fund I, LLC                          |                                                     |             |              |            |   |               | (10,000,000 | )          |   |              | (17,725,000 | )           
|                                      |                                                                                       | Vestin Fund III, LLC                        |                                                     |             | (10,000,000   | )          |   |               |            |            |   |              |            |             
|                                      |                                                                                       | Manager                                     |                                                     |             |              |            |   |               |            |            |   |              | (7,077,000  | )           
|                                      |                                                                                       | Vestin Group, Inc.                          |                                                     |             |              |            |   |               |            |            |   |              | (15,023,000 | )           
|                                      |                                                                                       | Other related party                         |                                                     |             | (2,700,000    | )          |   |               |            |            |   |              | (5,658,000  | )           
|                                      | Proceeds received from sale of real estate loans to:                                  |                                             |                                                     |             |               |            |   |               |             |            |   |              |            
|                                      |                                                                                       | Vestin Fund I, LLC                          |                                                     |             | 600,000       |            |   |               | 806,000     |            |   |              | 15,250,000  |             
|                                      |                                                                                       | Vestin Fund III, LLC                        |                                                     |             | 5,000,000     |            |   |               | 10,000,000  |            |   |              |            |             
|                                      |                                                                                       | Manager                                     |                                                     |             |              |            |   |               |            |            |   |              | 501,000     |             
|                                      |                                                                                       | Vestin Group, Inc.                          |                                                     |             |              |            |   |               |            |            |   |              | 4,500,000   |             
|                                      |                                                                                       | Other related party                         |                                                     |             | 4,000,000     |            |   |               |            |            |   |              | 2,675,000   |             
|                                      | Proceeds from loan payoff                                                             |                                             |                                                     | 136,158,000 |               |            |   | 183,048,000   |             |            |   | 110,747,000  |            
|                                      | Sales of investments in real estate loans                                             |                                             |                                                     | 17,033,000  |               |            |   | 77,928,000    |             |            |   | 85,027,000   |            
|                                      | Repayment of secured borrowing                                                        |                                             |                                                     |            |               |            |   | (2,442,000    | )           |            |   |             |            
|                                      | Assets transferred from Vestin Group                                                  |                                             |                                                     |            |               |            |   |              |             |            |   | (2,000,000   | )          
|                                      | Cash outlay for investments in real estate held for sale                              |                                             |                                                     | (177,000    | )             |            |   | (455,000      | )           |            |   |             |            
|                                      | Proceeds from sale of real estate held for sale                                       |                                             |                                                     | 16,397,000  |               |            |   | 3,754,000     |             |            |   |             |            
|                                      | Purchase of local agency bonds                                                        |                                             |                                                     | (31,942,000 | )             |            |   |              |             |            |   |             |            
|                                      | Cash proceeds from local agency bond                                                  |                                             |                                                     | 565,000     |               |            |   |              |             |            |   |             |            
|                                      | Purchase of investments in certificates of deposit                                    |                                             |                                                     |            |               |            |   | (265,000      | )           |            |   | (4,650,000   | )          
|                                      | Purchase of fixed assets                                                              |                                             |                                                     | (7,000      | )             |            |   |              |             |            |   |             |            
|                                      | Proceeds from investment in certificates of deposit                                   |                                             |                                                     | 1,425,000   |               |            |   | 8,915,000     |             |            |   |             |            
|                                      |                                                                                       |                                             |                                                     |             |               |            |   |               |            
|                                      |                                                                                       |                                             | Net cash provided by (used in) investing activities |             |               | 32,076,000 |   |               |             | 23,411,000 |   |              |             | (151,129,000 | )
|                                      |                                                                                       |                                             |                                                     |             |               |            |   |               |            

F-6



---



##### Table of Contents



VESTIN FUND II, LLC


STATEMENTS OF CASH FLOWS  (Continued)


|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |            |             |           |             |            |             | 
|--------------------------------------------------- | -------------------------------------------- | --------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ----------- | ------------- | ----------- | ---------- | ------------- | ---------- | ----------- | --------- | ----------- | ---------- | ----------- | 
|                                                    |                                              | For the Year Ended                                                                                  |                                                    
|                                                    |                                              |                                                                                                     |                                                    
|                                                    |                                              | June 30, 2005(1)                                                                                    |                                                     |             | June 30, 2004 |             |            | June 30, 2003 |           
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|Cash flows from financing activities:               |                                              |                                                                                                     |                                                     |             |               |             |            |               |            |             |           |            
|                                                    | Proceeds from issuance of membership units   |                                                                                                     |                                                     |            |               |             |            | 26,677,000    |            |             |           | 156,984,000 |           
|                                                    | Members distributions, net of reinvestments |                                                                                                     |                                                     | (16,147,000 | )             |             |            | (21,274,000   | )          |             |           | (25,269,000 | )         
|                                                    | Members redemptions                         |                                                                                                     |                                                     | (43,910,000 | )             |             |            | (51,254,000   | )          |             |           | (12,773,000 | )         
|                                                    | Proceeds from draws on line of credit        |                                                                                                     |                                                     |            |               |             |            |              |            |             |           | 5,000,000   |           
|                                                    | Payment on line of credit                    |                                                                                                     |                                                     |            |               |             |            | (2,000,000    | )          |             |           | (3,000,000  | )         
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              |                                                                                                     | Net cash provided by (used in) financing activities |             |               | (60,057,000 | )          |               |            | (47,851,000 | )         |             |            | 120,942,000 | 
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              |                                                                                                     | NET CHANGE IN CASH                                  |             |               | (1,371,000  | )          |               |            | 6,196,000   |           |             |            | 3,542,000   | 
|Cash, beginning of period                           |                                              |                                                                                                     | 11,937,000                                          |             |               |             | 5,741,000  |               |            |             | 2,199,000 |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|Cash, end of period                                 |                                              | $                                                                                                   | 10,566,000                                          |             |               | $           | 11,937,000 |               |            | $           | 5,741,000 |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|Supplemental disclosures of cash flows information: |                                              |                                                                                                     |                                                     |             |               |             |            |               |            |             |           |            
|                                                    | Non-cash investing activities:               |                                                                                                     |                                                     |             |               |             |            |               |            |             |           |             |           
|                                                    |                                              | Loans funded through secured borrowing                                                              |                                                     | $           | 36,269,000    |             |            | $             | 37,636,000 |             |           | $           | 26,730,000 |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Real estate held for sale acquired through foreclosure                                              |                                                     | $           | 37,627,000    |             |            | $             | 15,456,000 |             |           | $           | 16,046,000 |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Note receivable from Vestin Mortgage related to sale of rights
    to receive proceeds of guarantee |                                                     | $           | 1,000,000     |             |            | $             |           |             |           | $           | 1,715,000  |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Due to manager assumed through foreclosure                                                          |                                                     | $           |              |             |            | $             |           |             |           | $           | 745,000    |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Capital contribution from Manager related to sale of rights to
    receive proceeds of guarantee    |                                                     | $           | 1,984,000     |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Ownership of real estate held for sale assigned from Fund I                                         |                                                     | $           | 7,424,000     |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Loans rewritten with same or similar property as collateral                                         |                                                     | $           |              |             |            | $             | 41,331,000 |             |           | $           | 35,853,000 |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Unrealized loss on marketable securities                                                            |                                                     | $           | 804,000       |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Note receivable received from guarantor in exchange for release
    of guarantee                    |                                                     | $           | 328,000       |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Investment in real estate held for sale reclassified from
    interest receivable                   |                                                     | $           | 9,000         |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Note receivable from Vestin Mortgage paid off though relief of
    Due to manager                   |                                                     | $           | 1,000,000     |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           
|                                                    |                                              | Other receivable related to local agency bond liquidation                                           |                                                     | $           | 446,000       |             |            | $             |           |             |           | $           |           |            
|                                                    |                                              |                                                                                                     |                                                     |             |               |             |            |               |           






|    |                        
|--- | -----------------------
|(1) | As restated, see Note B



F-7



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##### Table of Contents



VESTIN FUND II, LLC





NOTES TO FINANCIAL STATEMENTS


JUNE 30, 2005


NOTE A  ORGANIZATION




| |             
| | ------------
| | Organization















F-8



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                     
| | --------------------
| | Management Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                    
| | -------------------
| | Revenue Recognition





| |                                 
| | --------------------------------
| | Investments in Real estate loans





F-9



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)








| |                          
| | -------------------------
| | Allowance for Loan Losses



|                                                                             |  |                     |            |  
|---------------------------------------------------------------------------- |  | ------------------- | ---------- | -
|                                                                             |  | Increase (Decrease) |           
|                                                                             |  | in Allowance for    |           
|Changed Assumption                                                           |  | Loan Losses         |           
|                                                                             |  |                     |           
|Allowance for loan losses assumption increased by 1.0% of loan
    portfolio |  | $                   | 2,354,000  |  
|Allowance for loan losses assumption increased by 5.0% of loan
    portfolio |  | $                   | 11,771,000 |  
|Allowance for loan losses assumption decreased by 1.0% of loan
    portfolio |  | $                   | (2,354,000 | )
|Allowance for loan losses assumption decreased by 2.2% of loan
    portfolio |  | $                   | (5,234,000 | )







| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | Declines in real estate market conditions which can cause a
    decrease in expected market value.          
|
| |  | Discovery of undisclosed liens for community improvement bonds,
    easements and delinquent property taxes.

F-10



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Lack of progress on real estate developments after we advance
    funds. We customarily utilize disbursement agents to monitor the
    progress of real estate developments and approve loan advances.
    After further inspection of the related property, progress on
    construction occasionally does not substantiate an increase in
    value to support the related loan advances.



| |                          
| | -------------------------
| | Real Estate Held For Sale

Accounting for the
Impairment or Disposal of Long Lived Assets






| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | Management commits to a plan to sell the properties.                                                                         
|
| |  | The property is available for immediate sale in its present
    condition subject only to terms that are usual and customary.
|
| |  | An active program to locate a buyer and other actions required
    to complete a sale have been initiated.                   
|
| |  | The sale of the property is probable.                                                                                        
|
| |  | The property is being actively marketed for sale at a reasonable
    price.                                                  
|
| |  | Withdrawal or significant modification of the sale is not likely.                                                            



| |                                                
| | -----------------------------------------------
| | Real Estate Held For Sale  Seller
    Financed







F-11



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                                                                       
| | ----------------------------------------------------------------------
| | Classification of Operating Results from Real Estate Held
    for Sale





| |                   
| | ------------------
| | Secured Borrowings

Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities






| |                      
| | ---------------------
| | Marketable Securities







| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments

Disclosures about Fair Value of Financial
Instruments


F-12



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)






| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Certificate of Deposits and Short Term Investments: The
    carrying amount of these instruments are at amortized cost which
    approximates fair value.                                                                                                                                                                                                                                                                 
|
| | (b) Investment in Real Estate Loans: The carrying value of
    these instruments, net of the allowance for loan losses,
    approximates the fair value due to their short-term maturities.
    Fair values for loans, which are delinquent and/or in
    foreclosure are indeterminable at this time as no ready market
    exists for these loans, but fair value may be significantly
    below the current carrying value.
|
| | (c) Assets under Secured Borrowing. The carrying amount of
    these instruments approximate fair value. The fair value is
    estimated based upon projected cash flows discounted at the
    estimated current interest rates at which similar loans would be
    made.                                                                                                                                                     





| |                                
| | -------------------------------
| | Net Income Allocated to Members





| |         
| | --------
| | Segments





| |             
| | ------------
| | Income Taxes





| |                  
| | -----------------
| | Reclassifications



NOTE B  RESTATEMENT


Form 10-K,


F-13



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                                  |  |               |             |  |            |   |            |             |  |   |             | 
|----------------------------------------------------------------- |  | ------------- | ----------- |  | ---------- | - | ---------- | ----------- |  | - | ----------- | 
|                                                                  |  | As Previously |             |  |            |   |           
|Balance Sheet as of June 30, 2005                                 |  | Reported      |             |  | Adjustment |   |            | As Restated | 
|                                                                  |  |               |             |  |            |   |            |             | 
|Investment in real estate loans, net of allowance for loan losses |  | $             | 218,643,000 |  |            | $ | (1,090,000 | )           |  | $ | 217,553,000 | 
|Total Assets                                                      |  | $             | 340,560,000 |  |            | $ | (1,090,000 | )           |  | $ | 339,470,000 | 
|Members Equity                                                   |  | $             | 312,170,000 |  |            | $ | (1,090,000 | )           |  | $ | 311,080,000 | 
|Total members equity                                             |  | $             | 312,170,000 |  |            | $ | (1,090,000 | )           |  | $ | 311,080,000 | 
|Total liabilities and members equity                             |  | $             | 340,560,000 |  |            | $ | (1,090,000 | )           |  | $ | 339,470,000 | 

|                                                                          |  |               |            |  |            |   |            |             |  |   |            | 
|------------------------------------------------------------------------- |  | ------------- | ---------- |  | ---------- | - | ---------- | ----------- |  | - | ---------- | 
|                                                                          |  | As Previously |            |  |            |   |           
|Statement of Income for the Year Ended June 30, 2005                      |  | Reported      |            |  | Adjustment |   |            | As Restated | 
|                                                                          |  |               |            |  |            |   |            |             | 
|Operating expenses                                                        |  |               |            |  |            |   |            |             |  |   |            | 
|Provision for loan losses                                                 |  | $             | 2,275,000  |  |            | $ | 500,000    |             |  | $ | 2,775,000  | 
|Professional fess                                                         |  | $             | 612,000    |  |            | $ | 590,000    |             |  | $ | 1,202,000  | 
|Total Operating Expenses                                                  |  | $             | 18,739,000 |  |            | $ | 1,090,000  |             |  | $ | 19,829,000 | 
|Net Income                                                                |  | $             | 9,978,000  |  |            | $ | (1,090,000 | )           |  | $ | 8,888,000  | 
|Net Income allocated to members                                           |  | $             | 9,978,000  |  |            | $ | (1,090,000 | )           |  | $ | 8,888,000  | 
|Net income allocated to members per weighted average membership
    units |  | $             | 0.29       |  |            | $ | (0.03      | )           |  | $ | 0.26       | 

|                                                     |  |               |             |  |            |   |            |             |  |   |             | 
|---------------------------------------------------- |  | ------------- | ----------- |  | ---------- | - | ---------- | ----------- |  | - | ----------- | 
|                                                     |  | As Previously |             |  |            |   |           
|Statement of Members Equity and Comprehensive Income |  | Reported      |             |  | Adjustment |   |            | As Restated | 
|                                                     |  |               |             |  |            |   |            |             | 
|Net income for the year ended June 30, 2005          |  | $             | 9,978,000   |  |            | $ | (1,090,000 | )           |  | $ | 8,888,000   | 
|Total comprehensive income                           |  | $             | 9,174,000   |  |            | $ | (1,090,000 | )           |  | $ | 8,084,000   | 
|Members equity at June 30, 2005                     |  | $             | 312,170,000 |  |            | $ | (1,090,000 | )           |  | $ | 311,080,000 | 

|                                                         |  |               |             |   |            |   |            |             |  |   |             |  
|-------------------------------------------------------- |  | ------------- | ----------- | - | ---------- | - | ---------- | ----------- |  | - | ----------- | -
|                                                         |  | As Previously |             |   |            |   |           
|Statement of Cash Flows for the Year Ended June 30, 2005 |  | Reported      |             |   | Adjustment |   |            | As Restated | 
|                                                         |  |               |             |   |            |   |            |             | 
|Cash flows from operating activities:                    |  |               |             |   |            |   |            |             |  |   |             |  
|Net Income                                               |  | $             | 9,978,000   |   |            | $ | (1,090,000 | )           |  | $ | 8,888,000   |  
|Provision for loan losses:                               |  | $             | 2,275,000   |   |            | $ | 500,000    |             |  | $ | 2,775,000   |  
|Net cash provided by operating activities:               |  | $             | 27,200,000  |   |            | $ | (590,000   | )           |  | $ | 26,610,000  |  
|Cash flows from investing activities:                    |  |               |             |   |            |   |            |             |  |   |             |  
|Investment in loans in real estate                       |  | $             | (77,808,000 | ) |            | $ | 590,000    |             |  | $ | (77,218,000 | )
|Net cash provided by (used in) investing activities      |  | $             | 31,486,000  |   |            | $ | 590,000    |             |  | $ | 32,076,000  |  

NOTE C  FINANCIAL INSTRUMENTS AND CONCENTRATIONS
OF CREDIT RISK






F-14



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)








NOTE D  INVESTMENTS IN REAL ESTATE LOANS






|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |        |   |  |  |       |  
|--------------------------- |  | --------- | -- |  | ---------- | -------- | ----------- | ------------- |  | --------- | ---------- | - | ------- | -------- | ------ | - |  |  | ----- | -
|                            |  |           |    |  |            | Weighted |             |               |  |           |           
|                            |  | Number of |    |  |            |          | Average     |               |  | Portfolio |            |   | Loan to |         
|Loan Type                   |  | Loans     |    |  | Balance(1) |          |             | Interest Rate |  |           | Percentage |   |         | Value(2) |       
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|Acquisition and development |  |           | 4  |  |            | $        | 57,313,000  |               |  |           | 8.69       | % |         |          | 24.35  | % |  |  | 67.58 | %
|Bridge(3)                   |  |           | 7  |  |            |          | 34,859,000  |               |  |           | 9.81       | % |         |          | 14.81  | % |  |  | 57.02 | %
|Commercial                  |  |           | 14 |  |            |          | 81,923,000  |               |  |           | 9.53       | % |         |          | 34.80  | % |  |  | 73.16 | %
|Construction                |  |           | 4  |  |            |          | 7,547,000   |               |  |           | 10.31      | % |         |          | 3.21   | % |  |  | 68.81 | %
|Land                        |  |           | 7  |  |            |          | 53,776,000  |               |  |           | 12.00      | % |         |          | 22.83  | % |  |  | 59.66 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|                            |  |           | 36 |  |            | $        | 235,418,000 |               |  |           | 9.95       | % |         |          | 100.00 | % |  |  | 66.23 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       

F-15



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |        |   |  |  |       |  
|--------------------------- |  | --------- | -- |  | ---------- | -------- | ----------- | ------------- |  | --------- | ---------- | - | ------- | -------- | ------ | - |  |  | ----- | -
|                            |  |           |    |  |            | Weighted |             |               |  |           |           
|                            |  | Number of |    |  |            |          | Average     |               |  | Portfolio |            |   | Loan to |         
|Loan Type                   |  | Loans     |    |  | Balance(1) |          |             | Interest Rate |  |           | Percentage |   |         | Value(2) |       
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|Acquisition and development |  |           | 9  |  |            | $        | 70,320,000  |               |  |           | 9.48       | % |         |          | 22.04  | % |  |  | 64.22 | %
|Bridge(3)                   |  |           | 17 |  |            |          | 52,363,000  |               |  |           | 10.11      | % |         |          | 16.41  | % |  |  | 48.03 | %
|Commercial                  |  |           | 14 |  |            |          | 77,210,000  |               |  |           | 12.07      | % |         |          | 24.20  | % |  |  | 65.95 | %
|Construction                |  |           | 7  |  |            |          | 58,606,000  |               |  |           | 11.95      | % |         |          | 18.37  | % |  |  | 62.49 | %
|Land                        |  |           | 8  |  |            |          | 60,562,000  |               |  |           | 9.95       | % |         |          | 18.98  | % |  |  | 57.31 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       
|                            |  |           | 55 |  |            | $        | 319,061,000 |               |  |           | 10.90      | % |         |          | 100.00 | % |  |  | 60.55 | %
|                            |  |           |    |  |            |          |             |               |  |           |            |   |         |          |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 the Company provided financing.
    GAAP requires the borrower to have a certain percentage equity
    ownership (typically 20%) to allow the Company 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 this requirement, the
    investment in the new loan is reduced by the amount originally
    invested in the real estate held for sale. Additionally, during
    the fiscal year ended June 30, 2005, we restructured a loan
    where we changed the interest rate on the loan from 12.5% to
    6.25%. The present value of the future cash flows from the
    restructured note using the effective interest rate yields an
    impaired balance of approximately $500,000. The impairment value
    is specifically reserved in the allowance for loan losses.

|                                                            |  |               |             |    |               |   |             |  
|----------------------------------------------------------- |  | ------------- | ----------- | -- | ------------- | - | ----------- | -
|                                                            |  | June 30, 2005 |             |    | June 30, 2004 |  
|                                                            |  | Balance       |             |    | Balance       |  
|                                                            |  |               |             |    |               |  
|Balance per Loan Portfolio                                  |  | $             | 235,418,000 |    |               | $ | 319,061,000 |  
|Less:                                                       |  |               |             |    |               |   |             |  
|Seller financed loans included in real estate held for sale |  |               | (12,631,000 | )  |               |   | (5,708,000  | )
|Allowance for loan losses                                   |  |               | (5,234,000  | )) |               |   | (9,500,000  | )
|                                                            |  |               |             |    |               |  
|Balance per Balance Sheet                                   |  | $             | 217,553,000 |    |               | $ | 303,853,000 |  
|                                                            |  |               |             |    |               |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 are generally dated no
    greater than 12 months prior to the date of loan
    origination and may have been commissioned by the borrower, and
    also may precede the placement of the loan with us. The
    appraisals may be for the current estimate of the as-if
    developed value of the property, and 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 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.
|   
|(3) | Bridge loans are a subcategory of commercial loans in which we
    provide interim financing for borrowers seeking long-term,
    permanent financing. Going forward, we expect to report bridge
    loans within the commercial category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-16



---



##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                     |  |               |             |  |            |  |        |               |  |   |             |  |  |  |        |  
|-------------------- |  | ------------- | ----------- |  | ---------- |  | ------ | ------------- |  | - | ----------- |  |  |  | ------ | -
|                     |  | June 30, 2005 |             |  | Portfolio  |  |        | June 30, 2004 |  |   | Portfolio   | 
|Loan Type            |  | Balance*      |             |  | Percentage |  |        | Balance*      |  |   | Percentage  | 
|                     |  |               |             |  |            |  |        |               |  |   |             | 
|First trust deeds    |  | $             | 228,668,000 |  |            |  | 97.14  | %             |  | $ | 311,178,000 |  |  |  | 97.53  | %
|Second trust deeds** |  |               | 6,750,000   |  |            |  | 2.86   | %             |  |   | 7,883,000   |  |  |  | 2.47   | %
|                     |  |               |             |  |            |  |        |               |  |   |             | 
|                     |  | $             | 235,418,000 |  |            |  | 100.00 | %             |  | $ | 319,061,000 |  |  |  | 100.00 | %
|                     |  |               |             |  |            |  |        |               |  |   |             | 






| |   |                               
| | - | ------------------------------
| | * | Please see footnote (1) above.



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



|     |  |   |             | 
|---- |  | - | ----------- | 
|2005 |  | $ | 118,525,000 | 
|2006 |  |   | 93,588,000  | 
|2007 |  |   | 23,305,000  | 
|     |  |   |            
|     |  | $ | 235,418,000 | 
|     |  |   |            



|               |  |               |             |  |            |  |        |               |  |   |             |  |  |  |        |  
|-------------- |  | ------------- | ----------- |  | ---------- |  | ------ | ------------- |  | - | ----------- |  |  |  | ------ | -
|               |  | June 30, 2005 |             |  | Portfolio  |  |        | June 30, 2004 |  |   | Portfolio   | 
|               |  | Balance*      |             |  | Percentage |  |        | Balance*      |  |   | Percentage  | 
|               |  |               |             |  |            |  |        |               |  |   |             | 
|Arizona        |  | $             | 38,184,000  |  |            |  | 16.22  | %             |  | $ | 45,322,000  |  |  |  | 14.20  | %
|California     |  |               | 84,818,000  |  |            |  | 36.03  | %             |  |   | 80,869,000  |  |  |  | 25.35  | %
|Florida        |  |               |            |  |            |  |       |               |  |   | 656,000     |  |  |  | 0.21   | %
|Hawaii         |  |               | 25,704,000  |  |            |  | 10.91  | %             |  |   | 34,283,000  |  |  |  | 10.75  | %
|Nevada         |  |               | 45,051,000  |  |            |  | 19.14  | %             |  |   | 91,349,000  |  |  |  | 28.63  | %
|New York       |  |               | 20,000,000  |  |            |  | 8.50   | %             |  |   | 19,998,000  |  |  |  | 6.27   | %
|North Carolina |  |               |            |  |            |  |       |               |  |   | 1,610,000   |  |  |  | 0.50   | %
|Oklahoma       |  |               | 2,155,000   |  |            |  | 0.92   | %             |  |   |            |  |  |  |       |  
|Texas          |  |               | 19,506,000  |  |            |  | 8.28   | %             |  |   | 44,974,000  |  |  |  | 14.09  | %
|               |  |               |             |  |            |  |        |               |  |   |             | 
|               |  | $             | 235,418,000 |  |            |  | 100.00 | %             |  | $ | 319,061,000 |  |  |  | 100.00 | %
|               |  |               |             |  |            |  |        |               |  |   |             | 






|  |                               
|- | ------------------------------
|* | Please see footnote (1) above.

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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                                                                   |  |               |            |  |               |  |                  |                |  |            |         |  |  |  |     | 
|-------------------------------------------------------------------------------------------------- |  | ------------- | ---------- |  | ------------- |  | ---------------- | -------------- |  | ---------- | ------- |  |  |  | --- | 
|                                                                                                   |  |               |            |  |               |  |                  | Percentage of  | 
|                                                                                                   |  | Balance       |            |  |               |  | Number of Months |                |  | Total Loan |        
|Description of Collateral                                                                          |  | June 30, 2005 |            |  | Maturity Date |  |                  | Non-Performing |  |            | Balance | 
|                                                                                                   |  |               |            |  |               |  |                  |                |  |            |         | 
|4 cemeteries and 8 mortuaries in Hawaii                                                            |  | $             | 7,704,000  |  |               |  | 03/31/2004       |                |  |            | 15      |  |  |  | 23% | 
|Racetrack and hotel in Vernon, NY                                                                  |  |               | 20,000,000 |  |               |  | 06/30/2005       |                |  |            | 11      |  |  |  | 77% | 
|25 acres tentatively mapped for 104 single family
    residential lots in Palm Springs, California |  |               | 1,195,000  |  |               |  | 01/23/2006       |                |  |            | 8       |  |  |  | 92% | 
|4 separate commercial parcels in Rancho Cucamonga, Palm Springs,
    and Cathedral City, CA        |  |               | 1,558,000  |  |               |  | 04/16/2005       |                |  |            | 3       |  |  |  | 22% | 
|Development of 400 single and multi- family residential lots in
    Cathedral City, California     |  |               | 5,539,000  |  |               |  | 04/20/2005       |                |  |            | 8       |  |  |  | 85% | 
|                                                                                                   |  |               |            |  |               |  |                  |                |  |            |         | 
|                                                                                                   |  | $             | 35,996,000 |  |               |  |                  |                |  |            |         |  |  |  |     | 
|                                                                                                   |  |               |            |  |               |  |                  |                |  |            |         | 







|                      |  |              |           |  |            |   |           |            |         |   |               |   |  |   |           | 
|--------------------- |  | ------------ | --------- |  | ---------- | - | --------- | ---------- | ------- | - | ------------- | - |  | - | --------- | 
|                      |  | Balance      |           |  |            |   |           |            | Balance |  
|Description           |  | July 1, 2004 |           |  | Provisions |   |           | Deductions |         |   | June 30, 2005 |  
|                      |  |              |           |  |            |   |           |            |         |   |               |  
|General Valuation     |  |              |           |  |            |   |           |            |         |   |               |   |  |   |           | 
|Allowance             |  | $            | 2,500,000 |  |            | $ |          |            |         | $ | (41,000       | ) |  | $ | 2,459,000 | 
|Specific allowance(1) |  |              | 7,000,000 |  |            |   | 2,775,000 |            |         |   | (7,000,000    | ) |  |   | 2,775,000 | 
|                      |  |              |           |  |            |   |           |            |         |   |               |  
|Total                 |  | $            | 9,500,000 |  |            | $ | 2,775,000 |            |         | $ | (7,041,000    | ) |  | $ | 5,234,000 | 
|                      |  |              |           |  |            |   |           |            |         |   |               |  

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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)







|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Rightstar Loan Allowance  As of
    June 30, 2005, we had commenced a judicial foreclosure on a
    loan secured by 4 cemeteries and 8 mortuaries in Hawaii. The
    aggregate amount of the loan is approximately $32 million,
    of which our balance totals $7,704,000. Of the 4 lenders
    included in this loan, 1 lender has priority over the remaining
    3 lenders in the approximate amount of $14 million pursuant
    to an inter-creditor agreement. In exchange for expediting the
    foreclosure process, the lenders jointly agreed to release the
    guarantors from their guaranty of the loan. Foreclosure
    proceedings were delayed during the three months ended
    June 30, 2005 due to issues encountered in obtaining a
    license to operate the facilities. We cannot estimate when the
    foreclosure will be completed or when we may obtain title to the
    underlying properties. The cemeteries and mortuaries are
    operating businesses and, after obtaining title and pending
    disposition of these properties, we may have to include the
    operating results of these businesses in our financial
    statements on a consolidated basis. All significant intercompany
    balances and transactions will be eliminated in the
    consolidation. During the year ended June 30, 2005, the
    State of Hawaii notified the lenders of a potential trust fund
    deficit estimated at $19.5 million and claimed this balance
    has priority over all lenders. The lenders dispute the amount
    and priority of this deficit. However, we re-evaluated the
    underlying value of the collateral including this estimated
    trust fund deficit. Based on this estimate, we calculated our
    total specific reserve allowance for loss of approximately
    $2,275,000. During July 2005, we and Fund I acquired the
    lenders position which held priority over the remaining 3
    lenders by acquiring its balance of the loan for approximately
    $15.5 million, including accrued interest of approximately
    $1.5 million of which our portion is approximately
    $10.1 million, including accrued interest of approximately
    $1 million. We acquired this balance to expedite the
    foreclosure process and remove the lender from its priority
    position which had the potential to impair the value we may
    receive at the time the property is sold.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Impairment on Restructured Loan  During the
    fiscal year ended June 30, 2005, we restructured a loan
    where we changed the interest rate on the loan from 12.5% to
    6.25%. An impairment of $500,000 reflects the difference between
    the present value of the future cash flows to be received under
    the original loan and the present value of future cash flows to
    be received under the restructured loan discounted at the
    effective interest rate. The $500,000 impairment is specifically
    reserved for in the allowance for loan losses.





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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                                
| | -------------------------------
| | Asset Quality and Loan Reserves







| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | 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; and                                                                          
|
| |  | Estimated net realizable value of any underlying collateral in
    relation to the loan amount.             



NOTE E  INVESTMENT IN LOCAL AGENCY BONDS






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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)








NOTE F  RELATED PARTY TRANSACTIONS




| |                              
| | -----------------------------
| | Transactions with the Manager





start-up






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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Transactions with the Funds











| |                                        
| | ---------------------------------------
| | Transactions with other related parties







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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)


NOTE G  REAL ESTATE HELD FOR SALE




|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |   |  |   |            |   |  |   |            | 
|--------------------------------------------------------------------------- |  | -------- | -------- |  | ------------- |  | --- | ------------ |  | - | ------------ | --------- | ------------- | ---------- | ---------- | ------- | ----------- | ---------- | ----------- | -------- |  | -------- | -------- | - |  | - | ---------- | - |  | - | ---------- | 
|                                                                            |  |          |          |  |               |  |     |              |  |   |              | Gain      |               |            | Write Down |         |             |           
|                                                                            |  |          |          |  |               |  |     |              |  |   |              | (Loss) on |               |            | on Real    |         |             | Balance at |            
|                                                                            |  | Date     |          |  | Percentage of |  |     | Balance      |  |   |              |           | Consideration |            |            | Sale of |             |            | Estate Held |          |  | June 30, |         
|Description                                                                 |  | Acquired |          |  | Ownership     |  |     | July 1, 2004 |  |   | Acquisitions |           |               | from Sales |            |         | Real Estate |            |             | for Sale |  |          | 2005     |  
|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |  
|Custom residential property located in Santa Fe,
    NM(2)                  |  |          | 3/4/03   |  |               |  | 7   | %            |  | $ | 76,000       |           |               | $          |           |         |             | $          | (58,000     | )        |  | $        | 2,000    |   |  | $ | (20,000    | ) |  | $ |           | 
|140 Unit/224 bed senior facility in Mesa, AZ(2)                             |  |          | 5/26/04  |  |               |  | 86  | %            |  |   | 6,034,000    |           |               |            | 75,000     |         |             |            | (6,043,000  | )        |  |          | (66,000  | ) |  |   |           |   |  |   |           | 
|28 acres of raw land in Mesquite, NV(2)                                     |  |          | 11/27/02 |  |               |  | 42  | %            |  |   | 1,671,000    |           |               |            |           |         |             |            | (2,429,000  | )        |  |          | 758,000  |   |  |   |           |   |  |   |           | 
|Hotel/ Casino in Las Vegas, NV(2)                                           |  |          | 2/2/04   |  |               |  | 21  | %            |  |   | 6,190,000    |           |               |            |           |         |             |            | (6,153,000  | )        |  |          | (37,000  | ) |  |   |           |   |  |   |           | 
|40 acres of land containing 354 residential lots in
    Henderson, NV(2)    |  |          | 2/28/03  |  |               |  | 34  | %            |  |   | 3,511,000    |           |               |            |           |         |             |            | (775,000    | )        |  |          |         |   |  |   | (179,000   | ) |  |   | 2,557,000  | 
|460 acre residential sub-division in Lake Travis,
    TX(1)                 |  |          | 8/3/04   |  |               |  | 66  | %            |  |   |             |           |               |            | 3,478,000  |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 3,478,000  | 
|Two real estate parcels in Cedar Park and Austin, TX(3)                     |  |          | 3/2/04   |  |               |  | 100 | %            |  |   | 3,232,000    |           |               |            | 1,984,000  |         |             |            | (3,566,000  | )        |  |          |         |   |  |   | (1,050,000 | ) |  |   | 600,000    | 
|Partially completed golf course on 570 acres of land near
    Austin, TX(1) |  |          | 8/3/04   |  |               |  | 100 | %            |  |   |             |           |               |            | 5,633,000  |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 5,633,000  | 
|126 unit, (207 bed) assisted living facility in Phoenix,
    AZ(1)          |  |          | 9/8/04   |  |               |  | 90  | %            |  |   |             |           |               |            | 13,965,000 |         |             |            |            |          |  |          |         |   |  |   | (5,852,000 | ) |  |   | 8,113,000  | 
|126 unit Hotel in Mesquite, NV(1)(2)                                        |  |          | 10/04/04 |  |               |  | 68  | %            |  |   |             |           |               |            | 4,588,000  |         |             |            | (3,759,000  | )        |  |          | (829,000 | ) |  |   |           |   |  |   |           | 
|150-unit condominium conversion of The Club at
    Stablechase(1)         |  |          | 6/15/05  |  |               |  | 100 | %            |  |   |             |           |               |            | 9,058,000  |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 9,058,000  | 
|504 unit apartments in Austin, TX(1)                                        |  |          | 6/7/05   |  |               |  | 100 | %            |  |   |             |           |               |            | 14,426,000 |         |             |            |            |          |  |          |         |   |  |   |           |   |  |   | 14,426,000 | 
|74 unit, (90 bed) assisted living facility in
    San Bernardino, CA(4)     |  |          | 4/6/04   |  |               |  | 100 | %            |  |   | 7,550,000    |           |               |            | 282,000    |         |             |            | (200,000    | )        |  |          |         |   |  |   | (282,000   | ) |  |   | 7,350,000  | 
|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |  
|                                                                            |  |          |          |  |               |  |     |              |  | $ | 28,264,000   |           |               | $          | 53,489,000 |         |             | $          | (22,983,000 | )        |  | $        | (172,000 | ) |  | $ | (7,383,000 | ) |  | $ | 51,215,000 | 
|                                                                            |  |          |          |  |               |  |     |              |  |   |              |           |               |            |            |         |             |            |             |          |  |          |          |  






|    |                                               
|--- | ----------------------------------------------
|(1) | Foreclosures for the year ended June 30, 2005:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of June 30, 2005, we foreclosed on the collateral
    securing a local agency bond, consisting of a 504 unit
    apartment complex located in Austin, Texas, with a cost of
    approximately $15.4 million, including fees of $947,000.
    Upon the foreclosure of the property, we received approximately
    $1.0 million which was held in a trust account for accrued
    interest related to the bonds. These proceeds reduced the book
    value of the

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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | property. Based on a recent appraisal of the 504 unit
    apartment complex located in Austin, Texas, no valuation
    allowance was deemed necessary as of June 30, 2005. The
    value of this investment is no longer treated as a marketable
    security and has been reclassified as real estate held for sale.
    The accumulated unrealized loss of $244,000 related to this
    investment was not realized and the amount of this other
    comprehensive loss has been reported as a part of the cost of
    the real estate held for sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | During the three months ended September 30, 2004, we
    foreclosed on loan secured by a 460 acre residential
    sub-division in Lake Travis, Texas. Our Manager has evaluated
    the carrying value of $3,478,000 and based on its estimated
    value, no valuation allowance was deemed necessary as of
    June 30, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | During the year ended June 30, 2003, we re-evaluated the
    underlying collateral for one of our loans with a principal
    balance of $13.0 million. The collateral is 570 acres
    of land near Austin, Texas. We made the loan for construction of
    an 18-hole golf course and clubhouse. As foreclosure proceedings
    began, we obtained estimates of current value for the partially
    completed golf course and estimates of the costs to complete
    construction. Based on those estimates, we provided a specific
    allowance for loan loss of $7.0 million related to this
    impaired loan. During the three months ended September 30,
    2004, foreclosure was completed on the loan and we took
    ownership of the property. Consequently, the asset was removed
    from our loan portfolio and added to our real estate held for
    sale portfolio. The related allowance has been netted against
    the carrying value of the real estate. Our Manager has
    re-assessed the value of the real estate and has determined no
    further valuation allowance was deemed necessary on the carrying
    value of $5,633,000 as of June 30, 2005.
|
| | During the three months ended September 30, 2004, we
    foreclosed on a loan secured by a 126 unit assisted living
    facility in Phoenix, Arizona totaling $13,965,000. We and
    Fund I wrote down the carrying value of the property in the
    quarter ended March 31, 2005 by approximately
    $6.5 million, of which our portion was approximately
    $5,852,000. During August 2005, we sold the 126 unit, (207
    bed) assisted living facility in Phoenix, Arizona through 100%
    financing of which the terms include: a $10,500,000 loan;
    interest rate of 7.50% commencing six months following the date
    of the loan. The borrower agreed to reduce the principal balance
    of the loan by $2 million within six months following the
    closing of the loan. Upon loan payoff we will recover a portion
    of the write down and do not expect to have any further gains or
    losses on the sale of this property.                                                                                                                                                                                                                             
|
| | During October 2004, we took title to 68% of a 126 unit
    hotel in Mesquite, Nevada. Vestin Fund I owns the other
    32%. In January 2005, we and Fund I entered into an
    agreement to sell the property for $5.5 million, as noted
    below in (2). In addition, during June 2005, we entered into a
    settlement agreement with the guarantors of the loan in the
    amount of $2,000,000 in exchange for a release of their personal
    guarantees of which our share was approximately $1,350,000. The
    balance is secured by a second trust deed and is payable in a
    first installment of $100,000 due in July 2005 and interest only
    payments of 5% on $1,100,000 from July 2005 through July 2008,
    at which time the entire balance is due. The guarantors are
    entitled to a discount of $782,000 from the principal balance in
    the event the entire balance is paid by December 2006. The first
    installment was received and recognized as income in July 2005.
    Our portion was $68,000. Payments will be recognized as revenue
    when received.                                                                              
|
| | During June 2005, we took title to 133 units of a
    150 unit condominium conversion of The Club at
    Stablechase located in Houston, Texas. Our Manager has
    evaluated the carrying value of $9,058,000 and based on its
    estimated value and the underlying personal guarantee from the
    borrower, no valuation allowance was deemed necessary as of
    June 30, 2005. Additionally, the guarantor entered into an
    unsecured promissory note totaling $375,000 bearing an annual
    interest rate of 8.0%, payable in monthly payments of principal
    of $6,250 plus interest and maturing during June 2010. Due to
    uncertainty of collectibility, payments will be recognized when
    received as a decrease to the value of the real estate held for
    sale.                                                                                                                                                                                                                                                                                                                                                                                     

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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




|    |                                                                         
|--- | ------------------------------------------------------------------------
|(2) | Sales of real estate held for sale for the year ended
    June 30, 2005:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During March 2005, the custom residential property located in
    Santa Fe, New Mexico was sold for $860,000 of which our
    proceeds were approximately $58,000. During the quarter ended
    December 31, 2004, we wrote down the carrying value of this
    property by approximately $20,000 based on our estimate of the
    net realizable value of the property. Consequently, as a result
    of completion of the sale we recorded a gain of approximately
    $2,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | During March 2005, the 126 unit hotel in Mesquite, Nevada
    was sold for $5.5 million of which our share of the
    proceeds was approximately $3.8 million which resulted in a
    loss upon sale of approximately $829,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | During September 2004 we entered into an agreement to sell the
    remaining 28 acres of raw land in Mesquite, Nevada for
    $6.2 million, of which our portion was approximately
    $2.4 million. During the prior quarter, $150,000 was
    released from escrow representing an early release of funds. The
    transaction was finalized during December 2004 and resulted in a
    gain of $758,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | During October 2004, we and Fund I sold the Castaways
    Hotel/ Casino in Las Vegas, Nevada of which our portion of the
    net cash proceeds totaled $5,825,000. 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 $440,000 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 $328,000 which is based on a discount rate
    of 8%. The transaction resulted in a loss of $37,000 which was
    recognized during the prior quarter as a write down on real
    estate held for sale.          
|
| | During November 2004, we and Fund I sold the 140 Unit/224
    bed senior facility in Mesa, Arizona of which our consideration
    received totaled $6,043,000. We received cash of $948,000 and
    held back a promissory note and first deed of trust totaling
    $5,095,000. This transaction resulted in a loss of $66,000. The
    promissory note is payable in interest only payments of 8% on
    the principal balance outstanding. Commencing June 25, 2005
    through May 25, 2006, monthly payments shall increase to
    $15,000 and be applied to principal and accrued interest.
    Beginning June 25, 2006 through May 25, 2009 payments
    are to increase to $20,000 monthly. Due to uncertainty of
    collectibility, we have provided a valuation allowance for the
    entire balance of the promissory note. Payments will be
    recognized when received as a decrease to the value of the real
    estate held for sale.                                                                                       
|
| | During July 2003, we and Fund I entered into an agreement
    for the sale of a portion of our interest in 40 acres of
    land containing 354 residential lots in Henderson, Nevada. The
    agreement requires the buyer to purchase 138 lots for cash
    and gives the buyer an option to purchase the remaining 216 lots
    over the next three years at a predetermined price, which may be
    adjusted for potential value increases. Through June 30,
    2005, the buyer has purchased 188 lots of the 354 lots. We and
    Fund I recorded a valuation adjustment for the year ended
    June 30, 2005 of $179,000 and $354,000, respectively, to
    write down the carrying value of the Companys interest in
    the parcel to the amount corresponding to the negotiated sale
    and option price. During July 2005, the buyer exercised their
    option to purchase an additional 84 lots for approximately
    $3.85 million of which we received approximately
    $1.25 million, resulting in no further gain or loss.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | During March 2004, we foreclosed on two loans and took title to
    the related properties, which consisted of two undeveloped
    parcels of land in Austin and Cedar Park, Texas totaling
    $5,216,000. During September 2004, our Manager estimated the
    current value of the properties to be $1,650,000 based on
    updated appraisals. We have assigned the rights to any future
    judgments related to the personal guarantees

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VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | associated with the loans to the Manager in exchange for
    $3,566,000 which is the estimated deficiency on the value of the
    properties. We received $2,566,000 in cash and a note receivable
    from Vestin Mortgage of $1,000,000. This transaction results in
    recovery net of legal and collection costs of the $1,984,000
    which is shown as a capital contribution from our Manager.
    During the year ended June 30, 2005, our Manager estimated
    the combined current value on the two properties to be $600,000,
    resulting in a write down of approximately $1.0 million.                                                                                                                                                                                                                                                                                                        
|   
|(4) | During April 2004, we foreclosed on a loan secured by a 74
    Unit/90 bed assisted living facility in San Bernardino,
    California. The business has continued operations. The property
    was listed for sale. During the year ended June 30, 2005,
    we wrote down the carrying value of the facility located in
    San Bernardino, California by $282,000. During April 2005,
    we entered into a purchase and sale agreement for the sale of
    the facility through 97% financing of which the terms include: a
    payment of $200,000; a $7,150,000 loan; a scheduled closing date
    during October 2005; bearing an interest rate of 8.5%; quarterly
    payments of interest of approximately $152,000; maturing during
    November 2006. Upon the closing of the transaction, the balance
    will be accounted for as an investment in real estate held for
    sale  seller financed.

NOTE H  REAL ESTATE HELD FOR
SALE - SELLER FINANCED




|                                                                           |  |          |            |  |               |  |    |              |  |           |              |  |               |          |           |       |             |            |               |   |  |   |   |  |  |   |            | 
|-------------------------------------------------------------------------- |  | -------- | ---------- |  | ------------- |  | -- | ------------ |  | --------- | ------------ |  | ------------- | -------- | --------- | ----- | ----------- | ---------- | ------------- | - |  | - | - |  |  | - | ---------- | 
|                                                                           |  |          |            |  |               |  |    |              |  | Principal |              |  |               |          |          
|                                                                           |  |          |            |  |               |  |    |              |  | Payments  |              |  | Valuation/    |          |          
|                                                                           |  | Date     |            |  | Percentage of |  |    | Balance at   |  |           |              |  | Received from |          |           | Other |             | Balance at |              
|Description                                                                |  | Acquired |            |  | Ownership     |  |    | July 1, 2004 |  |           | Acquisitions |  |               | Borrower |           |       | Adjustments |            | June 30, 2005 |  
|                                                                           |  |          |            |  |               |  |    |              |  |           |              |  |               |          |           |       |             |            |               |  
|An approximate 200-unit apartment complex located in Las Vegas,
    Nevada |  |          | 1/27/2003  |  |               |  | 95 | %            |  | $         | 3,214,000    |  |               | $        |          |       |             | $          |              |   |  | $ |  |  |  | $ | 3,214,000  | 
|An uncompleted golf course in Mesquite, Nevada                             |  |          | 11/6/2002  |  |               |  | 45 | %            |  |           | 1,209,000    |  |               |          |          |       |             |            |              |   |  |   |  |  |  |   | 1,209,000  | 
|36 acres of raw land in Mesquite, Nevada                                   |  |          | 11/27/2002 |  |               |  | 52 | %            |  |           | 357,000      |  |               |          |          |       |             |            |              |   |  |   |  |  |  |   | 357,000    | 
|Assisted living facility in Las Vegas, Nevada                              |  |          | 9/23/2004  |  |               |  | 48 | %            |  |           |             |  |               |          | 7,424,000 |       |             |            | (115,000      | ) |  |   |  |  |  |   | 7,309,000  | 
|Raw land in Mesquite, Nevada                                               |  |          | 11/27/2002 |  |               |  | 47 | %            |  |           | 928,000      |  |               |          |          |       |             |            | (386,000      | ) |  |   |  |  |  |   | 542,000    | 
|                                                                           |  |          |            |  |               |  |    |              |  |           |              |  |               |          |           |       |             |            |               |   | 
|                                                                           |  |          |            |  |               |  |    |              |  | $         | 5,708,000    |  |               | $        | 7,424,000 |       |             | $          | (501,000      | ) |  | $ |  |  |  | $ | 12,631,000 | 
|                                                                           |  |          |            |  |               |  |    |              |  |           |              |  |               |          |           |       |             |            |               |   | 



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)


NOTE I  SECURED BORROWINGS


Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities






NOTE J  NOTES RECEIVABLE








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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)






NOTE K  NOTE RECEIVABLE FROM MANAGER




NOTE L  RECENT ACCOUNTING PRONOUNCEMENTS








F-28



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)






NOTE M  LEGAL MATTERS INVOLVING THE MANAGER








NOTE N  LEGAL MATTERS INVOLVING THE COMPANY




F-29



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)






NOTE O  REDEMPTION LIMITATION




Form S-4




F-30



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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)


NOTE P  SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)




|                                                                          |  |         |            |  |         |   |            |         |  |   |            |   |  |      |            |   |  |   |            | 
|------------------------------------------------------------------------- |  | ------- | ---------- |  | ------- | - | ---------- | ------- |  | - | ---------- | - |  | ---- | ---------- | - |  | - | ---------- | 
|                                                                          |  | First   |            |  | Second  |   |            | Third   |  |   | Fourth     |   |  |     
|                                                                          |  | Quarter |            |  | Quarter |   |            | Quarter |  |   | Quarter    |   |  | Year |           
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |   |  |      |           
|Revenues                                                                  |  | $       | 10,067,000 |  |         | $ | 6,890,000  |         |  | $ | 5,918,000  |   |  | $    | 5,842,000  |   |  | $ | 28,717,000 | 
|Expenses                                                                  |  |         | 3,413,000  |  |         |   | 1,657,000  |         |  |   | 8,800,000  |   |  |      | 5,959,000  |   |  |   | 19,829,000 | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |   |  |      |           
|Net income (loss)                                                         |  | $       | 6,654,000  |  |         | $ | 5,233,000  |         |  | $ | (2,882,000 | ) |  | $    | (117,000   | ) |  | $ | 8,888,000  | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |   |  |      |           
|Net income allocated to members per weighted average membership
    units |  | $       | 0.18       |  |         | $ | 0.14       |         |  | $ | (0.09      | ) |  | $    | (0.00      | ) |  | $ | 0.26       | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |   |  |      |           
|Weighted average membership units                                         |  |         | 36,845,690 |  |         |   | 36,615,137 |         |  |   | 32,761,982 |   |  |      | 32,779,096 |   |  |   | 34,769,757 | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |   |  |      |           



|                                                                          |  |         |            |  |         |   |            |         |  |   |            |  |  |      |            |  |  |   |            | 
|------------------------------------------------------------------------- |  | ------- | ---------- |  | ------- | - | ---------- | ------- |  | - | ---------- |  |  | ---- | ---------- |  |  | - | ---------- | 
|                                                                          |  | First   |            |  | Second  |   |            | Third   |  |   | Fourth     |  |  |     
|                                                                          |  | Quarter |            |  | Quarter |   |            | Quarter |  |   | Quarter    |  |  | Year |           
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |  |  |      |           
|Revenues                                                                  |  | $       | 11,905,000 |  |         | $ | 10,465,000 |         |  | $ | 11,926,000 |  |  | $    | 9,173,000  |  |  | $ | 43,469,000 | 
|Expenses                                                                  |  |         | 2,447,000  |  |         |   | 4,075,000  |         |  |   | 2,625,000  |  |  |      | 2,591,000  |  |  |   | 11,738,000 | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |  |  |      |           
|Net income                                                                |  | $       | 9,458,000  |  |         | $ | 6,390,000  |         |  | $ | 9,301,000  |  |  | $    | 6,582,000  |  |  | $ | 31,731,000 | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |  |  |      |           
|Net income allocated to members per weighted average membership
    units |  | $       | 0.24       |  |         | $ | 0.16       |         |  | $ | 0.26       |  |  | $    | 0.18       |  |  | $ | 0.86       | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |  |  |      |           
|Weighted average membership units                                         |  |         | 39,971,474 |  |         |   | 40,029,576 |         |  |   | 35,127,158 |  |  |      | 37,143,153 |  |  |   | 36,714,812 | 
|                                                                          |  |         |            |  |         |   |            |         |  |   |            |  |  |      |           

NOTE Q  SUBSEQUENT EVENTS








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##### Table of Contents



VESTIN FUND II, LLC


NOTES TO FINANCIAL STATEMENTS  (Continued)






NOTE R  OTHER MATTER


Form S-4


F-32



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##### Table of Contents



Schedule I


Vestin Fund II, LLC


REAL ESTATE LOANS ON REAL ESTATE





REAL ESTATE LOAN ROLLFORWARD


|                      |                              |                                              |             |   |             | 
|--------------------- | ---------------------------- | -------------------------------------------- | ----------- | - | ----------- | 
|Balance,June 30, 2003 |                              | $                                            | 352,481,000 |  
|                      | Additions during the period  |                                              |             |   |            
|                      |                              | New mortgage loans                           |             |   | 262,134,000 | 
|                      |                              | Mortgage loans bought                        |             |   | 44,159,000  | 
|                      | Deductions during the period |                                              |             |   |            
|                      |                              | Collections of principal                     |             |   | 220,379,000 | 
|                      |                              | Foreclosed loans (Real estate held for sale) |             |   | 24,625,000  | 
|                      |                              | Mortgage loans sold                          |             |   | 94,709,000  | 
|                      |                              |                                              |            
|                      |                              |                                              | (33,420,000 | )
|                      |                              |                                              |            
|Balance,June 30, 2004 |                              | $                                            | 319,061,000 |  
|                      |                              |                                              |            
|                      | Additions during the period  |                                              |             |   |            
|                      |                              | New mortgage loans                           |             |   | 72,219,000  | 
|                      |                              | Mortgage loans bought                        |             |   | 39,758,000  | 
|                      | Deductions during the period |                                              |             |   |            
|                      |                              | Collections of principal                     |             |   | 135,959,000 | 
|                      |                              | Foreclosed loans (Real estate held for sale) |             |   | 37,627,000  | 
|                      |                              | Mortgage loans sold                          |             |   | 22,034,000  | 
|                      |                              |                                              |            
|                      |                              |                                              | (83,643,000 | )
|                      |                              |                                              |            
|Balance,June 30, 2005 |                              | $                                            | 235,418,000 |  
|                      |                              |                                              |            

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##### Table of Contents



Schedule II


Vestin Fund II, LLC


REAL ESTATE LOANS ON REAL ESTATE





REAL ESTATE LOANS BY TYPE OF PROPERTY




|                            |  |               |         |                |      |   |             |                |  |          |            |  |            |             |           |  |  |   |            | 
|--------------------------- |  | ------------- | ------- | -------------- | ---- | - | ----------- | -------------- |  | -------- | ---------- |  | ---------- | ----------- | --------- |  |  | - | ---------- | 
|                            |  |               |         |                |      |   |             |                |  | Amount   |           
|                            |  |               |         | Face Amount of |      |   | Carrying    |                |  | Maturity |            |  | Subject to |            
|Type of Property            |  | Interest Rate |         |                | Loan |   |             | Amount of Loan |  |          | Date       |  |            | Delinquency |          
|                            |  |               |         |                |      |   |             |                |  |          |            |  |            |             |          
|Commercial                  |  |               | 5%-14%  |                |      | $ | 151,525,000 |                |  | $        | 81,923,000 |  |            |             | 3/04-2/07 |  |  | $ | 27,703,000 | 
|Construction                |  |               | 8%-13%  |                |      | $ | 29,145,000  |                |  | $        | 7,547,000  |  |            |             | 8/05-7/06 |  |  | $ |           | 
|Acquisition and Development |  |               | 8%-12%  |                |      | $ | 79,162,000  |                |  | $        | 57,313,000 |  |            |             | 1/05-1/06 |  |  | $ | 5,539,000- | 
|Land                        |  |               | 10%-14% |                |      | $ | 102,579,000 |                |  | $        | 53,776,000 |  |            |             | 6/05-4/06 |  |  | $ |           | 
|Bridge                      |  |               | 8%-14%  |                |      | $ | 49,720,000  |                |  | $        | 34,859,000 |  |            |             | 8/05-4/06 |  |  | $ | 2,754,000  | 



|                            |  |               |          |                |      |   |             |                |  |          |            |  |            |             |            |  |  |   |            | 
|--------------------------- |  | ------------- | -------- | -------------- | ---- | - | ----------- | -------------- |  | -------- | ---------- |  | ---------- | ----------- | ---------- |  |  | - | ---------- | 
|                            |  |               |          |                |      |   |             |                |  | Amount   |           
|                            |  |               |          | Face Amount of |      |   | Carrying    |                |  | Maturity |            |  | Subject to |            
|Type of Property            |  | Interest Rate |          |                | Loan |   |             | Amount of Loan |  |          | Date       |  |            | Delinquency |           
|                            |  |               |          |                |      |   |             |                |  |          |            |  |            |             |           
|Commercial                  |  |               | 8%-14%   |                |      | $ | 101,121,000 |                |  | $        | 77,210,000 |  |            |             | 8/04-3/05  |  |  | $ | 12,310,000 | 
|Construction                |  |               | 11%-15%  |                |      | $ | 100,500,000 |                |  | $        | 58,606,000 |  |            |             | 6/03-8/05  |  |  | $ | 20,037,000 | 
|Acquisition and Development |  |               | 7.5%-13% |                |      | $ | 121,325,000 |                |  | $        | 70,320,000 |  |            |             | 11/04-1/06 |  |  | $ |           | 
|Land                        |  |               | 12%-14%  |                |      | $ | 30,630,000  |                |  | $        | 60,562,000 |  |            |             | 9/04-6/05  |  |  | $ |           | 
|Bridge                      |  |               | 6%-14%   |                |      | $ | 158,031,750 |                |  | $        | 52,363,000 |  |            |             | 7/04-4/06  |  |  | $ | 13,664,000 | 

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##### Table of Contents



Schedule III


Vestin Fund II, LLC


REAL ESTATE LOANS ON REAL ESTATE





REAL ESTATE LOANS BY LIEN POSITION




|              |  |                |             |  |               |  |          |                |  |          |             |  |            |             |            |  |  |   |            | 
|------------- |  | -------------- | ----------- |  | ------------- |  | -------- | -------------- |  | -------- | ----------- |  | ---------- | ----------- | ---------- |  |  | - | ---------- | 
|              |  |                |             |  |               |  |          |                |  | Amount   |            
|              |  | Face Amount of |             |  |               |  | Carrying |                |  | Maturity |             |  | Subject to |            
|Lien Position |  | Loan           |             |  | Interest Rate |  |          | Amount of Loan |  |          | Date        |  |            | Delinquency |           
|              |  |                |             |  |               |  |          |                |  |          |             |  |            |             |           
|1st           |  | $              | 402,067,000 |  |               |  | 5%-14%   |                |  | $        | 228,668,000 |  |            |             | 3/04-12/07 |  |  | $ | 30,457,000 | 
|2nd           |  | $              | 10,064,000  |  |               |  | 10%-15%  |                |  | $        | 6,750,000   |  |            |             | 4/05-10/06 |  |  | $ | 5,539,000  | 



|              |  |                |             |  |               |  |            |                |  |          |             |  |            |             |            |  |  |   |            | 
|------------- |  | -------------- | ----------- |  | ------------- |  | ---------- | -------------- |  | -------- | ----------- |  | ---------- | ----------- | ---------- |  |  | - | ---------- | 
|              |  |                |             |  |               |  |            |                |  | Amount   |            
|              |  | Face Amount of |             |  |               |  | Carrying   |                |  | Maturity |             |  | Subject to |            
|Lien Position |  | Loan           |             |  | Interest Rate |  |            | Amount of Loan |  |          | Date        |  |            | Delinquency |           
|              |  |                |             |  |               |  |            |                |  |          |             |  |            |             |           
|1st           |  | $              | 501,332,000 |  |               |  | 5.5%-15%   |                |  | $        | 311,178,000 |  |            |             | 6/03-4/06  |  |  | $ | 46,051,000 | 
|2nd           |  | $              | 10,275,000  |  |               |  | 9.0%-13.0% |                |  | $        | 7,883,000   |  |            |             | 12/04-4/05 |  |  | $ |           | 

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##### Table of Contents



Schedule IV


Vestin Fund II, LLC


REAL ESTATE LOANS ON REAL ESTATE





REAL ESTATE LOANS THAT EXCEED THREE PERCENT OF THE
PORTFOLIO




|                            |  |          |        |  |          |  |          |          |  |  |                |        |  |                |            |  |             |   |            |  |  |   |            | 
|--------------------------- |  | -------- | ------ |  | -------- |  | -------- | -------- |  |  | -------------- | ------ |  | -------------- | ---------- |  | ----------- | - | ---------- |  |  | - | ---------- | 
|                            |  |          |        |  |          |  |          |          |  |  |                | Amount | 
|                            |  | Interest |        |  | Maturity |  |          | Lien     |  |  | Face Amount of |        |  | Carrying       |            |  | Subject to  |  
|Description of Loan         |  | Rate     |        |  | Date     |  |          | Position |  |  | Loan           |        |  | Amount of Loan |            |  | Delinquency |  
|                            |  |          |        |  |          |  |          |          |  |  |                |        |  |                |            |  |             |  
|Acquisition and Development |  |          | 9.00%  |  |          |  | 7/13/05  |          |  |  | 1st            |        |  | $              | 30,000,000 |  |             | $ | 27,574,000 |  |  | $ |           | 
|Acquisition and Development |  |          | 8.00%  |  |          |  | 1/25/06  |          |  |  | 1st            |        |  | $              | 35,000,000 |  |             | $ | 24,040,000 |  |  | $ |           | 
|Land                        |  |          | 10.00% |  |          |  | 3/30/06  |          |  |  | 1st            |        |  | $              | 35,000,000 |  |             | $ | 23,918,000 |  |  | $ |           | 
|Commercial                  |  |          | 11.00% |  |          |  | 6/30/05  |          |  |  | 1st            |        |  | $              | 26,000,000 |  |             | $ | 20,000,000 |  |  | $ | 20,000,000 | 
|Bridge                      |  |          | 8%     |  |          |  | 5/20/06  |          |  |  | 1st            |        |  | $              | 18,000,000 |  |             | $ | 18,000,000 |  |  | $ |           | 
|Commercial                  |  |          | 6.25%  |  |          |  | 12/25/07 |          |  |  | 1st            |        |  | $              | 13,000,000 |  |             | $ | 11,377,000 |  |  | $ |           | 
|Land                        |  |          | 14.00% |  |          |  | 2/15/06  |          |  |  | 1st            |        |  | $              | 21,632,000 |  |             | $ | 10,772,000 |  |  | $ |           | 
|Land                        |  |          | 13.00% |  |          |  | 7/22/05  |          |  |  | 1st            |        |  | $              | 20,000,000 |  |             | $ | 8,757,000  |  |  | $ |           | 
|Commercial                  |  |          | 14.00% |  |          |  | 3/31/04  |          |  |  | 1st            |        |  | $              | 34,000,000 |  |             | $ | 7,704,000  |  |  | $ | 7,704,000  | 
|Commercial                  |  |          | 5.00%  |  |          |  | 9/21/07  |          |  |  | 1st            |        |  | $              | 15,334,000 |  |             | $ | 7,310,000  |  |  | $ |           | 



|                            |  |          |        |  |          |  |          |          |  |  |                |        |  |                |            |  |             |   |            |  |  |   |            | 
|--------------------------- |  | -------- | ------ |  | -------- |  | -------- | -------- |  |  | -------------- | ------ |  | -------------- | ---------- |  | ----------- | - | ---------- |  |  | - | ---------- | 
|                            |  |          |        |  |          |  |          |          |  |  |                | Amount | 
|                            |  | Interest |        |  | Maturity |  |          | Lien     |  |  | Face Amount of |        |  | Carrying       |            |  | Subject to  |  
|Description of Loan         |  | Rate     |        |  | Date     |  |          | Position |  |  | Loan           |        |  | Amount of Loan |            |  | Delinquency |  
|                            |  |          |        |  |          |  |          |          |  |  |                |        |  |                |            |  |             |  
|Bridge                      |  |          | 10.00% |  |          |  | 3/30/06  |          |  |  | 1st            |        |  | $              | 35,000,000 |  |             | $ | 22,857,000 |  |  | $ |           | 
|Land                        |  |          | 12.00% |  |          |  | 12/18/04 |          |  |  | 1st            |        |  | $              | 12,365,000 |  |             | $ | 9,382,000  |  |  | $ |           | 
|Construction                |  |          | 14.00% |  |          |  | 8/1/03   |          |  |  | 1st            |        |  | $              | 17,500,000 |  |             | $ | 12,096,000 |  |  | $ | 12,096,000 | 
|Commercial                  |  |          | 12.5%  |  |          |  | 11/03/03 |          |  |  | 1st            |        |  | $              | 12,500,000 |  |             | $ | 12,310,000 |  |  | $ | 12,310,000 | 
|Construction                |  |          | 13.50% |  |          |  | 8/31/05  |          |  |  | 1st            |        |  | $              | 51,450,000 |  |             | $ | 23,479,000 |  |  | $ |           | 
|Bridge                      |  |          | 8.00%  |  |          |  | 5/20/05  |          |  |  | 1st            |        |  | $              | 18,000,000 |  |             | $ | 17,199,000 |  |  | $ |           | 
|Bridge                      |  |          | 5.50%  |  |          |  | 6/25/05  |          |  |  | 1st            |        |  | $              | 15,500,000 |  |             | $ | 13,664,000 |  |  | $ | 13,664,000 | 
|Commercial                  |  |          | 12%    |  |          |  | 8/27/04  |          |  |  | 1st            |        |  | $              | 31,850,000 |  |             | $ | 20,318,000 |  |  | $ |           | 
|Commercial                  |  |          | 14%    |  |          |  | 11/12/04 |          |  |  | 1st            |        |  | $              | 11,500,000 |  |             | $ | 11,500,000 |  |  | $ |           | 
|Acquisition and Development |  |          | 8.00%  |  |          |  | 1/25/06  |          |  |  | 1st            |        |  | $              | 35,000,000 |  |             | $ | 20,209,000 |  |  | $ |           | 
|Acquisition and Development |  |          | 9.00%  |  |          |  | 1/13/05  |          |  |  | 1st            |        |  | $              | 30,000,000 |  |             | $ | 20,281,000 |  |  | $ |           | 
|Commercial                  |  |          | 11.00% |  |          |  | 6/28/05  |          |  |  | 1st            |        |  | $              | 26,000,000 |  |             | $ | 19,998,000 |  |  | $ |           | 

F-36