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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549FORM 10-K

(MARK ONE)

|      |  |                                                                               
|----- |  | ------------------------------------------------------------------------------
|[   ] |  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JUNE 30, 2002

|    |  |                                                                                   
|--- |  | ----------------------------------------------------------------------------------
|[X] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM JANUARY 1, 2002 TO JUNE 30, 2002.

COMMISSION FILE NUMBER 333-32800

VESTIN FUND II, LLC

(NAME OF BUSINESS ISSUER IN ITS CHARTER)

|                                                                      |  |                                                
|--------------------------------------------------------------------- |  | -----------------------------------------------
|NEVADA
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) |  | 88-0481336
(I.R.S. EMPLOYER
IDENTIFICATION NO.)



2901 EL CAMINO AVENUE, LAS VEGAS, NEVADA 89102
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

ISSUERS TELEPHONE NUMBER: 702.227.0965

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NONE

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
NONE

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained in this form, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days. Not applicable.





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TABLE OF CONTENTS



|              |                                                                                               |                               |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- | ----------------------------- |  |  |  |  |  | 
|PART I       
|              | ITEM 1. BUSINESS                                                                             
|              | ITEM 2. PROPERTIES                                                                           
|              | ITEM 3. LEGAL PROCEEDINGS                                                                    
|              | 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                
|              | ITEM 6. SELECTED FINANCIAL DATA                                                              
|              | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|              | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|              | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III     
|              | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT                                      
|              | ITEM 11. EXECUTIVE COMPENSATION                                                              
|              | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|              | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV      
|              | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                    
|EXHIBIT INDEX
|SIGNATURES   
|              |                                                                                               | BALANCE SHEETS               
|              |                                                                                               | STATEMENTS OF INCOME         
|              |                                                                                               | STATEMENTS OF MEMBERS EQUITY
|              |                                                                                               | STATEMENTS OF CASH FLOWS     
|              |                                                                                               | NOTES TO FINANCIAL STATEMENTS



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TABLE OF CONTENTS

|              |  |                                                                                              
|------------- |  | ---------------------------------------------------------------------------------------------
|PART I        |  |                                                                                              
|              |  | ITEM 1. BUSINESS                                                                             
|              |  | ITEM 2. PROPERTIES                                                                           
|              |  | ITEM 3. LEGAL PROCEEDINGS                                                                    
|              |  | 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                
|              |  | ITEM 6. SELECTED FINANCIAL DATA                                                              
|              |  | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
|              |  | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|              |  | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|              |  | BALANCE SHEETS                                                                               
|              |  | STATEMENTS OF INCOME                                                                         
|              |  | STATEMENTS OF MEMBERS EQUITY                                                                
|              |  | STATEMENTS OF CASH FLOWS                                                                     
|              |  | NOTES TO FINANCIAL STATEMENTS                                                                
|              |  | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 
|PART III      |  |                                                                                              
|              |  | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT                                      
|              |  | ITEM 11. EXECUTIVE COMPENSATION                                                              
|              |  | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|              |  | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV       |  |                                                                                              
|              |  | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                    
|EXHIBIT INDEX
|SIGNATURES   

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PART I

Note Regarding Forward Looking Statements

This report and other written reports and oral statements made from time to
time by us may contain forward looking statements. Such forward looking
statements may be identified by the use of such words as expects, plans,
estimates, forecasts, projects, anticipates, believes and words of
similar meaning. Forward looking statements are likely to address such matters
as our business strategy, future operating results, future sources of funding
for mortgage loans brokered by us, future economic conditions and pending
litigation involving us. Some of the factors which could affect future results
are set forth in the discussion under Managements Discussion and Analysis of
Financial Condition and Results of Operations  Factors Affecting Our Operating
Results.




ITEM 1. BUSINESS

General

We were organized in December 2000 as a Nevada limited liability company
for the purpose of investing in mortgage loans. We invest in loans secured by
real estate through deeds of trust and mortgages. We commenced our business
operations in June 2001. From June 2001 through June 2002, we raised
approximately $228,820,000 through a public offering of our membership
interests (Units). The public offering for up to $500,000,000 is continuing.
Our manager is Vestin Mortgage, Inc., a licensed mortgage company in the State
of Nevada (Vestin Mortgage, our Manager). Vestin Mortgage is a wholly-owned
subsidiary of Vestin Group, Inc., a Delaware corporation,
whose common stock is publicly held and traded on the Nasdaq National Market
under the ticker symbol VSTN. Through its subsidiaries,
Vestin Group, Inc. is engaged in asset management, real estate lending
and other financial services. In June 2002, we changed our fiscal year end
from December 31 to June 30. The transition period ended June 30, 2002
reflects six months of operational activities as a result of the change in
fiscal year end. In this annual report, from time to time we will refer to our
company, Vestin Fund II, LLC, as the Company.

We invest in mortgage loans throughout the areas in which Vestin Mortgage
and its correspondents have experience, primarily Arizona, California, Hawaii,
Nevada and Texas. The loans we invest in are selected for us by Vestin Mortgage
from among loans originated by Vestin Mortgage or non-affiliated mortgage
brokers. When Vestin Mortgage or a non-affiliated mortgage broker originates a loan for us, that
entity identifies the borrower, processes the loan application, makes or
invests in the loan, and brokers or sells the loan to us. We believe that our
loans are attractive to borrowers because of the expediency of Vestin
Mortgages loan approval process, which takes about 10 to 20 days.

As a non-conventional lender, we are more willing to invest in mortgage
loans to borrowers that conventional lenders would not deem to be creditworthy.
Because of our increased willingness to fund riskier loans and borrowers,
borrowers are willing to pay us an interest rate that is 2 to 5 points above
the rates charged by conventional lenders. We invest a significant amount of
our funds in loans in which the real property being developed is not generating
any income to the borrower. The balloon payment loans and bridge loans in
which we invest are riskier because the borrowers repayment depends on its
ability to refinance the loan or develop the property so it can refinance the
loan.

Our principal investment objectives are to:



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

Acquisition and Investment Policies

We seek to invest about 97% of our assets in mortgage loans. At least 3%
will be held as a working capital cash reserve.

The majority of our collateral on our mortgage loans are the real property
that the borrower is purchasing or developing with the funds that we make
available. We sometimes refer to these real properties as the security
properties. While we may invest in other

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types of loans, most of the loans in which we invest have been made to real
estate developers with a lesser proportion of loans involving land loans and
bridge financing.

Our mortgage investments are not insured or guaranteed by any government
agency.

Vestin Mortgage continuously evaluates prospective investments, selects
the mortgages in which we invest and makes all investment decisions on our
behalf in its sole discretion. In evaluating prospective mortgage loan
investments, Vestin Mortgage considers such factors as the following:



| |  |  | the ratio of the amount of the investment to the value of the property by which it is secured (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.                      

Vestin Mortgage may obtain our loans from non-affiliated mortgage brokers
and previous borrowers, and by solicitation of new borrowers in those states
where permissible. We may purchase existing loans that were originated by third
party lenders and acquired by Vestin Mortgage to facilitate our purchase of the
loans. Vestin Mortgage will sell the loans to us for no greater than Vestin
Mortgages cost, not including its service fees and compensation. There are no
specific requirements or guidelines governing Vestin Mortgages discretion in
determining which mortgage loans it will place with us and which it will place
with other funding sources.

When selecting
mortgage loans for us, Vestin Mortgage uses the
following guidelines, which are intended to control the quality of the
collateral given for our loans:

1. Priority of Mortgages.Generally, our assets are secured by first
mortgages. First mortgages are mortgages secured by a full or divided interest
in a first deed of trust secured by the property. Other mortgages that we
invest in on the security property will not be junior to more than one other
mortgage. As of June 30, 2002, more than 99% of the principal amount of our
outstanding interest in loans was secured by first mortgages.

2. Loan-to-Value
Ratio.We generally use the following loan-to-value guidelines
when originating loans:

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

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, in its opinion, 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 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.

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Nevertheless, in no event will the loan-to-value ratio on any loan exceed
80% of the independently appraised completed value of the property. The target
loan-to-value ratio for our loan portfolio as a whole is approximately 70%. As
of June 30, 2002, our average loan-to-value ratio was 56%.

The Manager receives
an appraisal at the time of loan underwriting, which may precede the
placement of the loan with the Company. Generally, these appraisals
are completed within twelve months prior to funding of the
loan. Also, the appraisal may have been previously performed for the
borrower. The appraisal may be for the current estimated as-if
developed value of the property or, in the case of acquisition and
development loans or construction loans, for the estimated value of
the property upon completion of the project. We 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 reviews each appraisal report
and conducts 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 Mortgage Loans. We invest in construction loans other than
home improvement loans on residential property, subject to the following
guidelines:

We do not anticipate that the loan-to-value ratio on construction loans in
which we invest will exceed 75% of the independently appraised, completed value
of the security property.

4. Terms of Mortgage Loans.Our loans to date in 2002 ranged from a two
month term to a three year term. 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.

Currently, substantially all of our loans provide for payments of interest
only with a balloon payment of principal payable in full at the end of the
term. In addition, we invest in mortgage loans which require borrowers to
maintain interest reserves funded from the principal amount of the loan for a
period of time. At June 30, 2002, we had outstanding principal on mortgage
loans that had interest reserves of approximately $73,473,348 and interest
reserves in the amount of approximately $10,921,831.

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, with the
title insurance policy naming us as the insured and 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, naming us as loss payee in an amount
sufficient to cover the replacement cost of improvements.                                                                                                                                                                                                                
|
| |  |  | All insurance policies, notes, deeds of trust or mortgages, escrow
agreements, and any other loan documents for a particular transaction
will name us as payee and beneficiary. Mortgage loans will not be written
in the name of Vestin Mortgage or any other nominee.                                                                                                                                          

6. Purchase of Mortgage Investments from Affiliates.We may acquire
mortgage loans from our affiliates, including Vestin Mortgage, for a price not
in excess of the par value of the note or its fair market value, whichever is
lower, plus allowable fees and expenses, but without the allowance of any other
compensation for the loans. Except for the compensation paid to Vestin
Mortgage described elsewhere herein, any affiliate from which we purchase
mortgage loans will remit to us all income it earns from the mortgage loan
while the loan is in its portfolio.

7. Note Hypothecation.We may also acquire mortgage loans secured by
assignments of secured promissory notes. These mortgage 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. For example, if
the property securing a note we acquire is commercial property, the total
amount of outstanding debts secured by the property would generally not exceed 75% of the
appraised value of the property, and the mortgage loan would not exceed 80% of
the principal amount of the assigned note. For mortgage loans secured by
promissory notes, we will rely on the appraised value of the underlying
property, as determined by a written appraisal which was conducted
within the then-preceding twelve months at the time of loan
origination. If an appraisal was not conducted
within that period, then we will arrange for a new appraisal to be prepared for
the property.

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8. Participation.We participate in loans with other lenders, including
affiliates as permitted by the North American Securities Administrators
Association guidelines (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.                                                                                                                                                                
|
| |  |  | 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.

As of June 30, 2002, 61% of our loans were loans in which we participated
with other lenders.

9. Diversification.The NASAA Guidelines provide that we neither invest
in or make mortgage 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
mortgage 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, 2002, we
had one mortgage loan which accounted for approximately 10.4% of our total
assets. The loan is a land loan made to Rio Vista and secured by real property. The outstanding balance of the loan was
$24,088,072 and the loan matures on June 28, 2003.

10. Reserve Fund.We have established contingency working capital
reserves of at least 3% of our capital to cover our unexpected cash needs.

11. Credit Evaluations.Before making a loan, Vestin Mortgage must first
determine that a borrower has sufficient equity in the security property to
meet the loan-to-value ratios described above. Vestin Mortgage may also
consider the income level and creditworthiness of a borrower to determine its
ability to repay the mortgage loan.

12. Sale of Mortgage Investments.Although Vestin Mortgage has no plan to
do so, Vestin Mortgage may sell our mortgage loans or interests 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. In
addition, we will not sell our mortgage loans to Vestin Mortgage.

Mortgage Loans to Affiliates

We will not invest in mortgage loans made to Vestin Mortgage, Vestin Group
or any of our affiliates. However, we may acquire an investment in a mortgage
loan payable by Vestin Mortgage when Vestin Mortgage has assumed the obligations of the borrower under that loan, through a
foreclosure on the property.

Purchase of Loans from Vestin Mortgage and its Affiliates

In addition to those loans Vestin Mortgage selects for us, we purchase
loans that were originated by Vestin Mortgage or other parties and first held
for Vestin Mortgages own portfolio, as long as the loan is not in default and
otherwise satisfies all of our lending criteria. This requirement also applies
to any loan originated by an affiliate of Vestin Mortgage, such as Vestin
Group, Michael Shustek, Chief Executive officer of Vestin Group or another
principal of Vestin Mortgage. However, we will not acquire a loan from or sell
a loan to a mortgage program in which Vestin Mortgage has an interest unless in
compliance with NASAA Guidelines.

Types of Loans We Invest In

We primarily invest in loans which are secured by first or second
mortgages on real property. Such loans fall into the following categories: raw
and unimproved land, acquisition and development, construction, commercial,
residential and bridge loans.

Raw And Unimproved Land Loans

Approximately 15-25% of the loans invested in by us may be loans made for
the purchase or development of raw, unimproved land. Generally, we determine
whether to invest in these loans based upon the appraised value of the
property and the borrowers actual capital investment in the
property. We will generally invest in loans for up to 60% of
the as-if developed appraised value of the property and we generally require that the
borrower have invested in the property actual capital expenditures of at least
25% of the propertys value. As of June 30, 2002, approximately 22% of our
loans were in this category.

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Acquisition and Development Loans

Approximately 10-25% of the loans invested in by us may be acquisition and
development loans. These loans enable borrowers to complete the basic
infrastructure and development of their property prior to the construction of
buildings or structures. Such development may include installing utilities,
sewers, water pipes, and/or streets. We will generally invest in loans with a
face value of up to 60% of the appraised value of the property. As of June 30,
2002, approximately 10% of our loans were in this category.

Construction Loans

Approximately 10-70% of our loans may be construction loans. A
construction loan provides funds for the construction of one or more structures
on developed land. Funds under this type of loan will generally not be
forwarded to the borrower until work in the previous phase of the project has
been completed and an independent inspector has verified certain aspects of the
construction and its costs. We will typically require material and labor lien
releases by the borrower per completed phase of the project. We will review the
appraisal of the value of the property and proposed improvements, and will
generally invest in loans for up to 75% of the appraised value of the property and proposed improvements. As of June 30, 2002,
approximately 27% of our loans were in this category.

Commercial Property Loans

Approximately 20-50% of the loans invested in by us may be commercial
property loans. Commercial property loans provide funds to allow commercial
borrowers to make improvements or renovations to the property in order to
increase the net operating income of the property so that it may qualify for
institutional refinancing. We will review the appraisal of the value of the
property and will generally invest in loans for up to 75% of the
appraised value of the property. As of
June 30, 2002, approximately 36% of our loans were in this category.

Residential Loans

A small percentage of the loans invested in by us may be residential
loans. Such loans facilitate the purchase or refinance of one to four family
residential property units provided the borrower uses one of the units on the
property as such borrowers principal residence. We will
generally invest in loans for up
to 75% of the value of the property. As of June 30, 2002, less than 2% of our
loans were in this category.

Bridge Loans

Up to 15% of our loans may be bridge loans. Such loans provide interim
financing (twelve to twenty-four months) to enable commercial borrowers
to qualify for permanent refinancing. We will review the appraisal of the value
of the property and will generally invest in loans for up to 75% of
the appraised value of the property.
As of June 30, 2002, approximately 3% of our loans were in this category.

Collateral

The types of collateral that will secure the loans include a first deed of
trust, a second deed of trust or a leasehold interest.

First Deed of Trust

Most of our loans are secured by a first deed of trust. Thus as a lender,
we will have rights as a first mortgage lender of the collateralized property.
As of June 30, 2002, more than 99% of our loans were secured by a first deed of
trust.

Second Deed of Trust

In the future, up to 10% of our loans may be secured by second deeds of
trust. In a second mortgage loan, the rights of the lender (such as the right
to receive payment on foreclosure) will be subject to the rights of the first
mortgage lender. In a wraparound loan, the lenders rights will be comparably
subject to the rights of a first mortgage lender, but the aggregate
indebtedness evidenced by the loan documentation will be the first mortgage
loan plus the new funds the lender invests. The lender would receive all
payments from the borrower and forward to the senior lender its portion of the
payments the lender receives. As of June 30, 2002, less than 1% of our loans
were secured by a second deed of trust.

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Leasehold Interest

Up to 20% of the loans invested in by us may be in loans where the
collateral is an interest in a lease. As of June 30, 2002, we did not have any
loans secured by a leasehold interest.

Prepayment Penalties and Exit Fees

Generally, the loans we invest in will not contain prepayment penalties or
exit fees. If our loans are at a high rate of interest in a market of falling
interest rates, the failure to have a prepayment penalty provision or exit fee
in the loan allows the borrower to refinance the loan at a lower rate of
interest, thus providing a lower yield to us on the reinvestment of the
prepayment proceeds. However, these loans will usually be written with
relatively high minimum interest rates, which we would expect to minimize the
risk of lower yields.

Extensions to Term of Loan

Our original loan agreements 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.
However, we only grant extensions when a borrower is in full compliance with
the terms of the loan, including, but not limited to, the borrowers obligation
to make interest payments on the loan.

Balloon Payment

Currently,
substantially all of the loans we invest in or purchase will require the
borrower to make a balloon payment on the principal amount upon maturity of
the loan. There are no specific criteria used in evaluating the credit quality
of borrowers for mortgage loans requiring balloon payments. Furthermore, a
substantial period of time may elapse between the review of the financial
statements of the borrower and the date when the balloon payment is due. As a
result, there is no assurance that a borrower will have sufficient resources to
make a balloon payment when due. To the extent that a borrower has an
obligation to pay mortgage loan principal in a large lump sum payment, its
ability to repay the loan may be dependent upon its ability to sell the
property, obtain suitable refinancing or otherwise raise a substantial amount
of cash. As a result, these loans can involve a higher risk of default than
loans where the principal is paid at the same time as the interest payments.

Repayment of Mortgages on Sale of Properties

We may require a borrower to repay a mortgage loan upon the sale of the
mortgaged property rather than allow the buyer to assume the existing loan. We
will require repayment if we determine that repayment appears to be
advantageous to us based upon then-current interest rates, the length of time
that the loan has been held by us, the creditworthiness of the buyer and our
objectives. We will either invest our net proceeds from any capital
transaction in new mortgage loans, hold the net proceeds as cash or distribute
them to our Members. These net proceeds will also include the principal of a
loan deemed to be repaid for tax purposes as a result of the nature of a loan
modification or loan extension. Our Operating Agreement provides that whether
we choose to distribute the proceeds or reinvest them, our Members will be
deemed to have received a distribution of capital and recontributed the same
amount to us. Capital transactions include payments of principal, foreclosures
and prepayments of mortgages, to the extent classified as a return of capital
under the Internal Revenue Code, and any other disposition of a mortgage or
property.

Variable Rate Loans

To date, all of the loans we invest in are fixed rate loans. Occasionally
we may acquire variable rate loans. Variable rate loans originated by Vestin
Mortgage may use as indices the one and five year Treasury Constant Maturity
Index, the Prime Rate Index and the Monthly Weighted Average Cost of Funds
Index for Eleventh District Savings Institutions (Federal Home Loan Bank
Board). Vestin Mortgage may negotiate spreads over these indices of 2.5% to
5.5%, depending upon market conditions when the loan is made.

It is possible that the interest rate index used in a variable rate loan
will rise (or fall) more slowly than the interest rate of other loan
investments available to us. Vestin Mortgage attempts to minimize this interest
rate differential by tying variable rate loans to indices that are sensitive to
fluctuations in market rates. Additionally, most variable rate loans originated
by Vestin Mortgage contain provisions under which the interest rate cannot fall
below the initial rate.

Variable rate loans generally have interest rate caps. We anticipate that
the interest rate cap will be a ceiling that is 2-4% above the starting rate
with a floor rate equal to the starting rate. For these loans there is the risk
that the market rate may exceed the interest cap rate.

Variable rate loans of five to ten year maturities are not assumable
without the prior consent of Vestin Mortgage. We do not expect to invest in or
purchase a significant amount of other assumable loans. To minimize our risk,
any borrower assuming an existing mortgage loan will be subject to the same
underwriting criteria as the original borrower.

Borrowing

We may incur indebtedness:



| |  |  | to finance our investments in mortgage loans,                                                               
| | - |  | ------------------------------------------------------------------------------------------------------------
|
| |  |  | to prevent a default under mortgage loans that are senior to our mortgage loans,                            
|
| |  |  | to discharge senior mortgage loans if this becomes necessary to protect our investment in mortgage loans, or

8



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| |  |  | to operate or develop a property that we acquired under a defaulted loan.
| | - |  | -------------------------------------------------------------------------

Our indebtedness will not exceed 70% of the fair market value of our
mortgage loans. This indebtedness may be with recourse to our assets.

In addition, we may enter into structured arrangements with other lenders
in order to provide them with a senior position in mortgage loans which we
might jointly fund. For example, we might establish a wholly-owned special
purpose corporation which would borrow funds from an institutional lender under
an arrangement where the resulting mortgage loans would be assigned to a trust,
and the trust would issue a senior certificate to the institutional lender and
a junior certificate to the special purpose corporation. This would assure the
institutional lender of repayment in full prior to our receipt of any repayment
on the jointly funded mortgage loans.

Competition

There are hundreds of commercial banks, insurance companies, mortgage
brokers, pension funds and other institutional lenders competing to make the
type of loans in which we invest. No particular competitor dominates the
market. We anticipate substantial competition for investments in mortgages
secured by commercial properties, which creates pressure on lenders to lower
interest rates. Consequently, we may not be able to obtain as high interest
rates on mortgage investments as we would otherwise obtain, which would affect
our revenues and the distributions made to our investors.

Regulation

Our operations are conducted by Vestin Mortgage. Vestin Mortgages
operations as a mortgage company are subject to extensive regulation by
federal, state and local laws and governmental authorities. Vestin Mortgage
conducts its real estate mortgage business under a license issued by the State
of Nevada Financial Institutions Division. Under applicable Nevada law, the
division has broad discretionary authority over Vestin Mortgages activities,
including the authority to conduct periodic regulatory audits of all aspects of
Vestin Mortgages operations.

We and Vestin Mortgage are also subject to the Equal Credit Opportunity
Act of 1974, which prohibits creditors from discriminating against loan
applicants on the basis of race, color, sex, age or marital status, and the
Fair Credit Reporting Act of 1970, which requires lenders to supply applicants
with the name and address of the reporting agency if the applicant is denied
credit. We are also subject to various other federal and state securities laws
regulating the issuance and sale of securities, as well as the Employee
Retirement Income Security Act of 1974.




ITEM 2. PROPERTIES

Our Manager, Vestin Mortgage, operates from its executive offices at 2901 El
Camino Avenue, Las Vegas, Nevada 89102. We do not have any separate offices.




ITEM 3. LEGAL PROCEEDINGS

We are not parties to any pending litigation and, to the best of our Managers
knowledge, no legal proceedings have been threatened against us.




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

None.

9



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##### Table of Contents






PART II




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

Market Information



| | a. |  | There is no established public trading market for the trading of Units.                                                                                                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | As of June 30, 2002, approximately 3,258 Unit holders held 23,239,836 Units of interest in the Company.                                                                                                                                                                                                                                                                                         
|
| | c. |  | We generally distribute substantially all net income generated by us to Unit holders on a monthly
basis. We made distributions of net income to our Unit holders of approximately $10,392,755 (prior to
reinvested distributions) during the transition period ended June 30, 2002. It is our intention to
continue to distribute substantially all net income earned by us to the Unit holders.




ITEM 6. SELECTED FINANCIAL DATA

Vestin Fund II, LLC

As of June 30, 2002 and December 31, 2001, and for the transition period
ended June 30, 2002 and year end December 31, 2001

|                                                                            |  |               |             |                   |  |   |             | 
|--------------------------------------------------------------------------- |  | ------------- | ----------- | ----------------- |  | - | ----------- | 
|                                                                            |  | June 30, 2002 |             | December 31, 2001
|                                                                            |  |               |             |                  
|Balance Sheet Data:                                                         |  |               |             |                   |  |   |             | 
|Investments in mortgage loans, net of allowance for loan losses             |  | $             | 222,058,326 |                   |  | $ | 117,236,471 | 
|Cash, cash equivalents, certificates of deposits and short-term investments |  | $             | 8,623,542   |                   |  | $ | 10,012,601  | 
|Interest and other receivables                                              |  | $             | 2,189,631   |                   |  | $ | 1,066,369   | 
|Other assets                                                                |  | $             | 255,637     |                   |  | $ | 142,448     | 
|Total assets                                                                |  | $             | 233,127,136 |                   |  | $ | 128,457,889 | 
|Liabilities                                                                 |  | $             | 650,765     |                   |  | $ | 269,078     | 
|Members capital                                                            |  | $             | 232,476,371 |                   |  | $ | 128,188,811 | 
|Total liabilities and Members capital                                      |  | $             | 233,127,136 |                   |  | $ | 128,457,889 | 
|Income Statement Data:                                                      |  |               |             |                   |  |   |             | 
|Revenues                                                                    |  | $             | 11,504,100  |                   |  | $ | 3,801,649   | 
|Expenses                                                                    |  | $             | 781,081     |                   |  | $ | 86,959      | 
|Net income                                                                  |  | $             | 10,723,019  |                   |  | $ | 3,714,690   | 
|Net income allocated to Members                                             |  | $             | 10,723,019  |                   |  | $ | 3,714,690   | 
|Net income allocated to Members per weighted average membership units       |  | $             | 0.59        |                   |  | $ | 0.67        | 
|Weighted average membership units                                           |  |               | 18,326,615  |                   |  |   | 5,548,510   | 

The information in this table should be read in conjunction with the
accompanying audited financial statements and notes to financial statements
included elsewhere in this document.




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

Prior to June 14, 2001, we were a development stage company with no operational
activities. We commenced the offering of our Units in June 2001; that offering
continues. Our financial results reflect the amount of capital we had available
for investment in mortgage loans. Our past performance may not be indicative of
future results. This discussion should be read in conjunction with our
financial statements and accompanying notes and other detailed information
regarding the Company appearing elsewhere in this Form 10-K.

OVERVIEW

Our primary business objective is to generate monthly income by investing in
mortgage loans. We believe there is a significant market opportunity to make
mortgage loans to owners and developers of real property whose financing needs
are not met by traditional mortgage lenders. The loan
underwriting standards our Manager utilizes are less strict than traditional
mortgage lenders. In addition, one of our competitive advantages is our ability
to approve loan applications more quickly than traditional lenders. As a
result, in certain cases, we may make mortgage loans which are riskier than
mortgage loans made by commercial banks. However, in return we seek a higher
interest rate and our Manager takes steps to mitigate the lending risks such as
imposing a lower loan to value ratio. While we may assume more risk than
traditional mortgage lenders, in return, we seek to generate higher yields from
our mortgage loans.

10



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Our operating results are affected primarily by: (i) the amount of capital we
have to invest in mortgage loans, (ii) the level of real estate lending
activity in the markets we service, (iii) our ability to identify and work with
suitable borrowers, (iv) the interest rates we are able to charge on our loans
and (v) the level of foreclosures and related loan losses which we may
experience. In June 2001, we commenced the sale of our Units, raising
approximately $229 million by June 30, 2002. That offering will continue until
the earlier of June 2003 or such time as we raise $500 million. These funds,
subject to a 3% reserve, will constitute the bulk of the funds we have
available for investment in mortgage loans. We do not have any arrangements in
place to increase materially the funds we will have available to invest from
any other sources. See the discussion below under Capital and Liquidity.

The US economy is currently suffering from a mild recession which began in
2001. However, we have not experienced a material slowdown in commercial real
estate lending in the principal markets which we service. To some extent, more
conservative lending practices implemented by some traditional mortgage lenders
to cope with the recession have had the result of increasing the pool of
potential borrowers willing to pay the higher rates which we charge. This trend
has also enabled us to continue to earn yields of approximately 12% per annum,
notwithstanding the decline in interest rates in the general economy. However,
this trend has begun to be off-set by the continuing decline in interest rates
which is putting downward pressure on the yields we can generate for Members.
As a result, our annualized net interest yield to Members for the transition
period ended June 30, 2002 was 11.7%, compared to 12.4% at December 31, 2001.

While our business has not been significantly impacted by the current
recession, if the recession deepens or is prolonged, we would face a number of
potential risks. A prolonged recession will likely dampen real estate
development activity, thereby diminishing the market for our loans. In
addition, if interest rates remain low for an extended period, it will be more
difficult for us to continue to generate yields of 12% or better. Moreover, a
deepening of the recession, or poor credit decisions by our Manager, may
increase the default rate on our loans. To the extent that the efforts of our
borrowers to develop and sell commercial real estate projects are adversely
impacted by the status of the economy, we may experience an increase in loan
defaults, which may reduce the amount of funds we have for distribution to our
Members. In this regard, it should be noted that the weighted average maturity
of our outstanding loans as of June 30, 2002 was 7.7 months, compared to 11
months at December 31, 2001.

Accordingly, adverse economic conditions during the next year could have a
material impact on the collectibility of our loans. Recognizing this risk, we
seek to maintain low loan to value ratios which, as of June 30, 2002, were 56%
on a weighted average basis. In this manner, we hope to retain sufficient
cushion in the underlying equity position to protect the value of our loan in
the event of a default. Nevertheless, no assurances can be given that a marked
increase in loan defaults accompanied by a rapid decline in real estate values
will not have a material adverse effect upon our financial condition and
operating results.

Historically, our Manager has focused its operations on Nevada and certain
Western states. Because our Manager has a significant degree of knowledge with
respect to the real estate markets in such states, it is likely most of our
loans will be concentrated in such states. As of June 30, 2002, 29% of the
principal amount of our loans were secured by real estate in Nevada, while 24%,
19%, 17%, and 7% were secured by real estate in Texas, California, Arizona, and
Hawaii, respectively. Such geographical concentration creates greater risk that
any downturn in such local real estate markets could have a significant adverse
effect upon our results of operations. Commercial real estate markets in Nevada
have continued to prosper, with significant borrowing activity, throughout the
current recession. However, the rate of growth appears to be slowing. The
commercial real estate markets in Texas, Arizona and California also appear to
be relatively unaffected by the recession. Hawaii has been adversely affected
by the downturn in tourism after September 11, 2001. Continued weakness in the
tourism market may have significant adverse effects on real estate lending in
Hawaii. As noted above, if the recession continues for an extended period or
deepens, particularly in any of the identified states, our operating results
could be adversely affected.

We commenced our business operations on June 14, 2001. Since then, we have
increased our funds available for investment in mortgage loans through the
continuing public offering of our Units. As a result, no meaningful comparison
may be drawn between the results of operations for the transition period ended
June 30, 2002 and the results of operations for the year ended December 31,
2001 or between the results of operations for the transition period ended June
30, 2002 and the results of operations for the period from June 14, 2001
through June 30, 2001.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

Interest is recognized as revenue when earned according to the terms of the
loan.

Investments in Mortgage Loans

Investment in mortgage loans secured by trust deeds and mortgages are
originated by our Manager in accordance with terms contained in our Operating
Agreement. Currently, all of the mortgage loans are fixed rate loans with
maturities ranging from one to two years, secured by first or second deeds of
trust on properties securing commercial, land, construction, residential,
bridge, and acquisition and development loans. Bridge loans provide interim
financing (up to six months) to enable commercial borrowers to attempt to
qualify for permanent financing. Currently, substantially all of our mortgage
loans require interest only payments with a balloon payment of the principal at
maturity. We have both the intent and ability to hold mortgage loans until
maturity and, therefore, mortgage loans are classified and accounted for as
held for investment and are carried at cost. Interest income on loans is
accrued by the effective interest method. We do not recognize interest income
on
loans once they are determined to be impaired. A loan is impaired when, based
on current information and events, it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the
loan agreement. Cash receipts will be allocated to interest income, except when
such payments are specifically designated by the terms of the loan as principal
reduction or when our Manager does not believe our investment in the loan is
fully recoverable.

Real Estate Held For Sale

Real estate held for sale includes real estate acquired through foreclosure and
will be carried at the lower of the recorded amount, inclusive of any senior
indebtedness, or the propertys estimated fair value, less estimated costs to
sell. As of June 30, 2002 and December 31, 2001, the Company did not have any
real estate held for sale.

Allowance for Loan Losses

We maintain an allowance for loan losses on our investment in mortgage loans
for estimated and expected credit impairment which is considered inherent to
our investment in mortgage loans portfolio. Our Managers estimate of expected
losses is based on a number of factors including the types and dollar amounts
of loans in the portfolio, adverse situations that may effect the borrowers
ability to repay, prevailing economic conditions and the underlying collateral
securing the loan. Additions to the reserve are provided through a charge to
earnings and are based on an assessment of certain factors including, but not
limited to, estimated losses on the loans. Actual losses on loans are recorded
as a charge-off or a reduction to the loan loss reserve. Subsequent recoveries
of amounts previously charged off are added back to the reserve. Our
Manager believes that the allowance for loan losses totaling $500,000 included in the
accompanying balance sheet as of June 30, 2002 is adequate to address estimated
and expected credit impairment.

RESULTS OF OPERATIONS

|                                                                      |  |                     |            |                   |  |                    |           |   |  |   |         |  
|--------------------------------------------------------------------- |  | ------------------- | ---------- | ----------------- |  | ------------------ | --------- | - |  | - | ------- | -
|                                                                      |  |                     |            |                   |  | FOR THE PERIOD    
|                                                                      |  | FOR THE TRANSITION  |            | FOR THE YEAR      |  | FROM JUNE 14, 2001
|                                                                      |  | PERIOD              |            | ENDED             |  | THROUGH           
|                                                                      |  | ENDED JUNE 30, 2002 |            | DECEMBER 31, 2001 |  | JUNE 30, 2001     
|                                                                      |  |                     |            |                   |  |                   
|Total revenues                                                        |  | $                   | 11,504,100 |                   |  | $                  | 3,801,649 |   |  | $ | 15,405  |  
|Total expenses                                                        |  | $                   | 781,081    |                   |  | $                  | 86,959    |   |  | $ | 20      |  
|Net income                                                            |  | $                   | 10,723,019 |                   |  | $                  | 3,714,690 |   |  | $ | 15,385  |  
|Net income allocated to Members per weighted
average membership units |  | $                   | 0.59       |                   |  | $                  | 0.67      |   |  | $ | 0.02    |  
|Annualized net interest yield to Members(b)                           |  |                     | 11.7       | %                 |  |                    | 12.4      | % |  |   | 04.8    | %
|Weighted average membership units(a)                                  |  |                     | 18,326,615 |                   |  |                    | 5,548,510 |   |  |   | 635,912 |  



|(a) |  | The weighted average number of outstanding units for the transition period
ended June 30, 2002 is calculated based upon the daily number of outstanding
units beginning on January 1, 2002. The weighted average number of outstanding
units for the year ended December 31, 2001 is calculated based upon the daily
number of outstanding units beginning on June 14, 2001. The weighted average
number of outstanding units for the period from June 14, 2001 through June 30,
2001 is calculated based upon the daily number of outstanding units beginning on
June 14, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|(b) |  | The annualized net interest yield to unit holders is calculated based upon
the net income allocated to unit holders per weighted average units then
divided by number of months during each period and multiplied by 12 months,
then divided by ten (the $10 cost per unit).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fiscal Year Ended June 30, 2002 Compared To December 31, 2001

Prior to June 14, 2001, we were a development stage company with no operational
activities. We commenced the offering of our Units in June 2001; that offering
continues. Our financial results reflect the amount of capital we had available
for investment in mortgage loans. Our past performance may not be indicative of
future results. In June 2002, the Company changed its fiscal year end from
December 31 to June 30. The transition period ended June 30, 2002 reflects six
months of operating activities as a result of the change in fiscal year end.

Total Revenues. In 2002, total revenues totaled $11.5 million compared to $3.8
million in 2001, an increase of $7.7 million or 203%. Growth in revenue was
mainly due to an increase in our investments in mortgage loans of approximately
$105 million compared to 2001 primarily as a result of new membership units
sold totaling $102 million during 2002. Overall, our average interest yields
on our investments in mortgage loans during 2002 have not changed significantly
compared to 2001, with average interest yields of 12.5% and 12.4% for 2002 and 2001,
respectively.

Total Expenses. In 2002, total expenses totaled $0.8 million compared to $0.1
million for 2001, an increase of $0.7 million or 798%. Increase in total
expenses for 2002 mainly related to an allowance for loan losses of $0.5
million and management fees of $0.2 million. We are continually evaluating the
quality of our investments in mortgage loan portfolio and based upon future
evaluations, may require additional charges to our allowance for loan losses.
Management fees will be an annual recurring expense based upon an amount up to
0.25% of aggregate outstanding capital annually.

Net Income. Overall, net income for 2002 totaled $10.7 million compared to
$3.7 million for 2001, an increase of $7 million or 187%.

Annualized Net Interest Yield To Members. For 2002, annualized net interest
yield to members totaled 11.7% compared to 12.4% for 2001. The decrease in
annualized net interest yield to members was primarily related to allowance for
loan losses which our Manager decided to establish during the transition
period ended June 30, 2002. To date, no specific loans have been
written off or written down. See discussion below under Asset
Quality and Loan Reserves.

Investment in Mortgage Loans Secured by Real Estate Portfolio

The following is a summary of our investment in mortgage loans as of June 30,
2002:

|                            |  |   |             |  |  |  |        |  
|--------------------------- |  | - | ----------- |  |  |  | ------ | -
|Commercial                  |  | $ | 78,759,650  |  |  |  | 35.39  | %
|Construction                |  |   | 59,008,277  |  |  |  | 26.51  | %
|Acquisition and development |  |   | 50,177,032  |  |  |  | 22.54  | %
|Bridge                      |  |   | 7,764,367   |  |  |  | 3.49   | %
|Land                        |  |   | 22,180,376  |  |  |  | 9.97   | %
|Residential                 |  |   | 4,668,624   |  |  |  | 2.10   | %
|                            |  |   |             |  |  |  |        |  
|                            |  | $ | 222,558,326 |  |  |  | 100.00 | %
|                            |  |   |             |  |  |  |        |  
|First mortgages             |  | $ | 222,513,820 |  |  |  | 99.98  | %
|Second mortgages            |  |   | 44,506      |  |  |  | 0.02   | %
|                            |  |   |             |  |  |  |        |  
|                            |  | $ | 222,558,326 |  |  |  | 100.00 | %
|                            |  |   |             |  |  |  |        |  

The following is a schedule of maturities of investment in mortgage loans as of
June 30, 2002 for the calendar years ending December 31:

|      |  |   |             | 
|----- |  | - | ----------- | 
|2002  |  | $ | 92,624,193  | 
|2003  |  |   | 123,841,163 | 
|2004  |  |   | 5,083,146   | 
|2005  |  |   | 1,009,824   | 
|      |  |   |             | 
|Total |  | $ | 222,558,326 | 
|      |  |   |             | 

The following is a schedule by geographic location of investment in mortgage
loans as of June 30, 2002:

|           |  |   |             |  |  |  |        |  
|---------- |  | - | ----------- |  |  |  | ------ | -
|Arizona    |  | $ | 37,528,258  |  |  |  | 16.86  | %
|California |  |   | 43,242,770  |  |  |  | 19.43  | %
|Hawaii     |  |   | 15,681,746  |  |  |  | 7.05   | %
|Idaho      |  |   | 2,855,202   |  |  |  | 1.28   | %
|Missouri   |  |   | 5,430,000   |  |  |  | 2.44   | %
|Nevada     |  |   | 64,641,428  |  |  |  | 29.04  | %
|New Mexico |  |   | 42,495      |  |  |  | 0.02   | %
|Texas      |  |   | 53,136,427  |  |  |  | 23.88  | %
|           |  |   |             |  |  |  |        |  
|Total      |  | $ | 222,558,326 |  |  |  | 100.00 | %
|           |  |   |             |  |  |  |        |  

Asset Quality and Loan Reserves

Some losses may be expected when lending money and the amounts of losses vary
as the loan portfolio is affected by changing economic conditions and the
financial position of borrowers. There is no precise method of predicting
specific losses or amounts that ultimately may be charged off on particular
segments of the loan portfolio.

The conclusion that a mortgage loan is uncollectible or that collectibility is
doubtful is a matter of judgment. Our Manager, in connection with the quarterly
closing of our accounting records and the preparation of our financial
statements, evaluates our mortgage loan portfolio to determine if any
outstanding loans are uncollectible or impaired and, in such event, whether a
loss is probable. The fact that a loan is past due does not necessarily mean
that the loan is uncollectible or impaired. Rather, all relevant circumstances
are considered by our Manager to determine the probability of loan losses. Such
evaluation, which includes a review of all loans on which full collectibility
may not be reasonably assured, considers among other matters:

12



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

Based upon this evaluation, a determination is made as to whether the allowance
for loan losses is adequate to cover any potential losses. Additions to the
allowance for loan losses are made by charges to the provision for loan losses.
Loan losses deemed to be uncollectible are charged against the allowance for
loan losses. Recoveries of previously charged off amounts are credited to the
allowance for loan losses. There were no actual losses incurred on loans by
us during the transition period ended June 30, 2002. At June 30, 2002, we had
one loan totaling $42,000 that was both past due on principal and more than 90
days past due on interest.
Foreclosure proceedings have commenced on this loan. At June 30, 2002, we also
had three loans totaling $6,471,000 that were past due on principal and
interest. The borrowers on these loans are companies which are affiliated with
one another. We commenced foreclosure proceedings on these three loans. However, in
August 2002, the borrowers on these three loans filed for voluntary bankruptcy
proceedings under Chapter 11 of the U.S. Bankruptcy Code. We are pursuing our
legal remedies in the Bankruptcy Court and have filed legal action against the
personal guarantors. Our Manager evaluated these loans with regards to the
underlying collateral and financial strength of the personal guarantors, and
believes that these borrowers or their guarantors have the ability to repay principal and interest
on these loans. Accordingly, our Manager does not believe an allowance for
loan losses is necessary for these four loans as of June 30, 2002.

In addition to the above-mentioned loans, at June 30, 2002, our Manager had
granted extensions on 14 loans pursuant to the terms of the original loan
agreements which permit extensions by mutual consent. Such extensions are
generally provided on loans where the original term was 12 months or less and
where a borrower requires additional time to complete a construction project or
negotiate take out financing. However, we only grant extensions when a borrower
is in full compliance with the terms of the loan, including, but not limited
to, the borrowers obligation to make interest payments on the loan. The
aggregate amount due to us from borrowers whose loans had been extended as of
June 30, 2002 was approximately $41,410,000. The average loan to value ratio
on such loans is 59%. As of June 30, 2002, all loans, except for the four loans
mentioned above, were current and performing according to their terms.

Because of the fact that any decision regarding reserves for loan losses
reflects a judgment about the probability of future events, there is an
inherent risk that such judgments will prove incorrect. In such event, actual
losses may exceed (or be less than) the amount of any reserve. To the extent
that we experience losses greater than the amount of our reserves, we may incur
a charge to our earnings that will adversely affect our operating results and
the amount of any distributions payable to our Members.

CAPITAL AND LIQUIDITY

Liquidity is a measure of a companys ability to meet potential cash
requirements, including ongoing commitments to fund lending activities and for
general operation purposes. Subject to a 3% reserve, we use all of our
available funds to invest in mortgage loans. Income generated from such loans
is paid out to our Members unless they have elected to reinvest their
dividends. Over 1,100 of our 3,258 Members currently reinvest their dividends.
These reinvesting Members hold Units equal to over 23% of our capital. We do
not anticipate the need for hiring any employees, acquiring fixed assets such
as office equipment or furniture, or incurring material office expenses during
the next twelve months because Vestin Mortgage will manage our affairs. We may
pay Vestin Mortgage an annual management fee of up to 0.25% of our aggregate
capital contributions. Pursuant to our Operating Agreement, the maximum amount
of management fees Vestin Mortgage was entitled to receive during the
transition period ended June 30, 2002 was $237,000.

During the transition period ended June 30, 2002, cash flows provided by our
operating activities approximated $10,368,000. Our investing activities for the
transition period ended June 30, 2002 consisted of investment in loans secured
by real estate in the amount of $105,322,000 (net of proceeds from payoffs and
sales of mortgage loans), and investment in certificate of deposits of
$4,024,000. Our financing activities primarily consisted of proceeds from the
sale of Units in the amount of $102,020,000 and Members distributions, net of
reinvestments, of $8,384,000.

As the offering of our Units is continuing, we currently rely upon the sale of
Units, loan repayments and dividend reinvestments to provide the cash necessary
to carry on our business. Our ability to attract investors to purchase Units
depends upon a number of factors, some of which are beyond our control. The key
factors in this regard include general economic conditions, the conditions of
commercial real estate markets, the availability and attractiveness of
alternative investment opportunities, our operating performance and the track
record and reputation of our Manager. We believe our ability to attract
investors has been enhanced by the high historical yields generated by our
mortgage investments and by comparable yields earned by Vestin Fund I, LLC
which is managed by our Manager. These yields may prove particularly attractive
to the extent that equity markets are viewed as risky or volatile and to the
extent that most fixed income investments provide a lower yield.
Notwithstanding our high historical yields, our ability to raise additional
funds from investors may be impaired by our relatively small size and our
limited operating history. In addition, the

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mortgage loans in which we invest are not federally insured as are certain bank
deposits and are generally illiquid as compared to government and certain
corporate bonds. Thus, our ability to generate high yields is critical to
offsetting some of these disadvantages. Our ability to raise additional funds
would suffer if the performance of our loan portfolio declines or if
alternative investment vehicles offering comparable yields and greater safety
and/or liquidity become available.

Any significant level of defaults on outstanding
loans could significantly impact our liquidity, hurting or
eliminating our ability to make distributions, invest in new loans,
or return invested capital. This would diminish our
capital resources and would impair our ability to invest in new loans. See the
discussion above under Asset Quality and Loan Reserves. In addition,
withdrawals by our Members would reduce the capital we have available for
investment. Such withdrawals are limited by the terms of our Operating
Agreement to not more than 10% per year and are subject to other conditions.

As of June 30, 2002, we have only one revolving line of credit, which is from
First Hawaiian Bank in the amount of $2,000,000. There was no outstanding
balance as of June 30, 2002 for this line of credit. As of June 30, 2002, the
Company was in compliance with all applicable covenants related to the line of
credit.

We may seek to expand our capital resources through borrowings from
institutional lenders or through securitization of our loan portfolio or
similar arrangements. Other than the line of credit mentioned above, we
currently do not have in place any commitments to borrow any funds. No
assurance can be given that, if we should seek to borrow funds or to securitize
our assets we would be able to do so on commercially attractive terms. Our
ability to expand our capital resources in this manner is subject to many
factors, some of which are beyond our control, including the state of the
economy, the state of the capital markets and the perceived quality of our loan
portfolio.

We do not currently have any interest in any special purpose entities nor do we
have any commitments or obligations which are not reflected on our balance
sheet. We do not have any interest in derivative contracts.

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

FACTORS AFFECTING OUR OPERATING RESULTS

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

Risks of Investing in Mortgage Loans.



| |  |  | Our underwriting standards and procedures are more lenient than conventional lenders in that we will invest in loans to
borrowers who will not be required to meet the credit standards of conventional mortgage lenders.                                                                                                                                                                                                                    
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We approve mortgage loans more quickly then other mortgage lenders. Due to the nature of loan approvals, there is a risk that
the credit inquiry our Manager performs will not reveal all material facts pertaining to the borrower and the security.                                                                                                                                                                                        
|
| |  |  | Our results of operations will vary with changes in interest rates and with the performance of the relevant real estate markets.                                                                                                                                                                                                                                                                                                             
|
| |  |  | If the economy is healthy, we expect that more people will be borrowing money to acquire, develop or renovate real property.
However, if the economy grows too fast, interest rates may increase too much and the cost of borrowing may become too expensive.
This could result in a slowdown in real estate lending which may mean we will have fewer loans to acquire, thus reducing the our
revenues and the distributions to our Members.

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| |  |  | If, at a time of relatively low interest rates, a borrower should prepay
obligations that have a higher interest rate from an earlier period,
investors will likely not be able to reinvest the funds in mortgage loans
earning that higher rate of interest. In the absence of a prepayment fee,
the investors will receive neither the anticipated revenue stream at the
higher rate nor any compensation for their loss. This in turn could harm
our reputation and make it more difficult for us to attract investors
willing to acquire interests in mortgage loans.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risk of Defaults

Our performance will be directly impacted by any defaults on the loans in our
portfolio. As noted above, we may experience a higher rate of defaults than
conventional mortgage lenders. We seek to mitigate the risk by estimating the
rate of the underlying collateral and insisting on low loan to value ratios.
However, no assurance can be given that these efforts will fully protect us
against losses on defaulted loans. Moreover, during the period of time when a
defaulted loan is the subject of foreclosure proceedings, it is likely that we
will earn less (if any) income from such loans, thereby reducing our earnings.
If we do foreclose on a property, our Manager may determine that the best
course of action is to sell such property quickly in order to generate a return
of funds to the Company which may then be used in our lending operations. As
a result, we may not receive the best price for the foreclosed property and, in
some cases, we may receive less than the amount due to us under the defaulted
loan.

Competition for Borrowers.

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

Effect of Fluctuations in the Economy.

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




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, primarily from changes in interest rates. We do
not deal in any foreign currencies and do not own any options, futures or other
derivative instruments. We do not have any debt as of June 30, 2002.

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Most of our assets consist of investments in mortgage loans. At June 30, 2002,
our aggregate investment in mortgage loans was approximately $222,558,326 with
a weighted average effective interest rate of 13.35%. Most of the mortgage
loans have a term of 12 months; the weighted average term of outstanding loans
at June 30, 2002 was 7.7 months. All of the outstanding mortgage loans at June
30, 2002 were fixed rate loans. Currently, all of the mortgage loans are held
for investment purposes; none are held for sale. We intend to hold such
mortgage loans to maturity. However, our Manager may at times sell mortgage
loans in order take advantage of new loans with higher yields. Mortgage loans
identified for future sale will be reclassified as held for sale investments.
All of the mortgage loans do not have prepayment penalties.

At June 30, 2002, we also had approximately $8,623,542 invested in cash and
cash equivalents, and certificates of deposit. At least 3% of our assets will
be held in such accounts as a cash reserve; additional deposits in such
accounts will be made as funds are received from new investors and repayment of
loans pending the deployment of such funds in new mortgage loans. We believe
that these financial assets do not give rise to significant interest rate risk
due to their short term nature.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




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

Effective April 18, 2002, we replaced Grant
Thornton LLP with Ernst and Young as our independent auditors. During
the period from January 1, 2002 through April 18, 2002,
there were no disagreements with Grant Thornton LLP on any matters of
accounting principles or practices, financial statement disclosure,
or auditing scope and procedures which, if not resolved to the
satisfaction of Grant Thornton LLP, would have caused Grant Thornton
LLP, to make reference to the matter in their report.




PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The Company does not have any directors or officers. The Company is
managed by Vestin Mortgage. Vestin Mortgage is a wholly-owned subsidiary of
Vestin Group, Inc., a Delaware corporation, whose common
stock is publicly held and is traded on the NASDAQ under the symbol
VSTN. Through its subsidiaries,
Vestin Group, Inc. is engaged in asset management, real estate lending
and other financial services.

The directors and executive officers of Vestin Mortgage, Inc. are listed
below:

|                     |  |     |    |       |  |                                                           
|-------------------- |  | --- | -- | ----- |  | ----------------------------------------------------------
|Name                 |  | Age |    | Title
|                     |  |     |    |      
|Stephen J. Byrne     |  |     | 45 |       |  | Chief Executive Officer and Director                      
|Lance K. Bradford    |  |     | 35 |       |  | Chief Financial Officer, Treasurer,
Secretary and Director
|Peggy S. May         |  |     | 33 |       |  | President                                                 
|Stephen A. Schneider |  |     | 55 |       |  | Vice President                                            
|Michael V. Shustek   |  |     | 43 |       |  | Director                                                  

The principal occupation and business experience for each of our officers and
directors and key employees, for at least the last five years, are as follows:

Stephen J. Byrne has been the Chief Executive Officer of Vestin Mortgage and
the Chief Operations Officer of Vestin Group since January 2001. Mr. Byrne has
also been a director of Vestin Mortgage since 1997 and of Vestin Group since
April 1999. From its inception in 1997 to 2000, Mr. Byrne was the President of
Vestin Mortgage. From 1999-2000, Mr. Byrne also served as the President of
Vestin Group. Mr. Byrne joined Del Mar Mortgage in June 1998 as its Senior
Lending Officer. In 1997, Mr. Byrne founded Capsource, Inc., a predecessor of
Vestin Mortgage, which he owned and operated before joining Del Mar Mortgage.
From 1991 to 1997, Mr. Byrne served as Vice President of Wells Fargo Bank and
of its predecessor First Interstate Bank of Nevada. Mr. Byrne served in various
capacities with First Interstate Bank, including Manager of the Diversified
Asset Group based in Las Vegas and the commercial Diversified Asset Group in
Houston, Texas. Mr. Byrne received a Bachelor of Science degree in Business
Administration from Hastings College, Hastings, Nebraska.

Lance K. Bradford has been the Chief Financial Officer, Treasurer, Secretary
and a director of Vestin Mortgage since April 1999. Mr. Bradford has been the
Chief Financial Officer, President, Treasurer, and a director of Vestin Group
since April 1999. From 1999 to 2000, Mr. Bradford was also the Corporate
Secretary of Vestin Group. Since 1992, Mr. Bradford has been a partner in L.L.
Bradford & Company, Las Vegas, Nevada, a Certified Public Accounting firm that
he founded. From 1988 to 1991, Mr. Bradford served as an accountant with Ernst
& Young International. Mr. Bradford received a Bachelor of Science degree in
Accounting from the University of Nevada, in Reno, Nevada.

Peggy S. May has been with Vestin Group since September 1995, and has been the
President of Vestin Mortgage since January 2001. From 1997 to 2000, Ms. May was
the Senior Vice President of Vestin Mortgage. She is responsible for all new
and existing clients, loan packages and manages investor relationships and
serves as the administrator of the corporate offices. Ms. May has over ten
years of experience in title, escrow and private lending.

Stephen A. Schneider has been Vice President of Vestin Mortgage since January
2001. From July 2000 to December 2000, Mr. Schneider was the Chief Operation
Officer of Vestin Group. Mr. Schneider is responsible for the maintenance of
all banking and financial relationships. Mr. Schneider has over 26 years
experience in the financial services industry. He worked at US Bank where he
managed the banks business banking department and underwrote loans for
companies with sales of $1 million to $10 million and maintained relationships
with the banks business customers. Mr. Schneider sits on the boards of Focus
Las Vegas and Leadership Las Vegas Youth as well as several other
organizations. He assisted in the creation of the Vestin Foundation, a
non-profit organization aimed at funding local charitable organizations.

Michael V. Shustek has been a director of Vestin Mortgage and Chairman of the
Board of Directors, Chief Executive Officer and a director of Vestin Group
since April 1999. In 1995, Mr. Shustek founded Del Mar Mortgage, and has been
involved in various aspects of the real estate industry in Nevada since 1990.
In 1993, he founded Foreclosures of Nevada, Inc., a company specializing in
non-judicial foreclosures. In 1993, Mr. Shustek also started Shustek
Investments, a company that originally specialized in property valuations for
third-party lenders or investors and which continues today as the primary
vehicle for his private investment portfolio. In 1997, Mr. Shustek was involved
in the initial founding of Nevada First Bank, with the largest initial capital
base of any new state charter in Nevadas history. In 2000, Mr. Shustek
co-authored a book, Trust Deed Investments, on the topic of private mortgage
lending. Mr. Shustek is a guest lecturer at the University of Nevada, Las
Vegas, where he also has taught a course in Real Estate Law and Ethics. Mr.
Shustek received a Bachelor of Science degree in Finance at the University of
Nevada, Las Vegas.

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On March 26, 1999, Del Mar Mortgage, a company controlled by Mr. Shustek,
entered into a stipulated court order (the Order) with the State of Nevada,
Department of Business and Industry, Financial Institutions Division (the
Division) resolving a dispute regarding Del Mar Mortgages alleged
noncompliance with various Nevada regulatory statutes. Without admitting any
facts, and solely to settle these matters, Del Mar Mortgage agreed to assure
compliance with applicable Nevada law in its advertising solicitation of
mortgage borrowers and in its making and servicing of mortgage loans. Vestin
Group and Vestin Mortgage, as successors to the mortgage company business of
Del Mar Mortgage, agreed to adhere to the terms of the Order. Del Mar Mortgage
paid the Division an aggregate of $50,000 to cover the Divisions costs. The
Order contained no findings of wrongful conduct by Del Mar Mortgage.




ITEM 11. EXECUTIVE COMPENSATION

Not Applicable.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

No person or entity owns beneficially more than 5% of the ownership interests
in us. Our Manager owns approximately 110,000 units or 0.90% of our capital as
of June 30, 2002.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Management and Others

Management Fee

Our Manager is entitled to receive from us a management fee of up to 0.25% on
an annual basis of the aggregate capital contribution, paid monthly in arrears.
The amount of management fees incurred but not yet paid to our Manager for the
transition period ended June 30, 2002 and year ended December 31, 2001
approximated $237,000 and $87,000, respectively.

Amount Due to the Manager

As of June 30, 2002 and December 31, 2001, we owed our Manager approximately
$651,000 and $269,000, respectively, for expenses advanced on our behalf, and
unpaid management fees and distributions due related to units owned by our
Manager.

Loan Brokerage and Origination Fees

Our Manager received loan brokerage and origination fees from borrowers on all
of the mortgage loans held by us. During the transition period ended June 30,
2002 and year ended December 31, 2001, our Manager earned loan brokerage and
origination fees on loans funded by us in the amount of approximately $4,770,000 and
$3,100,000, respectively.

Servicing Fees

Our Manager may received from borrowers a
negotiated servicing fee annually
of the outstanding principal balance of loans. During the transition period
ended June 30, 2002 and year ended December 31, 2001, our Manager earned loan
servicing fees on loans funded by us in the amount of approximately
$48,900 and $16,000,
respectively.

Extension Fees

Our Manager receives loan extension fees of 2.00% to 5.00% of the outstanding
principal as permitted by local law and local market conditions. As of June 30,
2002 and December 31, 2001, our Manager earned loan extension fees paid by the
borrowers in the amount of approximately $361,000 and $791,000, respectively.

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Loan Evaluation and Processing Fees

Loan evaluation and processing fees from borrowers are paid to our Manager for
loans held by us. During the transition period ended June 30, 2002 and year
ended December 31, 2001, our Manager earned loan evaluation and processing fees
on our loans in the amount of approximately $101,000 and $65,000, respectively.

Purchase of Loans from Vestin Fund I, LLC

During the transition period ended June 30, 2002 and year ended December 31,
2001, we purchased approximately $665,000 and $21,290,000 in mortgage
loans from Vestin Fund I, LLC, a company managed by our Manager.

Other Transactions with the Manager

During the transition period ended June 30, 2002, the Company and Vestin Fund
I, LLC made a mortgage loan in the amount of $130,500 and $3,000,000,
respectively, for a total of $3,130,500 to an independent borrower who used the
proceeds of the loan to purchase a property from the Companys
Manager which the Companys Manager had previously acquired
through foreclosure proceedings. The
loan from the Company to such independent borrower is interest only, payable
monthly at an annual rate of 10% with the principal due in June 2003. The
transaction resulted in a deferred gain of approximately $367,000 to the
Companys Manager. The terms of the loan to such third party borrower were
negotiated by our Manager; such terms were not reviewed by any independent
parties.

During the transition period ended June 30, 2002, the Company purchased
$10,000,000 in mortgage loans from the Companys Manager at their historical
cost pursuant to Section 4.4.1 of the Companys Operating
Agreement.

Short-Term instrument in LTD, Inc.

As of December 31, 2001, the Company had an amount totaling $1,675,000 invested
in certificates of LTD, Inc., an investment fund owned by the Chief Executive
Officer of Vestin Group, Inc. LTD, Inc. is an investment fund offering
2001-Prime Plus One Certificates (Certificate), earning 5.75% at December 31,
2001. The terms of the Certificates provide the subscriber repayment of their
funds in full or in part upon a thirty (30) day written request. In March
2002, the Company liquidated its investment in these certificates resulting in
no gain or loss. The Certificates were recorded on the balance sheet as of
December 31, 2001 as short-term investments  related party.

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PART IV




ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K




EXHIBIT INDEX

|            |  |                                            
|----------- |  | -------------------------------------------
|Exhibit No. |  | Description of Exhibits                    
|            |  |                                            
|3.1(1)      |  | Articles of Organization(1)                
|10          |  | Amended and Restated Operating Agreement(2)



|(1) |  | Incorporated herein by reference to our S-11 Registration Statement filed on December 21, 2000.              
|--- |  | -------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Incorporated herein by reference to Amendment No. 2 to our S-11 Registration Statement filed on July 3, 2002.

REPORTS ON FORM 8-K

Current Reports on Form 8-K filed with the Commission on April 25, 2002 and
April 29, 2002, which report the following items:

(i)  Item 4  Changes in Registrants Certifying Accountant; and

(ii)  Item 7  Exhibits.

Current Report on Form 8-K filed with the Commission on June 24, 2002, which
reports the following item:

Item 8  Change in Fiscal Year.




SIGNATURES

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



| | Vestin Fund II, LLC
| | -------------------

| |  |     |  |                                                                                             
| |  | --- |  | --------------------------------------------------------------------------------------------
| |  | By: |  | Vestin Mortgage,
Inc., its sole Manager                                                     
|
| |  | By: |  | /s/ Stephen J. Byrne                                                                        
| |  |     |  |                                                                                             
| |  |     |  | Stephen J. Byrne
Chief Executive Officer and Director
(Principal Officer of the Manager)    
|
| |  | By: |  | /s/ Lance K. Bradford                                                                       
| |  |     |  |                                                                                             
| |  |     |  | Lance K. Bradford
Director, Secretary and Treasurer
(Chief Financial Officer of the Manager)
|
| |  | By: |  | /s/ Michael V. Shustek                                                                      
| |  |     |  |                                                                                             
| |  |     |  | Michael V. Shustek
Director of the Manager                                                  

Dated:  September 27, 2002

CERTIFICATIONS

I, Steven J. Byrne, certify that:

1. I have reviewed this transition report on Form 10-K of Vestin Fund II, LLC;

2. Based on my knowledge, this transition report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
transition report; and

3. Based on my knowledge, the financial statements, and other financial
information included in this transition report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this transition
report.

Date:  September 27, 2002

/s/ Stephen J. Byrne
Stephen J. Byrne*
Chief Executive Officer
of Vestin Mortgage, Inc., Manager of the Registrant

* Stephen J. Byrne functions as the equivalent of the chief executive
officer of the Registrant for purposes of Rule 13a-14 under the
Securities Exchange Act of 1934.



---

I, Lance K. Bradford, certify that:

1. I have reviewed this transition report on Form 10-K of Vestin Fund II, LLC;

2. Based on my knowledge, this transition report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
transition report; and

3. Based on my knowledge, the financial statements, and other financial
information included in this transition report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this transition
report.

Date: September 27, 2002

/s/ Lance K. Bradford
Lance K. Bradford*
Chief Financial Officer
of Vestin Mortgage, Inc., Manager of the Registrant

* Lance K. Bradford functions as the equivalent of
the chief financial officer of the Registrant for purposes of
Rule 13a-14 under the Securities Exchange Act of 1934.

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CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350

Stephen J. Byrne, as Chief Executive Officer of Vestin Mortgage, Inc., the sole
Manager of Vestin Fund II, LLC (the Registrant), and Lance K. Bradford, as
Chief Financial Officer of Vestin Mortgage, Inc., hereby certify, pursuant to
18 U.S.C. §1350, that

| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) the
Registrants Transition Report on Form 10-K for the transition
period ended June 30, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the Report), fully complies with the
applicable requirements of Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934; and
|
| | (2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Registrant.                                                                                                                                                             



|                           |  |                                                                                               
|-------------------------- |  | ----------------------------------------------------------------------------------------------
|Dated:  September 27, 2002 |  | /s/ Stephen J. Byrne                                                                          
|                           |  |                                                                                               
|                           |  | Stephen J. Byrne*
Chief Executive Officer
of Vestin Mortgage, Inc., Manager of the Registrant 
|                          
|Dated: September 27, 2002  |  | /s/ Lance K. Bradford                                                                         
|                           |  |                                                                                               
|                           |  | Lance K. Bradford*
Chief Financial Officer
of Vestin Mortgage, Inc., Manager of the Registrant





|* |  | Stephen J. Byrne and Lance K. Bradford function, respectively, as the
equivalent of the chief executive officer and chief financial officer of the
Registrant for purposes of 18 U.S.C. Section 1350.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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CONTENTS

|                                                   |                                                                                 |                                                           |       |       |    | 
|-------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------------------------------- | ----- | ----- | -- | 
|                                                   |                                                                                 |                                                           |       | Page 
|                                                   |                                                                                 |                                                           |       |      
|REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS |                                                                                 |                                                           | 23-24 |      
|                                                  
|FINANCIAL STATEMENTS                               |                                                                                 |                                                           |       |      
|                                                   | Balance Sheets                                                                  |                                                           |       | 25    |   
|                                                   | Statements of Income                                                            |                                                           |       | 26    |   
|                                                   | Statements of Members Equity                                                   |                                                           |       | 27    |   
|                                                   | Statements of Cash Flows                                                        |                                                           |       | 28    |   
|                                                   | Notes to Financial Statements                                                   |                                                           |       | 29-38 |   
|                                                  
|SUPPLEMENTARY INFORMATION                          |                                                                                 |                                                           |       |      
|                                                   | Report of Independent Certified Public Accountants on
Supplementary Information |                                                           |       | 40    |   
|                                                   |                                                                                 | Mortgage Loans on Real Estate:                            |       |       |    | 
|                                                   |                                                                                 | Mortgage Loan Rollforward                                 |       |       | 41 | 
|                                                   |                                                                                 | Mortgage Loans by Type of Property                        |       |       | 42 | 
|                                                   |                                                                                 | Mortgage Loans by Lien Position                           |       |       | 43 | 
|                                                   |                                                                                 | Mortgage Loans that Exceed Three Percent of the Portfolio |       |       | 44 | 

22



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Report of Independent Certified Public Accountants

Members of Vestin Fund II, LLC

We have audited the accompanying balance sheet of Vestin Fund II, LLC (the
Company) as of June 30, 2002, and the related statements of income, members
equity, and cash flows for the six-month period then ended. These financial
statements are the responsibility of the Companys management.. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of the Company for the year ended December
31, 2001 were audited by other auditors whose report dated February 8, 2002,
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vestin Fund II, LLC as of June
30, 2002, and the results of its operations and its cash flows for the
six-month period then ended in conformity with accounting principles generally
accepted in the United States.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplementary information is
presented for purposes of additional analysis and is not a required part of the
financial statements. Such information has been subjected to the auditing
procedures applied in our audit of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.

/s/ Ernst & Young, LLP
Los Angeles, California
September 16, 2002

23



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##### Table of Contents



Report of Independent Certified Public Accountants

Members
Vestin Fund II, LLC

We have audited the accompanying balance sheets of Vestin Fund II, LLC as of
December 31, 2001 and 2000, and the related statements of income, members
equity, and cash flows for the year ended December 31, 2001 and for the period
from December 7, 2000 (Date of Inception) through December 31, 2000. These
financial statements are the responsibility of the Companys management and
Board of Directors of Vestin Group, Inc. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vestin Fund II, LLC as of
December 31, 2001 and 2000, and the results of its operations and its cash
flows for the year ended December 31, 2001 and for the period from December 7,
2000 (Date of Inception) through December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Grant Thornton, LLP
Reno, Nevada
February 8, 2002

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Vestin Fund II, LLC

BALANCE SHEETS

ASSETS

|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |   |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------------- | ----------- | ------------- | ----------- | ----------------- | ----------- | ----------------- | ----------- | - | ------- | - | ------- | 
|                                                                                                                                                                                                     |                                 |                                       |             | JUNE 30, 2002 |             | DECEMBER 31, 2001 |             | DECEMBER 31, 2000
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                  
|Cash                                                                                                                                                                                                 |                                 | $                                     | 2,198,542   |               |             | $                 | 5,936,951   |                   |             | $ |        |  
|Short-term investments-related party                                                                                                                                                                 |                                 |                                       |            |               |             |                   | 1,675,000   |                   |             |   |        |  
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|                                                                                                                                                                                                     | Total cash and cash equivalents |                                       |             | 2,198,542     |             |                   |             | 7,611,951         |             |   |         |  |        
|Certificates of deposit                                                                                                                                                                              |                                 |                                       | 6,425,000   |               |             |                   | 2,400,650   |                   |             |   |        |  
|Interest and other receivables                                                                                                                                                                       |                                 |                                       | 2,189,631   |               |             |                   | 1,066,369   |                   |             |   |        |  
|Investment in mortgage loans, net of allowance for loan losses
of $500,000 and $0 at June 30 2002, and December 31, 2001,
respectively                                                               |                                 |                                       | 222,058,326 |               |             |                   | 117,236,471 |                   |             |   |        |  
|Deferred
offering costs                                                                                                                                                                              |                                 |                                       | 255,637     |               |             |                   | 142,448     |                   |             |   | 264,275 |  
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|                                                                                                                                                                                                     |                                 | $                                     | 233,127,136 |               |             | $                 | 128,457,889 |                   |             | $ | 264,275 |  
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|LIABILITIES AND MEMBERS EQUITY                                                                                                                                                                     
|Liabilities                                                                                                                                                                                          |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|                                                                                                                                                                                                     | Due to Managing Member          |                                       | $           | 650,765       |             |                   | $           | 269,078           |             |   | $       |  |        
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|                                                                                                                                                                                                     |                                 | Total liabilities                     |             |               | 650,765     |                   |             |                   | 269,078     |   |         |   |        | 
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|Members equity  authorized 50,000,000 units 23,239,836, 12,844,106 and 26,428
units issued and outstanding at $10 per unit at June 30, 2002, December 31,
2001 and December 31, 2000, respectively |                                 |                                       | 232,476,371 |               |             |                   | 128,188,811 |                   |             |   | 264,275 |  
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|                                                                                                                                                                                                     |                                 | Total members equity                 |             |               | 232,476,371 |                   |             |                   | 128,188,811 |   |         |   | 264,275 | 
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  
|                                                                                                                                                                                                     |                                 | Total liabilities and members equity |             | $             | 233,127,136 |                   |             | $                 | 128,457,889 |   |         | $ | 264,275 | 
|                                                                                                                                                                                                     |                                 |                                       |             |               |             |                   |             |                   |             |   |         |  

The accompanying notes are an integral part of these statements.

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Vestin Fund II, LLC

STATEMENTS OF INCOME

|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                     |   | 
|--------------------------------------------------------------------- | ------------------------------------------------- | ------------------------ | ---------- | ----------------- | ---------- | ------------------- | ------- | ----------------- | ------ | ------------------- | --------- | ------------------- | --------- | ---------------- | - | ------------------- | - | 
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   | FOR THE PERIOD FROM
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           | FOR THE PERIOD FROM |           | DECEMBER 7,
2000
|                                                                      |                                                   |                          |            | TRANSITION PERIOD |            | FOR THE SIX MONTHS  |         | FOR THE YEAR      |        | (DATE OF
INCEPTION)
|                                                                      |                                                   |                          |            | ENDED             |            | ENDED JUNE 30, 2001 |         | ENDED             |        | THROUGH            
|                                                                      |                                                   |                          |            | JUNE 30, 2002     |            | (UNAUDITED)         |         | DECEMBER 31, 2001 |        | DECEMBER 31,
2000  
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                    
|Revenues                                                              |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|                                                                      | Interest income from investment in
mortgage loans |                          | $          | 11,288,619        |            |                     | $       | 15,405            |        |                     | $         | 3,801,649           |           |                  | $ |                    |  
|                                                                      | Other income                                      |                          |            | 215,481           |            |                     |         |                  |        |                     |           |                    |           |                  |   |                    |  
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|                                                                      |                                                   | Total revenues           |            |                   | 11,504,100 |                     |         |                   | 15,405 |                     |           |                     | 3,801,649 |                  |   |                     |  | 
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|Operating expenses                                                    |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|                                                                      | Management fees to Managing Member                |                          |            | 236,778           |            |                     |         |                  |        |                     |           | 86,832              |           |                  |   |                    |  
|                                                                      | Provision for loan losses                         |                          |            | 500,000           |            |                     |         |                  |        |                     |           |                    |           |                  |   |                    |  
|                                                                      | Other                                             |                          |            | 44,303            |            |                     |         | 20                |        |                     |           | 127                 |           |                  |   |                    |  
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|                                                                      |                                                   | Total operating expenses |            |                   | 781,081    |                     |         |                   | 20     |                     |           |                     | 86,959    |                  |   |                     |  | 
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|                                                                      |                                                   | NET INCOME               |            | $                 | 10,723,019 |                     |         | $                 | 15,385 |                     |           | $                   | 3,714,690 |                  |   | $                   |  | 
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|Net income allocated to members                                       |                                                   | $                        | 10,723,019 |                   |            | $                   | 15,385  |                   |        | $                   | 3,714,690 |                     |           | $                |  |                    
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|Net income allocated to members per
weighted average membership units |                                                   | $                        | 0.59       |                   |            | $                   | 0.02    |                   |        | $                   | 0.67      |                     |           |                  |   |                    
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    
|Weighted average membership units                                     |                                                   |                          | 18,326,615 |                   |            |                     | 635,912 |                   |        |                     | 5,548,510 |                     |           |                  |  |                    
|                                                                      |                                                   |                          |            |                   |            |                     |         |                   |        |                     |           |                     |           |                  |   |                    

The accompanying notes are an integral part of these statements.

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Vestin Fund II, LLC

STATEMENTS OF MEMBERS EQUITY

FOR THE TRANSTION PERIOD ENDED JUNE 30, 2002 AND
FOR THE YEAR ENDED DECEMBER 31, 2001

|                                          |  |       |            |        |  |   |             |  
|----------------------------------------- |  | ----- | ---------- | ------ |  | - | ----------- | -
|                                          |  | Units |            | Amount
|                                          |  |       |            |       
|Inception, December 7, 2000               |  |       |           |        |  |   |            |  
|Issuance of units                         |  |       | 26,428     |        |  | $ | 264,275     |  
|                                          |  |       |            |        |  |   |             |  
|Members equity at December 31, 2000      |  |       | 26,428     |        |  | $ | 264,275     |  
|Issuance of units (net of offering costs) |  |       | 12,771,595 |        |  |   | 126,615,950 |  
|Distributions                             |  |       |           |        |  |   | (2,866,933  | )
|Reinvestments of distributions            |  |       | 47,092     |        |  |   | 470,920     |  
|Members withdrawals                      |  |       | (1,009     | )      |  |   | (10,091     | )
|Net income                                |  |       |           |        |  |   | 3,714,690   |  
|                                          |  |       |            |        |  |   |             |  
|Members equity at December 31, 2001      |  |       | 12,844,106 |        |  | $ | 128,188,811 |  
|Issuance of units                         |  |       | 10,202,022 |        |  |   | 102,020,216 |  
|Distributions                             |  |       |           |        |  |   | (10,392,755 | )
|Reinvestments of distributions            |  |       | 200,909    |        |  |   | 2,009,092   |  
|Members withdrawals                      |  |       | (7,201     | )      |  |   | (72,012     | )
|Net income                                |  |       |           |        |  |   | 10,723,019  |  
|                                          |  |       |            |        |  |   |             |  
|Members equity at June 30, 2002          |  |       | 23,239,836 |        |  | $ | 232,476,371 |  
|                                          |  |       |            |        |  |   |             |  

The accompanying notes are an integral part of these statements.

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Vestin Fund II,
LLC


STATEMENTS OF CASH FLOWS

|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                     |   |  | 
|--------------------------------------------------- | ---------------------------------------------------------------------------------- | --------------------------------------------------------- | ----------------------------------------- | ------------ | ----------------- | ------------ | ------------------- | ---------- | ----------------- | ---------- | ------------------- | ------------ | ---------- | ------------ | ---------------- | - | ------------------- | - |  | 
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   | FOR THE
PERIOD FROM |  
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              | DECEMBER
7, 2000 |  
|                                                    |                                                                                    |                                                           |                                           |              | TRANSITION PERIOD |              | FOR THE SIX MONTHS  |            | FOR THE
YEAR      |            | (DATE OF
INCEPTION) |             
|                                                    |                                                                                    |                                                           |                                           |              | ENDED             |              | ENDED JUNE 30, 2001 |            | ENDED             |            | THROUGH             |             
|                                                    |                                                                                    |                                                           |                                           |              | JUNE 30, 2002     |              | (UNAUDITED)         |            | DECEMBER 31, 2002 |            | DECEMBER
31, 2000   |             
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |             
|Cash flows from operating activities:               |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |  
|                                                    | Net income                                                                         |                                                           | $                                         | 10,723,019   |                   |              | $                   | 15,385     |                   |            | $                   | 3,714,690    |            |              | $                |  |                     |  
|                                                    | Adjustments to reconcile net income to net
cash provided by operating activities:  |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    | Increase in interest and other receivables                |                                           |              | (1,123,262        | )            |                     |            | (8,085            | )          |                     |              | (1,066,369 | )            |                  |   |                    |   | 
|                                                    |                                                                                    | Increase in allowance for loan losses                     |                                           |              | 500,000           |              |                     |            |                  |            |                     |              |           |              |                  |   |                    |  
|                                                    |                                                                                    | Increase in other assets                                  |                                           |              | (113,189          | )            |                     |            |                  |            |                     |              |           |              |                  |   |                    |   | 
|                                                    |                                                                                    | Increase in due to Managing Member                        |                                           |              | 381,687           |              |                     |            |                  |            |                     |              |           |              |                  |   |                    |  
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    |                                                           | Net cash provided by operating activities |              |                   | 10,368,255   |                     |            |                   | 7,300      |                     |              |            | 2,648,321    |                  |   |                     |  |  | 
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|Cash flows from investing activities:               |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |  
|                                                    | Purchase of investments in mortgage loans                                          |                                                           |                                           | (153,844,526 | )                 |              |                     | (8,473,473 | )                 |            |                     | (133,379,244 | )          |              |                  |  |                     |  
|                                                    | Purchase of investments in mortgage loans
from Vestin Fund I, LLC                  |                                                           |                                           | (665,000     | )                 |              |                     |           |                   |            |                     | (21,289,763  | )          |              |                  |  |                    
|                                                    | Proceeds received from sale of investments in
mortgage loans to Vestin Fund I, LLC |                                                           |                                           |             |                   |              |                     |           |                   |            |                     | 10,000,000   |            |              |                  |  |                     |  
|                                                    | Proceeds from loan payoff                                                          |                                                           |                                           | 33,495,536   |                   |              |                     |           |                   |            |                     | 22,405,938   |            |              |                  |  |                    
|                                                    | Purchase of investments in mortgage loans
from Managing Member                     |                                                           |                                           | (10,000,000  | )                 |              |                     |           |                   |            |                     |             |            |              |                  |  |                     |  
|                                                    | Proceeds received from sale of investments in
mortgage loans to Managing Member    |                                                           |                                           |             |                   |              |                     |           |                   |            |                     | 4,026,598    |            |              |                  |  |                    
|                                                    | Proceeds received from sale of investments
in mortgage loans                       |                                                           |                                           | 25,692,135   |                   |              |                     |           |                   |            |                     | 1,000,000    |            |              |                  |  |                     |  
|                                                    | Investment in certificates of deposit                                              |                                                           |                                           | (4,024,350   | )                 |              |                     | (250,000   | )                 |            |                     | (2,400,650   | )          |              |                  |  |                    
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    |                                                           | Net cash used in investing activities     |              |                   | (109,346,205 | )                   |            |                   | (8,723,473 | )                   |              |            | (119,637,121 | )                |   |                     |  |  | 
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|Cash flows from financing activities:               |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |  
|                                                    | Proceeds from issuance of membership units                                         |                                                           |                                           | 102,020,216  |                   |              |                     | 10,573,775 |                   |            |                     | 126,880,225  |            |              |                  |  |                     |  
|                                                    | Members distributions, net of reinvestments                                       |                                                           |                                           | (8,383,663   | )                 |              |                     |           |                   |            |                     | (2,349,383   | )          |              |                  |  |                    
|                                                    | Members withdrawals                                                               |                                                           |                                           | (72,012      | )                 |              |                     |           |                   |            |                     | (10,091      | )          |              |                  |  |                     |  
|                                                    | Advance from manager                                                               |                                                           |                                           |             |                   |              |                     |           |                   |            |                     | 80,000       |            |              |                  |  |                    
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    |                                                           | Net cash provided by financing activities |              |                   | 93,564,541   |                     |            |                   | 10,573,775 |                     |              |            | 124,600,751  |                  |   |                     |  |  | 
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    |                                                           | NET
(DECREASE) INCREASE IN CASH           |              |                   | (5,413,409   | )                   |            |                   | 1,857,602  |                     |              |            | 7,611,951    |                  |   |                     |  | 
|Cash, beginning of period                           |                                                                                    |                                                           | 7,611,951                                 |              |                   |              |                    |            |                   |            |                    |              |            |              |                 |   |                    
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|Cash, ending of period                              |                                                                                    | $                                                         | 2,198,542                                 |              |                   | $            | 1,857,602           |            |                   | $          | 7,611,951           |              |            | $            |                 |  
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|Supplemental disclosures of cash flows information: |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|Non-cash financing activities:                      |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |  
|                                                    |                                                                                    | Conversion of deferred offering costs to
membership units |                                           | $            |                  |              |                     | $          | 593,026           |            |                     | $            | 835,725    |              |                  | $ | 264,275             |   | 
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    | Reinvestment of members distributions                    |                                           | $            | 2,009,092         |              |                     | $          |                  |            |                     | $            | 470,920    |              |                  | $ |                    |  
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    | Deferred debt offering costs paid by Manager              |                                           | $            | 135,573           |              |                     | $          |                  |            |                     | $            | 142,448    |              |                  | $ |                    |   | 
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    
|                                                    |                                                                                    | Distributions payable to Manager                          |                                           | $            | 68,961            |              |                     | $          |                  |            |                     | $            | 46,630     |              |                  | $ |                    |  
|                                                    |                                                                                    |                                                           |                                           |              |                   |              |                     |            |                   |            |                     |              |            |              |                  |   |                    

The accompanying notes are an integral part of these statements.


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Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS

June 30, 2002 and December 31, 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Organization

Vestin Fund II, LLC, a Nevada Limited Liability Company, (the Company) is
primarily engaged in the business of mortgage lending. The Company invests
in loans secured by real estate through deeds of trust and mortgages. The
Company was organized on December 7, 2000 and will continue until December
31, 2020 unless dissolved prior or extended thereto under the provisions of
its Operating Agreement.

On June 13, 2001, the Companys Form S-11/A filed with the Securities and
Exchange Commission became effective for the initial public offering of
50,000,000 units at $10 per unit. Consequently, the Company commenced
operations on June 14, 2001. As of June 30, 2002, the Company had sold
approximately 23,130,000 units of the total 50,000,000 units offered.
Additionally, the Company issued 110,000 units to its Manager for offering
costs paid by them to unrelated third parties on the Companys behalf. The
Company will continue to offer its remaining unsold units to the public for
a period of up to two years following the effective date of its Form S-11/A.

The Manager of the Company is Vestin Mortgage, Inc., a Nevada corporation
engaged in the business of brokerage, placement and servicing of commercial
loans secured by real property. The Manager is a wholly-owned subsidiary of
Vestin Group, Inc., a Delaware Corporation whose common
stock is publicly held and traded on the Nasdaq National Market under the
symbol VSTN. Through its subsidiaries,
Vestin Group, Inc. is engaged in asset management, real estate
lending and other financial services. The Operating Agreement provides that the Manager has
exclusive control over the business of the Company; including the power to
assign duties, to determine how to invest the Companys assets, to sign
bills of sale, title documents, leases, notes, security agreements, mortgage
investments and contracts, and to assume direction of the business
operations.

Vestin Mortgage, Inc. is also the Manager of Vestin Fund I, LLC, an entity
in the same business as the Company.

In June 2002, the Company changed its fiscal year end from December 31 to
June 30. The transition period ended June 30, 2002 reflects six months of
operating activities as a result of the change in fiscal year end.

See Note Efor detail of transactions with the Manager.

2. Management Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

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Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continued

3. Income Taxes

Income tax effects resulting from the Companys operations pass through to
the members individually and, accordingly, no provision for income taxes is
included in the financial statements.

4. Cash and Cash Equivalents

Cash and cash equivalents include interest-bearing and noninterest-bearing
bank deposits, money market accounts, short-term certificates of deposit
with original maturities of three months or less, and short-term instruments
with liquidation provision of one month or less (see Note E).

5. Investment in Mortgage Loans

Investment in mortgage loans secured by trust deeds and mortgages are
originated by the Manager in accordance with terms contained in the
Companys Operating Agreement. Currently, all of the mortgage loans are
fixed rate loans with maturities ranging from two months to three years,
secured by first or second deeds of trust on properties securing commercial,
land, construction, residential, bridge, and acquisition and development
loans. Bridge loans provide interim financing (twelve to twenty four
months) to enable commercial borrowers to attempt to qualify for permanent
financing. Currently, substantially all of the Companys mortgage loans
require interest only payments with a balloon payment of the principal at
maturity. The Company has the intent and ability to hold mortgage loans
until maturity and, therefore, mortgage loans are classified and accounted
for as held for investment and are carried at cost. Interest income on loans
is accrued by the effective interest method.

The Company also invests in mortgage loans that have interest reserves.
Loans with interest reserves require the borrowers to maintain interest
reserves funded from the principal amount of the loan for a period of time.
At June 30, 2002 and December 31, 2001, the Company had
outstanding principal on mortgage loans on which interest reserves
are maintained of approximately $73,473,000 and $35,700,000,
respectively. Interest reserves on such loans amounted to
approximately $10,922,000 and $912,000, at June 30, 2002 and
December 31, 2001, respectively.

The Company also sells full or partial interests in loans to related and
third parties at the discretion of the Manager. During the transition period
ended June 30, 2002 and the year ended December 31, 2001, the Company sold
loans to third parties in the amount of $25,700,000 and $1,000,000,
respectively. During the year ended December 31, 2001, the Company sold
loans to related parties in the amount of approximately $14,000,000. No
loans were sold to related parties during the transition period ended June
30, 2002. The sale of all loans resulted in no gain or loss in the
accompanying financial statements.

6. Revenue Recognition

Interest is recognized as revenue when earned according to the terms of the
loans, using the effective interest method. . The Company does not recognize
interest income on loans once they are determined to be impaired. A loan is
impaired when, based on current information and events, it is probable that
the Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Cash receipts will be allocated to
interest income, except when such payments are specifically designated by
the terms of the loan as principal reduction or when management does not
believe the Companys investment in the loan is fully recoverable.

30



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##### Table of Contents



Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continued

7. Allowance for Loan Losses

The Company maintains an allowance for loan losses on its investment in
mortgage loans for estimated and expected credit impairment which is
considered inherent to the Companys investment in mortgage loans portfolio.
The Managers estimate of expected losses is based on a number of factors
including the types and dollar amounts of loans in the portfolio, adverse
situations that may effect the borrowers ability to repay, prevailing
economic conditions and the underlying collateral securing the loan.
Additions to the reserve are provided through a charge to earnings and are
based on an assessment of certain factors including, but not limited to,
estimated losses on the loans. Actual losses on loans are recorded as a
charge-off or a reduction to the loan loss reserve. Subsequent recoveries
of amounts previously charged off are added back to the reserve.

8. Fair Value of Financial Instruments

The Financial Accounting Standards Boards Statement No. 107, Disclosures
about Fair Value of Financial Instruments, requires the determination of
fair value of certain of the Companys assets. The following methods and
assumptions were used to estimate the fair value of financial statements
included in the following categories:



|(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 Mortgage Loans: The carrying value of these
instruments, net of the allowance for loan losses, approximates the
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.

9. Net Income Allocated to Members

Net income allocated to members is computed by
dividing net income by the weighted average number of membership units outstanding for
the year.

10. Segments

The Company operates as one business segment.

11. Reclassification

The statement of cash flows for the year ended December 31, 2001 reflects
certain reclassifications, which have no effect on net income, to conform to
classifications in the current year.

NOTE B  FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

Financial instruments with concentration of credit and market risk include
cash and loans secured by trust deeds.

The Company maintains cash deposit accounts and certificates of deposit
which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash. As of June 30, 2002 and December 31,
2001, the Company had $7,414,000 and $7,838,000, respectively, in excess of
the federally insured limits.

31



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Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE B  FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK- Continued

As of June 30, 2002, 29% of the Companys mortgage loans were in Nevada
(compared to 39% at December 31, 2001) and 24% of the Companys investment
in mortgage loans were in Texas (compared to 26% at December 31, 2001). As
a result of this geographical concentration of the Companys investment in
mortgage loans, a downturn in the local real estate markets in Nevada and/or
Texas could have a material adverse effect on the Company.

At June 30, 2002, the aggregate amount of loans to the Companys three
largest borrowers represented 25% of the Companys total investment in
mortgage loans. These mortgage loans consisted of land and commercial
loans, located in Arizona and California, with a first lien position,
earning between 11% and 14%, outstanding balances of approximately
$55,752,000 and maturities from June 2003 through November 2003. At
December 31, 2001, the aggregate amount of loans to the Companys three
largest borrowers represented 30% of the Companys total investment in
mortgage loans. These mortgage loans consisted of acquisition and
development and commercial loans, located in Arizona, California, and
Hawaii, with a first lien position, earning between 10% and 14%, outstanding
balances of approximately $35,658,000 and maturities from November 2001
through October 2003. Because the Company has a significant concentration
of credit risk with its three largest borrowers, a default by any of these
borrowers could have a material adverse effect on the Company.

Substantially all of the Companys mortgage loans will require the borrower
to make a balloon payment of the principal at maturity. The success of a
borrowers ability to repay its mortgage loan obligation in a large lump-sum
payment may be dependent upon the borrowers ability to refinance the
obligation or otherwise raise a substantial amount of cash. An increase in
interest rates over the mortgage rate applicable at origination of the loan
may have an adverse effect on the borrowers ability to refinance.

NOTE C  INVESTMENT IN MORTGAGE LOANS

Investments in mortgage loans as of June 30, 2002 are as follows:

|                            |  |   |             |  |  |  |        |  
|--------------------------- |  | - | ----------- |  |  |  | ------ | -
|Commercial                  |  | $ | 78,759,650  |  |  |  | 35.39  | %
|Construction                |  |   | 59,008,277  |  |  |  | 26.51  | %
|Acquisition and development |  |   | 50,177,032  |  |  |  | 22.54  | %
|Bridge                      |  |   | 7,764,367   |  |  |  | 3.49   | %
|Land                        |  |   | 22,180,376  |  |  |  | 9.97   | %
|Residential                 |  |   | 4,668,624   |  |  |  | 2.10   | %
|                            |  |   |             |  |  |  |        |  
|                            |  | $ | 222,558,326 |  |  |  | 100.00 | %
|                            |  |   |             |  |  |  |        |  
|First mortgages             |  | $ | 222,513,820 |  |  |  | 99.98  | %
|Second mortgages            |  |   | 44,506      |  |  |  | 0.02   | %
|                            |  |   |             |  |  |  |        |  
|                            |  | $ | 222,558,326 |  |  |  | 100.00 | %
|                            |  |   |             |  |  |  |        |  

32



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##### Table of Contents



Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE C  INVESTMENT IN MORTGAGE LOANS- Continued

The following is a schedule of maturities of investment in mortgage loans as
of June 30, 2002 for the fiscal years ending December 31:

|                                                             |  |   |             | 
|------------------------------------------------------------ |  | - | ----------- | 
|2002 (includes loans with past due maturities of $6,513,000) |  | $ | 92,624,193  | 
|2003                                                         |  |   | 123,841,163 | 
|2004                                                         |  |   | 5,083,146   | 
|2005                                                         |  |   | 1,009,824   | 
|                                                             |  |   |             | 
|                                                             |  | $ | 222,558,326 | 
|                                                             |  |   |             | 

The following is a schedule by geographic location of investment in mortgage
loans as of June 30, 2002:

|           |  |   |             |  |  |  |        |  
|---------- |  | - | ----------- |  |  |  | ------ | -
|Arizona    |  | $ | 37,528,258  |  |  |  | 16.86  | %
|California |  |   | 43,242,770  |  |  |  | 19.43  | %
|Hawaii     |  |   | 15,681,746  |  |  |  | 7.05   | %
|Idaho      |  |   | 2,855,202   |  |  |  | 1.28   | %
|Missouri   |  |   | 5,430,000   |  |  |  | 2.44   | %
|Nevada     |  |   | 64,641,428  |  |  |  | 29.04  | %
|New Mexico |  |   | 42,495      |  |  |  | 0.02   | %
|Texas      |  |   | 53,136,427  |  |  |  | 23.88  | %
|           |  |   |             |  |  |  |        |  
|           |  | $ | 222,558,326 |  |  |  | 100.00 | %
|           |  |   |             |  |  |  |        |  

Investment in mortgage loans as of December 31, 2001 are as follows:

|                            |  |   |             |  |  |  |        |  
|--------------------------- |  | - | ----------- |  |  |  | ------ | -
|Commercial                  |  | $ | 50,135,497  |  |  |  | 42.76  | %
|Construction                |  |   | 25,210,571  |  |  |  | 21.50  | %
|Acquisition and development |  |   | 18,156,395  |  |  |  | 15.49  | %
|Bridge                      |  |   | 8,030,064   |  |  |  | 6.85   | %
|Land                        |  |   | 15,610,554  |  |  |  | 13.32  | %
|Residential                 |  |   | 93,390      |  |  |  | 0.08   | %
|                            |  |   |             |  |  |  |        |  
|                            |  | $ | 117,236,471 |  |  |  | 100.00 | %
|                            |  |   |             |  |  |  |        |  
|First mortgages             |  | $ | 117,106,471 |  |  |  | 99.89  | %
|Second mortgages            |  |   | 130,000     |  |  |  | 0.11   | %
|                            |  |   |             |  |  |  |        |  
|                            |  | $ | 117,236,471 |  |  |  | 100.00 | %
|                            |  |   |             |  |  |  |        |  

The following is a schedule of maturities of investment in mortgage loans as
of December 31, 2001:

|                       |  |   |             | 
|---------------------- |  | - | ----------- | 
|2001 (past maturities) |  | $ | 5,675,873   | 
|2002                   |  |   | 99,933,312  | 
|2003                   |  |   | 11,627,286  | 
|                       |  |   |             | 
|                       |  | $ | 117,236,471 | 
|                       |  |   |             | 

33



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##### Table of Contents



Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE C  INVESTMENT IN MORTGAGE LOANS- Continued

The following is a schedule by geographic location of investment in mortgage
loans as of December 31, 2001:

|           |  |   |             |  |  |  |        |  
|---------- |  | - | ----------- |  |  |  | ------ | -
|Arizona    |  | $ | 13,429,333  |  |  |  | 11.45  | %
|California |  |   | 12,030,072  |  |  |  | 10.26  | %
|Hawaii     |  |   | 14,915,681  |  |  |  | 12.72  | %
|Nevada     |  |   | 45,993,471  |  |  |  | 39.23  | %
|New Mexico |  |   | 42,495      |  |  |  | 0.04   | %
|Texas      |  |   | 30,825,149  |  |  |  | 26.29  | %
|           |  |   |             |  |  |  |        |  
|           |  | $ | 117,236,471 |  |  |  | 100.00 | %
|           |  |   |             |  |  |  |        |  

At December 31, 2001, the Company did not have any loans with payments that
were delinquent more than 90 days. At December 31, 2001, the Company had
one loan approximating $5,676,000 which was past the scheduled maturity, and
which was repaid in full in May 2002. At June 30, 2002, the Company had
one loan totaling $42,000 that was both past due on principal and more than
90 days past due on interest. Foreclosure proceedings have been commenced on this loan. At June 30,
2002, the Company also had three loans totaling $6,471,000 that were past
due on principal and interest. The borrowers on these loans are companies
which are affiliated with one another. The Company commenced foreclosure
proceedings on these three loans. However, in August 2002, the borrowers on
these three loans filed for voluntary bankruptcy proceedings under Chapter
11 of the U.S. Bankruptcy Code. The Company is pursuing its legal
remedies in
the Bankruptcy Court and has filed legal action against the personal
guarantors. The Companys Manager evaluated these loans with regards to the
underlying collateral and financial strength of the personal guarantors, and
believes that these borrowers or their guarantors have the ability to repay principal and
interest on these loans. Accordingly, the Companys Manager does not
believe an allowance for loan losses is necessary for these four
loans as of June 30, 2002.

In addition, the Companys Manager granted extensions on fourteen and seven
loans as of June 30, 2002 and December 31, 2001, respectively, pursuant to
the terms of the original loan agreements which permit extensions by mutual
consent. Such extensions are generally provided on loans where the original
term was twelve months or less and where a borrower requires additional time
to complete a construction project or negotiate take out financing. However,
the Companys Manager only grants extensions when a borrower is in full
compliance with the terms of the loan, including, but not limited to, the
borrowers obligation to make interest payments on the loan. The aggregate
amount due to the Company from borrowers whose loans have been extended as
of June 30, 2002 and December 31, 2001 was approximately $41,410,000 and
$21,043,000, respectively. As of June 30, 2002, all loans, except for the
four loans mentioned above, were current and performing according to their
terms.

The Companys Manager has evaluated the collectibility of the loans in light of the
types and dollar amounts of loans in the portfolio, adverse situations that
may affect the borrowers ability to repay, prevailing economic conditions
and the underlying collateral securing the loan. The Companys
Manager believes that
the allowance for loan losses totaling $500,000 included in the accompanying
balance sheet as of June 30, 2002 is adequate to address estimated and
expected credit impairment which is considered inherent in the Companys
investment in mortgage loans as of that date.

The Company has six mortgage loan products consisting of land, construction,
commercial building, bridge, residential, and acquisition and development
loans. Substantially all mortgage loans have effective interest rates
ranging from 8% to 16% and 10% to 16% at June 30, 2002 and December 31,
2001, respectively. Revenue by product will fluctuate based upon relative
balances during the period. Due to the similar nature of the effective
interest rates in the majority of the Companys loan portfolio, the Company
does not report revenues by product type.

NOTE D  DEFERRED OFFERING
COSTS

As of June 30, 2002, deferred offering costs
approximating $256,000 related to the Companys continuing
efforts in securing a debt security. Upon completion of the debt
security offering, the Company will charge the deferred offering
costs against the gross proceeds of the debt security offering.
However, if the Company does not complete the debt security offering,
then such deferred offering costs shall be expensed.

As December 31, 2001 and 2000, deferred offering
costs approximating $142,000 and $264,000, respectively, consisted of
costs related to the offering of the Companys units. These
costs have been charged against the gross proceeds of the units sold.

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Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE E  REVOLVING LINE OF CREDIT

The Company has a revolving line of credit with a financial institution,
which provides for borrowing up to $2,000,000. There was no outstanding
balance as of June 30, 2002 and December 31, 2001. The line of credit, which
is secured by the Companys certificates of deposit with First Hawaiian
Bank, is payable in monthly installments of interest only at 1.50% over the
weighted average interest rate paid on the First Hawaiian Bank certificates
of deposit (2.51% at June 30, 2002 and 3.75% at December 31, 2001), maturing
October 31, 2002. The interest rate will be reset upon the occurrence of
either a new drawing on the revolving line of credit or at the maturity of
the certificate of deposit. The agreement contains covenants which the
Company was in compliance with as of June 30, 2002 and December 31, 2001.

NOTE F  MEMBERS EQUITY

1. Membership Units

The Manager (in its Capacity as the Initial Member) shall contribute to the
capital of the Company such amount as it deems appropriate; provided that
the Manager shall be deemed to have contributed to the capital of the
Company an amount equal to expenses of the Company incurred in connection
with the Offering up to a maximum of $1,100,000, to the extent such expenses
are paid by the Manager to non-affiliated parties (offering expenses). As
defined in the Operating Agreement, offering expenses included legal and
accounting fees, registration expenses, printing fees and promotional and
marketing expenses. As of June 30, 2002, the Manager has contributed to the
capital of the Company $1,100,000 in connection with offering costs
incurred. The members shall contribute to the capital of the Company an
amount equal to $10.00 for each unit subscribed for by each member, with a
minimum subscription of 200 units per member. The total Capital contribution
of the members will not exceed $500,000,000 not including reinvested
distributions.

2. Allocations and Distributions

In accordance with the Operating Agreement, the Companys profits, gains and
losses are to be credited to and charged against each member in proportion
to their respective capital accounts as of the close of business on the last
day of each calendar month.

Interest received on mortgage loans is distributed monthly to members,
members may elect to reinvest their distributions.

Distributions of proceeds from the repayment of principal on a mortgage loan
will be made to the members pro rata based on their capital accounts.

3. Working Capital Reserves

The Company is required by the Operating Agreement to maintain working
capital reserves of at least 3% of the aggregate capital accounts of the
members. This reserve is available to pay any future expenses in excess of
revenues, satisfy obligations of underlying security properties, expend
money to satisfy the Companys unforeseen obligations and for other
permitted uses of its working capital. Working capital reserves of up to 3%
in cash or cash equivalents, short-term investments and certificates of
deposit are excluded from the funds committed to mortgage investments in
determining what proportion of the offering proceeds and reinvested
distributions have been invested in mortgage loans. As of June 30, 2002 and
December 31, 2001, the Company had approximately $8,624,000 and $10,013,000,
respectively, for its working capital reserves.

35



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##### Table of Contents



Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE G  TRANSACTIONS WITH THE MANAGER AND ITS AFFILIATES

1. Fees Paid by the Company



|a. |  | The Companys Manager is entitled to receive from the Company a
management fee of up to 0.25% on an annual basis of the aggregate
capital contributions, paid monthly in arrears. As of June 30, 2002
and December 31, 2001, management fees to the Manager approximated
$237,000 and $87,000, respectively.         
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b. |  | The Manager may receive fees for reselling foreclosed
properties. These fees may not be greater than 3.00% of the proceeds
where substantial service has been performed by the Manager. As of
June 30, 2002 and December 31, 2001, no such services were required,
accordingly, no payments were paid to the Manager.

2. Fees Paid by Borrowers



|a. |  | The Manager receives fees of up to 5.00% upon origination of
the principal amount of each loan as compensation for loan evaluation
and processing. These fees shall be reasonable and shall be payable
only for services actually rendered. As of June 30, 2002 and December
31, 2001, the Manager earned loan evaluation and processing fees paid
by borrowers in the amount of $101,000 and $65,000, respectively.                                
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b. |  | The Manager generally originates loans the Company invests in.
The Manager acts as broker for which it generally charges loan
brokerage and origination fees of approximately 2.00% to 6.00% of the
principal amount of each mortgage investment made during the year. As
of June 30, 2002 and December 31, 2001, the Manager earned loan
brokerage and origination fees paid by borrowers in the amount of
$4,770,000 and $3,100,000, respectively.
|  
|c. |  | All of the Companys loans are to be serviced by the Manager,
in consideration for which the Manager may receive a negotiated
servicing fee annually of the total unpaid principal balance of each mortgage loan
serviced. As of June 30, 2002 and December 31, 2001, the Manager
earned servicing fees paid by borrowers in the amount of
approximately $48,900 and $16,000, respectively.                                                         
|  
|d. |  | The Manager may receive loan extension fees of 2.00% to 5.00%
of the outstanding principal of extended loans as permitted by local law and local
market conditions. As of June 30, 2002 and December 31, 2001, the
Manager earned loan extension fees paid by the borrowers in the
amount of approximately $361,000 and $791,000, respectively.                                                                                                     

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##### Table of Contents



Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE G  TRANSACTIONS WITH THE MANAGER AND ITS AFFILIATES- Continued

3. Short-Term Instrument in LTD, Inc.

As of December 31, 2001, the Company had an amount totaling $1,675,000
invested in certificates of LTD, Inc., an investment fund owned by the Chief
Executive Officer of Vestin Group, Inc. LTD, Inc. is an investment fund
offering 2001-Prime Plus One Certificates (Certificate), earning 5.75% at
December 31, 2001. The terms of the Certificates provide the subscriber
repayment of their funds in full or in part upon a thirty (30) day written
request. In March 2002, the Company liquidated its investment in these
certificates resulting in no gain or loss. The Certificates were recorded on
the balance sheet as of December 31, 2001 as short-term investments 
related party.

4. Purchase of Loans from Vestin Fund I, LLC

During the transition period ended June 30, 2002 and year ended December 31,
2001, the Company purchased $665,000 and $21,290,000, respectively, in
mortgage loans from Vestin Fund I, LLC, a company managed by the Manager.

5. Due to the Manager

Due to the Manager at June 30, 2002 consisted of $298,000 in advances,
and unpaid management fees and distributions payable totaling $353,000 on
units owned by the Manager. Due to the Manager at December 31,
2001 consisted of $222,448 advances by the
Manager and of distributions payable to the Manager in the amount
of $46,630. These advances do not accrue interest and are due on demand.

6. Other Transactions with the
Manager

During the transition period ended June 30, 2002, the Company and Vestin
Fund I, LLC made a mortgage loan in the amount of $130,500 and $3,000,000,
respectively, for a total of $3,130,500 to an independent borrower who used
the proceeds of the loan to purchase a property from the
Companys Manager which the Companys Manager had previously
acquired through foreclosure proceedings. The loan from the Company to such independent borrower is interest
only, payable monthly at an annual rate of 10% with the principal due in
June 2003. The transaction resulted in a deferred gain of approximately
$367,000 to the Companys Manager. The terms of the loan to such third
party borrower were negotiated by the Companys Manager; such terms were not
reviewed by any independent parties.

During the transition period ended June 30, 2002, the Company purchased
$10,000,000 in mortgage loans from the Companys Manager at their historical
cost pursuant to Section 4.4.1 of the Companys Operating
Agreement.

The Manager may purchase from the Company the interest
receivable or principal on delinquent loans held by the Company. The Company
shall not sell a foreclosed property to the Manager or to another program in
which the Manager or its affiliates has an interest. As of June 30, 2002 and
December 31, 2001, no such transactions occurred.

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##### Table of Contents



Vestin Fund II, LLC

NOTES TO FINANCIAL STATEMENTS  CONTINUED

June 30, 2002 and December 31, 2001

NOTE G  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following schedule is a selected quarterly financial data for the
transition period ended June 30, 2002:

|                                                                      |  |         |            |         |  |          |            |  |  |   |            | 
|--------------------------------------------------------------------- |  | ------- | ---------- | ------- |  | -------- | ---------- |  |  | - | ---------- | 
|                                                                      |  | First   |            | Second  |  | June 30,
|                                                                      |  | Quarter |            | Quarter |  | 2002    
|                                                                      |  |         |            |         |  |         
|Revenues                                                              |  | $       | 4,732,343  |         |  | $        | 6,771,757  |  |  | $ | 11,504,100 | 
|Expenses                                                              |  |         | 103,599    |         |  |          | 677,482    |  |  |   | 781,081    | 
|                                                                      |  |         |            |         |  |          |            |  |  |   |            | 
|Net income                                                            |  | $       | 4,628,744  |         |  | $        | 6,094,275  |  |  | $ | 10,723,019 | 
|                                                                      |  |         |            |         |  |          |            |  |  |   |            | 
|Net income allocated
to members per
weighted average
membership units |  |         | .29        |         |  |          | .29        |  |  |   | .59        | 
|Weighted average
membership units                                     |  |         | 15,749,588 |         |  |          | 20,875,319 |  |  |   | 18,326,615 | 

The following schedule is a selected quarterly financial data for the year
ended December 31, 2001:

|                                                                      |  |         |   |         |  |         |         |         |  |      |           |  |  |   |           |  |  |   |           | 
|--------------------------------------------------------------------- |  | ------- | - | ------- |  | ------- | ------- | ------- |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                                                      |  | First   |   | Second  |  | Third   |         | Fourth  |  |      |           | 
|                                                                      |  | Quarter |   | Quarter |  | Quarter |         | Quarter |  | Year
|                                                                      |  |         |   |         |  |         |         |         |  |     
|Revenues                                                              |  | $       |  |         |  | $       | 15,405  |         |  | $    | 1,094,999 |  |  | $ | 2,691,245 |  |  | $ | 3,801,649 | 
|Expenses                                                              |  |         |  |         |  |         | 20      |         |  |      | 60        |  |  |   | 86,879    |  |  |   | 86,959    | 
|                                                                      |  |         |   |         |  |         |         |         |  |      |           |  |  |   |           |  |  |   |           | 
|Net income                                                            |  | $       |  |         |  | $       | 15,385  |         |  | $    | 1,094,939 |  |  | $ | 2,604,366 |  |  | $ | 3,714,690 | 
|                                                                      |  |         |   |         |  |         |         |         |  |      |           |  |  |   |           |  |  |   |           | 
|Net income allocated
to members per
weighted average
membership units |  |         |  |         |  |         | .02     |         |  |      | .31       |  |  |   | .31       |  |  |   | .67       | 
|Weighted average
membership units                                     |  |         |  |         |  |         | 635,912 |         |  |      | 3,535,728 |  |  |   | 8,466,617 |  |  |   | 5,548,510 | 

38



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SUPPLEMENTARY INFORMATION

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Report of Independent Certified Public Accountants
on Supplementary Information

Members
Vestin Fund II, LLC

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole of Vestin Fund II, LLC as of December 31,
2001 and 2000, and for the year ended December 31, 2001 and for the period from
December 7, 2000 (Date of Inception) through December 31, 2000, which are
presented in the preceding section of this report. The supplementary
information presented hereinafter is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.

/s/ Grant Thornton, LLP
Reno, Nevada
February 8, 2002

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Schedule I

Vestin Fund II, LLC

MORTGAGE LOANS ON REAL ESTATE
MORTGAGE LOAN ROLLFORWARD

|                           |                              |                                              |             |  |             | 
|-------------------------- | ---------------------------- | -------------------------------------------- | ----------- |  | ----------- | 
|Balance, December 7, 2000  |                              | $                                            |            | 
|                           | Additions during the period  |                                              |             |  |            
|                           |                              | New mortgage loans                           |             |  |            | 
|                           | Deductions during the period |                                              |             |  |            
|                           |                              | Collections of principal
Mortgage loans sold |             |  |            | 
|                           |                              |                                              |             | 
|Balance, December 31, 2000 |                              |                                              |            | 
|                           | Additions during the period  |                                              |             |  |            
|                           |                              | New mortgage loans                           |             |  | 154,669,007 | 
|                           | Deductions during the period |                                              |             |  |            
|                           |                              | Collections of principal                     |             |  | 22,405,938  | 
|                           |                              | Mortgage loans sold                          |             |  | 15,026,598  | 
|                           |                              |                                              |             | 
|Balance, December 31, 2001 |                              |                                              | 117,236,471 | 
|                           | Additions during the period  |                                              |             |  |            
|                           |                              | New mortgage loans                           |             |  | 153,844,526 | 
|                           |                              | Mortgage loans bought                        |             |  | 10,665,000  | 
|                           | Deductions during the period |                                              |             |  |            
|                           |                              | Collections of principal                     |             |  | 33,495,536  | 
|                           |                              | Mortgage loans sold                          |             |  | 25,692,135  | 
|                           |                              |                                              |             | 
|                           |                              |                                              | 105,321,855 | 
|                           |                              |                                              |             | 
|Balance, June 30, 2002     |                              | $                                            | 222,558,326 | 
|                           |                              |                                              |             | 

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Schedule II

Vestin Fund II, LLC

MORTGAGE LOANS ON REAL ESTATE
MORTGAGE LOANS BY TYPE OF PROPERTY

As of June 30, 2002:

|                            |  |               |           |          |  |                |             |                    |  |                |            |  |  |                |           |  |  |   |           | 
|--------------------------- |  | ------------- | --------- | -------- |  | -------------- | ----------- | ------------------ |  | -------------- | ---------- |  |  | -------------- | --------- |  |  | - | --------- | 
|                            |  |               |           |          |  | Face Amount of |             | Carrying amount of |  |                |            |  |  | Amount Subject
|Type of Property            |  | Interest Rate |           | Mortgage |  | mortgage       |             | Maturity Date      |  | to Delinquency
|                            |  |               |           |          |  |                |             |                    |  |               
|Commercial                  |  |               | 10%-14.5  | %        |  | $              | 185,186,000 |                    |  | $              | 78,759,650 |  |  |                | 7/02-3/05 |  |  | $ |          | 
|Construction                |  |               | 13%-15.75 | %        |  | $              | 193,311,000 |                    |  | $              | 59,008,277 |  |  |                | 6/02-6/04 |  |  | $ | 3,437,937 | 
|Acquisition and Development |  |               | 8%-15.5   | %        |  | $              | 90,708,000  |                    |  | $              | 50,177,032 |  |  |                | 2/02-3/03 |  |  | $ | 3,075,514 | 
|Land                        |  |               | 10%-15.5  | %        |  | $              | 34,220,500  |                    |  | $              | 22,180,376 |  |  |                | 7/02-6/03 |  |  | $ |          | 
|Bridge                      |  |               | 14        | %        |  | $              | 17,725,000  |                    |  | $              | 7,764,367  |  |  |                | 6/02-5/03 |  |  | $ |          | 
|Residential                 |  |               | 8%-14     | %        |  | $              | 6,460,050   |                    |  | $              | 4,668,624  |  |  |                | 8/02-5/03 |  |  | $ |          | 

As of December 31, 2001:

|                            |  |               |        |          |  |                |             |                    |  |             |            |  |  |            |             |  |  |        |   | 
|--------------------------- |  | ------------- | ------ | -------- |  | -------------- | ----------- | ------------------ |  | ----------- | ---------- |  |  | ---------- | ----------- |  |  | ------ | - | 
|                            |  |               |        |          |  |                |             |                    |  |             |            |  |  |            |             |  |  | Amount
|                            |  |               |        |          |  | Face Amount of |             | Carrying amount of |  |             |            |  |  | Subject to
|Type of Property            |  | Interest Rate |        | Mortgage |  | mortgage       |             | Maturity Date      |  | Delinquency
|                            |  |               |        |          |  |                |             |                    |  |            
|Commercial                  |  |               | 10%-15 | %        |  | $              | 113,333,500 |                    |  | $           | 50,135,497 |  |  |            | 3/02-10/03  |  |  | $      |  | 
|Construction                |  |               | 14%-15 | %        |  | $              | 75,330,000  |                    |  | $           | 25,210,571 |  |  |            | 1/02-12/02  |  |  | $      |  | 
|Acquisition and Development |  |               | 13%-16 | %        |  | $              | 52,913,043  |                    |  | $           | 18,156,395 |  |  |            | 12/02       |  |  | $      |  | 
|Land                        |  |               | 10%-15 | %        |  | $              | 20,325,000  |                    |  | $           | 15,610,554 |  |  |            | 12/01-12/02 |  |  | $      |  | 
|Bridge                      |  |               | 14     | %        |  | $              | 31,500,000  |                    |  | $           | 8,030,064  |  |  |            | 11/01-1/02  |  |  | $      |  | 
|Residential                 |  |               | 14     | %        |  | $              | 1,300,000   |                    |  | $           | 93,390     |  |  |            | 5/02        |  |  | $      |  | 

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Schedule III

Vestin Fund II, LLC

MORTGAGE LOANS ON REAL ESTATE
MORTGAGE LOANS BY LIEN POSITION

As of June 30, 2002:

|              |  |                |             |               |  |             |        |                 |  |             |             |                   |  |  |            |  |  |   |           | 
|------------- |  | -------------- | ----------- | ------------- |  | ----------- | ------ | --------------- |  | ----------- | ----------- | ----------------- |  |  | ---------- |  |  | - | --------- | 
|              |  | Face Amount of |             |               |  |             |        | Carrying amount |  | Maturity    |             | Amount Subject to
|Lien Position |  | Mortgage       |             | Interest Rate |  | of mortgage |        | Date            |  | Delinquency
|              |  |                |             |               |  |             |        |                 |  |            
|1st           |  | $              | 527,610,550 |               |  |             | 8%-16  | %               |  | $           | 222,513,820 |                   |  |  | 2/02-3/05  |  |  | $ | 6,513,451 | 
|2nd           |  | $              | 53,113,000  |               |  |             | 10%-15 | %               |  | $           | 44,506      |                   |  |  | 6/02-11/03 |  |  | $ |          | 

As of December 31, 2001:

|              |  |                |             |               |  |             |        |                 |  |             |             |            |  |  |             |  |  |        |   | 
|------------- |  | -------------- | ----------- | ------------- |  | ----------- | ------ | --------------- |  | ----------- | ----------- | ---------- |  |  | ----------- |  |  | ------ | - | 
|              |  |                |             |               |  |             |        |                 |  |             |             |            |  |  |             |  |  | Amount
|              |  | Face Amount of |             |               |  |             |        | Carrying amount |  | Maturity    |             | Subject to
|Lien Position |  | Mortgage       |             | Interest Rate |  | of mortgage |        | Date            |  | Delinquency
|              |  |                |             |               |  |             |        |                 |  |            
|1st           |  | $              | 280,673,543 |               |  |             | 10%-16 | %               |  | $           | 117,106,471 |            |  |  | 11/01-10/03 |  |  | $      |  | 
|2nd           |  | $              | 14,028,000  |               |  |             | 10%-15 | %               |  | $           | 130,000     |            |  |  | 12/01-12/02 |  |  | $      |  | 

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Schedule IV

Vestin Fund II, LLC

MORTGAGE LOANS ON REAL ESTATE
MORTGAGE LOANS THAT EXCEED THREE PERCENT
OF THE PORTFOLIO

As of June 30, 2002:

|                            |  |          |       |               |  |          |            |          |  |                |  |                    |            |            |  |   |            |  |  |   |   |        |  | 
|--------------------------- |  | -------- | ----- | ------------- |  | -------- | ---------- | -------- |  | -------------- |  | ------------------ | ---------- | ---------- |  | - | ---------- |  |  | - | - | ------ |  | 
|                            |  |          |       |               |  |          |            |          |  |                |  |                    |            |            |  |   |            |  |  |   |   | Amount
|                            |  | Interest |       |               |  |          |            | Lien     |  | Face Amount of |  | Carrying Amount of |            | Subject to
|Description of Loan         |  | Rate     |       | Maturity Date |  | Position |            | Mortgage |  | Mortgage       |  | Delinquency       
|                            |  |          |       |               |  |          |            |          |  |                |  |                   
|Commercial                  |  |          | 13.00 | %             |  |          | 11/25/03   |          |  | 1st & 2nd*     |  | $                  | 29,000,000 |            |  | $ | 19,000,000 |  |  | $ |  |       
|Commercial                  |  |          | 11.00 | %             |  |          | 10/22/2003 |          |  | 1st            |  | $                  | 15,150,000 |            |  | $ | 12,664,188 |  |  | $ |  |       
|Acquisition and
Development |  |          | 14.00 | %             |  |          | 9/10/2002  |          |  | 1st            |  | $                  | 18,000,000 |            |  | $ | 10,852,154 |  |  | $ |  |       
|Land                        |  |          | 14.00 | %             |  |          | 7/30/2002  |          |  | 1st            |  | $                  | 12,500,000 |            |  | $ | 8,000,000  |  |  | $ |  |       
|Acquisition
and Development |  |          | 14.00 | %             |  |          | 06/28/03   |          |  | 1st            |  | $                  | 32,000,000 |            |  | $ | 24,088,072 |  |  | $ |  |       
|Construction                |  |          | 15.75 | %             |  |          | 8/25/2002  |          |  | 1st            |  | $                  | 14,000,000 |            |  | $ | 6,900,133  |  |  | $ |  |       
|Commercial                  |  |          | 10.00 | %             |  |          | 12/11/2002 |          |  | 1st & 2nd*     |  | $                  | 13,245,000 |            |  | $ | 7,995,000  |  |  | $ |  |       

* 2nd lien position of each loan totals $5,000.

As of December 31, 2001:

|                            |  |          |       |               |  |          |            |          |  |                |  |                    |            |            |  |   |            |  |  |   |   |        |  | 
|--------------------------- |  | -------- | ----- | ------------- |  | -------- | ---------- | -------- |  | -------------- |  | ------------------ | ---------- | ---------- |  | - | ---------- |  |  | - | - | ------ |  | 
|                            |  |          |       |               |  |          |            |          |  |                |  |                    |            |            |  |   |            |  |  |   |   | Amount
|                            |  | Interest |       |               |  |          |            | Lien     |  | Face Amount of |  | Carrying Amount of |            | Subject to
|Description of Loan         |  | Rate     |       | Maturity Date |  | Position |            | Mortgage |  | Mortgage       |  | Delinquency       
|                            |  |          |       |               |  |          |            |          |  |                |  |                   
|Commercial                  |  |          | 10.00 | %             |  |          | 12/11/02   |          |  | 1st            |  | $                  | 13,245,000 |            |  | $ | 12,995,000 |  |  | $ |  |       
|Commercial                  |  |          | 11.00 | %             |  |          | 10/22/2003 |          |  | 1st            |  | $                  | 15,150,000 |            |  | $ | 11,627,286 |  |  | $ |  |       
|Acquisition and
Development |  |          | 14.00 | %             |  |          | 9/10/2002  |          |  | 1st            |  | $                  | 18,000,000 |            |  | $ | 11,036,089 |  |  | $ |  |       
|Land                        |  |          | 14.00 | %             |  |          | 04/30/02   |          |  | 1st            |  | $                  | 12,500,000 |            |  | $ | 8,000,000  |  |  | $ |  |       
|Commercial                  |  |          | 14.00 | %             |  |          | 10/26/2002 |          |  | 1st            |  | $                  | 7,840,000  |            |  | $ | 7,445,245  |  |  | $ |  |       
|Construction                |  |          | 15.00 | %             |  |          | 2/25/02    |          |  | 1st            |  | $                  | 14,000,000 |            |  | $ | 6,210,625  |  |  | $ |  |       
|Bridge                      |  |          | 14.00 | %             |  |          | 11/27/01   |          |  | 1st            |  | $                  | 20,000,000 |            |  | $ | 5,675,873  |  |  | $ |  |       
|Construction                |  |          | 14.25 | %             |  |          | 1/1/02     |          |  | 1st            |  | $                  | 5,350,000  |            |  | $ | 4,703,590  |  |  | $ |  |       
|Commercial                  |  |          | 12.50 | %             |  |          | 11/29/02   |          |  | 1st            |  | $                  | 6,412,500  |            |  | $ | 4,612,500  |  |  | $ |  |       
|Commercial                  |  |          | 14.00 | %             |  |          | 6/29/02    |          |  | 1st            |  | $                  | 5,250,000  |            |  | $ | 4,246,000  |  |  | $ |  |       
|Commercial                  |  |          | 14.00 | %             |  |          | 11/7/02    |          |  | 1st            |  | $                  | 45,000,000 |            |  | $ | 3,879,592  |  |  | $ |  |       

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