10-Q/A 1 e-7859.txt AMENDMENT NO. 1 TO QTRLY REPORT DATED 6-30-01 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Transition Period From ______ To ______ COMMISSION FILE NUMBER 333-32800 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) (Exact Name of Registrant as Specified in Its Charter) NEVADA 88-0446244 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 2901 EL CAMINO AVENUE, SUITE 206, LAS VEGAS, NEVADA 89102 (Address Of Principal Executive Offices) (Zip Code) Registrant's Telephone Number: 702.227.0965 DM MORTGAGE INVESTORS, LLC Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report. Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of August 13, 2001, the Issuer had 10,129,510 of its Units outstanding. ITEM 1. FINANCIAL STATEMENTS Page ---- Balance sheets as of June 30, 2001 (unaudited) and December 31, 2000...... 3 Statements of income for the three and six months ended June 30, 2001 (unaudited) and 2000 (unaudited) ........................................ 4 Statement of members' equity (unaudited).................................. 5 Statements of cash flows for the six months ended June 30, 2001 (unaudited) and 2000 (unaudited) ........................................ 6 Notes to financial statements............................................. 7 2 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) BALANCE SHEET June 30, 2001 December 31, 2000 (Unaudited) (Audited) ------------ ------------ (Restated) ASSETS Cash $ 114,343 $ 370,304 Certificates of deposit 3,000,000 1,200,000 Due from Managing Member 147,823 199,396 Interest and other receivables 1,041,602 491,122 Investment in mortgage loans 97,794,230 39,376,619 ------------ ------------ Total assets $102,097,998 $ 41,637,441 ============ ============ LIABILITIES AND MEMBERS' EQUITY Liabilities Distribution payable to Managing Member $ 58,891 $ -- Deferred revenues 82,807 256,230 ------------ ------------ Total liabilities 141,698 256,230 Members' equity 101,956,300 41,381,211 ------------ ------------ Total members' equity 101,956,300 41,381,211 ------------ ------------ Total liabilities and members' equity $102,097,998 $ 41,637,441 ============ ============ The accompanying notes are an integral part of these statements 3 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) STATEMENTS OF INCOME (UNAUDITED)

The accompanying notes are an integral part of these statements 4 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) STATEMENT OF MEMBERS' EQUITY (RESTATED) (UNAUDITED) Units Amount ---------- ------------- Members' equity at December 31, 2000 (Audited) 4,173,991 $ 41,381,211 Issuance of units (net of offering costs) 5,933,564 59,176,787 Distributions -- (3,956,853) Reinvestments of distributions 74,545 745,449 Declared distribution to Managing Member -- (58,891) Net income -- 4,668,597 ---------- ------------- Members' equity at June 30, 2001 (Unaudited) 10,182,100 $ 101,956,300 ========== ============= The accompanying notes are an integral part of this statement 5 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) STATEMENTS OF CASH FLOWS (UNAUDITED)

The accompanying notes are an integral part of these statements 6 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. ORGANIZATION Vestin Fund I, LLC (Formerly known as DM Mortgage Investors, LLC), a Nevada Limited Liability Company, (the Company) is primarily engaged in the business of mortgage lending. The Company invests in loans secured by real estate through deeds of trust and mortgages. The Company was organized on December 14, 1999 (date of formation) and will continue until December 31, 2019 unless dissolved prior or extended thereto under the provisions of the Operating Agreement. On July 9, 2001, the Company changed its name from DM Mortgage Investors, LLC to Vestin Fund I, LLC. Prior to September 1, 2000, the Company was a development stage company. On August 23, 2000, the Company's Form S-11/A filed with the Securities and Exchange Commission became effective for the initial public offering of 10,000,000 units at $10 per unit. Consequently, the Company commenced operations on September 1, 2000. During June 2001, the Company sold all remaining units of the $100 million set forth in the Company's registration statement. No additional units will be sold, however current members may continue to participate in the Company's Distribution Reinvestment Plan whereby the member's distribution may be applied to additional units at $10.00 per unit. The Manager of the Company is Vestin Mortgage, Inc., a Nevada corporation engaged in the business of brokerage, placement and servicing of commercial loans secured by real property. The Manager is a wholly-owned subsidiary of Vestin Group, Inc., a Delaware Corporation, whose common stock is publicly held and is traded on the NASDAQ under the symbol "VSTN." The Operating Agreement provides that the Manager has exclusive control over the business of the Company; including the power to assign duties, to determine how to invest the Company's assets, to sign bills of sale, title documents, leases, notes, security agreements, mortgage investments and contracts, and to assume direction of the business operations. The financial statements have been prepared in accordance with Securities Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-K for the fiscal year ended December 31, 2000 of the Company. The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operation. All such adjustments are of a normal recurring nature. 7 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) NOTE B - INVESTMENT IN MORTGAGE LOANS Investment in mortgage loans as of June 30, 2001 are as follows: Bridge $14,500,714 14.83% Commercial 14,550,679 14.88% Construction 20,119,000 20.57% Acquisition and development 34,291,983 35.07% Land 14,331,854 14.65% Residential -- 0.00% ----------- ------ $97,794,230 100.00% =========== ====== First mortgages $97,318,538 99.51% Second mortgages 475,692 0.49% ----------- ------ $97,794,230 100.00% =========== ====== The following is a schedule of maturities of investment in mortgage loans as of June 30, 2001 for the following years ended December 31: 2001 $62,584,205 2002 32,545,025 2003 -- 2004 -- 2005 2,340,000 2006 325,000 ----------- $97,794,230 =========== The following is a schedule by geographic location of investment in mortgage loans as of June 30, 2001: Arizona $3,500,000 3.58% California 15,416,090 15.76% Hawaii 9,457,485 9.67% Louisiana 1,768,269 1.81% New Mexico 923,000 0.94% Nevada 29,823,293 30.50% Oregon 4,785,450 4.89% Texas 20,504,928 20.97% Utah 10,015,715 10.24% Washington 1,600,000 1.64% ----------- ------ $97,794,230 100.00% =========== ====== 8 VESTIN FUND I, LLC (FORMERLY KNOWN AS DM MORTGAGE INVESTORS, LLC) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) NOTE B - INVESTMENT IN MORTGAGE LOANS (continued) As of June 30, 2001, all mortgage loan payments are current and all loans are performing in accordance with their terms. Accordingly, the Company's management estimates that an allowance for loan losses is not deemed necessary. The Company has six mortgage loan products consisting of bridge, commercial, construction, acquisition and development, land, and residential. Substantially all mortgage loans have similar effective interest rates ranging from 13% to 15%. Revenue by product will fluctuate based upon relative balances during the period. Due to the similar nature of the effective interest rates, the Company does not report revenues by product type. NOTE C - REVOLVING LINE OF CREDIT The Company has a revolving line of credit, which provides for borrowing up to $400,000. There was no outstanding balance as of June 30, 2001. The line of credit, which is secured by the Company's certificates of deposit, is payable in monthly installments of interest only at 7.25%, maturing June 25, 2002. NOTE D - RESTATEMENT During September 2001, the Company declared a distribution to the Managing Member based upon historical yields of distributions during the nine months ended September 30, 2001 made to the other members. As of June 30, 2001, the Managing Member had a weighted average membership units in the Company of approximately 89,000 units. The Company has not made any distributions to the Managing Member to date. Accordingly, the Company has reflected the declared distribution in the periods the Managing Member was entitled to receive such distributions since similar distributions were made to other members in those periods. Therefore, the Company has recorded a distribution payable totaling $58,891 as of June 30, 2001 for distributions of $31,180 and $27,711 entitled to for the three months ended June 30, 2001 and March 31, 2001, respectively. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BACKGROUND Vestin Fund I, LLC (formerly known as DM Mortgage Investors, LLC) (the "Company") was organized in December 1999 as a Nevada limited liability company for the purpose of investing in mortgage loans. The Company invests in loans secured by real estate through deeds of trust and mortgages. Prior to September 1, 2000, the Company was a development stage company. The Company's manager is Vestin Mortgage, Inc., a licensed mortgage company in the State of Nevada (the "Manager"). Vestin Mortgage is a wholly-owned subsidiary of Vestin Group, Inc., a Delaware corporation, whose common stock is publicly held and traded on the NASDAQ under the ticker symbol "VSTN." The following financial review and analysis is the Company's financial condition and results of operations for the three-month period ended June 30, 2001. Prior to September 1, 2000, the Company were a development stage company with no operational activities. This information should be read in conjunction with the Company's financial statements and accompanying notes and other detailed information regarding the Company appearing elsewhere in this Form 10-Q and the annual Form 10-K for the year ended December 31, 2000. OVERVIEW On August 23, 2000, the Company's Registration Statement as filed with the Securities and Exchange Commission became effective for the initial public offering of up to 10,000,000 units at $10 per unit. The Company commenced operations on September 1, 2000. During June 2001, the Company sold all remaining units of the $100 million set forth in the Company's registration statement. No additional units will be sold, however current members may continue to participate in the Company's Distribution Reinvestment Plan whereby the member's distribution may be applied to additional units at $10.00 per unit. Additionally, the Company issued 100,000 units to its Manager for offering costs paid by them on the Company's behalf. SUMMARY OF FINANCIAL RESULTS

---------- (a) The annualized net interest yield to unit holders is calculated based upon the net income allocated to unit holders per weighted average units as of June 30, 2001 divided by 6 (number of months from January 2001 through June 2001) and multiplied by twelve (12) months, then divided by ten (the $10 cost per unit). Net income for the three months ended June 30, 2001 was derived primarily from interest income on mortgage loans approximating $2.8 million, interest income of approximately $49 thousand earned on cash and cash equivalents held at bank institutions and approximately $87 thousand from mortgage origination fees earned. Net income for the six months ended June 30, 2001 was derived primarily from interest income on mortgage loans approximating $4.5 million, interest income of approximately $92 thousand earned on cash and cash equivalents held at bank institutions and $173 thousand from mortgage origination fees earned. 10 INVESTMENT IN MORTGAGE LOANS SECURED BY REAL ESTATE PORTFOLIO As of June 30, 2001, the Company invested in mortgage loans secured by real estate approximating $97,794,000. Such loans consisted of forty-eight (48) loans of which forty-six (46) loans are secured through first deeds of trust and two (2) loan is secured through second deeds of trust. The following is a summary of the Company's investment in mortgage loans as of June 30, 2001:

11 As of June 30, 2001, investment in loans secured by real estate are invested in loans with a weighted average interest yield of 13.70% maturing within the next one to sixty (60) months. Losses may be expected to occur when funding mortgage loans. The amount of losses will vary as the loan portfolio is affected by changing economic conditions and the financial position of borrowers. There is no precise method of predicting potential losses. The conclusion that the Company's loans may become uncollectible, in whole or in part, is a matter of professional judgment. Conventional lenders such as traditional banks and savings and loan institutions are subject to federal and state regulations that require such lenders to perform ongoing analyses of their loan portfolios, loan to value ratios, reserves, etc., and to obtain current information regarding their borrowers and the securing properties. As a non-conventional lender, the Company is not subject to such regulations and has not adopted these practices. Rather, in connection with the quarterly and annual closing of the Company's accounting records and the preparation of the Company's financial statements, the Manager evaluates investments in mortgage loans and determines whether the allowance for loan losses is adequate to cover the Company's potential losses. As of June 30, 2001 the Manager determined that no allowances for loan losses was necessary. The Manager's professional judgment of the adequacy of allowance for loan losses may include: considerations of economic conditions, borrower's financial condition, evaluation of industry trends, review and evaluation of loans identified as having loss potential, and quarterly review by the Manager's loan committee. CAPITAL AND LIQUIDITY Liquidity is a measure of a company's ability to meet potential cash requirements, including ongoing commitments to fund lending activities and for general operation purposes. The Company believes that interest earned from both investment loans and cash held at bank institutions in the next twelve months will be sufficient to meet the Company's capital requirements. The Company does not anticipate the need for hiring any employees, acquiring fixed assets such as office equipment or furniture, or incurring material office expenses during the next twelve months because the Manager will manage the Company's affairs. The Company may pay the Manager an annual management fee of up to 0.25% of the Company's aggregate capital contributions. Pursuant to the Company's Operating Agreement the maximum amount of management fees the manager was entitled to receive during the six months ended June 30, 2001 was $91,388. For the six months ended, the Company paid the Manager approximately $7,000 in management fees. During the six months ended June 30, 2001, cash flows provided by operating activities approximated $4.0 million. Investing activities consisted of investment in loans secured by real estate in the amount of $58.4 million (net of proceeds from payoffs of mortgage loans), and investment in certificate of deposits of $1.8 million. Financing activities consisted of proceeds from the sale of units in the amount of $59.2 million, and distributions of $3.2 million (net of reinvestments). The Company will rely upon the cash flow from operations to provide for its capital requirements. The Manager believes that cash generated from operations will be sufficient to provide for its capital requirements for at least the next 12 months. At June 30, 2001, the Company had $114 thousand in cash, $3.0 million in certificates of deposit and $102 million in total assets. On the same date, total liabilities approximated $83 thousand. Accordingly, it appears the Company has sufficient working capital to meet its operating needs in the near term. 12 The Company maintains working capital reserves of at least 3% of aggregate members' capital accounts in cash and cash equivalents, and certificates of deposits. This reserve is available to pay expenses in excess of revenues, satisfy obligations of underlying security properties, expend money to satisfy unforeseen obligations and for other permitted uses of the working capital. Working capital reserves of up to 3% are included in the funds committed to loan investments in determining what proportion of the offering proceeds and reinvested distributions have been invested in mortgage loans. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk, primarily from changes in interest rates. The Company does not deal in any foreign currencies and does not own any options, futures or other derivative instruments. The Company does not have any debt. Most of the Company's assets consist of investments in mortgage loans. At June 30, 2001, the Company's aggregate investment in mortgage loans was approximately $97,794,000 with a weighted average effective interest rate of 13.70%. These mortgage loans have a term of 6 months to 5 years. All of the outstanding mortgage loans at June 30, 2001 were fixed rate loans. All of the mortgage loans are held for investment purposes; none are held for sale. Most of the mortgage loans do not have prepayment penalties. Changes in interest rates would not affect the asset value of the Company's investment in mortgage loans. However, a significant change in interest rates could affect the Company's operating results. If interest rates decline significantly, some of the borrowers could prepay their loans with the proceeds of a refinancing at lower interest rates. This would reduce the Company's earnings and funds available for distribution to unit holders. On the other hand, a significant increase in interest rates could result in a slowdown in real estate development activity which would reduce the demand for commercial mortgage loans. As a result, the Company might encounter greater difficulty in identifying appropriate borrowers. The Company is not in a position to quantify the potential impact on its operating results from a material change in interest rates. For the six months ended June 30, 2001, the Company invested $1,800,000 in certificates of deposit and other short-term deposit accounts. The Company anticipates that at least 3% of its assets will be held in such accounts as a cash reserve; additional deposits in such accounts will be made as funds are received by the Company from new investors and repayment of loans pending the deployment of such funds in new mortgage loans. The Company believes that these financial assets do not give rise to significant interest rate risk due to their short term nature. 13 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not Applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS The registration statement (Commission file number 333-32800) registering up to 10,000,000 of the Company's units valued at $100,000,000, with the Securities and Exchange Commission became effective on August 23, 2000. The offering of the Company's units commenced on September 1, 2000. As of June 30, 2001, the Company had sold all units available from the offering. There is no public trading market for the Company's units. The Company's units are sold where permitted by the Manager and/or by Vestin Capital, Inc., a registered broker/dealer. Investors in the Company must satisfy applicable state requirements in order to purchase units in the Company. In exchange for services provided by the Manager, it has received approximately $7,000 in management fees. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the second quarter 2001. ITEM 5. OTHER INFORMATION On June 29, 2001, Vestin Fund I, LLC (the "Company") filed an amendment to its Articles of Organization which changed the name of the Company from "DM Mortgage Investors, LLC" to "Vestin Fund I, LLC." ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2.1 Articles of Organization* 10.1 Operating Agreement* 11 Statement re: computation of per share earnings* ---------- * Previously filed. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VESTIN FUND I, LLC By: Vestin Mortgage, Inc., its sole manager By: /s/ Lance K. Bradford --------------------------------------- Lance K. Bradford Director, Secretary and Treasurer (Chief Accounting Officer of the Manager and Duly Authorized Officer) Dated: December 11, 2001 15

VESTIN FUND I LLC 10-Q/A