UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
 **FORM
10-QSB**
 
 [X]
    Quarterly
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarterly period ended:December
      31, 2004[ 
      ]
    Transition
      Report pursuant to 13 or 15(d) of the Securities Exchange Act of
      1934For
      the transition period ____________to__________Commission
      File Number:333-115444
 
 MV
Fund II, LLC
 (Exact
name of small business issuer as specified in its charter)
 
 Nevada
    20-0987069(State
      or other jurisdiction of incorporation or organization)
    (IRS
      Employer Identification No.)
 
 
 7311
      W. Charleston Blvd., Suite 110, Las Vegas, Nevada
  89117(Address
      of principal executive offices)
 
 702-228-7105(Issuer’s
      telephone number)_______________________________________________________________(Former
      name, former address and former fiscal year, if changed since last
      report)
 
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days [ ] Yes
[X] No
 
 0 Units
outstanding as of March 31, 2005
 
 Transitional
Small Business Disclosure Format (check one): Yes [ ] No [X]
 
  ***Table of Contents***
  
 
 TABLE OF CONTENTS
    PagePART
      I - FINANCIAL INFORMATIONItem
      1:
    Financial Statements
    3Item
      2:
    Plan of Operation
    4Item
      3:
    Controls and Procedures
    7PART
      II - OTHER INFORMATIONItem
      1:
    Legal Proceedings
    8Item
      2:
    Unregistered Sales of Equity Securities and Use of
      Proceeds
    8Item
      3:
    Defaults Upon Senior Securities
    8Item
      4:
    Submission of Matters to a Vote of Security
      Holders
    8Item
      5:
    Other Information
    8Item
      6:
    Exhibits
    8
  2
 ***Table of Contents***
  **PART
I - FINANCIAL INFORMATION**
 
 **Item
1.** **Financial
Statements**
 
 Our
unaudited financial statements included in this Form 10-QSB are as
follows:
 
 (a)
    Balance
      Sheet as of December 31, 2004.
 (b)
    Statements
      of Operations for the three and six month periods ended December 31, 2004,
      for period from September 2, 2003 (Inception) to December 31, 2003, for
      period from September 2, 2003 (Inception) to December 31,
      2004;
 (c)
    Statement
      of Changes in Member’s Equity for period from September 2, 2003
      (inception) to December 31, 2004
 (d)
    Statements
      of Cash Flow for the six months ended December 31, 2004 and 2003;
 (e)
    Notes
      to Financial Statements.
 
 These
unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and the SEC instructions to Form 10-QSB. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. Operating results for the interim period ended December 31, 2004
are not necessarily indicative of the results that can be expected for the full
year.
  3
 ***Table of Contents***
   **MV
      Fund II, LLC****(a
      Development Stage Company)****Balance
      Sheet****(Unaudited)**December
      31,2004**Assets**Current
      assets:Deferred
      offering expenses
    
    
    
    $
    10,000Total
      current assets
    
    
    
    
    10,000$
    10,000**Liabilities
      and Member's Equity**Current
      liabilitiesAccrued
      expenses
    
    
    
    $
    10,000Member's
      equity - no units issued at 12/31/04
    
    
    
    
    -10,000$
    10,000
  F -
1
 ***Table of Contents***
 ****


**MV
Fund II, LLC**


**(a
Development Stage Company)**


**Statements
of Operations**


**(Unaudited)**


****





September
      2, 2003
    
    September
      2, 2003Three
      months ended
    
    Three
      months ended
    
    Six
      months ended
    
    (Inception)
      to
    
    (Inception)
      toDecember
      31,
    
    December
      31,
    
    December
      31,
    
    December
      31,
    
    December
      31,2004
    
    2003
    
    2004
    
    2003
    
    2004Revenue
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    
    
    $
    -Expenses:General
      and administrative expenses
    
    
    -
    
    
    -
    
    
    -
    
    
    
    
    
    -Total
      expenses
    
    
    -
    
    
    -
    
    
    -
    
    
    
    
    
    -Net
      (loss)
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    
    
    $
    -Net
      (loss) allocated to members
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    
    
    $
    -Weighted
      average membership units
    
    
    -
    
    
    -
    
    
    -
    
    
    
    
    
    -Net
      (loss) allocated to members perweighted
      average membership units
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    
    
    $
    -





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


F -
2
 ***Table of Contents***


**MV
Fund II, LLC**


**(a
Development Stage Company)**


**Statement
of Changes in Member's Equity**


**(Unaudited)**


****


Units
    
    AmountSeptember
      2, 2003 (Inception)
    
    
    -
    
    $
    -Net
      (loss)
    
    
    
    
    
    -Balance,
      December 31, 2003
    
    
    -
    
    
    -Net
      (loss)
    
    
    
    
    
    -Balance,
      December 31, 2004
    
    
    -
    
    $
    -


****


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





F -
3
 ***Table of Contents***


****MV
Fund II, LLC**
**(a
Development Stage Company)**
**Statement
of Changes in Member's Equity**
**(Unaudited)**
******


****


**September
      2, 2003Six
      months ended
    
    Six
      months ended
    
    (Inception)
      toDecember
      31,
    
    December
      31,
    
    December
      31,2004
    
    2003
    
    2004**Cash
      flows from operating activities**Net
      (loss)
    
    $
    -
    
    $
    -
    
    $
    -Changes
      in operating assets and liabilities:Increase
      in deferred offering expenses
    
    
    
    
    
    
    
    
    (10,000
    )Increase
      in accrued expenses
    
    
    
    
    
    
    
    
    10,000Net
      cash (used) by operating activities
    
    
    -
    
    
    -
    
    
    -**Cash
      flows from financing activities**Net
      cash provided by financing activities
    
    
    -
    
    
    -
    
    
    -Net
      increase in cash
    
    
    -
    
    
    -
    
    
    -Cash
      - beginning
    
    
    -
    
    
    -
    
    
    -Cash
      - ending
    
    $
    -
    
    $
    -
    
    $
    -Non-cash
      transactions:Expenses
      paid for by the managing member
    
    $
    -
    
    $
    -
    
    $
    -Number
      of membership units issued for expenses
    
    
    -
    
    
    -
    
    
    -**











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


F -
4
 ***Table of Contents***


****MV
Fund II, LLC**
(a
Development Stage Company)
Notes to
Financial Statements
(Unaudited)**


**NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





Organization





MV Fund
II, LLC, a Nevada Limited Liability Company, (the Company) is a development
stage company primarily engaged in investing in mortgage loans on real estate.
The Company was organized on September 2, 2003 (date of inception) and will
continue until August 27, 2047, unless dissolved prior or extended thereto under
the provisions of the Operating Agreement.





The
Manager of the Company is MV Funding Group, Inc. a Nevada corporation engaged in
the investment business of mortgages, specifically the selection and origination
of mortgages.





For the
period from September 2, 2003 (date of inception) through December 31, 2004, the
Company has not commenced its planned operations and the only transactions were
costs associated with the offering (i.e., legal fees), which were deferred until
completion of the offering.





The
fiscal year end of MV Fund II, LLC is June 30.





Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles 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.





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.





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.





Investments
in mortgage loans





Investments
in mortgage loans are secured by trust deeds and mortgages. Such investments in
mortgage loans may include commercial, construction, acquisition and development
and land. Generally, all of the Company’s mortgage loans require interest only
payments with a balloon payment of the principal at maturity. The Company has
both the intent and ability to hold mortgage loans until maturity and therefore,
mortgage loans are classified and accounted for as held for investment and are
carried at amortized cost. Periodically, the Company will evaluate investments
in mortgage loans based upon loan to value ratios. Loan to value ratios are
based on appraisals obtained at the time of loan origination and may not reflect
subsequent changes in value estimates. Such appraisals, which may be
commissioned by the borrower,











F -
5
 ***Table of Contents***





**MV
Fund II, LLC**
 **(a
Development Stage Company)**
 **Notes
to Financial Statements**
 **(Unaudited)**






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





Real
estate held for sale





Upon a
foreclosure of the underlying real property securing the investments in mortgage
loans, the Company will reclassify such asset as investments in real estate held
for sale. Investments in real estate held for sale are accounted for at the
lower of cost or fair value less costs to sell with fair value based on
appraisals and knowledge of local market conditions. It is not the Company’s
intent to invest in or own real estate as a long-term investment. The Company
seeks to sell properties acquired through foreclosure as quickly as
circumstances permit. Any costs of managing, maintaining and developing a real
property acquired through foreclosure shall be expensed in the period such costs
are incurred. Gain/loss related to real estate held for sale will be recognize
within the period of such sale assuming 25% or more of the sales price has been
collected within the same period.





Allowance
for loan losses





Investments
in loans are carried at their principal amount outstanding less any unearned
income or unamortized discount. Interest on loans is accrued and credited to
interest income based on the daily principal amount outstanding. Loans are
generally placed in nonaccrual status when principal or interest is delinquent
for 30 days (unless adequately secured and in the process of collection) or
circumstances indicate that full collection of principal and interest is in
doubt.





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. 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. Typically, the Company will determine the need for
an allowance for loan losses by comparing the dollar amount of the loan with the
underlying collateral’s appraisal. Loans whose collateral has an “as if
developed” appraisal, the Company will assess the amount of the loan and cost to
complete the real property and compare it with the “as if developed” appraisal
to determine if any allowance for loan losses is needed. 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
allowance for loan losses reserve. Subsequent recoveries of amounts previously
charged off are added back to the reserve.





Debt
securities





The
Company will classify its debt securities as held-to-maturity, as the Company
has the ability and the intent to hold the securities until maturity. These
securities will be recorded at amortized cost, adjusted for the amortization or
accretion of premiums or discounts. A decline in the market value of any
held-to-maturity security below cost that is deemed to be other than temporary
will result in a reduction in carrying amount to fair value. The impairment
would be charged to earnings and a new cost basis for the security would be
established. Premiums and discounts will be amortized or accreted over the life
of the related security as an adjustment to yield using the effective interest
method.





****
 F -
6
 ***Table of Contents***


**MV
Fund II, LLC**
 **(a
Development Stage Company)**
 **Notes
to Financial Statements**
 **(Unaudited)**









Recent
accounting pronouncements





In
July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with
Exit or Disposal Activities”, which addresses financial accounting and reporting
for costs associated with exit or disposal activities and supersedes EITF No.
94-3, “Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).” SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred.
Under EITF No. 94-3, a liability for an exit cost was recognized at the date of
an entity’s commitment to an exit plan. SFAS No. 146 also establishes that the
liability should initially be measured and recorded at fair value. The
provisions of SFAS No. 146 will be adopted for exit or disposal activities that
are initiated after December 31, 2002.





In
December 2002, the FASB issued SFAS No. 148, “ Accounting
for Stock-Based Compensation—Transition and Disclosure—an amendment of SFAS No.
123.” This Statement amends SFAS No. 123, “Accounting for Stock-Based
Compensation” *,* to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The adoption of SFAS No. 148 is
not expected to have a material impact on the company’s financial position or
results of operations.





In
November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees and Indebtedness of Others” *,* an interpretation of FIN No. 5, 57 and 107, and rescission of FIN No.
34, *“* Disclosure
of Indirect Guarantees of Indebtedness of Others” *.* FIN
45 elaborates on the disclosures to be made by the guarantor in its interim and
annual financial statements about its obligations under certain guarantees that
it has issued. It also requires that a guarantor recognize, at the inception of
a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and measurement provisions of
this interpretation are applicable on a prospective basis to guarantees issued
or modified after December 31, 2002; while, the provisions of the disclosure
requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002. The company believes that the adoption of such
interpretation will not have a material impact on its financial position or
results of operations and will adopt such interpretation during fiscal year
2003, as required.





In
January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest
Entities” *,* an interpretation of Accounting Research Bulletin No. 51. FIN No. 46 requires
that variable interest entities be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity’s
activities or is entitled to receive a majority of the entity’s residual returns
or both. FIN No. 46 also requires disclosures about variable interest entities
that companies are not required to consolidate but in which a company has a
significant variable interest. The consolidation requirements of FIN No. 46 will
apply immediately to variable interest entities created after January 31, 2003.
The consolidation requirements will apply to entities established prior to
January 31, 2003 in the first fiscal year or interim period beginning after June
15, 2003. The disclosure requirements will apply in all financial statements
issued after January 31, 2003. The company will begin to adopt the provisions of
FIN No. 46 during the first quarter of fiscal 2003.














F -
7
 ***Table of Contents***


**MV
Fund II, LLC**
 **(a
Development Stage Company)**
 **Notes
to Financial Statements**
 **(Unaudited)**











**NOTE
2 - MEMBER’S EQUITY**





Membership
units





The
Company is offering and selling to the public, up to a maximum of 20,000
membership interests. The members shall contribute to the capital of the Company
an amount equal to $2,500 for each unit subscribed for by each member. The total
Capital contributions of the members will not exceed $50,000,000. The Manager
shall be entitled to 4% of any capital contributions made by members paid as an
organization fee.





Allocations
and distributions





In
accordance with the Operating Agreement, the Company's income, 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.





Distributions
of net income are paid monthly in cash or as reinvested distributions. Net
income available for distribution, as defined in the operating agreement, is
cash flow less amounts set aside for restoration of reserves during the month.





Issuance
of membership units





As of
December 31, 2004, the Company has not issued any membership units.





**NOTE
3 - TRANSACTIONS WITH THE MANAGER AND ITS AFFILIATES**





Fees
paid by the Company





The
Managing Member shall be entitled to a 4% share of any capital contributions
obtained from Members as provided by the Operating Agreement. In addition, the
Managing Member shall be entitled to one quarter of one percent (0.25%) of the
interest income generated by loans made by the Fund as noted in Note 1 under
“Revenue recognition” as a management fee.





The
Managing Member shall pay all expenses including but not limited to, all
expenses incurred in the offering of Interests and any operating expenses out of
its Organizational Fee and its Managing Membership Interest Income.








F -
8
 ***Table of Contents***


****


**Item 2.     Plan of Operation**





**Forward-Looking
Statements**





Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
materially from those included in the forward-looking statements. The Company
intends such forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes of
complying with those safe-harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the
words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,”
“prospects,” or similar expressions. The Company’s ability to predict results or
the actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse affect on the operations and future
prospects of the Company on a consolidated basis include, but are not limited
to: changes in economic conditions, legislative/regulatory changes, availability
of capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Company’s
financial results, is included herein and in the Company’s other filings with
the SEC.





**Plan
of Operation**





We were
organized on September 2, 2003 and currently have no operational activities. The
Fund will begin operations once we are capitalized and receive the minimum
investment of securities registered with the Securities and Exchange Commission.
Upon receiving this minimum, management anticipates distributing all funds held
in a segregated account and negotiating the purchase of the Fund’s first loans.
Management will be seeking to loan out all the funds assets from the start in
order to maximize the potential Fund earnings. While, it is management’s
preference to avoid larger loans in order to diversify risk, especially when its
capital is limited as is likely during the start up of Fund operations, it does
not expect to avoid larger loans as long as they offer the Fund a good
investment opportunity and there is sufficient capital available to purchase the
loan. However, investors should note that a larger loan would expose the fund to
substantial credit risk, as a default by a single borrower could substantially
reduce the fund’s assets.





Management
intends to begin with loans that have an upfront interest component of one year.
Thus, there will be less need to hire staff to support the loans during this
early period of operation. Management anticipates that its officers will be able
to negotiate, purchase, process and manage all loans for the first six months
following the initial funding. As new investment monies are received, management
will actively seek to use these funds, net of the fees described herein, to
purchase additional loans.





Our
primary business objective is to generate monthly income by investing in
mortgage loans with the money we receive from this offering. 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 that our Manager, MV Funding, utilizes
will be less strict than traditional mortgage lenders. In addition, one of our
competitive advantages is





4
 ***Table of Contents***





expected
to be 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 will
seek a higher interest rate and will take 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 will seek to generate higher yields
from our mortgage loans.




Our
operating results will be affected primarily by (i) the amount of capital we
will have to invest in mortgage loans, (ii) the level of real estate lending
activity in the markets we will 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 delinquencies, foreclosures and related loan losses
which we experience. We expect to raise funds through the sale of our Membership
interests and accordingly the size of our investment portfolio will be
contingent upon the success of this offering.




Adverse
economic conditions during the next year could have a material impact on the
collectibility of any loans we will make. Recognizing this risk, we will seek to
maintain low loan to value ratios. In this manner, we will hope to maintain a
sufficient cushion in the underlying equity position to protect the value of any
loan in the event of a default. Nevertheless, there can be no assurance that a
marked increase in loan defaults accompanied by a rapid decline in real estate
values would have a material adverse effect upon our operating results when we
commence operations.




Because
MV Funding’s officers have a significant degree of knowledge with respect to the
real estate markets in Nevada and certain Western states, it is likely most of
our loans will be concentrated in such states. Geographical concentration
creates greater risk that any downturn in such local real estate markets could
have a significant adverse effect upon our operating results when we commence
operations. Commercial real estate markets in Nevada have continued to prosper,
with significant borrowing activity.




We expect
to commence our operations when we receive financing from the sale of our
membership interests in our equity offering.




Significant
Accounting Policies





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.





Revenue
recognition





Interest
is recognized as revenue when earned according to the terms of the loan. The
Company does not recognize interest income on loans once they are determined to
be impaired or non-performing. 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.





Debt
securities





The
Company will classify its debt securities as held-to-maturity, as the Company
has the ability and the intent to hold the securities until maturity. These
securities will be recorded at amortized cost, adjusted for the amortization or
accretion of premiums or discounts. A decline in the market value of any
held-to-maturity security below cost that is deemed to be other than temporary
will result in a reduction in carrying amount to fair value. The impairment
would be charged to earnings and a new cost basis for the security would be
established. Premiums and discounts will be amortized or accreted over the life
of the related security as an adjustment to yield using the effective interest
method.





5
 ***Table of Contents***







Purchase
mortgage loans





The
Company has 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. The Company does not intend to purchase loans using
forward purchase commitments.





Investments
in mortgage loans





Investments
in mortgage loans are secured by trust deeds and mortgages. Such investments in
mortgage loans may include commercial, construction, acquisition and development
and land. Generally, all of the Company’s mortgage loans require interest only
payments with a balloon payment of the principal at maturity. The Company has
both the intent and ability to hold mortgage loans until maturity and therefore,
mortgage loans are classified and accounted for as held for investment and are
carried at amortized cost. Periodically, the Company will evaluate investments
in mortgage loans based upon loan to value ratios. Loan to value ratios are
based on appraisals obtained at the time of loan origination and may not reflect
subsequent changes in value estimates. Such appraisals, which may be
commissioned by the borrower, are generally dated within 12 months of the
date of loan origination. The appraisals may be for the current estimate of the
“as-if developed” value of the property, which approximates the
post-construction value of the collateralized property assuming that such
property is developed. As-if developed values on raw land loans or acquisition
and development loans often dramatically exceed the immediate sales value and
may include anticipated zoning changes and timely successful development by the
purchaser. As most of the appraisals will be prepared on an as-if developed
basis, if a loan goes into default prior to any development of a project, the
market value of the property may be substantially less than the appraised value.
As a result, there may be less security than anticipated at the time the loan
was originally made. If there is less security and a default occurs, the Company
may not recover the full amount of the loan.





Real
estate held for sale





Upon a
foreclosure of the underlying real property securing the investments in mortgage
loans, the Company will reclassify such asset as investments in real estate held
for sale. Investments in real estate held for sale are accounted for at the
lower of cost or fair value less costs to sell with fair value based on
appraisals and knowledge of local market conditions. It is not the Company’s
intent to invest in or own real estate as a long-term investment. The Company
seeks to sell properties acquired through foreclosure as quickly as
circumstances permit. Any costs of managing, maintaining and developing a real
property acquired through foreclosure shall be expensed in the period such costs
are incurred. Gain/loss related to real estate held for sale will be recognize
within the period of such sale assuming 25% or more of the sales price has been
collected within the same period.





Allowance
for loan losses





Investments
in loans are carried at their principal amount outstanding less any unearned
income or unamortized discount. Interest on loans is accrued and credited to
interest income based on the daily principal amount outstanding. Loans are
generally placed in nonaccrual status when principal or interest is delinquent
for 30 days (unless adequately secured and in the process of collection) or
circumstances indicate that full collection of principal and interest is in
doubt.








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**Item 3.     Controls and Procedures**





We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2004. This evaluation was carried
out under the supervision and with the participation of the Chief Executive
Officer (“CEO”) and the Chief Financial Officer (“CFO”) of MV Funding Group,
Inc., the Company’s Manager, who function as the equivalent of the CEO and CFO
of the Company. Based upon such evaluation, the Manager’s CEO and CFO have
concluded that, as of the Evaluation Date, the Company’s disclosure controls and
procedures were effective. There have been no significant changes in our
internal controls over financial reporting during the quarter ended December 31,
2004 that have materially affected or are reasonably likely to materially affect
such controls.





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.





Limitations
on the Effectiveness of Internal Controls





Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. An internal control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.














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**PART
II - OTHER INFORMATION**





**Item 1.     Legal
Proceedings**





None





**Item 2.     Unregistered Sales of Equity
Securities and Use of Proceeds**





Subsequent
to the reporting period on January 25, 2005, the registration statement filed on
Form S-1 (Commission file number 333-115444) was declared effective. This
offering has commenced and is ongoing.





**Item 3.     Defaults upon Senior
Securities**





None





**Item 4.     Submission of Matters to a
Vote of Security Holders**





None





**Item 5.  Other
Information**








**Item 6.      Exhibits**





**Exhibit
      Number**
    **Description
      of Exhibit**31.1
    Certification of Chief Executive Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
    Certification of Chief Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
    Certification of Chief Executive Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002











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**SIGNATURES**





In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.





**MV
      Fund II, LLC****By:  
      MV Funding Group, Inc., its sole manager**
      ****Date:
    May
      16, 2005By:/s/ 
      Sam
      Medley
      Sam
      Medley
      Title:****Chief
      Executive Officer of MV Funding Group, Inc.,
      sole Manager of MV Fund II, LLC














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