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U.S. SECURITIES AND EXCHANGE COMMISSION  FORM 10-KSB (Mark One) x
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the year ended December 31, 2003 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from _______________ to _______________ Commission File Number 000-24803 VESTIN GROUP, INC.  Delaware
    
    52-2102142(State or other jurisdiction of
    
    (I.R.S. Employerincorporation of organization)
    
    Identification No.)
 2901 El Camino Avenue, Suite 206, Las Vegas, Nevada 89102  (Address of principal executive offices)
 (702) 227-0965  (Issuers telephone number)
 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange
Act: Common Stock, $.0001 Par Value Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will
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-KSB or any amendment to this Form 10-KSB. x State issuers revenues
for its most recent fiscal year. $23,080,565 As of March 1, 2004, there were 5,328,340 shares of the issuers common
stock, $.0001 par value, issued and outstanding. The aggregate market value
of the common stock held by non-affiliates on March 1, 2004 was
approximately $9.32 million. The following items are the
subject of a Form 12b-25 and have been omitted from this report:
Items 6, 7, 8 and 8A and Exhibits 31.1, 31.2 and 32.




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Documents Incorporated By Reference None. Transitional Small Business Disclosure Format (check one): Yes o No x




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|              |                                                                                                                         |  |  |  |  |  |  | 
|------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I       
|              | ITEM 1. DESCRIPTION OF BUSINESS                                                                                        
|              | ITEM 2. DESCRIPTION OF PROPERTY                                                                                        
|              | ITEM 3. LEGAL PROCEEDINGS                                                                                              
|              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            
|PART II      
|              | ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                       
|PART III     
|              | ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|              | ITEM 10. EXECUTIVE COMPENSATION AND RELATED INFORMATION                                                                
|              | ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                
|              | ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                
|              | ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                                                              
|              | ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                        
|SIGNATURES   
|EXHIBIT INDEX
|EXHIBIT 10.14
|EXHIBIT 10.15
|EXHIBIT 10.16
|EXHIBIT 10.17
|EXHIBIT 10.18
|EXHIBIT 10.19
|EXHIBIT 10.20
|EXHIBIT 14.1 
|EXHIBIT 21.1 



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PART I NOTE REGARDING FORWARD LOOKING STATEMENTS This annual report and other written reports and oral statements made from time
to time by the Company may contain forward looking statements. Such forward
looking statements may be identified by the use of such words as experts,
plans, estimates, forecasts, projects, anticipates, believes and
words of similar meaning. Forward looking statements are likely to address such
matters as the Companys business strategy, future operating results, future
sources of funding for mortgage loans brokered by the Company, future economic
conditions and pending litigation involving the Company. As a result, investors
should carefully consider any forward looking statements in light of the
various factors which could affect future results. Some of these factors are
discussed below. 
 
 ITEM 1. DESCRIPTION OF BUSINESS The Company Vestin Group, Inc. (Vestin, the Company or we, us or our) is
primarily engaged in the commercial mortgage brokerage business. The Company
arranges loans to owners and developers of real property whose financing needs
are not being met by traditional mortgage lenders. The underwriting standards
and length of time required by traditional mortgage lenders, such as commercial
banks, results in certain potential borrowers who are unable to or unwilling to
go through the process required by traditional lenders. As a non-conventional
lender, the Company focuses on the needs of borrowers unable or unwilling to
meet the more restrictive requirements of traditional lenders. When evaluating
prospective borrowers, the Company will typically focus on the value of
collateral, which reduces the paperwork and time needed to evaluate other
factors. The Company conducts its operations primarily through Vestin Mortgage, Inc., a
wholly owned subsidiary (Vestin Mortgage or Manager). Vestin Mortgage
operates as a mortgage broker licensed in the state of Nevada. Vestin Mortgage
is engaged in the brokerage and placement of commercial loans secured by real
property. Vestin Mortgages primary operations consist of the brokerage and
placement of commercial, construction, acquisition and development, land, and
residential mortgage loans secured by real property as well as managing three
publicly held funds, Vestin Fund I, LLC (Fund I), Vestin Fund II, LLC (Fund
II), Vestin Fund III, LLC (Fund III, collectively referred to as the
Funds) and an entity owned by the Companys Chief Executive Officer, inVestin
Nevada, Inc. (inVestin Nevada). The Funds and inVestin Nevada invest in
mortgage loans. Fund III also intends to invest in real property. The Company was originally incorporated in Delaware on June 2, 1998 under the
name Sunderland Acquisition Corporation. We changed our name to Vestin Group,
Inc. on June 23, 2000. Our principal executive offices are located at 2901
El Camino Avenue, Suite 206, Las Vegas, Nevada 89102. Our telephone number is
702-227-0965. Mortgage Brokerage Operations The Companys mortgage business involves processing loan applications as well
as approving, funding, and servicing loans. In processing a loan application,
the Company will determine whether a proposed loan satisfies the Companys
lending criteria by analyzing the purpose of the loan, the value of the
underlying real estate, and the credit history and references of the borrower.
In order to verify a prospective borrowers equity in a property or project,
the Company typically receives an independent appraisal from an appraiser
licensed or qualified as an independent appraiser and who is certified by or
holds designations from one or more of the following organizations: the Federal
National Mortgage Association of Review Appraisers, the Appraisal Institute,
the Society of Real Estate Appraisers, M.A.I., or Class IV Savings and Loan
Appraisers. Generally, these appraisals are completed within twelve months
prior to funding of the loan and may have been previously performed for the
borrower. The appraisals may be for the current estimated as-if developed or
as-if completed 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. As-if completed or as-if developed
values on raw land loans or acquisition 1




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and development loans often dramatically exceed the immediate sales value and
may include anticipated zoning changes, selection by a purchaser against
multiple alternatives, and successful development by the purchaser; upon which
development is dependent on availability of financing. However, appraisals are
only estimates of value and cannot be relied on solely as measures of
realizable value. An employee or agent of Vestin Mortgage reviews each
appraisal report and conducts a physical inspection for each property. Additionally, the Company will order and review a property title search and
review the documentation provided to determine whether there exists sufficient
evidence of the borrowers right to the property or project. Generally,
employees of the Company will physically inspect the property to enhance the
Companys knowledge with respect to the underlying property in an effort to
ensure there is sufficient equity in the property to secure the financing. 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. The loan approval process of the Company typically involves a review by a loan
committee which generally consists of three or more officers of the Company
authorized to approve loans. The loan committee meets on a weekly basis or as
necessary to review potential loans, reports and other information regarding a
particular loan and/or borrower. Generally, the officers serving on the loan
committee have substantial experience in the real estate and mortgage lending
industries. The credit evaluation process may take up to 20 days as compared to
conventional lenders which may take up to 120 days or longer in approving a
particular loan. The loans brokered by the Company for the Funds typically require the borrowers
to execute promissory notes on the behalf of the Funds. The Funds receive
monthly interest payments from the promissory notes as paid by the borrowers.
Interest payments from the borrower may come from an interest reserve
established at loan closing. The interest reserve may be advanced by the
Company or other lenders with the amount of the borrowers indebtedness
increased by the amount of such advances. The deeds of trust grant a security
interest in the real property that serves as collateral for the loan. The
Company will arrange loans which generally range from 50-75% of the appraised
value of the property that serves as collateral for the loan in order to
provide protection for the investments while permitting a significant return.
The appraised value can increase or decrease as conditions and circumstances
affecting the property change. Such change can be significant. The general terms of a loan brokered by the Company typically include: (i) a
one to seven year maturity date; (ii) regular interest payments; and (iii) a
balloon payment of principal payable in full at the end of the term. To the
extent that a borrower has an obligation to pay mortgage loan principal in a
large lump sum payment, such borrowers ability to repay the loan may depend
upon its ability to sell the property, obtain suitable refinancing, or
otherwise raise capital. The Company monitors the repayment of the loans through its loan accounting
department which services the loans. Servicing agents in the loan accounting
department receive loan payments from the borrowers, disburse corresponding
payments to the applicable lenders, such as the Funds, and assist in collection
efforts on past due loans. Additionally, the servicing agents review loan
status reports and alert collection agents within the Company in the event a
borrower has not made a payment on its loan within one day of such payments
due date. Collection agents notify the delinquent borrower of its default and
allow the borrower to respond in a timely fashion prior to engaging in
foreclosure action. Should the Company be required to commence foreclosure
action on property serving as collateral to a loan in default, the Company will
simultaneously begin negotiations with potential purchasers of the foreclosed
property. Neither the Company nor the Funds intend to hold foreclosed
properties as investments. 2




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Management of Fund I, Fund II and Fund III Vestin Mortgage is the manager of Fund I, Fund II, and Fund III, all of which
are Nevada limited liability companies. As manager, Vestin Mortgage evaluates
prospective investments, selects the mortgages in which the Funds will invest
and makes all investment decisions for the Funds. Additionally, Vestin Mortgage
is responsible for all administrative matters such as accounting, tax and legal
requirements for the Funds. Vestin Mortgage records an annual management fee of
up to 0.25% of the aggregate capital contributions to the Funds per annum. The
Manager may, in its sole discretion, waive its management fee. For the year
ended December 31, 2003, the Manager recorded management fees of approximately
$254,000 from Fund I and $953,000 from Fund II as compared to $249,000 from
Fund I and $586,000 from Fund II for the same period in 2002. Amounts due from
Fund I totaling $401,705 and $530,873 as of December 31, 2003 and 2002,
respectively, and amounts due from Fund II totaling $1,431,253 and $1,247,156
for the same periods relate to management fees, earnings on units in Fund I and
reimbursable expenses. In connection with the organization of the Funds,
Vestin Mortgage received approximately 100,000 Units in Fund I for expenses
paid by Vestin Mortgage to unaffiliated third parties in connection with the
offering of units in Fund I, and 110,000 units from Fund II for such offering
expenses which is the maximum amount allowed for such expenses under the
Operating Agreement of Fund II. As of December 31, 2003, Fund III raised
approximately $1,616,247 of the required $10,000,000 to break escrow and
commence operations. Therefore, no management fees were earned by Vestin
Mortgage for the year ended December 31, 2003 for Fund III. As of February 12,
2004, Fund III raised the required $10,000,000 to break escrow and commence
operations. The Operating Agreements for
the Funds provide that Vestin Mortgage may be indemnified
for any action, claim or liability arising from any act or omission made in
good faith and in the performance of its duties under the Operating Agreement. Types of Loans Brokered The Company primarily brokers 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
property, residential and bridge loans. Raw and Unimproved Land Loans Approximately 15 - 25% of the loans placed by the Company are loans made for
the purchase or development of raw, unimproved land. Generally, the Company
determines whether to broker these loans based upon the appraised value of the
property and the borrowers actual capital investment in the property. The
Company will generally broker loans with a face value of up to 60% of the as-if
developed appraised value of the property and we usually require that the
borrower has invested in the property actual capital expenditures of at least
25% of the propertys value. As-if developed values on raw and unimproved land
loans often dramatically exceed the immediate sales value and may include
anticipated zoning changes, selection of a purchaser against multiple
alternatives, and successful development by the purchaser; upon which
development is dependent on availability of financing. Acquisition and Development Loans Approximately 10-25% of the loans placed by the Company are 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. Generally, the Company will broker loans
with a face value of up to 60% of the appraised value of the property. Loan to
value ratios on some acquisition and development loans may be calculated using
as-if developed appraisals. Such appraisals have the same valuation limitations
as raw and unimproved land loans, described above. Construction Loans Approximately 10-70% of the Companys brokered loans are 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 3




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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. The Company will typically require material and
labor lien releases by the borrower per completed phase of the project. The
Company will review the appraised value of the property and proposed
improvements, and will arrange loans for up to 75% of the appraised value. Loan
to value ratios on some construction loans may be calculated using as-if
developed appraisals. Such appraisals have the same valuation limitations as
raw and unimproved land loans as described above. Commercial Property Loans Approximately 20-50% of the loans placed by the Company are 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. The Company will review the appraised value of the property and
will broker loans for up to 75% of such appraised value. Residential Loans A small percentage of the loans brokered by the Company are residential loans.
Such loans facilitate the purchase or refinance of one to four family
residential property provided the borrower uses one of the units on the
property as such borrowers principal residence. The Company will place loans
for up to 75% of the appraised value of the property. Bridge Loans Up to 15% of the Companys brokered loans are bridge loans. Such loans provide
interim financing (up to six months) to enable commercial borrowers to qualify
for permanent refinancing. The Company will review the appraised value of the
property and will generally arrange for loans of up to 75% of that value. Such
appraisals may be based on either an as-is basis or as-if developed basis,
depending on the circumstances. Collateral The types of collateral that will secure the loans brokered by the Company
include a first deed of trust, a second deed of trust or a leasehold interest. First Deed of Trust The majority of the loans placed by the Company are secured by a first deed of
trust. Thus the applicable lender will have rights as a first mortgage lender
of the collateralized property. Second Deed of Trust Up to 10% of the loans placed by the Company may be in second mortgage loans
and in wraparound mortgage loans. 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. Leasehold Interest Up to 20% of the loans brokered by the Company may be in loans where the
collateral is an interest in a lease. Sources of Revenue The Companys mortgage brokerage operations generate revenues through (i) loan
placement fees on the loans it brokers; (ii) loan servicing fees; and (iii)
loan extension fees charged to borrowers who desire to extend the term of 4




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their loan(s). Mortgage brokerage operations accounted for approximately 96%
and 93% of the Companys revenues in 2003 and 2002, respectively. For each loan brokered by the Company, the Company receives a loan placement
fee typically between 2% to 6% of the principal amount of the loan. Such fee is
a competitive fee based upon local market conditions. An evaluation and
processing fee of up to 5% per loan is charged to document and package the
loan. Such fee is also a competitive fee based upon local market conditions.
The servicing fee for administering the financing is an annual fee up to .25%
of the outstanding principal of each loan. Loan extension fees may be up to 6%
of outstanding principal on the loan as determined by law and local market
conditions. Late charges are assessed for non-timely payments. During the year ended December 31, 2003, there were 65 mortgage loans placed by
the Company with an aggregate value of $266,843,250. During the year ended
December 31, 2002, there were 79 mortgage loans placed by the Company with an
aggregate value of $477,942,550. The majority of the loans placed by the
Company are secured by real estate located in Nevada and other western states
such as Arizona, California, Hawaii, Texas, Utah and Washington. The following chart sets forth a summary of the types of loans arranged by the
Company for the years ended December 31, 2003 and 2002. Number of
    
    Aggregate
    
    Loan Placement
    
    AverageLoans
    
    Dollar Amount
    
    Fees by Loan
    
    Origination FeesLoan Type
    
    Originated
    
    in Total
    
    Type
    
    as % of Loans2003Bridge and
Residential Loans
    
    
    32
    
    
    $
    15,658,750
    
    
    $
    361,820
    
    
    
    2.31
    %Construction
and Acquisition and Development Loans
    
    
    17
    
    
    
    87,191,500
    
    
    
    5,025,119
    
    
    
    5.76
    %Land Loans
    
    
    3
    
    
    
    43,618,000
    
    
    
    1,649,950
    
    
    
    3.78
    %Commercial Loans
    
    
    13
    
    
    
    120,375,000
    
    
    
    6,211,050
    
    
    
    5.16
    %65
    
    
    $
    266,843,250
    
    
    $
    13,247,939
    
    
    
    4.96
    %2002Bridge and
Residential Loans
    
    
    15
    
    
    $
    31,205,050
    
    
    $
    1,217,496
    
    
    
    3.90
    %Construction
and Acquisition and Development Loans
    
    
    25
    
    
    
    226,836,000
    
    
    
    11,084,200
    
    
    
    4.89
    %Land Loans
    
    
    12
    
    
    
    34,271,500
    
    
    
    1,047,450
    
    
    
    3.06
    %Commercial Loans
    
    
    27
    
    
    
    185,630,000
    
    
    
    7,422,825
    
    
    
    4.00
    %79
    
    
    $
    477,942,550
    
    
    $
    20,771,971
    
    
    
    4.35
    %
 Investment in Mortgage Loans and Other Investments The Funds are a primary source of money for loans originated by the Company.
From time to time, the Company may co-invest in certain mortgage loans with
participating lenders. The type and nature of such mortgage loans generally
mirror the composition of loans placed through the Companys mortgage brokerage
operations. As of December 31, 2003, the Company held for investment approximately
$8,474,445 before valuation allowance of $1,795,670 of interests in mortgage
loans. Interest income generated by such types of investments comprised less
than 5% of the Companys revenues for 2003 and 2002. In the event of a default of loans in which the Company invested, the Company
will initiate foreclosure activity on the property securing the corresponding
loan and as a result, own such real estate. The types of real estate which the
Company may own as a result of foreclosure include raw and undeveloped land and
commercial and residential 5




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properties. Simultaneously with the foreclosure actions, the Company anticipates entering into negotiations with
potential purchasers of such property. At December 31, 2003, the Company had
eight properties totaling $6,678,774 net of valuation allowance of $1,795,660,
which were acquired through foreclosure and recorded as investments in real
estate held for sale. Such investments in real estate held for sale are
recorded at the lower of cost or fair value less costs to sell, based on
appraisals and knowledge of local market conditions. It is not the Companys
intent to invest in or own real estate acquired through foreclosure. The
Company seeks to sell properties acquired through foreclosure as quickly as
circumstances permit. As of December 31, 2003, the Company held approximately 100,000 units in Fund
I, representing approximately 1% of the equity of Fund I, and 110,000 units in
Fund II, representing approximately 0.3% of the equity of Fund II. The primary
activity of the Funds consists of investing in mortgage loans. The Company
serves as manager of the Funds and evaluates loans to determine which loans the
Funds should invest in. As of December 31, 2003, the Company had an investment
in Fund III of approximately $673,088, which consists of certain costs paid on
behalf of Fund III related to the registration and start-up costs. As of
February 12, 2004, Fund III raised the required $10,000,000 to break escrow and
commence operations. Such costs will be converted into membership
units at a conversion price of $10 per unit once Fund III receives
sufficient gross proceeds to ensure that such costs do not exceed 2%
of the gross proceeds received by the Company. If converted into
units, Vestin Mortgage would have received 67,309 units in Fund
III related to this investment. Competition The Company must compete both for sources of funds to finance the mortgage
loans which it brokers and for borrowers who are seeking mortgage loans. Competition for Funds Historically, the main source of the Companys funds had been individual
investors interested in the investment opportunity offered by the Company.
Since 2001 the main source of the Companys revenues have been the Funds. In
seeking investors for the Funds, the Company competes with alternative
investment vehicles as well as competing mortgage brokers. The attractiveness
of the Companys mortgage loans as compared with other investment opportunities
depends upon the yields on loans placed by the Company, the safety of the
underlying investment, the Companys reputation, general economic conditions
and real estate market conditions. The increase in
non-performing assets in the Funds and the resulting decline in rate
of return and unit values has adversely affected the Company's
ability to compete for new investors. In addition, the Company is at a disadvantage compared to
alternative investment vehicles to the extent that an investment in mortgage
loans lacks liquidity and is not guaranteed or insured by a governmental
agency. In addition, the Company is smaller than many of the full service
financial firms which market alternative investment vehicles and has a more
limited operating history. In competing with other mortgage brokers, the Company has been a leading
non-traditional real estate lender in southern Nevada. However, this may carry
less weight as the Company expands its operations into other markets. Competition for Borrowers Generally, real estate developers depend upon the timely completion of a
project to obtain a competitive advantage when selling their properties. The
Company has sought to attract real estate developers by offering expedited loan
processing, which generally provides quick loan approval and funding of a loan.
As a result, the Company has established a market niche as a non-conventional
mortgage lender. The Company considers its direct competitors 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. To a lesser extent, the Company also competes
with conventional mortgage lenders and mortgage loan investors, such as
commercial banks, thrifts, conduit lenders, insurance companies, mortgage
brokers, pension funds and other financial institutions that offer conventional
mortgage loans. The Companys principal competitors in its market niche as a
non-conventional mortgage lender include: USA Capital, Residential Funding,
First Security Bank, and United Bank of Texas. Many of the companies against
which the Company competes have substantially greater financial, technical and
other resources than the Company. Competition in the Companys 6




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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. Other Business Operations The Company conducts other operations through its subsidiaries. Vestin
Capital, Inc., a wholly owned subsidiary of the Company, serves as the lead
broker dealer on the sale of units for Fund I, Fund II, and Fund III and also
provides administrative services. Vestin Capital does not receive any
commissions from the sale of units for Fund I and Fund II. Rather, Vestin
Capital receives an administrative fee from Vestin Mortgage related to the
maintenance of investor files. Vestin Advisors, Inc., a wholly owned subsidiary of the Company, is a passive
non-bank custodian that serves as a custodian for individual retirement
accounts of investors in Vestin products. Government Approval and Regulation The primary operations of Vestin Group are conducted through its wholly owned
operating subsidiary, Vestin Mortgage. These operations are subject to
regulation by federal, state and local laws and governmental authorities.
Vestin Mortgage conducts its real estate mortgage business under a privileged
license issued by the State of Nevada Financial Institutions Division (the
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. 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. In April 1999, Vestin Group (then
known as Sunderland Acquisition Corporation) acquired the customer lists, good
will and certain other intangible assets of Del Mar Mortgage and assumed
certain liabilities related to such assets. Neither Vestin Group (then
Sunderland Acquisition Corporation) nor Vestin Mortgage (then known as
Capsource, Inc.) acquired any loans or other financial assets of Del Mar
Mortgage, which continued to operate as an independent business. In
contemplation of such acquisition, Vestin Group (then Sunderland Acquisition
Corporation) and Vestin Mortgage (then Capsource, Inc.) agreed to be bound by
the terms of the Order. The Company is required to comply with 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. The
Company is 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. Because the Companys business is regulated, the laws, rules and regulations
applicable to the Company are subject to regular modification and change. There
can be no assurance that laws, rules or regulations will not be adopted in the
future that could make compliance much more difficult or expensive, restrict
the Companys ability to broker or service loans, further limit or restrict the
amount of commissions, interest and other charges earned on loans brokered by
the Company, or otherwise adversely affect the business or prospects of the
Company. 7




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Employees As of March 1, 2004, the
Company and its subsidiary, Vestin Mortgage, employed 43 personnel of which one was a
part-time employee. Of these employees, 16 were employed to identify, arrange,
and service loans and 27 performed general and administrative as well as
information technology and marketing functions. The Company has entered into
employment agreements with certain officers and key employees. No employees are
covered by a collective bargaining agreement. Available Information Our Internet website address is www.vestingroup.com. We make available free of
charge this website our Annual Reports on Form 10-KSB, Quarterly Reports on
Form 10-QSB, Current Reports on Form 8-K and all amendments to those reports as
soon as reasonably practicable after such material is electronically filed with
or furnished to the Securities and Exchange Commission. 
 ITEM 2. DESCRIPTION OF PROPERTY The Company currently maintains its executive offices at 2901 El Camino Avenue,
Las Vegas, Nevada 89102. The Companys office is approximately 15,000 square
feet and houses the Companys marketing, loan processing and administrative
personnel. The Company leases its principal executive offices from
The Wildwood Hills Development, Corporation. The lease agreement governing this property
expires in April 2006 and the base rent is approximately $36,000 per month. The Company has entered into a new lease for its executive offices which are
currently under construction at Durango Road and the 215 Beltway in Las Vegas,
Nevada with Luke Properties, LLC. The Company believes that construction will
be completed in summer 2004. The Company is attempting to sublease its current
office space. The Companys new office space is approximately 41,614 square
feet. The new lease agreement governing this property will expire in March
2014 and the base rent is approximately $72,824.50 per month. The Company
anticipates that it will need to make $100,000 to $150,000 in tenant
improvements in excess of the allowance provided by the landlord. The Company
believes that the new leased office space is adequate for its current
operations. 
 ITEM 3. LEGAL PROCEEDINGS Vestin Group, Vestin Mortgage, and Del Mar Mortgage, Inc., a company wholly
owned by Michael Shustek, the largest stockholder and CEO of Vestin Group are
defendants in a civil action entitled Desert Land, L.L.C. et al. v. Owens
Financial Group, Inc. et al (the Action). The Action was initiated by Desert
Land, L.L.C. (Desert Land) on various loans arranged by Del Mar Mortgage,
Inc. and/or Vestin Mortgage. On April 10, 2003, the United States District
Court for the District of Nevada (the Court) entered judgment jointly and
severally in favor of Desert Land against Vestin Group, Vestin Mortgage and Del
Mar Mortgage, Inc. Judgment was predicated upon the Courts finding that Del
Mar Mortgage, Inc. received an unlawful penalty fee from the plaintiffs. Defendants subsequently filed a motion for reconsideration. The Court denied
the motion and, on August 13, 2003, held that Vestin Group, Vestin Mortgage,
and Del Mar Mortgage, Inc. are jointly and severally liable for the judgment in
the amount of $5,683,312.19 (which amount includes prejudgment interest and
attorneys fees). On August 27, 2003, the Court stayed execution of the
judgment against Vestin Group and Vestin Mortgage based upon the posting of a
bond in the amount of $5,830,000. The bond was arranged by Michael Shustek and
was posted without any cost or obligation to Vestin Group and Vestin Mortgage.
Additionally, Del Mar Mortgage, Inc. has indemnified Vestin Group and Vestin
Mortgage for any losses and expenses in connection with the Action, and Mr.
Shustek has guaranteed the indemnification. On September 12, 2003, all of the
defendants held liable to Desert Land appealed the judgment to the United
States Court of Appeals for the Ninth Circuit. The staff of the Pacific Regional Office of the Securities and Exchange
Commission (SEC) has been conducting an informal inquiry into certain matters
related to the Company, Fund I, Fund II and Fund III. The staff of the SEC 8




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##### Table of Contents



has not identified the reasons for its inquiry, which remains ongoing as of
March 30, 2004. We believe that we have fully complied with SEC disclosure
requirements and are fully cooperating with the inquiry. We cannot at this time
predict the outcome of the inquiry. The Company and its subsidiaries are involved in a number of legal proceedings
concerning matters arising in connection with the conduct of their business
activities. The Company believes it has meritorious defenses to each of these
actions and intends to defend them vigorously. The Company believes that it is
not a party to, nor are any of its subsidiaries the subject of, any pending
legal or arbitration proceedings that would have a material adverse effect on
the Companys financial condition or results of operations or cash flows,
although it is possible that the outcome of any such proceedings could have a
material impact on the Companys net income in any particular period. 9




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS We held our 2003 Annual Meeting of Stockholders as further discussed below:  (a)
    
    Our 2003 Annual Meeting of Stockholders was held on November 24,
2003 in San Diego, California.(b)
    
    Proxies for the Annual Meeting of Stockholders were solicited
pursuant to Regulation 14 under the Securities and Exchange Act of
1934, as amended. There was no solicitation in opposition to the
nominees in the proxy statement, and all of such nominees were elected.  (c)
    
    At the Annual Meeting of Stockholders the following matters were
considered and voted upon:  1.
    
    The election of five directors to serve on the Companys Board of
Directors until the 2004 Annual Meeting of Stockholders or until their
successors are duly elected and qualified. Nominee
    
    Votes For
    
    Votes Against
    
    AbstentionsMichael V. Shustek
    
    
    4,596,035
    
    
    
    0
    
    
    
    34,750Lance K. Bradford
    
    
    4,598,035
    
    
    
    0
    
    
    
    32,750Robert J. Aalberts
    
    
    4,599,035
    
    
    
    0
    
    
    
    31,750David Chavez
    
    
    4,599,035
    
    
    
    0
    
    
    
    31,750Roland M. Sansone
    
    
    4,599,035
    
    
    
    0
    
    
    
    31,750
  2.
    
    To ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ended December 31, 2003. Votes For
    
    Votes Against
    
    Abstentions4,623,885
    
    
    4,800
    
    
    
    2,100
 10




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##### Table of Contents



PART II 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information The Companys Common Stock is traded on the Nasdaq National Market under the
ticker symbol VSTN. The Company has received notice from the Nasdaq that it
no longer meets the minimum value of publicly held shares required for the
Companys inclusion on the Nasdaq National Market. The Company has been
afforded an opportunity to regain compliance or transfer to the Nasdaq Small
Cap Market. The Company is currently contemplating transferring its securities
to the Nasdaq Small Cap Market. The table below lists the quarterly high and low sales prices for the Common
Stock as reported by the Nasdaq for the four quarters in 2003 and 2002. As of
March 15, 2004, the closing sale price for the Companys Common Stock was $2.00
per share. NasdaqUS $High
    
    US $Low2003First Quarter
    
    
    7.00
    
    
    
    5.20Second Quarter
    

    
    6.01
    
    
    
    2.92Third Quarter
    
    
    3.70
    
    
    
    2.22Fourth Quarter
    
    
    3.15
    
    
    
    1.852002First Quarter
    
    
    8.02
    
    
    
    5.05Second Quarter
    
    
    9.75
    
    
    
    6.80Third Quarter
    
    
    9.20
    
    
    
    6.11Fourth Quarter
    
    
    7.84
    
    
    
    6.55
 Holders On March 1, 2004, there were approximately 145 stockholders of record of the
Companys Common Stock, which does not reflect the beneficial stockholders
whose shares are held in nominee names. Dividends Any determination to pay dividends is at the discretion of the Companys Board
of Directors and will depend upon the Companys financial condition, results of
operations, capital requirements, limitations contained in loan agreements and
such other factors as the Board of Directors deems relevant. According to the
Companys Certificate of Designations, holders of the Companys Series A
Preferred Stock are entitled to receive, when, as and if declared by the Board
of Directors, dividends in an amount to be determined by the Board of
Directors, but not less than 0.83% of the Original Issue Price per annum
(initially set at $10) and not more than 10% of the Original Issue Price per
annum, prior and in preference to any declaration or payment of any dividends
on the Common Stock, which may be paid in cash or in Common Stock and are not
cumulative. The Company paid approximately $901,911 in dividends to Preferred
Stock shareholders during 2003. During the year 2003 the Company declared
dividends on Common Stock as follows: Month
    
    Dividend PerDeclared
    
    Common ShareMarch
    
    $
    0.12
 11




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Recent Sales of Unregistered Securities None. 12




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PART III 
 ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
 The following sets forth certain information regarding the directors and
executive officers of Vestin Group as of March 15, 2004: Name
    
    Age
    
    TitleMichael V. Shustek
    
    
    45
    
    
    Chairman of the Board, Chief Executive Officer, President and DirectorLance K. Bradford
    
    
    37
    
    
    Treasurer, Chief Financial Officer and DirectorIra S. Levine
    
    
    43
    
    
    SecretaryMichael J. Whiteaker
    
    
    54
    
    
    Vice President of Regulatory AffairsPeggy S. May
    
    
    34
    
    
    Vice President of Vestin Mortgage, a subsidiary of Vestin GroupDaniel B. Stubbs
    
    
    42
    
    
    Senior Vice President, Underwriting of Vestin Mortgage, a subsidiary
of Vestin GroupRobert J. Aalberts
    
    
    53
    
    
    DirectorDavid Chavez
    
    
    39
    
    
    DirectorRoland M. Sansone
    
    
    49
    
    
    Director
 All the directors of Vestin Group hold office until the next annual meeting of
stockholders. The last annual meeting of Vestin Group stockholders was November
24, 2003. Michael Shustek can cause a change in the Board of Directors of
Vestin Group by virtue of his controlling ownership interest in Vestin Group.
The By-laws of Vestin Group provide for up to five directors and permit the
Board of Directors to fill any vacancy on the Board of Directors. Officers of
the company serve at the discretion of the Board of Directors. 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: Robert J. Aalbertshas been a director of Vestin Group since April 1999. Since
1991, Professor Aalberts has held the Ernst Lied Professor of Legal Studies
professorship at the University of Nevada, Las Vegas. From 1984 to 1991,
Professor Aalberts was an Associate Professor of Business Law at Louisiana
State University in Shreveport, Louisiana. From 1982 through 1984, he served as
an attorney for Gulf Oil Company. Professor Aalberts has co-authored a book
relating to the regulatory environment, law and business of real estate; and he
is the author of numerous legal articles, dealing with various aspects of real
estate, business and the practice of law. Professor Aalberts received his Juris
Doctor degree from Loyola University, in New Orleans, Louisiana and received a
Bachelor of Arts degree in Social Sciences, Geography from the Bemidji State
University in Bemidji, Minnesota. He is admitted to the State Bar of
Louisiana. Lance K. Bradfordhas served as Chief Financial Officer, Treasurer and
Secretary and a director of Vestin Mortgage and Treasurer and a director of
Vestin Group since April 1999. In addition, Mr. Bradford was appointed as Chief
Financial Officer of Vestin Group in February 2004 and serves on the Companys
loan committee. Mr. Bradford also served as President of Vestin Group from
January 2001 until February 2004. Mr. Bradford previously held the office of
Chief Financial Officer of Vestin Group from 1999 to September 2002. Mr.
Bradford also acts as the functional equivalent of a Chief Financial Officer
for both Vestin Fund I and Vestin Fund II. Mr. Bradford was also the Corporate
Secretary of Vestin Group from 1999 to 2000. 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. David Chavezhas served as the chief executive officer of Chavez & Koch, a
business consulting and certified public accounting firm since 1996. Prior to
1996, Mr. Chavez served in both the tax and audit practices of Arthur Andersen.
Mr. Chavez serves as the chairman of the Henderson Chamber of Commerces
Business Action 13




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##### Table of Contents



Committee. Mr. Chavez received his Bachelor of Science in Business
Administration from the University of Nevada, Las Vegas with a concentration in
Accounting. Mr. Chavez is a certified public accountant. Ira S. Levinehas been the Corporate Secretary of Vestin Group since January
2001. Mr. Levine also served as the Executive Vice President of Legal and
Corporate Affairs from September 2000 to December 2003. Mr. Levine received
his Bachelor of Science in Business Administration specializing in Accounting
from the University of Nevada in 1982, his Juris Doctor from Pepperdine
University School of Law in 1985 and his Masters of Legal Letters in Taxation
from New York University in 1986. Mr. Levine is a member of the state bars of
both Nevada and California. Since July 2003, Mr. Levine has been a partner of
Levine, Garfinkel & Katz, LLP. From 1997 to 2003, Mr. Levine was a partner in
the law firm of Berkley, Gordon, Levine, Goldstein & Garfinkel, LLP. Prior to
that he was a shareholder in the law firm of Levine, McBride & Garfinkel, LLP.
From 1995 to 1997, Mr. Levine was a shareholder in the law firm of Quartes &
Brady LLP, formerly known as Streich Lang. Prior to that, Mr. Levine was senior
vice president, secretary and general counsel of United Gaming, Inc. now known
as Alliance Gaming, Inc. Mr. Levine started his legal career with the law firm
of McKenna Long & Aldridge LLP formerly known as McKenna, Conner & Cuneo in Los
Angeles, California. Peggy S. Mayhas been with Vestin Group since September 1995, and is currently
Vice President of Vestin Mortgage. Ms. May was the President of Vestin
Mortgage from January 2001 to February 2004. From 1997 to 2000, Ms. May was the
Senior Vice President of Vestin Mortgage. Ms. May 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.
Ms. May is the former wife of Mr. Shustek, the
Companys Chief Executive Officer, President and Chairman. Roland M. Sansonehas served as President of Sansone Development, Inc. since
2002. Sansone Development, Inc. is a real estate development company. Mr.
Sansone has been self-employed as a manager and developer of real estate since
1980. Mr. Sansone is currently the president of several companies that develop,
own and manage commercial and residential property. Mr. Sansone attended Mt.
San Antonio College. Michael V. Shustekhas been a director of Vestin Mortgage, a subsidiary of
Vestin Group, and Chairman of the Board of Directors, Chief Executive Officer
and a director of Vestin Group since April 1999. In February 2004, Mr. Shustek
became the President of Vestin Group. Mr. Shustek also serves on the Companys
loan committee. In 2003, Mr. Shustek became the Chief Executive Officer of
Vestin Mortgage. 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. Mr. Shustek has co-authored
two books, entitled Trust Deed Investments, on the topic of private mortgage
lending, and If I Can Do It, So Can You. 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. Mr. Shustek is
the former husband of Ms. May, the Vice President of Vestin
Mortgage. Daniel B. Stubbshas been the Executive Vice President, Underwriting of Vestin
Mortgage since January 2000. Mr. Stubbs is responsible for analyzing the risks
of each loan as well as prescribing Title Insurance coverage for each
individual transaction. In addition, Mr. Stubbs serves on the loan committee
and acts as a liaison between Vestin Mortgage and the various banks that carry
its lines of credit. Mr. Stubbs has over 13 years experience in the Title
Insurance industry. Mr. Stubbs received his Bachelor of Arts in Communications
Studies from the University of Nevada, in Las Vegas, Nevada. Michael J. Whiteakerhas been Vice President of Regulatory Affairs of Vestin
Group since May 14, 1999 and is experienced in the banking and finance
regulatory fields, having most recently served with the State of Nevada,
Financial Institution Division from 1982 to 1999 as its Supervisory Examiner,
responsible for the financial and regulatory compliance audits of all financial
institutions in Nevada. Mr. Whiteaker has worked extensively on matters
pertaining to both state and federal statutes, examination procedures, policy
determination and credit administration for commercial and real estate loans.
From 1973 to 1982 Mr. Whiteaker was Assistant Vice President of Nevada National
Bank, responsible for a variety of matters including loan review. 14




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##### Table of Contents



Audit Committee Vestin Group has established an Audit Committee currently comprised of
Robert Aalberts, David Chavez, and Roland Sansone. The Board of Directors
of the Company believes that Mr. Chavez is an audit committee financial
expert as defined in Item 401(e) of Regulation S-B and meets the
definition of independent director as defined in Rule 4200 of the
Marketplace Rules of the National Association of Securities Dealers, Inc. Director Compensation We pay our non-employee directors a retainer of $1,500 for each Board meeting
attended in person, $750 per Board meeting attended by telephone conference and
$500 for each committee meeting attended, whether in person or by telephone.
Non-employee directors are reimbursed for reasonable travel time and other
out-of-pocket expenses incurred in connection with attendance at meetings of
the Board of Directors and committees of the Board of Directors. Each outside
director typically receives 15,000 options to acquire the Companys common
stock at the then fair market value on the date the non-employee director is
elected to the Board. Employee directors do not receive any additional compensation for serving as
members of our Board of Directors or any committee of our Board of Directors.
Employee directors are eligible to participate in our compensation and benefit
plans that are generally available to our other employees, including the
receipt of stock options under our 2000 Stock Option Plan and 401(k) Plan. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Companys executive officers and directors, and persons who own more than 10%
of a registered class of its equity securities, to file an initial report of
securities ownership on Form 3 and reports of changes in securities ownership
on Form 4 or 5 with the Securities and Exchange Commission. Such executive
officers, directors and 10% stockholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on the Companys review of the copies of such forms received by
the Company, or written representations from certain reporting persons that no
Forms 4 or 5 were required for such persons, the Company believes that, for the
2003 fiscal year, the Companys executive officers and directors timely filed
all reports required under Section 16(a) for such fiscal year. CODE OF ETHICS The Company has adopted a code of ethics that applies to the executive officers
and senior financial and accounting officers of the Company. The Companys
code of ethics has been filed as Exhibit 14.1 to this Report. If we make any
substantive amendments to the code of ethics or grant any waiver, including any
implicit waiver, from a provision of the code of ethics to our chief executive
officer, chief financial officer or chief accounting officer, we will disclose
the nature of such amendment or waiver on our website or in a Report on Form
8-K or quarterly or annual report under the Securities and Exchange Act of
1934. 
 ITEM 10. EXECUTIVE COMPENSATION AND RELATED INFORMATION The following Summary Compensation Table sets forth the compensation paid or
awarded for the fiscal year ended December 31, 2003 to Vestin Groups and
Vestin Mortgage, Inc.s Chief Executive Officer and the next most highly
compensated executive officers whose compensation for the fiscal year ended
December 31, 2003 exceeded $100,000. The individuals included in the following
table are collectively referred to as the Named Executive Officers. 15




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##### Table of Contents



Summary Compensation Table Annual Compensation
    
    Long-Term CompensationAwards
    
    PayoutsRestricted
    
    SecuritiesOther Annual
    
    Stock
    
    Underlying
    
    LTIP
    
    All OtherSalary
    
    Bonus
    
    Compensation
    
    Award(s)
    
    Options/SARs
    
    Payouts
    
    CompensationName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)(4)
    
    ($)
    
    (#)
    
    ($)
    
    ($)Michael V. Shustek
    
    
    2003
    
    
    
    150,000
    
    
    
    875,000
    
    
    
    0
    
    
    
    0
    
    
    
    500,000
    
    
    
    0
    
    
    
    0Chief Executive Officer
    
    
    2002
    
    
    
    793,500
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    500,000
    
    
    
    0
    
    
    
    0of the Company
    
    
    2001
    
    
    
    852,000
    
    
    
    20,529
    
    
    
    0
    
    
    
    0
    
    
    
    500,000
    
    
    
    0
    
    
    
    0Stephen J. Byrne (1)
    
    
    2003
    
    
    
    200,000
    
    
    
    166,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Chief Operations Officer
    
    
    2002
    
    
    
    361,100
    
    
    
    14,175
    
    
    
    0
    
    
    
    0
    
    
    
    100,000
    
    
    
    0
    
    
    
    0of the Company and Chief Executive
Officer of Vestin Mortgage
    
    
    2001
    
    
    
    332,908
    
    
    
    22,406
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Lance K. Bradford
    
    
    2003
    
    
    
    200,000
    
    
    
    122,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Chief Financial Officer
    
    
    2002
    
    
    
    302,160
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    200,000
    
    
    
    0
    
    
    
    0and Treasurer of the Company
    
    
    2001
    
    
    
    296,500
    
    
    
    2,597
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Peggy S. May
    
    
    2003
    
    
    
    160,000
    
    
    
    43,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Vice President of Vestin
    
    
    2002
    
    
    
    176,100
    
    
    
    62,009
    
    
    
    0
    
    
    
    0
    
    
    
    63,334
    
    
    
    0
    
    
    
    0Mortgage(2)
    
    
    2001
    
    
    
    132,667
    
    
    
    29,000
    
    
    
    0
    
    
    
    0
    
    
    
    35,000
    
    
    
    0
    
    
    
    0John Alderfer
    
    
    2003
    
    
    
    178,750
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Chief Financial Officer(3)
    
    
    2002
    
    
    
    175,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    02001
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Daniel B. Stubbs
    
    
    2003
    
    
    
    121,800
    
    
    
    20,685
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Senior Vice President,
    
    
    2002
    
    
    
    128,174
    
    
    
    70,000
    
    
    
    0
    
    
    
    0
    
    
    
    50,000
    
    
    
    0
    
    
    
    0Underwriting of Vestin
Mortgage
    
    
    2001
    
    
    
    90,000
    
    
    
    49,395
    
    
    
    0
    
    
    
    0
    
    
    
    10,000
    
    
    
    0
    
    
    
    0
  (1)
    
    Mr. Byrne resigned his position as Chief Operations Officer of the Company and as Chief Executive Officer of Vestin Mortgage in 2003. Mr. Byrnes 2003 compensation represents his total annual compensation. Mr. Byrnes
prorated salary was $191,666 and he received $180,000 in severance by the Company in 2003 and $180,000 in January of 2004. The compensation for Mr. Byrne includes compensation for services rendered to Vestin Mortgage,
Inc. as its Chief Executive Officer.(2)
    
    The compensation for Ms. May includes compensation for services rendered to Vestin Mortgage and Vestin Capital, Inc. All of Ms. Mays 2003 compensation was paid directly by Vestin Capital, Inc., and all of her 2002
compensation was paid for by Vestin Mortgage, and Vestin Mortgage and Vestin Capital each paid 50% of her compensation in 2001.(3)
    
    Mr. Alderfer joined Vestin Group in September 2002 and
resigned his position as Chief Financial Officer of the Company in
February 2004. Mr. Alderfers 2002 compensation
represents his total annual compensation. Mr. Alderfers
prorated salary was $43,750 and his bonus $500. Mr.
Alderfer received $102,500 in severance by the Company in February of 2004.(4)
    
    None of the Named Executive Officers received other annual compensation exceeding the lesser of $50,000 or 10% of their salary and bonus for the relevant year. Option Grants in Last Fiscal Year The following Option and Warrant/ SAR Grants Tables set forth the individual
grants of stock options made in fiscal 2003 to Vestin Groups Named Executive
Officers named in the Summary Compensation Table above.  16




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##### Table of Contents



Option & Warrant/ SAR Grants in Fiscal Year 2003
(Individual Grants) Number of
    
    Percent of TotalSecurities
    
    Options/SARsUnderlying
    
    Granted to
    
    Exercise orOptions/SARs
    
    Employees
    
    Base
    
    ExpirationName
    
    Granted(#)
    
    in Fiscal 2003(%)
    
    Price($/SH)
    
    DateMichael V. Shustek
    
    
    500,000
    
    
    
    98.1
    %
    
    $
    2.03
    
    
    
    12/12/2013
 Aggregated Option Exercises and Fiscal Year-End Values The following table sets forth information with respect to each of our
Named Executive Officers named in the Summary Compensation Table concerning
the exercise of stock options during the 2003 fiscal year and the number of
shares subject to unexercised stock options held at the close of such
fiscal year. No stock appreciation rights were exercised during the 2003
fiscal year, and no stock appreciation rights were outstanding at the close
of such year. In the following table, Value Realized is equal to the difference between
the fair value of the shares at the time of exercise and the exercise price
paid for the shares and the Value of Unexercised In-The-Money Options is
based the closing selling price per share at the close of the 2003 fiscal
year less the exercise price payable per share. Options are In-the-Money
if the fair market value of the underlying options exceeds the exercise
price of the option. Number of Shares of Common
    
    Value of UnexercisedStock Underlying Unexercised
    
    In-the-Money OptionsSharesAcquired on
    
    Value
    
    Options at December 31, 2003
    
    at December 31, 2003Name
    
    Exercise (#)
    
    Realized ($)
    
    Exercisable
    
    Unexercisable
    
    Exercisable ($)
    
    Unexercisable ($)Michael V. Shustek
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    265,000
    
    
    
    Stephen J. Byrne
    
    
    
    
    
    
    
    
    
    
    133,330
    
    
    
    
    
    
    
    
    
    
    
    Lance K. Bradford
    
    
    
    
    
    
    
    
    
    
    66,660
    
    
    
    133,340
    
    
    
    
    
    
    
    Peggy S. May
    
    
    
    
    
    
    
    
    
    
    66,109
    
    
    
    42,225
    
    
    
    
    
    
    
    John Alderfer
    
    
    
    
    
    
    
    
    
    
    16,665
    
    
    
    33,335
    
    
    
    
    
    
    
    Daniel Stubbs
    
    
    
    
    
    
    
    
    
    
    31,665
    
    
    
    33,335
    
    
    
    
    
    
    
    
 EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS In December 1999, we entered into an Employment Agreement with Michael V.
Shustek to serve as our Chief Executive Officer. Pursuant to the agreement, Mr.
Shustek is entitled to receive a minimum annual salary of $720,000 and such
additional salary as our Board of Directors deems appropriate. Mr. Shustek is
also entitled to receive an automobile allowance in the amount of $1,000 per
month during the term of the agreement. The agreement additionally provides
that Mr. Shustek is to receive warrants to purchase up to 500,000 shares of our
common stock each year during the term of the agreement. The agreement
terminates on November 30, 2002, but will continue for successive one year
periods unless either we or Mr. Shustek provide thirty days notice. In 17




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##### Table of Contents



February 2004, Mr. Shustek assumed the title of President along with the day-to-day
operational responsibilities associated with that position. On January 1, 2003, we entered into an Employment Agreement with Lance K.
Bradford to serve as our President. Pursuant to the agreement, Mr. Bradford is
entitled to receive an initial annual salary of $200,000 and performance
bonuses as our Board of Directors deems appropriate. Mr. Bradford is also
entitled to receive an automobile and living allowance in the amount of $1,000
per month during the term of the agreement. The agreement also provides that
Mr. Bradford will be entitled to an amount equal to the lesser
of six months,
salary or the salary due for the remaining term of his agreement in the event
that Mr. Bradford is terminated without Cause, as such term is defined in the
agreement. The agreement terminates December 31, 2008 but will continue for
successive one year periods unless either we or Mr. Bradford provide thirty
days notice. In February 2004, Mr. Bradford relinquished his title of
President in order to devote all of his energies as our new Chief Financial
Officer. Peggy S. May entered into an Employment Agreement with Vestin Mortgage, with an
effective date of September 1, 2001, to serve as its President. Pursuant to the
agreement, Ms. May is entitled to receive an initial annual salary of $160,000. Ms. May is also
eligible for bonuses subject to the discretion of Vestin Mortgages Board
of Directors. The agreement additionally provides that Ms. May is to receive an
amount equal to twelve months salary if Vestin Mortgage terminates the
agreement without Cause, as such term is defined in the agreement. The
agreement terminates on August 31, 2004 but will continue for successive one
year periods unless either Vestin Mortgage or Ms. May provides thirty days
notice. On January 1, 2003,
Daniel Stubbs entered into an Employment Agreement with Vestin
Mortgage to serve as an executive officer. Pursuant to the agreement,
Mr. Stubbs is entitled to receive an initial salary of $121,800.
Mr. Stubbs is also eligible to receive bonuses, subject to the
discretion of Vestin Mortgages Board of Directors. The agreement
also provides that Mr. Stubbs will be entitled to an amount
equal to the lesser of six months salary or the salary due for
the remaining term of his agreement in the event Mr. Stubbs is
terminated without Cause, as such term is defined in the agreement.
The agreement terminates December 31, 2008 but will continue for
successive one year periods unless either Vestin Mortgage or
Mr. Stubbs provides thirty days notice. On October 14, 2003, we entered into a Separation Agreement and Release with
Steve Byrne under which Mr. Byrnes
employment with us and certain of our affiliates was terminated, effective November 30, 2003.
Under the terms of the agreement, Mr. Byrne received a payment of $180,000 upon
the execution of the agreement and an additional $180,000 on or before January
31, 2004. The agreement also provides that Mr. Byrne may exercise his vested
stock options to purchase shares of our common stock through the remaining term
set forth in his option agreement. 18




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##### Table of Contents



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Share Ownership The following table indicates the beneficial ownership of Vestin Groups voting
securities by each person known by Vestin Group to be the beneficial owner of
more than 5% of such securities, as well as the securities of Vestin Group
beneficially owned by all officers and directors of Vestin Group as of March 1,
2004. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options and warrants held by that person that
are currently exercisable or that will become exercisable within 60 days of
March 1, 2004, are deemed outstanding even if they have not actually been
exercised. Those shares, however, are not deemed outstanding for purpose of
computing the percentage ownership of any other person. Unless otherwise
indicated, the stockholders listed possess sole voting and investment power
with respect to the shares shown. Percentage ofCommon Stock
    
    Common StockName
    
    Beneficially Owned
    
    Beneficially Owned(1)Michael V. Shustek, Chairman, Chief Executive Officer and President
    
    
    5,164,199
    (2)
    
    
    70.5
    %of Vestin Group
2901 El Camino Avenue
Las Vegas, Nevada 89102Ira S. Levine, Corporate Secretary of Vestin Group
    
    
    175,100
    (3)
    
    
    3.2
    %2901 El Camino Avenue
Las Vegas, Nevada 89102Peggy S. May, Vice President of Vestin Mortgage
    
    
    110,984
    (4)
    
    
    2.1
    %2901 El Camino Avenue
Las Vegas, Nevada 89102Lance K. Bradford, Treasurer, Chief Financial Officer and Director of
    
    
    97,160
    (5)
    
    
    *Vestin Group and Chief Financial Officer, Treasurer, Secretary and
Director of Vestin Mortgage
2901 El Camino Avenue
Las Vegas, Nevada 89102Daniel Stubbs, Senior Vice President, Underwriting of Vestin Mortgage
    
    
    34,325
    (6)
    
    
    *2901 El Camino Avenue
Las Vegas, Nevada 89102Michael J. Whiteaker, Vice President of Regulatory Affairs of Vestin Group
    
    
    50,200
    (7)
    
    
    1%2901 El Camino Avenue
Las Vegas, Nevada 89102
 19




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##### Table of Contents



Percentage ofCommon Stock
    
    Common StockName
    
    Beneficially Owned
    
    Beneficially Owned(1)Robert J. Aalberts, Director of Vestin Group
    
    
    16,700
    (8)
    
    
    *2901 El Camino Avenue
Las Vegas, Nevada 8910David Chavez, Director of Vestin Group
    
    
    0
    
    
    
    *2901 El Camino Avenue
Las Vegas, Nevada 89102Roland M. Sansone, Director of Vestin Group
    
    
    0
    
    
    
    *2901 El Camino Avenue
Las Vegas, Nevada 89102Bernard Greenblatt Trust U/A/D 7/15/96, Bernard Greenblatt, Trustee
    
    
    373,355
    (9)
    
    
    7.0
    %880 Buffwood Avenue
Las Vegas, Nevada 89123The Redd 1996 Trust, William Si Redd, Trustee
    
    
    834,704
    (10)
    
    
    15.7
    %2340 Camero Avenue
    
    
    
    (11)Las Vegas, Nevada 89123All directors and executive officers as a group (9 persons)(12)
    
    
    5,648,668
    
    
    
    78.4
    %
  *
    
    Less than 1%  (1)
    
    Based upon 5,328,340 shares outstanding on March 1, 2004.(2)
    
    Includes warrants to purchase up to 2,000,000 shares of Common Stock within 60 days of March 1, 2004.(3)
    
    Includes options to purchase up to 150,000 shares of Common Stock exercisable within 60 days of March 1, 2004.(4)
    
    Includes options to purchase up to 66,109 shares of Common Stock exercisable within 60 days of March 1, 2004.(5)
    
    Includes warrants to purchase up to 66,660 shares of Common Stock exercisable within 60 days of March 1, 2004.(6)
    
    Includes options to purchase up to 31,665 shares of Common Stock exercisable within 60 days of March 1, 2004.(7)
    
    Includes options to purchase up to 50,000 shares of Common Stock exercisable within 60 days of March 1, 2004.(8)
    
    Includes options to purchase up to 15,000 shares of Common Stock exercisable within 60 days of March 1, 2004.(9)
    
    The primary beneficiaries of the Greenblatt Trust are three hospitals and Leona Ledbedder. (10) Includes warrants to purchase 12,336 shares of Common Stock of the
Company held by Millennium 2001 Trust, which has common beneficiaries as the
Redd 1996 Trust. The Redd 1996 Trust and the Millennium 2001 Trust are
hereinafter referred to collectively as the Redd 1996 Trust. The beneficiary
of the Redd 1996 Trust is Tammy Redd. (11) The holders of the Companys preferred stock are entitled to convert
their preferred stock into common stock at a ratio of $6.08 for one share of
common stock. If all of the preferred stockholders were to convert into common
stock, the Redd 1996 Trust would own approximately 12.3% of the total issued
and outstanding shares and the Bernard Greenblatt Trust would own approximately
5.5%. In addition, the beneficial ownership of the following stockholders
would be reduced as follows: Michael Shustek 58.7%, Ira
Levine 2.5%, Peggy May 1.6%, Lance Bradford 1.4%, Michael Whiteaker
will own less than 1%, and all directors and
executive officers as a group 61.5%. (12) Includes options
and warrants to purchase up to 1,879,434 shares of Common Stock
exercisable within 60 days of March 1, 2004. 20




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##### Table of Contents



EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2003 with respect
to the shares of our common stock that may be issued under our existing equity
compensation plans. Number of SecuritiesRemaining Available forNumber of Securities to be
    
    
    
    
    
    Future Issuance UnderIssued Upon Exercise of
    
    Weighted-average Exercise
    
    Equity Compensation PlansOutstanding Options,
    
    Price of Outstanding Options,
    
    (Excluding SecuritiesWarrants and Rights
    
    Warrants and Rights
    
    Reflected in Column (a))Plan Category
    
    (a)
    
    (b)
    
    (c)Equity Compensation
Plans Approved by
Stockholders (1)
    
    
    1,129,330
    
    
    $
    5.57
    
    
    
    370,670
    (2)Equity Compensation
Plans Not Approved
by Stockholders
    
    
    2,000,000
    (3)
    
    $
    4.53
    
    
    
    Total
    
    
    3,129,330
    
    
    
    
    
    
    
    370,670
   (1)
    
    Consists of the 2000 Stock Option Plan, as amended in 2002.(2)
    
    Consists of shares available for future issuance under the 2000 Stock Option Plan. As of
December 31, 2003, an aggregate of
370,670 shares of our common stock were available for
issuance under the 2000 Stock Option Plan.(3)
    
    Consists of 2,000,000 warrants of which 500,000 has been granted each year for the past four
years to Mr. Shustek pursuant to his employment agreement. 21




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##### Table of Contents



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company has entered into a number of transactions with its principal
stockholder and other related parties. Such transactions fall into the
following categories: 1. Transactions with the Funds On July 2, 2001, Vestin Mortgage brokered a loan to Arroyo Heights for
$10,000,000. The loan was funded by Fund I and Fund II and was guaranteed by
three guarantors. Subsequently, Arroyo Heights defaulted on the loan, and Fund
I and Fund II foreclosed and took title to the collateral. Based on an
appraisal at the conclusion of the foreclosure, Fund I and Fund II determined
that there was a $4.8 million shortfall between the carrying amount of the loan
and the value of the collateral. Fund I and Fund II filed litigation to
recover the shortfall from the individual guarantors. Vestin Mortgage
purchased the rights to collect the proceeds of the guarantee from Fund I and
Fund II on December 31, 2002 in exchange for investments in mortgage loans on
real estate valued at $4.8 million. Vestin Mortgage did not recognize any gain
or loss on the sale to Fund I and Fund II. Vestin Mortgage entered into a
settlement of the Arroyo Heights matter in February 2004. Vestin Mortgage
expects that the settlement will result in the reversal of a previously
recorded $4.8 million reserve to cover the shortfall. For the years ended December 31, 2003 and 2002, the Company recorded revenues
of approximately $85,000 and $30,000, respectively, from its investment in Fund
I as a result of distributions declared during those periods. Vestin Mortgage,
as the Manager, is entitled to a monthly management fee of up to 0.25% of the
aggregate capital contributions to Fund I. During the years ended December 31,
2003 and 2002, Vestin Mortgage recorded management fees from Fund I of
approximately $254,000 and $249,000, respectively. For the years ended December 31, 2003 and 2002, the Company recorded revenues
of approximately $102,000 and $30,000, respectively, from its investment in
Fund II as a result of distributions declared during those periods. Vestin
Mortgage, as the Manager, is entitled to a monthly management fee of up to
0.25% of the aggregate capital contributions to Fund II. During the years ended
December 31, 2003 and 2002, Vestin Mortgage recorded management fees from Fund
II of approximately $953,000 and $586,000, respectively. As of December 31, 2003, the Company had an investment in Fund III of
approximately $673,088, which consists of certain costs paid on behalf of Fund
III related to the registration and start-up costs. As of February 12, 2004,
Fund III raised the required $10,000,000 to break escrow and commence
operations. Such costs will be converted into membership units at a
conversion price of $10 per unit once Fund III receives
sufficient gross proceeds to ensure that such costs do not exceed 2%
of the gross proceeds received by Fund III. If converted into
units Vestin Mortgage would have received 67,309 units in Fund III
related to this investment. During the year ended December 31, 2003, the Company elected to contribute
capital of $1.6 million to Fund I in the form of an interest-bearing amortizing
note of $723,763 and the forgiveness of an obligation due from Fund I in the
amount of $876,237. The Company did not receive any additional units in Fund I
in consideration of the capital contribution. The capital contribution
increased the existing members capital accounts in Fund I to approximately $10
per unit. The amount of the contribution was charged to current operating
results during the year ended December 31, 2003, as the Company did not receive
additional units for the contribution. The note was paid in full as of December
31, 2003. During the year ended December 31, 2003, the Company purchased real estate held
for sale of $1.6 million from Vestin Fund I. No gain or loss was recorded by
Fund I on this sale. During the year ended December 31, 2003, the Company sold $10.0 million in
loans to Fund II pursuant to the terms of the Operating Agreement of the Funds
which permits the Funds to acquire loans from the Company if the loans were
acquired to facilitate their acquisition by the Funds and provided that the
price paid is no greater than the Companys cost. During the year ended
December 31, 2003, the Company also purchased $4.7 million in loans from Fund
II. No gain or loss was recorded on these transactions as it is not the
Companys intent to make a profit on the purchase or sale of such investments.
The purpose is to either free up capital to make new investments or place
excess capital in investments to provide a return on investment. 22




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##### Table of Contents



2. Transactions with Officers and Directors and their Affiliates In 2000, the Company loaned Donovan Jacobs, an employee, approximately $251,000
to enable him to operate, develop and grow a California real estate loan fund.
The Company does not have any affiliations with the California real estate loan
fund. The loan is unsecured but is a full recourse loan to Mr. Jacobs. The
interest rate of 10% is payable on a semi-annual basis and the principal is due
on the maturity date of April 19, 2004. As of December 31, 2003, the balance on
this note was $87,964. At December 31, 2001, the Company had approximately $352,000 due from Mr.
Shustek, the majority stockholder and Chief Executive Officer of the Company.
These balances bore no interest and were due on demand. Such indebtedness was
incurred prior to the Company becoming a public company when the Company
advanced to Mr. Shustek funds necessary to enable him to pay taxes on
undistributed S corporation income. The largest amount outstanding on such
indebtedness during 2002 was $352,000. As of May 10, 2002, such indebtedness
was paid in full by Mr. Shustek. The Company had an investment in the amount of $153,810 in a mortgage loan to
Del Mar Mortgage, Inc., which is 100% owned by our Chief Executive Officer.
During December 2002, a sale of the property securing the investment was
consummated. As of December 31, 2002, the Company recorded a receivable for the
proceeds of the loan payoff which was fully collected in January 2003. The
Company has not made, and does not contemplate making, any investments in Del
Mar Mortgage, Inc. The Company had an investment in Prepaid Advisors.com, a financial services
start-up company, of $453,500 recorded at cost as of December 31, 2001. The
President of the Company previously had a controlling equity interest in
Prepaid Advisors.com and was Chairman of the companys board. The Company sold
its investment in Prepaid Advisors.com in the last quarter of 2002 and recorded
a loss of $253,500. The Company had an investment in an Internet credit reporting start-up company
of $150,000 recorded at cost as of December 31, 2001. The President of
Creditmart.com is a stockholder and former Director of the Company. The Company
wrote off the investment in June 2002. At December 31, 2001 and 2002 the Company had an investment of $69,310 in a
mortgage loan to an entity that is 100% owned by the Companys Chief Executive
Officer. The note had a face value of $669,310, with interest at 13.5% and
matured in January 2003. The remaining portion of the loan amount totaling
$600,000 was funded by another entity 100% owned by the Chief Executive Officer
of the Company. At December 31, 2001 and 2002, the note was delinquent more
than 90 days with respect to interest payments. The note was paid in full in
January 2003. Amounts due from inVestin Nevada, Inc. (inVestin Nevada) totaling $161,481
relate to management fees earned by Vestin Mortgage. Such amounts bear no
interest and are due on demand. In October 2002, inVestin Nevada, a corporation
wholly-owned by the Chief Executive Officer of the Company was created as an
additional funding source for the Company that will seek to raise $100,000,000
through the sale of subordinated notes to Nevada residents. Vestin Mortgage has
entered into an agreement to provide management services to inVestin Nevada
whereby Vestin Mortgage will receive a monthly management fee equal to the
first four percent (4%) of revenues earned by inVestin Nevada above the average
aggregate interest paid to the debenture holders During the year ended December
31, 2003, Vestin Mortgage earned approximately $161,000 relating to the
agreement. During March 2004, this balance was paid off in full. During the year ended
December 31, 2003, Vestin Mortgage had approximately $693,000 due
from Mr. Shustek related to various advances and legal costs paid by
Vestin Mortgage on his behalf. During December 2003, Mr. Shustek
repaid the entire balance through the assignment of certain assets. During the years ended December 31, 2003 and 2002, the Company paid $755,222
and $509,283, respectively, for legal fees to a law firm in which the Secretary
of the Company has an equity ownership interest. The Companys President and Tax Manager are equity owners in L.L. Bradford &
Company, LLC, Certified Public Accounting firm (L.L. Bradford). For the years
ended December 31, 2003 and 2002, approximately $228,000 and $150,000,
respectively, was paid to L.L. Bradford for services provided to the Company.
During the same period, L.L. Bradford also assisted in the preparation of the
Companys financial reports and provided bookkeeping services at no charge to
the Company. 23




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##### Table of Contents



During the year ended December 31, 2003, the Company paid approximately
$1,017,000 to C5, LLC, a company wholly owned by the Companys Chief Executive
Officer, pursuant to an Aircraft Usage Agreement. The agreement allows the
Company to use an airplane on a preferred basis over any other proposed user.
The Company used the airplane primarily for marketing and lending
activities. The Company is required to pay a monthly fee based on an hourly rate of $3,000
per hour for the first 10 hours and $2,500 per hour for each hour thereafter.
The Company is required to make a minimum monthly payment equivalent to 16
hours of usage ($45,000). The terms of the agreement were approved by
the Company's Board of Directors. The Company believes based upon a
review of aircraft rental rates that the terms of the Aircraft Usage
Agreement are fair and reasonable to the Company. During 2003, the Company paid approximately $28,000 to a company owned jointly
by the Companys Chief Executive Officer and a stockholder of the Company
related to the use of an airplane for company travel. 24




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##### Table of Contents



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT INDEX Exhibit
    
    
    
    Page Number/Number
    
    Description
    
    Filing Method2.1
    
    Agreement and Plan of Reorganization among the Company, Capsource, Inc. and
Stephen J. Byrne, dated as of April 9, 1999
    
    
    (1
    )2.2
    
    Asset Acquisition Agreement between the Company and Del Mar Holdings, Inc.,
dated as of April 9, 1999
    
    
    (1
    )2.3
    
    Asset Acquisition Agreement between the Company and Del Mar Mortgage, Inc.,
dated as of April 9, 1999
    
    
    (1
    )2.4
    
    Agreement and Plan of Reorganization among the Company, L. L. Bradford &
Company and the Shareholders of L. L. Bradford & Company, dated June 30,
2000
    
    
    (2
    )3.1
    
    Certificate of Incorporation
    
    
    (3
    )3.2
    
    By-laws
    
    
    (3
    )10.1
    
    Employment Agreement between Del Mar Mortgage, Inc. and Steve Byrne, dated
November 3, 1998
    
    
    (4
    )10.2
    
    Transition Agreement between Del Mar Mortgage, Inc. and Capsource, Inc.,
dated April 27, 1999 and First Amendment thereto, dated April 27, 1999
    
    
    (4
    )10.3
    
    Employment Agreement between Del Mar Mortgage and Mike Whiteaker, dated May
3, 1999
    
    
    (4
    )10.4
    
    The 2000 Stock Option Plan of Sunderland Corporation
    
    
    (4
    )10.5
    
    Employment Agreement between the Company and Michael V. Shustek, dated
December 1, 1999
    
    
    (4
    )10.6
    
    Third Amended and Restated Operating Agreement of DM Mortgage Investors,
LLC, dated as of November 2, 2000
    
    
    (5
    )10.7
    
    Certificate of Designations authorizing the issuance of Series A
Convertible Preferred Stock
    
    
    (6
    )10.8
    
    Operating Agreement of Vestin Fund II, LLC, dated as of December 7, 2001
    
    
    (7
    )10.9
    
    License Agreement by and between the Company and Planned Licensing, Inc.,
dated as of January 2001
    
    
    (8
    )10.10
    
    Amended and Restated Intercreditor Agreement by and among Vestin Mortgage,
Inc., Vestin Fund I, LLC, Vestin Fund II, LLC, Owens Financial Group, Inc.,
and Owens Mortgage Investment Fund, dated April 18, 2003.
    
    
    (9
    )10.11
    
    Aircraft Usage Agreement by and between the Company and C5, LLC, dated
September 1, 2002.
    
    
    (9
    )10.12
    
    Indemnity Agreement by and between the Company and Del Mar Mortgage, Inc.,
dated April 15, 2003.
    
    
    (10
    )10.13
    
    Guaranty by and among the Company, Michael V. Shustek, and Del Mar
Mortgage, Inc., dated April 15, 2003.
    
    
    (10
    )
 25




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##### Table of Contents



Exhibit
    
    
    
    Page Number/Number
    
    Description
    
    Filing Method10.14
    
    Employment Agreement by and between
Vestin Mortgage, Inc. and Peggy May, dated
September 1, 2001.10.15
    
    Employment Agreement by and between
Vestin Mortgage, Inc. and Daniel Stubbs, dated January 1, 200310.16
    
    Totally Restated and Amended Employment Agreement by and between the
Company and Lance Bradford, dated as of January 1, 2003.10.17
    
    Separation Agreement and Release of All Claims by and between Steve Byrne
and the Company, dated as of October 14, 200310.18
    
    Office Lease Agreement
between the Company and The Wildwood Hills Development, Corporation,
dated January 5, 2001.10.19
    
    Office Lease by and between Luke Properties, LLC and the Company, dated
March 2004.10.20
    
    Amended and Restated Intercreditor
Agreement by and between Vestin Mortgage, Inc., Vestin Fund I,
LLC, Vestin Fund II, LLC and Owens Financial Group, Inc., dated as of
September 25, 200214.1
    
    Code of Ethics21.1
    
    List of Subsidiaries of the Company31.1
    
    Section 302 Certification of Michael V. Shustek
    
    
    (11)31.2
    
    Section 302 Certification of Lance K. Bradford
    
    
    (11)32
    
    Certification Pursuant to U.S.C. 18 Section 1350
    
    
    (11)
   (1)
    
    Previously filed on Form 8-K (File No. 000-24803) on May 4, 1999.(2)
    
    Previously filed on Form 8-K (File No. 000-24803) on April 14, 2000.(3)
    
    Previously filed on Form 10-SB/A (File No. 000-24803) on August 13,
1998.(4)
    
    Previously filed on Form 10-KSB (File No. 000-24803) on March 31,
2000.(5)
    
    Previously filed on Form 424B5 (File No. 333-32800) on November 15,
2000.(6)
    
    Previously filed on Form 10-KSB (File No. 000-24803) on April 2,
2001.(7)
    
    Previously filed on Form S-11 (File No. 793646) on December 21, 2000.(8)
    
    Previously filed on Form 8-K (File No. 000-24803) on January 25,
2001.(9)
    
    Previously filed by Form SB-2/A (File No. 333-104109) on June 4,
2003.(10)
    
    Previously filed on Form SB-2/A (File No. 333-104109) on October 15,
2003.(11)
    
    To be filed by amendment. (b) Reports on Form 8-K. Current Reports on Form 8-K filed with the Commission on November 19, 2003 and
December 24, 2003, which report the following items:  (i)
    
    Item 5  Other Events and Regulation FD Disclosure;(ii)
    
    Item 7  Financial Statements and Exhibits;(iii)
    
    Item 9  Regulation FD Disclosure; and(iv)
    
    Item 12  Results of Operations and Financial Condition, including
Consolidated Statements of Income (Unaudited) for the three and nine months
ended September 30, 2003 and 2002. 26




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES During the fiscal years ended December 31, 2003 and December 31, 2002, Ernst &
Young LLP provided various audit, audit related and non-audit services to us as
follows: December 31, 2003
    
    December 31, 2002Audit Fees:
    
    $
    77,445
    
    
    $
    191,660Audit Related Fees:
    
    $
    332,226
    
    
    $
    127,931Tax Fees:
    
    $
    0
    
    
    $
    0All Other Fees:
    
    $
    174,520
    
    
    $
    48,417
 Our Audit Committee has considered whether provision of the services described
regarding audit related fees, tax fees and all other fees above were compatible
with maintaining the independent accountants independence and has determined
that such services did not adversely affect Ernst & Young LLPs independence. Prior to the completion of Ernst & Young LLPs audit of our consolidated
financial statements as of and for the year ended 2003, Ernst & Young LLP
notified our Audit Committee that it would not render its report for our
consolidated financial statements until the pending informal inquiry by the
Pacific Regional Office of the Securities and Exchange Commission, as more
fully described in Legal Proceedings in this Report, is substantially resolved.
On March 17, 2004, we engaged Moore, Stephens, Wurth, Frazer & Torbet, LLP
(Moore Stephens) to replace Ernst & Young LLP as our independent auditors to
conduct the audit of our consolidated financial statements as of and for the
year ended December 31, 2003. Moore Stephens did not provide services to us in
fiscal 2003 or 2002. The Audit Committee has direct responsibility to review and approve the
engagement of the independent auditors to perform audit services or any
permissible non-audit services. All audit and non-audit services to be provided
by the independent auditors must be approved in advance by the Audit Committee.
The Audit Committee may not engage the independent auditors to perform
specific non-audit services proscribed by law or regulation. All services
performed by independent auditors under engagements entered into on or after
May 6, 2003, were approved by the Audit Committee pursuant to its pre-approval
policy, and none was approved pursuant to the de minimusexception to the rules
and regulations of the Securities and Exchange Commission on pre-approval. 27




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##### Table of Contents



SIGNATURES In accordance with section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. VESTIN GROUP, INC./s/ Lance K. BradfordLance K. Bradford, Chief Financial Officer
 Dated: March 30, 2004 In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and
on the dates indicated. Signatures
    
    Title
    
    Date/s/ Michael V. Shustek
Michael V. Shustek
*Principal Executive Officer
    
    Chairman of the Board,
Chief Executive Officer and Director
    
    March 30, 2004/s/ Lance K. Bradford
Lance K. Bradford
*Principal Financial and
Accounting Officer
    
    Chief Financial Officer, Treasurer and
Director
    
    March 30, 2004/s/ Robert J. Aalberts
Robert J. Aalberts
    
    Director
    
    March 30, 2004/s/ David Chavez
David Chavez
    
    Director
    
    March 30, 2004




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##### Table of Contents



EXHIBIT INDEX Exhibit
    
    
    
    Page Number/Number
    
    Description
    
    Filing Method2.1
    
    Agreement and Plan of Reorganization among the Company, Capsource, Inc. and
Stephen J. Byrne, dated as of April 9, 1999
    
    
    (1
    )2.2
    
    Asset Acquisition Agreement between the Company and Del Mar Holdings, Inc.,
dated as of April 9, 1999
    
    
    (1
    )2.3
    
    Asset Acquisition Agreement between the Company and Del Mar Mortgage, Inc.,
dated as of April 9, 1999
    
    
    (1
    )2.4
    
    Agreement and Plan of Reorganization among the Company, L. L. Bradford &
Company and the Shareholders of L. L. Bradford & Company, dated June 30,
2000
    
    
    (2
    )3.1
    
    Certificate of Incorporation
    
    
    (3
    )3.2
    
    By-laws
    
    
    (3
    )10.1
    
    Employment Agreement between Del Mar Mortgage, Inc. and Steve Byrne, dated
November 3, 1998
    
    
    (4
    )10.2
    
    Transition Agreement between Del Mar Mortgage, Inc. and Capsource, Inc.,
dated April 27, 1999 and First Amendment thereto, dated April 27, 1999
    
    
    (4
    )10.3
    
    Employment Agreement between Del Mar Mortgage and Mike Whiteaker, dated May
3, 1999
    
    
    (4
    )10.4
    
    The 2000 Stock Option Plan of Sunderland Corporation
    
    
    (4
    )10.5
    
    Employment Agreement between the Company and Michael V. Shustek, dated
December 1, 1999
    
    
    (4
    )10.6
    
    Third Amended and Restated Operating Agreement of DM Mortgage Investors,
LLC, dated as of November 2, 2000
    
    
    (5
    )10.7
    
    Certificate of Designations authorizing the issuance of Series A
Convertible Preferred Stock
    
    
    (6
    )10.8
    
    Operating Agreement of Vestin Fund II, LLC, dated as of December 7, 2001
    
    
    (7
    )10.9
    
    License Agreement by and between the Company and Planned Licensing, Inc.,
dated as of January 2001
    
    
    (8
    )10.10
    
    Amended and Restated Intercreditor Agreement by and among Vestin Mortgage,
Inc., Vestin Fund I, LLC, Vestin Fund II, LLC, Owens Financial Group, Inc.,
and Owens Mortgage Investment Fund, dated April 18, 2003.
    
    
    (9
    )10.11
    
    Aircraft Usage Agreement by and between the Company and C5, LLC, dated
September 1, 2002.
    
    
    (9
    )10.12
    
    Indemnity Agreement by and between the Company and Del Mar Mortgage, Inc.,
dated April 15, 2003.
    
    
    (10
    )10.13
    
    Guaranty by and among the Company, Michael V. Shustek, and Del Mar
Mortgage, Inc., dated April 15, 2003.
    
    
    (10
    )10.14
    
    Employment Agreement by and between the Company and Peggy May, dated
September 1, 2001.




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##### Table of Contents



Exhibit
    
    
    
    Page Number/Number
    
    Description
    
    Filing Method10.15
    
    Employment Agreement by and between
the Company and Daniel Stubbs, dated January 1, 200310.16
    
    Totally Restated and Amended Employment Agreement by and between the
Company and Lance Bradford, dated as of January 1, 2003.10.17
    
    Separation Agreement and Release of All Claims by and between Steve Byrne
and the Company, dated as of October 14, 200310.18
    
    Office Lease Agreement between the
Company and The Wildwood Hills Development, Corporation, dated
January 5, 2001.10.19
    
    Office Lease by and between Luke Properties, LLC and the Company, dated
March 2004.10.20
    
    Amended and Restated Intercreditor
Agreement by and between Vestin Mortgage, Inc., Vestin Fund I,
LLC, Vestin Fund II, LLC and Owens Financial Group, Inc., dated
as of September 25, 2002.14.1
    
    Code of Ethics21.1
    
    List of Subsidiaries of the Company31.1
    
    Section 302 Certification of Michael V. Shustek
    
    
    (11
    )31.2
    
    Section 302 Certification of Lance K. Bradford
    
    
    (11
    )32
    
    Certification Pursuant to U.S.C. 18 Section 1350
    
    
    (11
    )
   (1)
    
    Previously filed on Form 8-K (File No. 000-24803) on May 4, 1999.(2)
    
    Previously filed on Form 8-K (File No. 000-24803) on April 14, 2000.(3)
    
    Previously filed on Form 10-SB/A (File No. 000-24803) on August 13,
1998.(4)
    
    Previously filed on Form 10-KSB (File No. 000-24803) on March 31,
2000.(5)
    
    Previously filed on Form 424B5 (File No. 333-32800) on November 15,
2000.(6)
    
    Previously filed on Form 10-KSB (File
No. 000-24803) on April 2,
2001.(7)
    
    Previously filed on Form S-11 (File No. 793646) on December 21, 2000.(8)
    
    Previously filed on Form 8-K (File No. 000-24803) on January 25,
2001.(9)
    
    Previously filed by Form SB-2/A (File No. 333-104109) on June 4,
2003.(10)
    
    Previously filed on Form SB-2/A (File No. 333-104109) on October 15,
2003.(11)
    
    To be filed by amendment.