UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**





[X]
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the fiscal year endedJune
                30, 2005[
                ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACTFor
                the transition period from _________ to ________Commission
                file number333-115444





**MV
                Fund II, LLC**(Name
                of small business issuer in its charter)**Nevada**
            ******20-0987069**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**7311
                W. Charleston Blvd., Suite 110**
              **Las
                Vegas, Nevada**
            **89117**(Address
                of principal executive offices)
            (Zip
                Code)Issuer’s
                telephone number:702-228-7105Securities
                registered under Section 12(b) of the Exchange Act:Title
                of each class
            Name
                of each exchange on which registeredNone
            Not
                ApplicableSecurities
                registered under Section 12(g) of the Exchange Act:None(Title
                of class)





Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities 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 [ ]





Check
      if
      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 [ ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). [X] Yes [ ] No





State
      issuer’s revenue for its most recent fiscal year  **$0**





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the average bid and asked price of
      such
      common equity, as of a specified date within the past 60 days.


**$0
      as of June 30, 2005**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. **0
      Membership Units outstanding as of September 7, 2005**





Transitional
      Small Business Disclosure Format (Check One): Yes [ ] No [X]













**TABLE
      OF CONTENTS**





PagePART
                IItem
                1:
            Description
                of Business
            3Item
                2:
            Description
                of Property
            4Item
                3:
            Legal
                Proceedings
            20Item
                4:
            Submission
                of Matters to a Vote of Security
                Holders
            20PART
                IIItem
                5:
            Market
                for Common Equity and Related Stockholder
                Matters
            20Item
                6:
            Management’s
                Discussion and Analysis
            20Item
                7:
            Financial
                Statements
            24Item
                8:
            Changes
                In and Disagreements With
                Accountants on Accounting and Financial Disclosure
            25Item
                8A:
            Controls
                and Procedures
            25Item
                8B:
            Other
                Information
            25PART
                IIIItem
                9:
            Directors,
                Executive Officers, Promoters and Control
                Persons; Compliance With Section 16(a) of the Exchange
                Act
            26Item
                10:
            Executive
                Compensation
            28Item
                11:
            Security
                Ownership of Certain Beneficial Owners
                and Management and Related Stockholder Matters
            29Item
                12:
            Certain
                Relationships and Related
                Transactions
            30Item
                13:
            Exhibits
            34Item
                14:
            Principal
                Accountant Fees and
                Services
            35











2


**** **PART
      I**


**Item
      1:** **Description
      of Business**





We
      were
      organized on September 2, 2003 and currently have no operational activities.
      The
      Fund will begin operations once we are capitalized and receive the minimum
      investment of securities registered with the Securities and Exchange Commission.
      On January 25, 2005, the registration statement filed on Form S-1 (Commission
      file number 333-115444) was declared effective. This offering has commenced
      and
      is ongoing. As of September 7, 2005, we have not sold any membership interests.





Upon
      receiving this minimum, management anticipates distributing all funds held
      in a
      segregated account and negotiating the purchase of the Fund’s first loans.
      Management will be seeking to loan out all the funds assets from the start
      in
      order to maximize the potential Fund earnings. While, it is management’s
      preference to avoid larger loans in order to diversify risk, especially when
      its
      capital is limited as is likely during the start up of Fund operations, it
      does
      not expect to avoid larger loans as long as they offer the Fund a good
      investment opportunity and there is sufficient capital available to purchase
      the
      loan. However, investors should note that a larger loan would expose the fund
      to
      substantial credit risk, as a default by a single borrower could substantially
      reduce the fund’s assets.





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





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





Our
      operating results will be affected primarily by (i) the amount of capital we
      will have to invest in mortgage loans, (ii) the level of real estate lending
      activity in the markets we will service, (iii) our ability to identify and
      work
      with suitable borrowers, (iv) the interest rates we are able to charge on our
      loans and (v) the level of delinquencies, foreclosures and related loan losses
      which we experience. We expect to raise funds through the sale of our Membership
      interests and accordingly the size of our investment portfolio will be
      contingent upon the success of this offering.





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





3


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




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




**Purchase
      and Sale of Plant or Significant Equipment**





We
      do not
      anticipate any purchase or sale of plant and significant equipment over the
      next
      twelve months.





**Employees**





We
      have
      no employees. Our Managing Member is MV Funding Group, Inc., a Nevada
      corporation, incorporated on September 5, 2003 (“MV Funding”).





**Existing
      and Probable Governmental Regulation**





Our
      operations are conducted by MV Funding and loans are expected to be obtained
      through independent mortgage brokers. Mortgage brokers generally conduct their
      businesses under a license issued by the State of Nevada Financial Institutions
      Division. Under applicable Nevada law, the division has broad discretionary
      authority over activities, including the authority to conduct periodic
      regulatory audits of all aspects of these types of operations.




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




Should
      we
      or MV Funding not adhere to these regulations, we could face potential
      disciplinary or other civil action that could have a material adverse effect
      on
      our business.





**Compliance
      with Environmental Laws**





We
      did
      not incur any costs in connection with the compliance with any federal, state,
      or local environmental laws.





**Item
      2:****Description
      of Property**





Currently,
      we do not own any real estate. We are leasing our executive offices 7311 W.
      Charleston Blvd., Suite 110, Las Vegas, Nevada 89117.





**Investment
      Policies**




We
      will
      invest in mortgage loans throughout the areas in which MV Funding’s officers
      have experience,




4


primarily
      California, Nevada, Colorado, Missouri, Texas, Utah, Alaska, Alabama and
      Oklahoma. Depending on the market and on the Fund's performance, we plan to
      expand our investments throughout the United States. However, MV Funding and
      its
      officers have limited experience outside of these areas. The loans we invest
      in
      will be selected for us by MV Funding from among loans originated by mortgage
      brokers. MV Funding anticipates identifying and pursuing loans from both
      affiliated and non-affiliated brokers and choosing from among the best loans
      its
      management is able to find. When a mortgage broker originates a loan for us,
      that person identifies the borrower, processes the loan application, makes
      or
      invests in the loan and brokers or sells the loan to us. We believe that our
      loans will be attractive to mortgage brokers and borrowers because of the
      expediency of our loan approval process, which will take about 10 to 20 days.
      We
      anticipate that MV Funding may originate some of the loans we decide to invest
      in. We expect, however, that this will represent less than 10% of our resulting
      loan portfolio.




We
      anticipate that because of our increased willingness to purchase riskier loans,
      we are likely to be able to obtain loans with higher interest rates than the
      rates charged by conventional lenders. We will invest a significant amount
      of
      our funds in loans in which the real property being developed is not generating
      any income to the borrower. We anticipate about 60% of our assets will be
      invested in commercial type loans and approximately 20% of our assets will
      be
      invested in residential type loans and an equal amount in loans on unimproved
      property.




These
      percentages are an approximate representation of how our portfolio is expected
      to be comprised, but they are not binding upon our Manager. Our operating
      agreement allows our Manager wide discretion in its decisions on portfolio
      representation for each loan type and the loan to value ratio that is used
      to
      approve a loan.




In
      addition to those policies contained in this prospectus and the Operating
      Agreement, MV Funding may establish written policies on loans and
      borrowings.


Our
      principal investment objectives will be to:





·
            Produce
                revenues from the interest income on our mortgage
                loans;





·
            Provide
                monthly cash distributions to our membership interest holders from
                the net
                income earned on our mortgage
                loans;





·
            Preserve
                our membership interest holders’ capital contributions:
                and





·
            Reinvest
                to the extent permissible payments of principal and proceeds of
                prepayments, sales and insurance proceeds, net of
                expenses.




We
      cannot
      assure our membership interest holders that we will achieve these objectives
      or
      that our membership interest holders’ capital will not decrease. MV Funding may
      change the overall investment strategy, subject to the fiduciary obligations
      that it owes to all members. MV Funding has no authority to do anything that
      would impair our ability to carry on our ordinary business as a mortgage
      lender.





**Acquisition
      and Investment Policies**





We
      cannot
      begin operations until we manage to sell a minimum of 200 membership interests
      ($500,000). On January 25, 2005, our registration statement filed on Form S-1
      (Commission file number 333-115444) was declared effective. This offering has
      commenced and is ongoing. As of September 7, 2005, we have not sold any
      membership interests. We must sell a minimum of 200
      units or $500,000 in order to begin the operations of the Fund.  Until
      this
      minimum is reached, all investment money received will be held in a segregated
      account, unused.  If this minimum is not reached, any and all investment
      money received by us will be returned to investors promptly, without
      interest.  Once the minimum is reached, all money held in the segregated
      account will be released into the Fund to start operations.  If we do
      not
      sell the minimum by December 22, 2005, the offeringwill close and we will be
      required to seek other sources of funding.




Upon
      commencing operations, we will seek to invest substantially all of the Offering
      proceeds in mortgage loans, after paying applicable fees and expenses, if any.
      We anticipate that




5


we
      will
      invest about 93% of the Offering proceeds in mortgage loans. Approximately
      3%
      will be held as a working capital cash reserve and 4% will be paid to MV Funding
      as an organizational fee. Currently, MV Funding does not have any arrangements,
      understandings, relationship or affiliations with any group of borrowers or
      potential borrowers, including any construction firms or land developers.




The
      majority of our collateral on our mortgage loans are the real property that
      the
      borrower is purchasing or developing with the funds that we make available.
      We
      sometimes refer to these real properties as the secured properties. While we
      may
      invest in other types of loans, most of the loans in which we will invest will
      be made to real estate developers with a lesser proportion of loans involving
      land loans and bridge financing.




We
      will
      not give any rebates or enter into any reciprocal agreement with MV Funding
      or
      any of its affiliates. We do not anticipate that our mortgage investments will
      be insured or guaranteed by any government agency.




MV
      Funding will continuously evaluate prospective investments, select the mortgages
      in which we will invest and makes all investment decisions on our behalf. our
      membership interest holders are not entitled to act on any proposed investment.
      In evaluating prospective mortgage loan investments, MV Funding considers such
      factors as the following:





·
            the
                ratio of the amount of the investment to the value of the property
                by
                which it is secured;





·
            the
                potential for capital appreciation or depreciation of the property
                securing the investment;





·
            expected
                levels of rental and occupancy rates (if
                applicable);





·
            potential
                for rental increases (if
                applicable);





·
            current
                and projected revenues from the
                property;





·
            the
                status and condition of the record title of the property securing
                the
                investment;





·
            geographic
                location of the property securing the investment;
                and





·
            the
                financial condition of the borrowers and their principals, if any,
                who
                guarantee the loan.





MV
      Funding will generally obtain our loans from non-affiliated mortgage brokers
      and
      previous borrowers, and by solicitation of new borrowers in those states where
      permissible. We may purchase existing loans that were originated by third party
      lenders and acquired by MV Funding to facilitate our purchase of the loans.
      There are no specific requirements or guidelines governing MV Funding’s
      discretion in determining which mortgage loans it will place with
      us.





We
      do not
      anticipate, at this time, investing in mortgage loans indirectly through other
      companies, general partnerships, joint ventures or other funds.




When
      selecting mortgage loans for us, MV Funding will use the following guidelines,
      which are intended to control the quality of the collateral given for our
      loans:




*1.
      Priority of Mortgages.* Generally,
      our assets will be secured by first mortgages. First mortgages are mortgages
      secured by a full or divided interest in a first deed of trust secured by the
      property. Other mortgages that we invest in on the secured property will not
      be
      junior to more than one other mortgage. The only subordinated mortgages we
      currently intend to invest in at this time are second mortgages, although in
      the
      future we may invest in wraparound, or all-inclusive, mortgages.







6




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







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







We
      may
      deviate from these guidelines under certain circumstances. For example, MV
      Funding, in its discretion, may increase any of the above loan-to-value ratios
      if, in its opinion, a given loan is supported by credit adequate to justify
      a
      higher loan-to-value ratio, including personal guarantees. Occasionally, our
      collateral may include personal property as well as real property. We do not
      have specific requirements with respect to the projected income or occupancy
      levels of a property securing our investment in a particular loan. These
      loan-to-value ratios will not apply to financing offered by us to the purchaser
      of any real estate acquired through foreclosure, or to refinance an existing
      loan that is in default when it matures. In those cases, MV Funding, in its
      sole
      discretion, shall be free to accept any reasonable financing terms it deems
      to
      be in our best interest. Nevertheless, in no event will the loan-to-value ratio
      on any loan exceed 80% of the independently appraised as-if developed value
      of
      the property at the time of loan origination. The target loan-to--value ratio
      for our loan portfolio as a whole is approximately 70%.




MV
      Funding receives an appraisal at the time of loan underwriting, which may
      precede the placement of the loan with us. Generally, these appraisals are
      completed within a few months prior to investing in a loan. Also, the appraisal
      may have been previously performed for the borrower. The appraisal may be for
      the current estimated as-if developed value of the property. We will use
      appraisers who are licensed or qualified as independent appraisers and certified
      by or hold designations from one or more of the following organizations: the
      Federal National Mortgage Association, the Federal Home Loan Mortgage
      Corporation, the National Association of Review Appraisers, the Appraisal
      Institute, the Society of Real Estate Appraisers, M.A.I., Class IV Savings
      and
      Loan appraisers or from among appraisers with other qualifications acceptable
      to
      MV Funding. However, appraisals are only estimates of value and cannot be relied
      on as measures of realizable value. 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 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. An employee or agent of MV Funding reviews each
      appraisal report and conducts a physical inspection for each property. A
      physical inspection includes an assessment of the subject property, the adjacent
      properties and the neighborhood but generally does not include entering any
      structures on the property.




7


We
      will
      depend upon our real estate security to protect us from default on the loans
      that we make. We will depend upon the skill of independent appraisers to value
      the security underlying our loans. However, notwithstanding the experience
      of
      the appraisers, they may make mistakes, or the value of the real estate may
      decrease due to subsequent events. In addition, most of the appraisals are
      prepared on an as if-developed basis. If the loan goes into default prior to
      completion of the project, the market value of the property may be substantially
      less than the appraised value. As a result, there may be less security than
      anticipated at the time the loan was originally made. If there is less security
      and a default occurs, we may not recover the full amount of our loan, thus
      reducing the amount of funds available to distribute to our membership interest
      holders.




*3.
      Construction Mortgage Loans.* We
      will
      invest in construction loans other than home improvement loans on residential
      property. We do not anticipate that the loan-to-value ratio on construction
      loans in which we invest will exceed 75% of the independently appraised as-if
      developed value of the security property.




*4.
      Terms of Mortgage Loans.* We
      expect
      that a majority of our loans will be for a term of 12 months. Our original
      loan
      agreements will permit extensions to the term of the loan by mutual consent.
      Such extensions will be generally provided on loans where the original term
      was
      12 months or less and where a borrower requires additional time to complete
      a
      construction project or negotiate take out financing.




We
      expect
      that many of our loans will provide for payments of interest only with a balloon
      payment of principal payable in full at the end of the term. In addition, we
      may
      invest in mortgage loans which require borrowers to maintain interest reserves
      funded from the principal amount of the loan for a period of time.




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




·
            Borrowers
                will obtain title insurance Coverage for all loans, with the title
                insurance policy naming us as the insured and providing title insurance
                in
                an amount at least




equal
      to
      the principal amount of the loan. Title insurance insures only the validity
      and
      priority of our deed of trust, and does not insure us against loss by other
      causes, such as diminution in the value of the security property.




·
            Borrowers
                will obtain fire and casualty insurance for all loans secured by
                improved
                real property, naming us as loss payee in an amount sufficient to
                cover
                the replacement cost of
                improvements.




·
            All
                insurance policies, notes, deeds of trust or mortgages, escrow agreements,
                and any other loan documents for a particular transaction will name
                us as
                payee and beneficiary. Mortgage loans will not be written in the
                name of
                MV Funding or any other nominee.




*6.
      Note Hypothecation.* We
      may
      also acquire mortgage loans secured by assignments of secured promissory notes.
      These mortgage loans must satisfy our stated investment standards, including
      our
      loan-to-value ratios, and also may not exceed 80% of the principal amount of
      the
      assigned note. For example, if the property securing a note we acquire is
      commercial property, the total amount of outstanding debts secured by the
      property must not exceed 75% ** of
      the
      appraised as-if developed value of the property, and the mortgage loan will
      not
      exceed 80% of the principal amount of the assigned note. For mortgage loans
      secured by promissory notes, we will rely on the appraised as-if developed
      value
      of the underlying property, as determined by a written appraisal which was
      conducted within the then-preceding twelve months at the time of loan
      origination. If an appraisal was not conducted within that period, then we
      will
      arrange for a new appraisal to be prepared for the property.




8


*7.
      Participation.* We
      may
      also participate in loans with other lenders, including affiliates by providing
      funds for or purchasing an undivided interest in a loan meeting our investment
      guidelines described above. Typically, we participate in loans if-:





·  we
      did
      not have sufficient funds to invest in an entire loan.





·  we
      are
      seeking to increase the diversification in our loan portfolio.




We
      may
      participate in loans with non-affiliates if we acquire a controlling interest,
      provided we would be able to direct or cause the direction of the management
      and
      policies of such participation, which would include the authority
      to:





·
            review
                all material contracts;





·
            cause
                a sale of the mortgage or our interest therein subject in certain
                cases to
                limitations imposed by the participation agreement between the
                parties;





·
            approve
                budgets and major capital expenditures, subject to a stated minimum
                amount;





·
            veto
                any sale of a mortgage, or alternatively, to receive a specified
                preference on sale or proceeds; and





·
            exercise
                a right of first refusal on any desired sale by a participant of
                its
                interest in a loan, except for transfer to its
                affiliate.





*8.
      Diversification.* We
      will
      neither invest in, nor make, mortgage loans on any one property which would
      exceed, in the aggregate, an amount equal to 20% of our capital, nor will we
      invest in or make mortgage loans to or from any one borrower that would exceed,
      in the aggregate, an amount greater than 20% of our capital.




*9.
      Reserve Fund.* We
      will
      establish contingency working capital reserves of approximately 3% of our
      capital to cover our unexpected cash needs.




*10.
      Credit Evaluations.* Before
      making a loan, we will first determine that a borrower has sufficient equity
      in
      the security property to meet the loan-to-value ratios described above. We
      will
      also consider the income level and creditworthiness of a borrower to determine
      its ability to repay the mortgage loan.




*11.
      Sale of Mortgage Investments.* Although
      we have no plan to do so, we may sell our mortgage loans or interests in our
      loans to either affiliates or non-affiliated parties when MV Funding believes
      that it is advantageous to us to do so. However, as noted elsewhere in this
      prospectus, we do not expect that the loans will be marketable or that a
      secondary market will ever develop for them.




**Purchase
      of Loans from MV Funding**




In
      addition to those loans MV Funding selects for us, we will purchase loans that
      were originated by MV Funding or other parties, as long as the loan satisfies
      all of our lending criteria. However, we will not acquire a loan from or sell
      a
      loan to a mortgage program in which MV Funding has an interest.




**Types
      of Loans We Intend to Invest In**




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




9


construction,
      commercial, residential and bridge loans. The disclosure that follows is an
      approximate representation of how our portfolio will be comprised. None of
      these
      standards are binding upon our Manager. The assumed portfolio representation
      for
      each loan type and the loan to value ratio contain significant concessions
      that
      allow the Manager to use its discretion to exceed these limits.




*Raw
      and Unimproved Land Loans*




Approximately
      20% of our assets will be invested in loans made for the purchase or development
      of raw, unimproved land. Generally, we determine whether to invest in these
      loans based upon the appraised value of the property and the borrower's actual
      capital investment in the property. Typically, we will invest in 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 have 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*





Some
      of
      our assets may be invested in acquisition and development loans. These loans
      enable borrowers to acquire and/or 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, we will invest in 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*





Some
      of
      our assets may be invested in construction loans. A construction loan provides
      funds for the construction of one or more structures on developed land. Funds
      under this type of loan will generally not be forwarded to the borrower until
      work in the previous phase of the project has been completed and an independent
      inspector has verified certain aspects of the construction and its costs. We
      will typically require material and labor lien releases by the borrower per
      completed phase of the project. We will review the appraisal of the value of
      the
      property and proposed improvements, and will arrange loans for up to 75% of
      the
      appraised value. Such appraisals have the same valuation limitations as raw
      and
      unimproved land loans, described above.




*Commercial
      Property Loans*





Approximately
      60% of our assets may be invested in commercial property loans. Commercial
      property loans provide funds to allow commercial borrowers to acquire
      income-producing property or to make improvements or renovations to the property
      in order to increase the value or net operating income of the property so that
      it may qualify for institutional refinancing. We will review the appraisal
      of
      the value of the property and will invest in loans for up to 75% of such
      appraised value.




*Residential
      Loans*





A
      relatively small percentage of our assets may be invested in residential loans.
      These loans facilitate the purchase or refinance of one to four family
      residential property membership interests provided the borrower uses the
      property as a principal residence. We will invest in loans for up to 75% of
      the
      value of the property.




10


*Bridge
      Loans*





Some
      of
      our assets may be invested in bridge loans. These loans provide interim
      financing (up to six months) to enable commercial borrowers to qualify for
      permanent refinancing. We will review the appraisal of the value of the property
      and will generally invest in loans 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, and therefore, may not be an accurate indicator of the fair
      value
      of the property.




**Collateral
      That Will Secure Our Loans**





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





*First
      Deed of Trust*




The
      majority of the loans we will invest in will be 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*




Some
      of
      the loans invested in by us 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. We would receive all payments from the
      borrower and forward to the senior lender its portion of the payments we
      receive.





*Leasehold
      Interest*




Some
      of
      our assets may be invested in loans where the collateral is an interest in
      a
      lease.





**Special
      Terms Of Loans We Expect To Make**





*Prepayment
      Penalties and Exit Fees*




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





*Extensions
      to Term of Loan*




Our
      original loan agreements will permit extensions to the term of the loan by
      mutual consent. Such extensions will be generally provided on loans where the
      original term was 12 months or less and where a borrower requires additional
      time to complete a construction project or negotiate take out financing.
      However, we will only grant extensions when a borrower is in full compliance
      with the terms of the loan, including, but not limited to, the borrower's
      obligation to make interest payments on the loan.





11


*Balloon
      Payment*




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





*Repayment
      of Mortgages on Sales of Properties*




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





*Variable
      Rate Loans*




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




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





*Interest
      Rate Caps*




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




12


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





**No
      Trust or Investment Company Activities**




We
      have
      not qualified as a real estate investment trust under the Internal Revenue
      Code,
      and therefore we are not subject to the restrictions on its activities that
      are
      imposed on real estate investment trusts. We intend to conduct our business
      so
      that we are not an investment company within the meaning of the Investment
      Company Act of 1940. Last, we intend to conduct our business so that we are
      not
      to be deemed a dealer in mortgage loans for federal income tax
      purposes.





**Competition
      and General Economic Conditions**




There
      are
      hundreds of commercial banks, insurance companies, mortgage brokers, pension
      funds and other institutional lenders competing to make the type of loans in
      which we plan to invest. No particular competitor dominates the market. For
      the
      past few years, the institutional lenders have not been as active in the
      commercial mortgage market as in prior years. Recently, however, many major
      institutional lenders have re-entered the commercial mortgage market due to
      a
      stronger economy, stabilized or increased property values and leasing rates,
      and
      the decrease in demand for residential loans.





**Regulation**




Our
      operations are conducted by our Managing Member, MV Funding, and loans are
      expected to be obtained through independent mortgage brokers. Mortgage brokers
      generally conduct their businesses under a license issued by the State of Nevada
      Financial Institutions Division. Under applicable Nevada law, the division
      has
      broad discretionary authority over activities, including the authority to
      conduct periodic regulatory audits of all aspects of these types of
      operations.




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




Should
      we
      or MV Funding not adhere to these regulations, we could face potential
      disciplinary or other civil action that could have a material adverse effect
      on
      our business.





**HOW
      WE PROTECT OUR RIGHTS AS A**  **LENDER**





The
      following discussion is a summary of legal aspects of mortgage loan business.
      Because this is a summary, it does not contain all the information that may
      be
      important to our membership interest holders. Many of the legal aspects of
      making mortgage loans are governed by applicable state laws, which may vary
      substantially. The following material does not reflect the laws of any
      particular state, unless specifically indicated.





**Overview
      of Mortgages**




We
      plan
      to invest in mortgage loans. In connection with these loans, we receive
      mortgages or other similar instruments such as deeds of trust, granting us
      rights in the secured properties. Our authority under a mortgage is governed
      by
      applicable law and the express provisions of the mortgage.




13


Priority
      of liens on mortgaged property created by mortgages depends on their terms
      and
      on the order of filing with a state, county or municipal office, although this
      priority may be altered by the mortgagee's knowledge of unrecorded liens against
      the secured property. However, filing or recording does not establish priority
      over governmental claims for real estate taxes and assessments. In addition,
      the
      Internal Revenue Code provides priority for certain tax liens over the
      mortgage.





**Foreclosure**





Our
      plan
      in the event of foreclosure is to protect our investment by immediately putting
      the property on the market for sale once we have obtained ownership rights.
      It
      is not our intent to hold or manage any property in any way; however, in the
      event that we are unable to sell the property immediately for an adequate
      amount, we will hire independent contractors to manage the property for us
      so as
      to minimize our time and involvement until the property can be sold. Management
      anticipates that despite the speculative nature of some of the loans that the
      Fund will make, in general our loan-to-value ratios will be low enough to allow
      us to sell property upon foreclosure and obtain an adequate return on our
      investment. Management’s belief that we will be able to recover is based on its
      knowledge of the historical movement of property values and the general ability
      of lenders to recover their investment at the loan-to-value ratios planned
      for
      our loans.





*Non
      judicial Foreclosure*




If
      a
      mortgage loan secured by a deed of trust is in default, we will protect our
      rights by foreclosing through a non-judicial sale. Deeds of trust differ from
      mortgages in form, but are in most other ways similar to mortgages. Deeds of
      trust will contain specific provisions enabling non judicial foreclosure in
      addition to those provided for in applicable statutes upon any material default
      by the borrower. Applicable state law controls the extent that we have to give
      notice to interested parties and the amount of foreclosure expenses and costs,
      including attorney's fees, which may be covered by a lender, and charged to
      the
      borrower.





*Judicial
      Foreclosure*




Foreclosure
      under mortgage instruments other than deeds of trust is more commonly
      accomplished by judicial action initiated by the service of legal pleadings.
      When the mortgagee's right to foreclose is contested, the legal proceedings
      necessary to resolve the issue can be time-consuming. A judicial foreclosure
      is
      subject to most of the delays and expenses of other litigation, sometimes
      requiring up to several years to complete. For this reason, we do not anticipate
      using judicial foreclosure to protect our rights unless it is necessary.




When
      foreclosing under a mortgage instrument, the sale by the designated official
      is
      often a public sale. The willingness of third parties to purchase the property
      will depend to some extent on the status of the borrower's title, existing
      redemption rights and the physical condition of the property. It is common
      for
      the lender to purchase the secured property at a public sale where no third
      party is willing to purchase the property, for an amount equal to the
      outstanding principal amount of the indebtedness and all accrued and unpaid
      interest and foreclosure expenses. In this case, the debt owed to the mortgagee
      will be extinguished. Thereafter, the mortgagee would assume the burdens of
      ownership, including paying operating expenses and real estate taxes and making
      repairs. The lender is then obligated as an owner until it can arrange a sale
      of
      the property to a third party. If we foreclose on the secured property, we
      expect to obtain the services of a real estate broker and pay the broker's
      commission in connection with the sale of the property. Depending upon market
      conditions, the ultimate proceeds of the sale of the property may not equal
      our
      investment in the property. A lender commonly incurs substantial legal fees
      and
      court costs in acquiring a mortgaged property through contested foreclosure
      and/or bankruptcy proceedings.




14


Lenders
      also need to comply with procedure-related environmental rules and regulations.
      An increasing number of states require that any environmental hazards are
      eliminated before a property may be resold. A lender may be responsible under
      federal or state law for the cost of cleaning up a mortgaged property that
      is
      environmentally contaminated. As a result, a lender could realize an overall
      loss on a mortgage loan even if the related mortgaged property is sold at
      foreclosure or resold after it is acquired through foreclosure for an amount
      equal to the full outstanding principal amount of the mortgage loan, plus
      accrued interest.




In
      foreclosure proceedings, courts frequently apply equitable principles, which
      are
      designed to relieve the borrower from the legal effects of his immaterial
      defaults under the loan documents or the exercise of remedies that would
      otherwise be unjust in light of the default. These equitable principles and
      remedies may impede our efforts to foreclose.





**Environmental
      Risks**




Our
      secured property may be subject to potential environmental risks. Of particular
      concern may be those secured properties which are, or have been, the site of
      manufacturing, industrial or disposal activity. These environmental risks may
      give rise to a diminution in value of the secured property or liability for
      clean-up costs or other remedial actions. This liability could exceed the value
      of the real property or the principal balance of the related mortgage loan.
      For
      this reason, we may choose not to foreclose on contaminated property rather
      than
      risk incurring liability for remedial actions.




Under
      the
      laws of certain states, an owner's failure to perform remedial actions required
      under environmental laws may give rise to a lien on mortgaged property to ensure
      the reimbursement of remedial costs. In some states this lien has priority
      over
      the lien of an existing mortgage against the real property. Because the costs
      of
      remedial action could be substantial, the value of a mortgaged property as
      collateral for a mortgage loan could be adversely affected by the existence
      of
      an environmental condition giving rise to a lien.




The
      state
      of law is currently unclear as to whether and under what circumstances clean-up
      costs, or the obligation to take remedial actions, can be imposed on a secured
      lender. If a lender does become liable for clean up costs, it may bring an
      action for contribution against the current owners or operators, the owners
      or
      operators at the time of the on-site disposal activity or any other party who
      contributed to the environmental hazard, but these persons or entities may
      be
      bankrupt or otherwise judgment-proof. Furthermore, an action against the
      borrower may be adversely affected by the limitations on recourse in the loan
      documents.




For
      the
      foregoing reasons, we anticipate that we will require a Phase I Environmental
      Site Assessment of all secured properties prior to approval of any loan from
      us.




**Second
      Mortgages; Rights of Senior Mortgages**




We
      do not
      presently intend to acquire mortgages that are subordinate to more than one
      other mortgage. Our rights as mortgagee or beneficiary under a second mortgage
      will be subordinate to those of the mortgagee under the senior mortgage,
      including the prior rights of the senior mortgagee to receive rents, hazard
      insurance and condemnation proceeds and to cause the secured property to be
      sold
      upon default of the mortgagor. This can extinguish a second mortgage unless
      we
      assert our subordinate interest in foreclosure litigation or satisfy the
      defaulted senior loan. In many states a junior mortgagee may satisfy a defaulted
      senior loan in full, or may cure the default, and bring the senior loan current,
      in either event adding the amounts expended to the balance due on the junior
      loan. Absent a provision in the senior mortgage, or unless required by state
      law, a senior mortgagee need not give notice of default to a junior
      mortgagee.




15


The
      form
      of mortgage used by many institutional lenders confers on the mortgagee the
      right both to receive insurance proceeds and condemnation awards. Thus, in
      the
      event improvements on the property are damaged or destroyed by fire or other
      casualty, or in the event the property is taken by condemnation, the first
      mortgagee will have the prior right to collect any insurance proceeds payable
      and any condemnation award of damages in and to apply the same to the
      indebtedness secured by the senior mortgage. Proceeds in excess of the amount
      of
      senior indebtedness will, in most cases, be applied to the indebtedness secured
      by a junior mortgage. The right to insurance proceeds and condemnation awards
      may be limited, as in cases where the mortgagor is allowed to use the insurance
      proceeds and condemnation award to repair the damage unless the security of
      the
      mortgagee has been impaired.




The
      form
      of mortgage used by many institutional lenders also contains a future advance
      clause, which provides that additional amounts advanced to or on behalf of
      the
      mortgagor by the mortgagee are to be secured by the mortgage. While this type
      of
      clause is valid under the laws of most states, the priority of any advance
      made
      under the clause may depend on whether the advance was an obligatory or optional
      advance. If the mortgagee is obligated to advance the additional amounts, the
      advance may be entitled to receive the same priority as amounts initially made
      under the mortgage, notwithstanding that there may be intervening junior
      mortgages and other liens and notwithstanding that the mortgagee or beneficiary
      had actual knowledge of them.




Where
      the
      mortgagee is not obligated to advance the additional amounts and has actual
      knowledge of the intervening junior mortgages and other liens, the advance
      may
      be subordinate to these intervening junior mortgages and other liens. Priority
      of advances under a future advance clause may also rest on state law giving
      priority to advances made under the loan agreement up to a credit limit amount
      stated in the recorded mortgage.





We
      can
      also protect ourselves by including provisions obligating the mortgagor to
      do
      the following:





·
            pay
                before delinquency all taxes and assessments on the property and,
                when
                due, all encumbrances, charges and liens on the property which appear
                prior to the mortgage,





·
            to
                provide and maintain fire insurance on the
                property,





·
            to
                maintain and repair the property,





·
            not
                to commit or permit any waste on the property,
                and





·
            to
                appear in and defend any action or proceeding purporting to affect
                the
                property or the rights of the mortgagee under the
                mortgage.





Upon
      a
      failure of the mortgagor to perform any of these obligations, we would have
      the
      right under the mortgage to perform the obligation, with the mortgagor agreeing
      to reimburse us for any sums we expend on behalf of the mortgagor. All sums
      we
      expend become part of the indebtedness secured by the mortgage.





**Statutory
      Rights of Redemption**





After
      a
      foreclosure sale pursuant to a mortgage, the borrower and foreclosed junior
      lienors may have a statutory period in which to redeem the property from the
      foreclosure sale. Redemption may be limited to where the mortgagee receives
      payment of all or the entire principal balance of the loan, accrued interest
      and
      expenses of foreclosure. The statutory right of redemption diminishes the
      ability of the lender to sell the foreclosed property. The right of redemption
      may defeat the title of any purchaser at a foreclosure




16


sale
      or
      any purchaser from the lender subsequent to a foreclosure sale. One remedy
      we
      may have is to avoid a post-sale redemption by waiving our right to a deficiency
      judgment. Consequently, as noted above, the practical effect of the redemption
      right is often to force the lender to retain the property and pay the expenses
      of ownership until the redemption period has run.





**Anti-Deficiency
      Legislation**





We
      may
      acquire interests in mortgage loans which limit our recourse to foreclosure
      upon
      the secured property, with no recourse against the borrower's other assets.
      Even
      if recourse is available pursuant to the terms of the mortgage loan against
      the
      borrower's assets in addition to the mortgaged property, we may confront
      statutory prohibitions which impose prohibitions against or limitations on
      this
      recourse. For example, the right of the mortgagee to obtain a deficiency
      judgment against the borrower may be precluded following foreclosure. A
      deficiency judgment is a personal judgment against the former borrower equal
      in
      most cases to the difference between the net amount realized upon the public
      sale of the security and the amount due to the lender. Other statutes require
      the mortgagee to exhaust the security afforded under a mortgage by foreclosure
      in an attempt to satisfy the full debt before bringing a personal action against
      the borrower. We may elect, or be deemed to have elected, between exercising
      our
      remedies with respect to the security or the deficiency balance. The practical
      effect of this election requirement is that lenders will usually proceed first
      against the security rather than bringing personal action against the borrower.
      Other statutory provisions limit any deficiency judgment against the former
      borrower following a judicial sale to the excess of the outstanding debt over
      the fair market value of the property at the time of the public
      sale.




In
      Nevada, for example, we can pursue a deficiency judgment against the borrower
      or
      a guarantor if the value of the property securing the loan is insufficient
      to
      pay back the debt owed to us. In jurisdictions like California, however, if
      we
      desire to seek a judgment in court against the borrower for the deficiency
      balance, we may be required to seek judicial foreclosure and/or have other
      security from the borrower. We would expect this to be a more prolonged
      procedure, and is subject to most of the delays and expenses that affect other
      lawsuits.





**Bankruptcy
      Laws**




We
      may be
      subject to delays from statutory provisions that afford relief to debtors from
      our ability to obtain payment of the loan, to realize upon collateral and/or
      to
      enforce a deficiency judgment. Under the United States Bankruptcy Code of 1978,
      which we refer to as the Bankruptcy Code, and analogous state laws, foreclosure
      actions and deficiency judgment proceedings are automatically suspended upon
      the
      filing of the bankruptcy petition, and often no interest or principal payments
      are made during the course of the bankruptcy proceeding. The delay and
      consequences in obtaining our remedy can be significant. Also under the
      Bankruptcy Code, the filing of a petition in bankruptcy by or on behalf of
      the
      holder of a second mortgage may prevent the senior lender from taking action
      to
      foreclose out the junior lien.




Under
      the
      Bankruptcy Code, the amount and terms of a mortgage on property of the debtor
      may be modified under equitable principles or otherwise. Under the terms of
      an
      approved bankruptcy plan, the court may reduce the outstanding amount of the
      loan secured by the real property to the then current value of the property
      in
      tandem with a corresponding partial reduction of the amount of the lender's
      security interest. This leaves the lender having the status of a general
      unsecured creditor for the differences between the property value and the
      outstanding balance of the loan. Other modifications may include the reduction
      in the amount of each monthly payment, which may result from a reduction in
      the
      rate of interest and/or the alteration of the repayment schedule, or change
      in
      the final maturity date. A court may approve a plan, based on the particular
      facts of the reorganization case that effected the curing of a mortgage loan
      default by paying arrearage over time. Also, under the Bankruptcy Code, a
      bankruptcy court may permit a debtor to de-accelerate a mortgage loan and to




17


reinstate
      the loan even though the lender accelerated the mortgage loan and final judgment
      of foreclosure had been entered in state court prior to the filing of the
      debtor's petition. This may be done even if the full amount due under the
      original loan is never repaid. Other types of significant modifications to
      the
      terms of the mortgage or deed of trust may be acceptable to the bankruptcy
      court, often depending on the particular facts and circumstances of the specific
      case.




In
      a
      bankruptcy or similar proceeding action may be taken seeking the recovery as
      a
      preferential transfer of any payments made by the mortgagor under the related
      mortgage loan to the lender. Payments on long-term debt may be protected from
      recovery as preferences if they are payments in the ordinary course of business
      made on debts incurred in the ordinary course of business. Whether any
      particular payment would be protected depends upon the facts specific to a
      particular transaction.





**Enforceability
      of Certain Provisions**





*Due-On-Sale
      Provisions*





Federal
      law pre-empts state constitutional, statutory and case law that prohibits the
      enforcement of due-on-sale clauses and permits lenders to enforce these claims
      in accordance with their terms. As a result, due-on-sale clauses are enforceable
      except in those states whose legislatures exercised their limited authority
      to
      regulate the enforceability of these clauses. Due-on-sale clauses will not
      be
      enforceable in bankruptcy proceedings.





*Acceleration
      on Default*




We
      may
      invest in mortgage loans which contain a debt-acceleration clause, which permits
      us to accelerate the full debt upon a monetary or nonmonetary default of the
      borrower. The courts of most states will enforce clauses providing for
      acceleration in the event of a material payment default after we give
      appropriate notices. The equity courts of any state, however, may refuse to
      foreclose a mortgage when an acceleration of the indebtedness would be
      inequitable or unjust. Furthermore, a borrower may avoid foreclosure and
      reinstate an accelerated loan by paying only the defaulted amounts and the
      costs
      and attorney's fees incurred by the lender in collecting these defaulted
      payments.




State
      courts also are known to apply various legal and equitable principles to avoid
      enforcement of the forfeiture provisions of installment contracts. For example,
      a lender's practice of accepting late payments from the borrower may be deemed
      a
      waiver of the forfeiture clause. State courts also may impose equitable grace
      periods for payment of arrearage or otherwise permit reinstatement of the
      contract following a default. If a borrower under an installment contract has
      significant equity in the property, a court may apply equitable principles
      to
      reform or reinstate the contract or to permit the borrower to share the proceeds
      upon a foreclosure sale of the property if the sale price exceeds the
      debt.





*Prepayment
      Provisions*




In
      the
      absence of state statutory provisions prohibiting prepayment fees, we expect
      that the courts will enforce claims requiring prepayment fees. However, in
      some
      states prepayment fees may be unenforceable for residential loans or after
      a
      mortgage loan has been outstanding for a number of years. Applicable law may
      limit the amount of any prepayment fee to a specified percentage of the original
      principal amount of the mortgage loan, to a specified percentage of the
      outstanding principal balance of a mortgage loan, or to a fixed number of
      month's interest on the prepaid amount. We may have to contend with laws that
      render prepayment provisions on default or other involuntary acceleration of
      a
      mortgage loan unenforceable against the mortgagor or trustor. Some state
      statutory provisions may also treat prepayment fees as usurious if they exceed
      statutory limits. We anticipate that our loans will not have prepayment
      provisions.





18


*Secondary
      Financing: Due-on-Encumbrance Provisions*




Some
      mortgage loans may have no restrictions on secondary financing, thereby
      permitting the borrower to use the mortgaged property as security for one or
      more additional loans. We are more likely to invest in mortgage loans that
      permit us, as first lender, to accelerate the maturity of a loan if the borrower
      grants a second mortgage or in mortgage loans that require our consent to any
      junior or substitute financing.




Where
      a
      borrower encumbers the mortgaged property with one or more junior liens, the
      first lender is subjected to the following additional risks:





·
            the
                borrower may have difficulty servicing and repaying multiple
                loans;





·
            acts
                of the senior lender which prejudice the junior lender or impair
                the
                junior lender's security may create a superior equity in favor of
                the
                junior lender;





·
            if
                the borrower defaults on the senior loan and/or any junior loan or
                loans,
                the existence of junior loans and actions taken by junior lenders
                can
                impair the security available to the senior lender and can interfere
                with,
                delay and even prevent the taking of action by the senior
                lender;





·
            the
                bankruptcy of a junior lender may operate to stay foreclosure or
                similar
                proceedings by the senior lender.




We
      expect
      that our loans will prohibit junior mortgages and intend to monitor our loans
      closely so that we will know when a junior lien holder acquires an interest
      in
      the secured property.





*Applicability
      of Usury Laws*




State
      and
      federal usury laws limit the interest that lenders are entitled to receive
      on a
      mortgage loan. In determining whether a given transaction is usurious, courts
      may include charges in the form of points and fees as interest, but may exclude
      payments in the form of reimbursement of foreclosure expenses or other charges
      found to be distinct from interest. If, however, the amount charged for the
      use
      of the money loaned is found to exceed a statutorily established maximum rate,
      the form employed and the degree of overcharge are both immaterial. Statutes
      differ in their provision as to the consequences of a usurious loan. One group
      of statutes requires the lender to forfeit the interest above the applicable
      limit or imposes a specified penalty. Under this statutory scheme, the borrower
      may have the recorded mortgage or deed of trust cancelled upon paying its debt
      with lawful interest, or the lender may foreclose, but only for the debt plus
      lawful interest. Under a second, more severe type of statute, a violation of
      the
      usury law results in the invalidation of the transaction, thereby permitting
      the
      borrower to have the recorded mortgage or deed of trust cancelled without any
      payment and prohibiting the lender from foreclosing.




Nevada
      law does not apply limitations on interest that may be charged on the type
      of
      loans that we intend to invest in or purchase. In California, we will only
      invest in loans that were made through real estate brokers licensed by the
      California Department of Real Estate. Mortgage loans made or arranged by a
      licensed real estate broker are exempt from the California usury law provisions
      that restrict the maximum rate of interest on California loans. All underlying
      mortgage loans on California property that are invested in or purchased by
      us
      will be arranged for us by such a licensed California real estate
      broker.





19


**Item
      3:****Legal
      Proceedings**





We
      are
      not aware of any pending or threatened litigation against the Fund, its manager,
      or affiliates that we believe is of a material nature or that could negatively
      affect the net worth of the Fund.





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





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the annual period ended June 30,
      2005.








**PART
      II**





**Item
      5:****Market
      for Common Equity and Related Membership Interest Holder
      Matters**





**Market
      Information**





There
      is
      no public market for our Membership Interests. On January 25, 2005, our
      registration statement filed on Form S-1 (Commission file number 333-115444)
      was
      declared effective. As of September 7, 2005, we have not sold any of the
      membership interests in our ongoing public offering.





**Holders
      of Our Membership Interests**





As
      of
      September 7, 2005, we had 0 holders of record of our membership
      interests.





**Dividends**





We
      have
      not declared any dividends or made any distributions, and we do not plan to
      declare any dividends or make any distributions in the foreseeable
      future.





**Recent
      Sales of Unregistered Securities**





On
      January 25, 2005, our registration statement filed on Form S-1 (Commission
      file
      number 333-115444) was declared effective. This offering has commenced and
      is
      ongoing. As of September 7, 2005, we have not sold any membership
      interests.




**Item
      6:****Management’s
      Discussion and Analysis**





**Forward-Looking
      Statements**




Historical
      results and trends should not be taken as indicative of future operations.
      Management’s statements contained in this report that are not historical facts
      are forward-looking statements within the meaning of Section 27A of
      the
      Securities Act of 1933, as amended, and Section 21E of the Securities and
      Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
      materially from those included in the forward-looking statements. The Company
      intends such forward-looking statements to be covered by the safe-harbor
      provisions for forward-looking statements contained in the Private Securities
      Litigation Reform Act of 1995, and is including this statement for purposes
      of
      complying with those safe-harbor provisions. Forward-looking statements, which
      are based on certain assumptions and describe future plans, strategies and
      expectations of the Company, are generally identifiable by use of the
      words “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,”
      or similar expressions. The Company’s ability to predict results or




20


the
      actual effect of future plans or strategies is inherently uncertain. Factors
      which could have a material adverse affect on the operations and future
      prospects of the Company on a consolidated basis include, but are not limited
      to: changes in economic conditions, legislative/regulatory changes, availability
      of capital, interest rates, competition, significant restructuring activities
      in
      calendar 2004 and thereafter, and generally accepted accounting principles.
      These risks and uncertainties should be considered in evaluating forward-looking
      statements and undue reliance should not be placed on such statements. Further
      information concerning the Company and its business, including additional
      factors that could materially affect the Company’s financial results, is
      included herein and in the Company’s other filings with the SEC.





**Plan
      of Operation**





We
      were
      organized on September 2, 2003 and currently have no operational activities.
      The
      Fund will begin operations and will be capitalized concurrent with the receipt
      of the minimum investment of $500,000 (200 units) under our Registration
      Statement which was declared effective by the Securities Exchange Commission
      on
      January 25, 2005.   We must sell a minimum of 200 units or $500,000
      in
      order to begin the operations of the Fund.  Until this minimum is reached,
      all investment money received will be held in a segregated account,
      unused.  If this minimum is not reached, any and all investment money
      received by us will be returned to investors promptly, without interest. 
      Once the minimum is reached, all money held in the segregated account will
      be
      released into the Fund to start operations.  If we do not sell the minimum
      by December 22, 2005, the offering will close and we will be required to seek
      other sources of funding.




To
      date,
      we have not earned any revenue as we have no operations.  We have incurred
      expenses in the amount of $125,606 since inception, primarily in connection
      with
      the expenses of our ongoing offering.




Upon
      receiving this minimum, management anticipates distributing the funds held
      in
      escrow and negotiating the purchase of the Fund’s first loans. Management will
      be seeking to loan out all the funds assets from the start in order to maximize
      the potential Fund earnings. While it is management’s preference to avoid larger
      loans in order to diversify risk, especially when its capital is limited as
      is
      likely during the start up of Fund operations, it does not expect to avoid
      larger loans as long as they offer the Fund a good investment opportunity and
      there is sufficient capital available to purchase the loan. However, investors
      should note that a larger loan would expose the fund to substantial credit
      risk,
      as a default by a single borrower could substantially reduce the fund’s
      assets.





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





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




Our
      operating results will be affected primarily by (i) the amount of capital we
      will have to invest in mortgage loans, (ii) the level of real estate lending
      activity in the markets we will service, (iii) our ability to identify and
      work
      with suitable borrowers, (iv) the interest rates we are able to charge on our
      loans and (v) the level of delinquencies, foreclosures and related loan losses
      which we experience. We expect to raise funds through the sale of our Membership
      interests and accordingly the size of our investment portfolio will be
      contingent upon the success of this offering.




Adverse
      economic conditions during the next year could have a material impact on the
      collectibility of any loans we will make. Recognizing this risk, we will seek
      to
      maintain low loan to value ratios. In this manner, we will hope to maintain
      a
      sufficient cushion in the underlying equity position to protect the value of
      any
      loan in the event of a default. Nevertheless,




21


there
      can
      be no assurance that a marked increase in loan defaults accompanied by a rapid
      decline in real estate values would have a material adverse effect upon our
      operating results when we commence operations.




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




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




**Significant
      Accounting Policies**





Income
      taxes





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





Revenue
      recognition





Interest
      is recognized as revenue when earned according to the terms of the loan. The
      Company does not recognize interest income on loans once they are determined
      to
      be impaired or non-performing. A loan is impaired when based on current
      information and events, it is probable that the Company will be unable to
      collect all amounts due according to the contractual terms of the loan
      agreement.





Debt
      securities





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




Purchase
      mortgage loans





The
      Company has both the intent and ability to hold mortgage loans until maturity
      and, therefore, mortgage loans are classified and accounted for as held for
      investment and are carried at cost. Interest income on loans is accrued by
      the
      effective interest method. The Company does not intend to purchase loans using
      forward purchase commitments.





Investments
      in mortgage loans





Investments
      in mortgage loans are secured by trust deeds and mortgages. Such investments
      in
      mortgage loans may include commercial, construction, acquisition and development
      and land. Generally, all of the Company’s mortgage loans require interest only
      payments with a balloon payment of the principal at maturity. The Company has
      both the intent and ability to hold mortgage loans until maturity and therefore,
      mortgage loans are classified and accounted for as held for investment and
      are
      carried at amortized cost. Periodically, the




22


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





Real
      estate held for sale





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





Allowance
      for loan losses





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





23


**Item
      7:****Financial
      Statements**





Index
      to
      Consolidated Financial Statements:





**Audited
      Financial Statements:**


F-1   Reports
      of Independent Registered Public Accounting Firms;





F-2   Balance
      Sheet as of June 30, 2005;





F-3   Statements
      of Operations - Years Ended June 30, 2005 and June 30, 2004;





F-4   Statement
      of Stockholders’ Equity (Deficit) and Comprehensive Loss for the Years Ended
      June 30, 2005 and June 30, 2004;





F-5   Statements
      of Cash Flows for the Years Ended June 30, 2005 and June 30, 2004;
      and




F-6   Notes
      to
      Financial Statements











**Beckstead
        and Watts, LLP**
 ***Certified
        Public Accountants***
 2425
        W
        Horizon Ridge Parkway
 Henderson,
        NV 89052
 702.257.1984
        (tel)
 702.362.0540
        (fax)
 
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 We
        have
        audited the accompanying balance sheet of MV Fund II, LLC (the “Company”) (A
        Development Stage Company), as of June 30, 2005, and the related statements
        of
        operations, changes in members’ (deficit), and cash flows for the year then
        ended, and the period September 2, 2003 (Date of Inception) to June 30, 2005.
        These financial statements are the responsibility of the Company’s management.
        Our responsibility is to express an opinion on these financial statements
        based
        on our audit.
  We
        conducted our audit in accordance with the standards of Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of MV Fund II, LLC (A Development
        Stage Company) as of June 30, 2005, and the related statement of operations,
        changes in members’ (deficit), and cash flows for the year then ended, and the
        period September 2, 2003 (Date of Inception) to June 30, 2005, in conformity
        with U.S. generally accepted accounting principles.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in Note 3 to the financial statements,
        the Company has had limited operations and have not commenced planned principal
        operations. This raises substantial doubt about its ability to continue as
        a
        going concern. Management’s plans in regard to these matters are also described
        in Note 3. The financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
 
 
 
 /s/
        Beckstead and Watts, LLP
 October
        21, 2005
 
 
 
 
 **Beckstead
          and Watts, LLP**
 ***Certified
          Public Accountants***
 2425
          W
          Horizon Ridge Parkway
 Henderson,
          NV 89052
 702.257.1984
          (tel)
 702.362.0540
          (fax)
 
 
 **REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 We
          have
          audited the accompanying restated balance sheet of MV Fund II, LLC (the
          “Company”) (A Development Stage Company), as of June 30, 2004, and the related
          restated statements of operations, changes in members’ (deficit), and cash flows
          for the year then ended, and for the period from September 2, 2003 (Date
          of
          Inception) to June 30, 2004 containing the restated financial statements
          for
          June 30, 2004. These financial statements are the responsibility of the
          Company’s management. Our responsibility is to express an opinion on these
          financial statements based on our audit.
  We
          conducted our audit in accordance with the standards of Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. An audit includes examining,
          on a
          test basis, evidence supporting the amounts and disclosures in the financial
          statements. An audit also includes assessing the accounting principles
          used and
          significant estimates made by management, as well as evaluating the overall
          financial statement presentation. We believe that our audit provides a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the financial statements referred to above, revised as described
          in
          Note 1, present fairly, in all material respects, the financial position
          of MV
          Fund II, LLC. (A Development Stage Company) as of June 30, 2004, and the
          related
          statements of operations, changes in members’ (deficit), and cash flows for the
          year ended June 30, 2004, and for the period from September 2, 2003 (Date
          of
          Inception) to June 30, 2004 containing the restated financial statements
          for
          June 30, 2004, in conformity with U.S. generally accepted accounting
          principles.
 
 The
          accompanying financial statements have been prepared assuming the Company
          will
          continue as a going concern. As discussed in Note 3 to the financial statements,
          the Company has had limited operations and have not commenced planned principal
          operations. This raises substantial doubt about its ability to continue
          as a
          going concern. Management’s plans in regard to these matters are also described
          in Note 3. The financial statements do not include any adjustments that
          might
          result from the outcome of this uncertainty.
 
 As
          discussed in Note 1 to the financial statements, the Company’s 2004 net loss
          previously reported as $-0- should have been $33,682. This discovery was
          made
          subsequent to the issuance of the financial statements. The financial statements
          have been restated to reflect this correction.
 
 
 /s/
          Beckstead and Watts, LLP
 August
          16, 2004, except for Note 1, as to which the date is October 21,
          2005











**MV
        Fund II, LLC**
 **(A
        Development Stage Company)**
 
 **Balance
        Sheets**
 **as
        of**
 **June
        30, 2005 and**
 **Restated
        June 30, 2004**
 
 **and**
 
 **Statement
        of Operations,**
 **Changes
        in Members’ (Deficit), and**
 **Cash
        Flows**
 **For
        the years ended**
 **June
        30, 2005 and**
 **Restated
        June 30, 2004**
 **and**
 **for
        the Period**
 **September
        2, 2003 (Date of Inception)**
 **through**
 **June
        30, 2005 containing**
 **Restated
        June 30, 2004**





**MV
                    Fund II, LLC****(a
                    Development Stage Company)****Balance
                    Sheet**June
                    30,
                
                
                June
                    30,2005
                
                
                2004**Assets**
                
                
                
                
                
                
                (Restated)Current
                    assets:Due
                    from managing member
                
                $
                -
                
                $
                -Total
                    current assets
                
                
                -
                
                
                -$
                -
                
                $
                -**Liabilities
                    and Members' (Deficit)**Current
                    liabilitiesAccrued
                    expenses
                
                $
                102,313
                
                $
                14,889Members'
                    (deficit) - no units issued at 6/30/05 and 6/30/04
                
                (102,313)
                
                
                (14,889)$
                -
                
                $
                -
  **MV
                      Fund II, LLC****(a
                      Development Stage Company)****Statements
                      of Operations**September
                      2, 2003
                  
                  September
                      2, 2003Twelve
                      months ended
                  
                  (Inception)
                      to
                  
                  (Inception)
                      toJune
                      30,
                  
                  June
                      30,
                  
                  June
                      30,2005
                  
                  2004
                  
                  2005(Restated)Net Revenue
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -Expenses:General and administrative expenses
                  
                  
                  91,924
                  
                  
                  33,682
                  
                  
                  125,606Total expenses
                  
                  
                  91,924
                  
                  
                  33,682
                  
                  
                  125,606Net (loss)
                  
                  $
                  (91,924)
                  
                  $
                  (33,682)
                  
                  $
                  (125,606)Net (loss) allocated to members
                  
                  $
                  (91,924)
                  
                  $
                  (33,682)
                  
                  $
                  (125,606)Weighted average membership units
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Net (loss) allocated to members
                      perweighted average membership units
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -


**MV
                      Fund II, LLC****(a
                      Development Stage Company)****Statement
                      of Changes in Members' (Deficit)**(Deficit)AccumulatedDuring
                  
                  TotalMember
                  
                  Additional
                      paid-
                  
                  Development
                  
                  Members'Units
                  
                  in
                      capital
                  
                  Stage
                  
                  (Deficit)September
                      2, 2003 (Inception)
                  -
                  
                  $                                                                         -
                  
                  $                                 
                                                    -
                  
                  $  
                                 
                      -Managing
                      member donated capital
                  
                  
                  18,793
                  
                  
                  
                  18,793Net
                      loss for the period September 2, 2003thru
                      June 30, 2004 (Restated)
                  
                  
                  
                  
                  (33,682)
                  
                  (33,682)Balance,
                      June 30, 2004 (Restated)
                  -
                  
                  18,793
                  
                  (33,682)
                  
                  (14,889)Managing
                      member donated capital
                  
                  
                  4,500
                  
                  
                  
                  4,500Net
                      loss for theyear
                      ended June 30, 2005
                  
                  
                  
                  
                  
                  (91,924)
                  
                  (91,924)Balance,
                      June 30, 2005
                  
                  -
                  
                  $    
                                                                               
                      23,293
                  
                  $                                                  (125,606)
                  
                  $(102,313)
   
 
  **MV
                      Fund II, LLC****(a
                      Development Stage Company)****Statements
                      of Cash Flows**September
                      2, 2003
                  
                  September
                      2, 2003Twelve
                      months ended
                  
                  (Inception)
                      to
                  
                  (Inception)
                      toJune
                      30,
                  
                  June
                      30,
                  
                  June
                      30,2005
                  
                  2004
                  
                  2005(Restated)**Cash flows from operating
                      activities**Net (loss)
                  
                  $
                  (91,924)
                  
                  $
                  (33,682)
                  
                  $
                  (125,606)Changes in operating assets and
                      liabilities:Increase in accrued expenses
                  
                  
                  87,424
                  
                  
                  14,889
                  
                  
                  102,313Net cash (used) by operating
                      activities
                  
                  
                  (4,500)
                  
                  
                  (18,793)
                  
                  
                  (23,293)**Cash flows from financing
                      activities**Expenses paid in capitalby managing member
                  
                  
                  4,500
                  
                  
                  18,793
                  
                  
                  23,293Net cash provided by financing
                      activities
                  
                  
                  4,500
                  
                  
                  18,793
                  
                  
                  23,293Net increase in cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Cash - beginning
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Cash - ending
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -Non-cash transactions:Expenses paid for by the managing
                      member
                  
                  $
                  4,500
                  
                  $
                  18,793
                  
                  $
                  23,293Number of membership units issued
                      for
                      expenses
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
 **MV
          Fund II,
          LLC**
 (a
          Development
          Stage company)
 Notes
          to Financial
          Statements
 
  NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Organization
          Correction of errors
      2004Accumulated (deficit) as previously
                      reported
                  $
                  0Reductions in previously reported
                      items:Deferred offering
                      expense
                  
                  (10,000)Additions in previously
                      reported
                      items:Accrued
                      expenses
                  
                  (4,889)Paid in capital
                  
                  (18,793)Organizational
                      & offering costs
                  
                  33,682Total addition to 2004 reported
                      net
                      (loss)
                  $
                  33,682Ending balance of 2004 accumulated
                      (deficit)
                  $
                  (33,682)
  The
            effect
            the adjustments on the Company’s previously reported June 30, 2004 financial
            statements are incorporated as follows:   
   MV
            Fund II,
            LLC
 (a
            Development Stage company)
 Notes
            to Financial Statements
 
   **Balance
                      Sheet as of June 30, 2004**
                  *Previously
                      Reported*
                  
                  *Increase/
                      (Decrease)*
                  
                  *Restated*Current
                      Assets
                  $
                      10,000
                  
                  $
                      (10,000)
                  
                  $
                      -0-Other
                      Assets
                  -0-
                  
                  -0-
                  
                  -0-Total
                      Assets
                  10,000
                  
                  (10,000)
                  
                  -0-Current
                      Liabilities
                  10,000
                  
                  4,889
                  
                  14,889Members'
                      (Deficit)Paid
                      in capital
                  -0-
                  
                  18,793
                  
                  18,793Accumulated
                      (deficit) - September 2 2003 (inception)
                  -0-
                  
                  -0-
                  
                  -0-Net
                      (loss) - June 30, 2004
                  -0-
                  
                  (33,682)
                  
                  (33,682)Ending
                      Members’ (deficit)
                  -0-
                  
                  (14,889)
                  
                  (14,889)Total
                      Liabilities and Members' (Deficit)
                  $
                      10,000
                  
                  $
                      (10,000)
                  
                  $
                      -0-**Statement
                      of Operations as of June 30, 2004**
                  *Previously
                      Reported*
                  
                  *Increase/
                      (Decrease)*
                  
                  *Restated*Revenues
                  $
                      -0-
                  
                  $
                      -0-
                  
                  $
                      -0-Cost
                      of revenues
                  -0-
                  
                  -0-
                  
                  -0-Gross
                      profit (loss)
                  -0-
                  
                  -0-
                  
                  -0-General
                      & administrative expenses
                  -0-
                  
                  (33,682)
                  
                  (33,682)Net
                      (loss)
                  $
                      -0-
                  
                  (33,682)
                  
                  $
                      (33,682)
   Estimates  The
            preparation of financial statements in conformity with generally accepted
            accounting principles requires management to make estimates and assumptions
            that
            affect the reported amounts of assets and liabilities and disclosure
            of
            contingent assets and liabilities at the date of the financial statements
            and
            the reported amounts of revenues and expenses during the reporting period.
            Actual results could differ from those estimates.  Income
            taxes  Income
            tax effects resulting from the Company’s operations pass through to the members
            individually and, accordingly, no provision for income taxes is included
            in the
            financial statements.  Revenue
            recognition  Interest
            is recognized as revenue when earned according to the terms of the loans,
            using
            the effective interest method. The Company does not recognize interest
            income on
            loans once they are determined to be impaired. A loan is impaired when
            based on
            current information and events, it is probable that  
  MV
            Fund II, LLC
 (a
            Development Stage company)
 Notes
            to Financial Statements
 
   the
            Company will be unable to collect all amounts due according to the contractual
            terms of the loan agreement. Cash receipts will be allocated to interest
            income,
            except when such payments are specifically designated by the terms of
            the loan
            as principal reduction or when management does not believe the Company’s
            investment in the loan is fully recoverable.  Investments
            in mortgage loans  Investments
            in mortgage loans are secured by trust deeds and mortgages. Such investments
            in
            mortgage loans may include commercial, construction, acquisition and
            development
            and land.  Generally, all of the Company’s mortgage loans require interest
            only payments with a balloon payment of the principal at maturity. The
            Company
            has both the intent and ability to hold mortgage loans until maturity
            and
            therefore, mortgage loans are classified and accounted for as held for
            investment and are carried at amortized cost. Periodically, the Company
            will
            evaluate investments in mortgage loans based upon loan to value ratios. 
            Loan to value ratios are based on appraisals obtained at the time of
            loan
            origination and may not reflect subsequent changes in value estimates.
            Such
            appraisals, which may be commissioned by the borrower, are generally
            dated
            within 12 months of the date of loan origination. The appraisals
            may be for
            the current estimate of the “as-if developed” value of the property, which
            approximates the post-construction value of the collateralized property
            assuming
            that such property is developed. As-if developed values on raw land loans
            or
            acquisition and development loans often dramatically exceed the immediate
            sales
            value and may include anticipated zoning changes and timely successful
            development by the purchaser. As most of the appraisals will be prepared
            on an
            as-if developed basis, if a loan goes into default prior to any development
            of a
            project, the market value of the property may be substantially less than
            the
            appraised value. As a result, there may be less security than anticipated
            at the
            time the loan was originally made. If there is less security and a default
            occurs, the Company may not recover the full amount of the loan.  Real
            estate held for sale  Upon
            a foreclosure of the underlying real property securing the investments
            in
            mortgage loans, the Company will reclassify such asset as investments
            in real
            estate held for sale.  Investments in real estate held for sale
            are
            accounted for at the lower of cost or fair value less costs to sell with
            fair
            value based on appraisals and knowledge of local market conditions. It
            is not
            the Company’s intent to invest in or own real estate as a long-term investment.
            The Company seeks to sell properties acquired through foreclosure as
            quickly as
            circumstances permit.  Any costs of managing, maintaining and
            developing a
            real property acquired through foreclosure shall be expensed in the period
            such
            costs are incurred.  Gain/loss related to real estate held for
            sale will be
            recognize within the period of such sale assuming 25% or more of the
            sales price
            has been collected within the same period.  Allowance
            for loan losses  Investments
            in loans are carried at their principal amount outstanding less any unearned
            income or unamortized discount. Interest on loans is accrued and credited
            to
            interest income based on the daily principal amount outstanding. Loans
            are
            generally placed in nonaccrual status when principal or interest is delinquent
            for 30 days (unless adequately secured and in the process of collection)
            or
            circumstances indicate that full collection of principal and interest
            is in
            doubt.  The
            Company maintains an allowance for loan losses on its investment in mortgage
            loans for estimated and expected credit impairment which is considered
            inherent
            to the Company’s investment in mortgage loans. The Manager’s estimate of
            expected losses is based on a number of factors including the types and
            dollar
            amounts of loans in the portfolio, adverse situations that may effect
            the
            borrower’s ability to repay, prevailing economic conditions and the underlying
            collateral securing the loan. Typically, the Company will determine the
            need for
            an allowance for loan losses by comparing the dollar amount of the loan
            with the
            underlying collateral’s appraisal.  Loans whose collateral has an “as if
            developed” appraisal, the Company will assess the amount of the loan and cost to
            complete the real property and compare it  
   MV
            Fund II, LLC
 (a
            Development Stage company)
 Notes
            to Financial Statements
 
   with
            the “as if developed” appraisal to determine if any allowance for loan losses is
            needed.  Additions to the reserve are provided through a charge
            to earnings
            and are based on an assessment of certain factors including, but not
            limited to,
            estimated losses on the loans. Actual losses on loans are recorded as
            a
            charge-off or a reduction to the allowance for loan losses reserve. Subsequent
            recoveries of amounts previously charged off are added back to the reserve.  Debt
            securities  The
            Company will classify its debt securities as held-to-maturity, as the
            Company
            has the ability and the intent to hold the securities until maturity.
            These
            securities will be recorded at amortized cost, adjusted for the amortization
            or
            accretion of premiums or discounts. A decline in the market value of
            any
            held-to-maturity security below cost that is deemed to be other than
            temporary
            will result in a reduction in carrying amount to fair value. The impairment
            would be charged to earnings and a new cost basis for the security would
            be
            established. Premiums and discounts will be amortized or accreted over
            the life
            of the related security as an adjustment to yield using the effective
            interest
            method.  Segment
            reporting
  The Company follows
            Statement of Financial Accounting Standards No. 130, “Disclosures About Segments
            of an Enterprise and Related Information”. The Company operates as a single
            segment and will evaluate additional segment disclosure requirements
            as it
            expands its operations.  Advertising
            costs
  The Company expenses
            all
            costs of advertising as incurred.  There were no advertising costs
            included
            in selling, general and administrative expenses for the periods ending
            June 30,
            2005 or 2004.  Reporting
            on the costs of start-up activities  Statement
            of Position 98-5 (SOP 98-5), “Reporting on the Costs of Start-Up Activities,”
            which provides guidance on the financial reporting of start-up costs
            and
            organizational costs, requires most costs of start-up activities and
            organizational costs to be expensed as incurred.  Recent accounting
            pronouncements  In December 2004, the FASB issued SFAS
            No.152,
“Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB
            Statements No. 66 and 67” (“SFAS 152) The amendments  made by Statement 152
            This Statement  amends FASB Statement No.  66, Accounting
            for Sales of
            Real Estate, to reference the financial accounting and reporting guidance
            for
            real estate time-sharing transactions that is provided in AICPA Statement
            of
            Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. 
            This Statement also amends FASB Statement No. 67, Accounting for Costs
            and
            Initial Rental Operations of Real Estate Projects, to state that the
            guidance
            for (a) incidental operations and (b) costs incurred to sell 
            real 
            estate  projects  does  not  apply 
            to real 
            estate  time-sharing transactions.  The accounting for
            those
            operations and costs is subject to the guidance in SOP 04-2. 
            This
            Statement is effective for financial statements for fiscal years beginning
            after
            June 15, 2005 with earlier application encouraged. The Company does not
            anticipate that the implementation of this standard will have a material
            impact
            on its financial position, results of operations or cash flows.  
  MV
            Fund II, LLC
 (a
            Development Stage company)
 Notes
            to Financial Statements
 
   On December 16, 2004, FASB issued Statement
            of
            Financial Accounting Standards No. 153, Exchanges of Non-monetary Assets,
            an
            amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions
            ("
            SFAS 153"). This statement amends APB Opinion 29 to  eliminate 
            the  exception  for  non-monetary  exchanges
            of similar
            productive  assets and  replaces it with a general 
            exception  for  exchanges of non-monetary assets that do
            not have
            commercial  substance.  Under SFAS 153, if a non-monetary 
            exchange of similar productive assets meets a  commercial-substance
            criterion and fair value is determinable,  the transaction must
            be
            accounted for at fair  value  resulting  in 
            recognition  of any  gain or  loss.  SFAS
            153 is effective
            for non-monetary transactions in fiscal periods that begin after June
            15,
            2005.  The Company does not anticipate that the implementation
            of this
            standard will have a material impact on its financial position, results
            of
            operations or cash flows.  In December 2004,
            the FASB
            issued SFAS No. 123(R), Share-Based Payment, which establishes standards
            for
            transactions in which an entity exchanges its equity instruments for
            goods or
            services. This standard requires an issuer to measure the cost of employee
            services received in exchange for an award of equity instruments based
            on the
            grant-date fair value of the award. This eliminates the exception to
            account for
            such awards using the intrinsic method previously allowable under Accounting
            Principles Board (APB) Opinion No. 25. We do not believe the adoption
            of SFAS
            No. 123 (R) will have a material impact on our financial statements.  **NOTE
            2 – MEMBER’S EQUITY**  Membership
            units  The
            Company is offering and selling to the public, up to a maximum of 20,000
            membership interests. The members shall contribute to the capital of
            the Company
            an amount equal to $2,500 for each unit subscribed for by each member.
            The total
            Capital contributions of the members will not exceed $50,000,000. The
            Manager
            shall be entitled to 4% of any capital contributions made by members
            paid as an
            organization fee.  Allocations
            and distributions  In
            accordance with the Operating Agreement, the Company's income, gains
            and losses
            are to be credited to and charged against each member in proportion to
            their
            respective capital accounts as of the close of business on the last day
            of each
            calendar month.  Distributions
            of net income are paid monthly in cash or as reinvested distributions.
            Net
            income available for distribution, as defined in the operating agreement,
            is
            cash flow less amounts set aside for restoration of reserves during the
            month.  Issuance
            of membership units  As
            of June 30, 2005, the Company has not issued any membership units. **NOTE 3 – GOING CONCERN** As shown in the accompanying financial statements,
            the Company has accumulated net losses from operations totaling $125,606,
            and as
            of June 30, 2005, has had no revenue from operations.  These factors
            raise
            substantial doubt about the Company’s ability to continue as a going
            concern. The
            Company’s financial statements are prepared using the generally accepted
            accounting principles applicable to a going concern, which contemplates
            the
            realization of assets and liquidation of liabilities in the normal course
            of
            business.  However, the Company has generated no revenue from
            its planned
            principal operations.  In order to obtain the necessary capital,
            the
            Company plans to begin operations with  
  MV
            Fund II, LLC
 (a
            Development Stage company)
 Notes
            to Financial Statements
 
   the
            receipt of a minimum investment of membership units and negotiating the
            purchase
            of the Fund’s first loans with this investment..  However, the Company is
            dependent upon its ability to secure financing, and there are no assurances
            that
            the Company will be successful.  Without sufficient financing
            it would be
            unlikely for the Company to continue as a going concern.  The
            accompanying
            financial statements do not include any adjustments that might be necessary
            if
            the Company is unable to continue as a going concern.  **NOTE
            4 – RELATED PARTY TRANSACTIONS**  Fees
            paid by the Company  The
            Managing Member shall be entitled to a 4% share of any capital contributions
            obtained from Members as provided by the Operating Agreement. In addition,
            the
            Managing Member shall be entitled to one quarter of one percent (0.25%)
            of the
            interest income generated by loans made by the Fund as noted in Note
            1 under
“Revenue recognition” as a management fee.  The
            Managing Member shall pay all expenses including but not limited to,
            all
            expenses incurred in the offering of Interests and any operating expenses
            out of
            its Organizational Fee and its Managing Membership Interest Income.





**Item
      8:** **Changes
      In and Disagreements with Accountants on Accounting and Financial** **Disclosure**





No
      events
      occurred requiring disclosure under Item 304(b) of Regulation S-B.





**Item
      8A:****Controls
      and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of June 30, 2005. This evaluation was carried out
      under the supervision and with the participation of the Chief Executive Officer
      (“CEO”) and the Chief Financial Officer (“CFO”) of MV Funding Group, Inc., the
      Company’s Manager, who function as the equivalent of the CEO and CFO of the
      Company. Based upon such evaluation, the Manager’s CEO and CFO have concluded
      that, as of the Evaluation Date, the Company’s disclosure controls and
      procedures were effective. There have been no significant changes in our
      internal controls over financial reporting during the quarter ended June 30,
      2005 that have materially affected or are reasonably likely to materially affect
      such controls.





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





Limitations
      on the Effectiveness of Internal Controls





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





**Item
      8B:****Other
      information**





None.


25





**PART
      III**




**Item
      9:****Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a)
      of the Exchange Act**





**Our
      Management**




Our
      business is managed by our Managing Member, MV Funding Group, Inc., a Nevada
      corporation (“MV Funding”). The telephone number for MV Funding’s offices is
      (702) 256-6337.





**MV
      Funding**




MV
      Funding manages and controls our affairs and has responsibility and final
      authority in almost all matters affecting our business. These duties include
      dealings with members, accounting, tax and legal matters, communications and
      filings with regulatory agencies and all other needed management and operational
      duties. As our only Manager, MV Funding has complete authority and
      responsibility for:







·
            evaluating
                and choosing the mortgage loans in which we will
                invest;





·
            deciding
                what agreements we will enter into and whether we will enter into
                joint
                ventures with other companies to invest in mortgage
                loans;





·
            originating,
                servicing and managing our mortgage loan investments;
                and





·
            managing
                all our other operations.





Notwithstanding
      that MV Funding has the broad authority described above, MV Funding may not
      do
      any of the following:





·
            impair
                our ability to carry on or change the nature of our
                business;





·
            anything
                else not permitted in the Operating
                Agreement.





Holders
      of our membership interests have no right to participate in the management
      or
      control of our business or affairs other than to exercise the limited voting
      rights provided for members in our Operating Agreement. MV Funding has primary
      responsibility for the initial selection, evaluation and negotiation of our
      mortgage loans. MV Funding will provide, itself or through outside agreements,
      all executive, supervisory and administrative services for our operations,
      including servicing the mortgage loans we hold. Our books and records are
      maintained by MV Funding, subject to audit by independent certified public
      accountants.







**Evaluation
      and Acquisition by MV Funding**




MV
      Funding will consider and evaluate prospective loans for us. In that regard,
      MV
      Funding will evaluate the credit of prospective borrowers, analyze the return
      to
      us of potential mortgage loan transactions, review property appraisals, and
      determine which types of transactions appear to be most favorable to us. We
      will
      not establish our own underwriting standards and will solely rely on MV Funding
      to provide such services.




26


**Mortgage
      Loans**





MV
      Funding will identify a potential loan and then process the application. When
      processing an application, MV Funding will perform process and quality control,
      including it will:





·
            order
                and review a property title search,





·
            perform
                an exterior property inspection,





·
            obtain
                an appraisal which is reviewed for reasonableness,
                and





·
            perform
                credit underwriting through borrower interviews, credit reports and
                review
                of borrower and principals'
                financials.


After
      processing the application, MV Funding will review the loan through its loan
      committee.





After
      we
      acquire mortgage loans, MV Funding will also manage our mortgage loan portfolio.
      MV





Funding
      will be responsible for:





·
            reviewing
                loans;





·
            making
                changes to loans;





·
            employing
                and supervising employees who handle the
                loans;





·
            preparing
                and reviewing projected
                performance;





·
            reviewing
                reserves and working capital;





·
            collecting
                and maintaining all loans;





·
            creating
                and implementing investment policies in furtherance of those contained
                in
                the Operating Agreement;





·
            preparing
                and reviewing budgets, economic surveys, cash flow and taxable income
                or
                loss projections and working capital
                requirements;





·
            preparing
                and reviewing reports for securities filings, distribution to our
                members
                or otherwise;





·
            communicating
                with members;





·
            supervising
                and reviewing our bookkeeping, accounting and
                audits;





·
            supervising
                and reviewing the preparation of our state and federal tax returns;
                and





·
            supervising
                professionals employed by us, including attorneys, accountants and
                appraisers.




**Directors
      and Executive Officers of MV Funding Group, Inc.**







The
      directors and executive officers of MV Funding Group, Inc. are listed
      below:








*Name*
            *Age*
            *Office(s)
                Held*Elaine
                Batlis
            50
            DirectorRowe
                Nelson
            32
            Secretary,
                Treasurer & DirectorSam
                Medley
            62
            CEO,
                President and DirectorLawrence
                Blanton
            63
            DirectorBlair
                F. Hadley
            57
            Director








*Elaine
      Batlis* is a
      Director of the MV Funding Group. Ms. Batlis has more than 25 years of banking
      and regulatory experience in the financial industry.  She has an extensive
      background in both the operation and lending areas of bank management. 
      From 1998 to present, she has risen to the level of President/CEO of In South
      Funding, Inc.  From 1995 to 1998, Mrs. Batlis served as


CFO/COO
      of Heritage Bank.  From 1994 to 1995, she served as a Compliance and
      Regulatory Liaison for First State Bank.  From 1990 to 1994, Mrs. Batlis
      was employed as a financial analyst at the Federal Reserve Bank.





*Rowe
      Nelson* is the
      Secretary, Treasurer and a Director of MV Funding Group. Mr. Nelson has also
      served as President of Mountain View since 2001.  He has been in the
      mortgage industry for 7 years and has an extensive financial/accounting
      background.  He is a direct endorsed Underwriter (FHA) and has extensive
      training in Fannie Mae’s Desktop Underwriting and Freddie Mac’s Loan
      Prospector.  Formerly with Crest Mortgage Fund in Dallas, TX, he was
      Vice
      President and involved in all aspects of the operation of the Fund. 
      Prior
      to the mortgage business, he was a Staff accountant.  He attended Oklahoma
      City University and pursued a degree in Business Administration and
      Accounting.  He has also served as a liaison and consultant between
      the
      Department of Housing and Urban Development, various mortgage companies, and
      warehouse banks.





*Sam
      Medley* is the
      Executive VP and Director of MV Funding Group. Mr. Medley has also served as
      Chief Executive Officer of Mountain View since 2001.  He has been in
      the
      mortgage business for the past 7 years and has an extensive business background
      and has managed a large portfolio of various businesses and investments. 
      Formally President and Co-Founder of Crest Mortgage Fund in Dallas, TX, he
      was
      involved in the marketing and management of that business
      venture.





*Lawrence
      Blanton* is a
      Director of MV Funding Group. Mr. Blanton is a recognized industry expert with
      over thirty years experience in banking and finance.  Currently, Mr.
      Blanton is CEO of Crest Mortgage Fund, Inc. formed in 1996.  From 1989
      to
      1994 he was CEO of Providers Funding Corp.  From 1987 to 1989 he was
      president and CFO of commercial finance at Bright Bank, a five billion dollar
      savings and loan.  From 1981 to 1986, he was President and COO of First
      City Financial Corp.  From 1972 to 1981 he served as the National Marketing
      Manager of GE Capital Corp.





*Blair
      F. Hadley* is
      a
      Director of MV Funding Group. Mr. Hadley has been working over thirty years
      in
      real estate, savings and loan business, and finance. Currently, Mr. Hadley
      is
      Sr. Financial Consultant to Vescor Capital Corporation, a Utah Corporation,
      and
      President of Blair F. Hadley Consulting, Inc. From 1987 to 1992, Mr. Hadley
      started and operated Frontier Mortgage Company based in Las Vegas, Nevada.
      Prior
      to this time period, Mr. Hadley served for fourteen years as Vice President
      of
      Loan Production and Servicing with Mountain West Savings and Loan. Mr. Hadley
      also served as Deputy Assessor for Weber County, Utah in charge of residential
      and commercial taxation.





27


**Involvement
      in Certain Legal Proceedings**





To
      the
      best knowledge of the Company, during the past five years, none of the following
      occurred with respect to a present or former director or executive officer
      of
      our Manager: (1) any bankruptcy petition filed by or against any business of
      which such person was a general partner or executive officer either at the
      time
      of the bankruptcy or within two years prior to that time; (2) any conviction
      in
      a criminal proceeding or being subject to a pending criminal proceeding
      (excluding traffic violations and other minor offenses); (3) being subject
      to
      any order, judgment or decree, not subsequently reversed, suspended or vacated,
      of any court of any competent jurisdiction, permanently or temporarily
      enjoining, barring, suspending or otherwise limiting his involvement in any
      type
      of business, securities or banking activities; and (4) being found by a court
      of
      competent jurisdiction (in a civil action), the SEC or the Commodities Futures
      Trading Commission to have violated a federal or state securities or commodities
      law, and the judgment has not been reversed, suspended or vacated.





**Audit
      Committee**





We
      do not
      have a designated standing audit committee.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Exchange Act requires the Company’s directors and executive
      officers and persons who beneficially own more than ten percent of a registered
      class of the Company’s equity securities to file with the SEC initial reports of
      ownership and reports of changes in ownership of common stock and other equity
      securities of the Company. Officers, directors and greater than ten percent
      beneficial shareholders are required by SEC regulations to furnish the Company
      with copies of all Section 16(a) forms they file. To the best of our knowledge
      based solely on a review of Forms 3, 4, and 5 (and any amendments thereof)
      received by the Company during or with respect to the year ended December 31,
      2004, no persons subject to section 16(a) have failed to file, on a timely
      basis, the identified reports required by Section 16(a) of the Exchange Act
      during fiscal year ended June 30, 2005:





**Code
      of Ethics Disclosure**





As
      of
      June 30, 2005, we have not adopted a Code of Ethics for Financial Executives,
      which include our principal executive officer, principal financial officer,
      principal accounting officer or controller, or persons performing similar
      functions, as required for listed issuers by sections 406 and 407 of the
      Sarbanes-Oxley Act of 2002.








**Item
      10:****Executive
      Compensation**








The
      following Summary Compensation Table sets forth the compensation paid or awarded
      for the fiscal year ended June 30, 2005 to MV Funding Group, Inc.’s Chief
      Executive Officers and the next four most highly compensated executive officers
      for the fiscal year ended June 30, 2005.








28





Summary
      Compensation Table





Annual
                Compensation
            Long
                Term CompensationName
            Title
            Year
            Salary
            Bonus
            Other
                annual
              Compensation
            Restricted
                StockAwarded
            Options/SARs
                (#)
            LTIPpayouts
            All
                OtherCompensationRowe
                Nelson
            Secretary
                & Treasurer of MV Funding Group
            2005
              2004
              2003
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/ASam
                Medley
            President
                & CEO
              of
                MV Funding Group
            2005
              2004
              2003
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A
            $0
              N/A
              N/A




The
      officers of MV Funding are also affiliated with Mountain View Mortgage Company,
      a mortgage broker. While these officers share their time between Mountain View
      and MV Funding, and Mountain View may be among the mortgage brokers that provide
      potential loans to us, there will not be any fees earned or charged on any
      loans
      made by us that are inconsistent with those that would have been paid by
      borrowers to any non-affiliated brokers.




These
      officers have not received any compensation for their services to us to date;
      however, these officers expect to receive compensation for their services in
      the
      form of salaries and/or commissions from MV Funding in the future when loans
      have been placed out of the fees paid to MV Funding under the operating
      agreement for its services as Manager. As these fees will be paid by borrowers
      as part of the loan fees described as going to MV Funding in this Prospectus,
      they will not otherwise affect the payment due to our membership interest
      holders based on interest. MV Funding has not yet determined the amount of
      any
      compensation that will be paid to any officer or director of MV Funding and
      has
      no current arrangements in this regard. However, MV Funding expects that any
      such salaries will be commensurate with officers performing similar functions
      in
      the mortgage loan industry.





**Stock
      Option Grants**





MV
      Funding Group did not grant any stock options to the executive officers or
      directors from inception on September 5, 2003 to June 30, 2005. MV Funding
      Group
      has also not granted any stock options since June 30, 2005.





**Compensation
      to Directors**





The
      Directors of MV Funding Group, Inc. receive no compensation for serving as
      directors.





**Item
      11:****Security
      Ownership of Certain Beneficial Owners and Management and****Related****Stockholder
      Matters**





The
      following table sets forth, as of September 7, 2005, the beneficial ownership
      of
      each person known to beneficially own more than 5% of MV Funding Group, along
      with all officers of MV Funding Group. Except as otherwise indicated, all
      Interests are owned directly.








29


Title
                of class
            Name
                and address of
              beneficial
                owner (1)
            Amount
                of
              beneficial
                ownership
            Percent
                of Class(2)Common
            Sam
                Medley
              7311
                W. Charleston Blvd.
              Suite
                110
              Las
                Vegas, Nevada 89117
            1,600,000
            33.7%Common
            Parrish
                Medley
              7311
                W. Charleston Blvd.
              Suite
                110
              Las
                Vegas, Nevada 89117
            1,600,000
            33.7%Common
            Elaine
                Batlis
              400
                Fifth Avenue
              Suite
                203
              Naples,
                Florida 34102
            150,000
            3.2
                %Common
            Rowe
                Nelson
              7311
                W. Charleston Blvd.
              Suite
                110
              Las
                Vegas, Nevada 89117
            650,000
            13.7%**Total
                of all officers and directors**
            2,400,000
            **50.5%**


(1)
      Sam
      Medley and Parrish Medley are father and son. Rowe Nelson is Sam Medley’s nephew
      and Parrish Medley’s cousin.





(2)
      The
      percent of class is based on 4,750,000 shares of common stock issued and
      outstanding as of September 7, 2005.





As
      used
      in this table, beneficial ownership means the sole or shared power to vote,
      or
      to direct the voting of, a security, or the sole or shared investment power
      with
      respect to a security (i.e., the power to dispose of, or to direct the
      disposition of, a security). In addition, for purposes of this table, a person
      is deemed, as of any date, to have beneficial ownership of any security that
      such person has the right to acquire within 60 days after such
      date.





**Item
      12:****Certain
      Relationships and Related Transactions**





MV
      Funding will receive the following compensation as the manager of the
      Fund:





Offering
      Stage:


In
      the
      offering stage, MV Funding will receive 4% of all capital contributions made
      by
      members as an organization fee. All our expenses in connection with this
      prospectus will be paid directly by MV Funding out of this organization fee.





As
      a
      result of this fee and the hold back for our reserve, the following table
      represents how much of each investment dollar will be available for mortgage
      lending:





**Investment**  **Organizational
      Fee**   **Reserve**   **Available
      for Lending**


$1.00    
      $0.04   $0.029  $0.931


$50,000,000    $2,000,000  $1,444,000  $46,556,000





30


Operational
      Stage:


In
      the
      operational stage, MV Funding will receive substantial fees as a result of
      our
      investment in mortgage loans. Most of these fees will be paid by borrowers
      for
      obtaining, processing, making, brokering, managing and selling of mortgage
      loans, as well as for other services. Many of these fees will be paid on an
      up-front basis. The fees for these services are described in greater detail
      in
      the main body of this Prospectus.





In
      the
      operational stage, MV Funding will also receive a managing member income
      interest of 0.25% of the interest income generated by the loans we make. All
      other interest income will be distributed to the members in proportion to their
      interest in the Fund.





All
      expenses of our operation and of the prossessing and servicing the loans we
      make
      will be paid by MV Funding out of these upfront fees and MV Funding’s managing
      member income interest.




Paid
      by Borrowers


The
      following types of fees may be paid by borrowers to MV Funding for the placement
      of the loans and other services performed by MV Funding during the loan
      process.


1.
      Loan
      Placement Fees for Loan Selection and Brokerage:





§
            2%-6%
                of each loan -- the actual percentage will be a competitive fee based
                on
                local market conditions. These fees are paid by the borrower no later
                than
                when the loan proceeds are
                disbursed.





2.
      Loan
      Evaluation and Processing Fees:




§
            Up
                to 5% of each loan -- the actual percentage will be a competitive
                fee
                based on local market conditions. These fees are paid by the borrower
                no
                later than when the loan proceeds are
                disbursed.





3.
      Service Fee for Administering Loans:





§
            Subject
                to regulatory requirements, MV Funding may receive, where permitted,
                mort-gage service fees, which when added to all other fees paid in
                connection with the servicing of a particular mortgage, does not
                exceed
                1/4 of one percent (0.25%) of the principal outstanding on such loan.
                These fees will be paid by the borrower either annually or added
                to the
                monthly payments. These servicing fees paid by borrowers reduce the
                amount
                of interest payments flowing to the
                members.




4.
      Loan
      Extension or Modification Fee:




§
            2%-5%
                of outstanding principal -- as permitted by local law and local market
                conditions. The actual amount that will be received is not determinable
                at
                this time. These fees will be paid when and if a loan is extended.
                Loan
                extension fees may be increased at the expense of the interest rate
                charged in the extended loan.







**Certain
      Relationships And Related Transactions**





Except
      as
      disclosed below, our manager, MV Funding Group, Inc., or any members of the


immediate
      family (including spouse, parents, children, siblings, and in-laws) of any
      of
      the officers or directors of our manager has any material interest, direct
      or
      indirect, in any transaction since our organization or in any presently proposed
      transaction which, in either case, has or will materially affect us other than
      the following:





·
            None




31





**Conflicts
      Of Interest**







The
      relationships among us and MV Funding will result in various conflicts of
      interest. MV Funding anticipates engaging in additional business activities
      in
      the future that may be competitive with us. MV Funding and its officers and
      directors will exercise their fiduciary duties to us and to our membership
      interest holders in a manner they believe will preserve and protect our
      membership interest holders’ rights as a member. Additionally, our Operating
      Agreement contains provisions that limit our ability to enter into transactions
      with MV Funding.




We
      may
      purchase mortgage loans from MV Funding if they were acquired for the purpose
      of
      facilitating our acquisition of such loans. MV Funding must sell such loans
      to
      us for a price no greater than the lesser of MV Funding’s cost, excluding
      certain service fees and compensation, or the fair market value of such loans.
      However, we will not sell our mortgage loans to MV Funding, nor acquire mortgage
      loans from, or sell mortgages to, a program in which MV Funding has an
      interest.




The
      paragraphs below describe material conflicts of interest that may arise in
      the
      course of MV Funding’s management and operation of our business. The list of
      potential conflicts of interest reflects our knowledge of the existing or
      potential conflicts of interest as of the date of this prospectus. We cannot
      assure our membership interest holders that no additional conflicts of interest
      will arise in the future.





*1.
      Payment of Fees and Expenses.* MV
      Funding will receive substantial fees and expenses from the proceeds of the
      Offering and our ongoing operations, including:





Paid
      by
      Borrowers:





·
            loan
                brokerage fees,


·
            loan
                evaluation and processing fees,


·
            loan
                servicing fees (where permitted),
                and


·
            loan
                extension or modification fees.





Paid
      by
      Us:





·
            annual
                management fee, and


·
            real
                estate brokerage commissions payable upon the resale of foreclosed
                properties.





Fees
      charged to us will be payable even if we are not profitable or the particular
      transaction causes us to incur a loss.





We
      record
      an annual management fee to MV Funding of 0.25% (one quarter of one percent)
      of
      the interest income received by us on the loans we make. The annual management
      fee paid to MV Funding shall be used to satisfy any general or administrative
      overhead expenses it incurs in connection with managing the operation of the
      Fund. MV Funding will be responsible for any general or administrative overhead
      expenses that exceed its annual management fee. MV Funding will be responsible
      for paying expenses to non-affiliates such as legal, accounting and tax




32


preparation
      fees on our behalf for expenses. However, MV Funding may seek reimbursement
      for
      these expenses and we will pay these expenses from available cash. In the event
      available cash is inadequate to cover such expenses, MV Funding shall advance
      such expenses on our behalf and will be repaid for such advances when there
      are
      adequate funds in the cash reserve.





*2.
      Purchase of Mortgage Notes from MV Funding.* We
      acquire our mortgage loans from or through MV Funding. MV Funding is in the
      business of obtaining, processing, making, brokering and selling, and managing
      and servicing mortgage loans. All our mortgage loans purchased from MV Funding
      are at prices no higher than the lesser of the cost of the mortgage loan to
      MV
      Funding or the then current market value of the mortgage loan. A committee
      of
      officers and directors of MV Funding, makes all decisions concerning the
      mortgage loans in which we will invest or purchase. Because MV Funding’s fees
      are generated by the volume of the mortgage loans we purchase, MV Funding will
      face a conflict of interest in determining whether a loan not squarely within
      our investment guidelines is appropriate for our loan portfolio.





*3.
      Non-Arms Length Agreements.* Our
      agreements and arrangements for compensating MV Funding are not the result
      of
      arm's-length negotiations. Additionally, none of the officers and directors
      of
      MV Funding are independent.





*4.
      Competition for the Time and Services of Officers.* We
      will
      rely on MV Funding and its management of our operations. When performing their
      duties, the officers, directors and employees of MV Funding may, for their
      own
      account or that of others, originate mortgages and acquire investments similar
      to those made or acquired by us. The officers of MV Funding also may act as
      trustees, directors or officers, or engage in other activities for themselves
      and/or other entities and may acquire, broker and originate similar mortgage
      investments for their own account or that of others. The officers of MV Funding
      will devote such time to our affairs and as they determine in good faith and
      in
      compliance with their fiduciary obligations to us and our members, to be
      necessary for our benefit.





MV
      Funding believes it has sufficient staff to be capable of discharging its
      responsibility to us and to all other entities to which they or their officers
      or affiliates are responsible.





*6.
      Lack of Separate Representation.* We
      are
      represented by the same counsel as MV Funding, and we anticipate that this
      multiple representation by our attorneys will continue in the future. If a
      dispute arises between us and MV Funding, MV Funding will either obtain separate
      counsel or facilitate our retaining separate counsel for such matters. However,
      we do not anticipate obtaining separate counsel should there be a need in the
      future to negotiate or prepare contracts or other agreements between us and
      MV
      Funding for services including those contemplated by this prospectus, and as
      a
      result these agreements will not reflect arm's length bargaining. Since the
      Fund's attorneys are also working for MV Funding and there is no independent
      member of the board of MV Funding, breaches of MV Funding's duties to the Fund
      may not be aggressively acted upon.





*7.
      Rights of Directors/ Officers.* Any
      director or officer of MV Funding may acquire, own, hold and dispose of
      membership interests for his individual account and may exercise all rights
      of a
      member to the same extent and in the same manner as if he were not an affiliate
      of ours.





*8.
      We
      May Co-Invest in Mortgages Acquired by MV Funding.* If
      MV
      Funding determines


that
      an
      entire loan is not suitable for our loan portfolio, we may co-invest in the
      loan
      with MV Funding. If we co-invest in a loan with MV Funding, our investment
      will
      be on substantially the same terms as those of MV Funding. A conflict of
      interest may arise between us and MV Funding if




33


the
      borrower defaults on the loan and each of us seeks to protect our interests
      in
      the loan and in the security property. Also, we have no written or oral
      agreement or understanding with MV Funding concerning our relative priority
      when
      a borrower defaults; as a result, our membership interest holders must rely
      on
      MV Funding to act in accordance with its fiduciary duty under the Operating
      Agreement to protect our membership interest holders’ interest.




MV
      Funding is a fiduciary for our membership interest holders and the Fund. As
      a
      fiduciary, MV Funding must exercise good faith and integrity when handling
      our
      affairs. MV Funding must not take advantage of us, and must make full disclosure
      of any conflicts of interest or benefit to it in its dealings with us. As set
      forth in the Operating Agreement, MV Funding has fiduciary responsibility for
      the safekeeping and use of all of our funds and assets and MV Funding will
      not
      use, or permit another to use our funds or assets in any manner except for
      our
      exclusive benefit. MV Funding will not allow our assets to be commingled with
      its assets or the assets of any other person or company. MV Funding and its
      affiliates may engage in activities similar to or identical with our business,
      but MV Funding must devote such of its time to our business as it determines,
      in
      good faith, to be reasonably necessary. MV Funding also acts for its own account
      as a mortgage broker. In connection with this activity, it also brokers,
      arranges and services mortgage loans for investors that it obtains in the
      ordinary course of its mortgage brokerage business, including by way of
      seminars, general solicitations and referrals. When it acts in those capacities,
      it has a fiduciary duty to each company as set forth in the respective
      organizational documents, if any, and under applicable law, and MV Funding
      is
      bound to treat each fairly and with appropriate access to investment
      opportunities.




Additionally,
      MV Funding could change our investment guidelines when a reasonably prudent
      person would do likewise, subject to its fiduciary duties to our members.
      However, MV Funding can only change our investment objectives upon approval
      of a
      majority of our members.




The
      above
      described fiduciary duty is both contractual, arising by virtue of the Operating
      Agreement, and imposed by Nevada common law.





**Item
      13:****Exhibits**





Exhibit
                Number
            Description31.1
            Certification
                of Chief Executive Officer pursuant to
                Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to
                Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232
            Certification
                of Chief Executive Officer and Chief
                Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant
                to Section 906 of the Sarbanes-Oxley Act of
                2002








34


**Item
      14:****Principal
      Accountant Fees and Services**





**Audit
      Fees**





The
      aggregate fees billed by our auditors for professional services rendered in
      connection with a review of the financial statements included in our quarterly
      reports on Form 10-QSB and the audit of our annual financial statements for
      the
      fiscal years ended June 30, 2004 and 2005 were approximately $5,000 and $5,000
      respectively.





**Audit-Related
      Fees**





Our
      auditors did not bill any additional fees for assurance and related services
      that are reasonably related to the performance of the audit or review of our
      financial statements.




**Tax
      Fees**





The
      aggregate fees billed by our auditors for professional services for tax
      compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
      ended June 30, 2004 and 2005.





**All
      Other Fees**





The
      aggregate fees billed by our auditors
      for all services other than those set forth above, such as attending meetings
      and other miscellaneous financial consulting, for the fiscal years ended June
      30, 2004 and 2005 were $0 and $0 respectively.


35


**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.








MV
      FUNDING GROUP, INC.





By:
      MV
      Funding Group, its sole manager





By:
              /s/
                Sam Medley
              Sam
                Medley
              Chief
                Executive Officer & Director
              (Principal
                Officer of the Manager)
              
              October
                19, 2005
            By:
              /s/
                Rowe Nelson
              Rowe
                Nelson
              Secretary,
                Treasurer, & Director
              (Chief
                Accounting Officer of the Manager)
              
              October
                19, 2005


In
      accordance with the requirements of the Securities Act of 1933, this
      registration statement was signed by the following persons in the capacities
      and
      on the date stated:





By:
              /s/
                Sam Medley
              Sam
                Medley
              Director
                of the Manager
              
              October
                19, 2005
            By:
              /s/
                Rowe Nelson
              Rowe
                Nelson
              Director
                of the Manager
              
              October
                19, 2005By:
              /s/
                Elaine Batlis
              Elaine
                Batlis
              Director
                of the Manager
              
              October
                19, 2005
            By:
              /s/
                Lawrence Blanton
              Lawrence
                Blanton
              Director
                of the Manager
              
              October
                19, 2005By:
              /s/
                Blair Hadley
              Blair
                F. Hadley
              Director
                of the Manager
              
              October
                19, 2005