UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 000-51301

VESTIN FUND III, LLC

(Exact name of registrant as specified in its charter)

NEVADA		87-0693972
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

8880 W. SUNSET ROAD, SUITE 200, LAS VEGAS, NEVADA 89148

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number: 702.227.0965

Indicate by check mark 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 [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of May 16, 2016, 2,024,424 membership units in the Company were outstanding.

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TABLE OF CONTENTS

		Page

Part I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	1

	Condensed Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015	1

	Unaudited Condensed Statements of Operations for the Three Months ended March 31, 2016 and 2015	2

	Unaudited Condensed Statements of Cash Flows for the Three Months ended March 31, 2016 and 2015	3

	Notes to Condensed Financial Statements (Unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 4.	Controls and Procedures	14

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 6.	Exhibits

	SIGNATURES	16

	Exhibit 31.1

	Exhibit 31.2

	Exhibit 32

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VESTIN FUND III, LLC

CONDENSED BALANCE SHEETS

	March 31, 2016 (Unaudited)		December 31, 2015
ASSETS
Assets
Cash and cash equivalents	$	438,000		$	198,000
Notes receivable, net of allowance of $287,000 at March 31, 2016 and $291,000 at December 31, 2015.		--			--
Marketable securities – related party		57,000			301,000
Due from related parties		583,000			582,000

Total assets	$	1,078,000		$	1,081,000

LIABILITIES AND MEMBERS' EQUITY

Liabilities
Accounts payable and accrued liabilities	$	7,000		$	10,000
Deferred gain		581,000			581,000
Total liabilities		588,000			591,000

Commitments and contingencies		--			--

Members' equity
Members' units - authorized 10,000,000 units, 2,024,424 units issued and outstanding at March 31, 2016 and December 31, 2015.		490,000			490,000

Total members' equity		490,000			490,000
Total liabilities and members' equity	$	1,078,000		$	1,081,000

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

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VESTIN FUND III, LLC

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For The Three Months Ended March 31,
	2016			2015
Revenues
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable	$	4,000		$	4,000
Total revenues		4,000			4,000

Operating expenses
Professional fees		18,000			20,000
Consulting		5,000			--
Other		2,000			9,000
Total operating expenses		25,000			29,000

Loss from operations		(21,000	)		(25,000	)

Non-operating income
Other income		17,000			58,000
Dividend income – related party		5,000			10,000
Total non-operating income, net		22,000			68,000
Income from continuing operations		1,000			43,000
Discontinued Operations
Expenses related to real estate held for sale		(1,000	)		(2,000	)
Total loss from discontinued operations		(1,000	)		(2,000	)

NET INCOME	$	--		$	41,000

Net income allocated to members	$	--		$	41,000

Income (loss) per weighted average membership unit – basic and diluted Continuing operations	$	0.00		$	0.02
Discontinued operations	$	(0.00	)	$	(0.00	)
Total income per weighted average membership unit – basic and diluted	$	0.00		$	0.02
Dividend declared per membership unit	$	--		$	--
Weighted average membership units		2,024,424			2,024,424

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

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VESTIN FUND III, LLC

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
	For the Three Months Ended March 31,
	2016			2015

Cash flows from operating activities:
Net income	$	--		$	41,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain from recovery of allowance for doubtful notes receivable		(4,000	)		(4,000	)
Distribution income – related party		(5,000	)		(10,000	)
Change in operating assets and liabilities:
Accounts payable and accrued liabilities		(3,000	)		(2,000	)
Due to/from related parties		(1,000	)		4,000
Net cash provided by (used in) operating activities	$	(13,000	)	$	29,000

Cash flows from investing activities:
Proceeds related to distribution income		5,000			10,000
Proceeds from notes receivable		4,000			--
Proceeds from sale of marketable securities		244,000			200,000
Net cash provided by investing activities	$	253,000		$	210,000

NET CHANGE IN CASH		240,000			239,000
Cash, beginning of period		198,000			485,000
Cash, end of period	$	438,000		$	724,000
Non-cash investing and financing activities:
Adjustment to note receivable and related allowance	$	--		$	4,000

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

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VESTIN FUND III, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2016

(Unaudited)

NOTE A — ORGANIZATION

Vestin Fund III, LLC was organized in April 2003 as a Nevada limited liability company for the purpose of investing in commercial real estate loans (hereafter referred to as “real estate loans”) and income-producing real property. In this report, we refer to Vestin Fund III, LLC as “the Company,” “our Company,” the “Fund,” “we,” “us,” or “our”.

We commenced operations in February 2004. Prior to March 2007, we invested in revenue-generating commercial real estate and loans secured by real estate through deeds of trust or mortgages (hereafter referred to collectively as “deeds of trust” and as defined in our Operating Agreement as “Mortgage Assets”). On March 5, 2007, a majority of our members approved the Third Amended and Restated Operating Agreement, which limited the Company’s investment objectives to investments in real estate loans.

At a special meeting of our members held on July 2, 2009, a majority of the members voted to approve the dissolution and winding up of the Fund, in accordance with the Plan of Complete Liquidation and Dissolution (the “Plan”) as set forth in Annex A of the Fund’s proxy statement filed with the Securities and Exchange Commission (the “SEC”) on May 11, 2009. The Plan became effective upon its approval by the members on July 2, 2009. As a result, we have commenced an orderly liquidation and we no longer invest in new real estate loans. We had anticipated that the liquidation would be substantially completed by the second half of 2014. However, the orderly sale of each of our remaining assets will take longer to complete than we had anticipated. We will not complete the liquidation before the end of 2016. The exact timing for completion of the liquidation will be impacted by the payment of Vestin Group, Inc. indemnity obligation and other matters beyond our control. In addition, other events and conditions may arise that may impact our ability and timing to complete the liquidation. Thus, no assurances can be given that we will be able to complete the liquidation within a particular date or by the anticipated time frame.

Because the liquidation of the Fund was not imminent, as of March 31, 2016, the financial statements are presented assuming the Fund will continue as a going concern. Pursuant to the Plan, we will make liquidating distributions to members as funds become available, subject to a reasonable reserve established to provide for payment of the Company’s ongoing expenses and contingent liabilities. Our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

On December 18, 2015 and May 13, 2015, we made liquidation distributions to all Fund members in the aggregate amount of approximately $0.3 million and $0.4 million, respectively, in accordance with the Plan. These distributions follow liquidation distributions we made on January 26, 2010, April 8, 2010, September 17, 2010, May 25, 2011, June 15, 2012, January 14, 2014, June 30, 2014, and September 15, 2014 in the aggregate amount of approximately $1.0 million, $0.9 million, $0.3 million, $0.3 million, $0.4 million, $0.3 million, $0.3 million and $1.1 million, respectively, in accordance with the Plan. The amounts distributed to each member of the Fund were calculated based upon the percentage ownership interest of such member in the Fund. See Note E – Members’ Equity.

We are not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor are we subject to any regulation thereunder.

Michael Shustek owns a significant majority of Vestin Mortgage, LLC, a Nevada limited liability company, which is our manager (the “manager” or “Vestin Mortgage”). The business of brokerage and placement of real estate loans has been performed by affiliated or non-affiliated mortgage brokers, including Advant Mortgage, LLC (“MVP Mortgage”), a licensed Nevada mortgage broker, which is indirectly wholly owned by Michael V. Shustek.

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Pursuant to our Operating Agreement and the Plan approved by a majority of our members on July 2, 2009, our manager will continue to manage our operations during the liquidation process. Consequently, the orderly liquidation of our assets and our operating results are dependent upon our manager’s ability and performance in managing our liquidation.

Vestin Mortgage is also the manager of Vestin Realty Mortgage I, Inc. (“VRM I”), as the successor by merger to Vestin Fund I, LLC, (“Fund I”) and Vestin Realty Mortgage II, Inc. (“VRM II”), as the successor by merger to Vestin Fund II, LLC, (“Fund II”). These entities have been formed to invest in real estate loans and direct investments in real estate.

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying unaudited condensed financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The condensed balance sheet as of December 31, 2015 contained herein has been derived from the audited financial statements as of December 31, 2014, but do not include all disclosures required by GAAP.

Management Estimates

The preparation of financial statements in conformity with GAAP 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.

Cash and Cash Equivalents

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

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been provided, the sales price charged is fixed or determinable, and collectability is reasonably assured. This generally means that revenue is recognized when services have been provided to the customers. Interest is fully allowed for on impaired loans and is recognized on a cash basis method. The receipt of previous loan or note receivable allowances or impairments are recognized as revenue.

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Deferred Revenue Recognition

Deferred income supports the amount of sales proceeds withheld on a sale of our building during November 2006, with which we were required to establish an irrevocable stand by letter of credit in favor of the purchaser of the building. See Note D – Related Party Transactions.

Classification of Operating Results from Real Estate Held for Sale

Generally, operating results and cash flows from long-lived assets held for sale are to be classified as discontinued operations as a separately stated component of net income. Our operations related to real estate held for sale are separately identified in the accompanying statements of operations.

Fair Value Disclosures

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. “the exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The established hierarchy for inputs used, in measuring fair value, maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement, which utilize the Company’s estimates and assumptions.

If the volume and level of activity for an asset or liability have significantly decreased, we will still evaluate our fair value estimate as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. In addition, since we are a public reporting company, we are required to make our fair value disclosures for interim reporting periods.

Net Income (Loss) Allocated to Members Per Weighted Average Membership Unit

Net income (loss) allocated to members per weighted average membership unit is computed by dividing net income (loss) calculated in accordance with GAAP by the weighted average number of membership units outstanding for the period.

Segments

We operate as one business segment.

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Income Taxes

Limited liability companies (“LLCs”) are not liable for federal or state income taxes and, therefore, no provision for income taxes is made in the accompanying financial statements. Rather, a proportionate share of the LLC’s income, deductions, credits and tax preference items are reported to the individual members for inclusion in their tax returns.

NOTE C — FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

Financial instruments consist of cash, notes receivable, accounts payable and accrued liabilities, and due to/from related parties. The carrying value of these instruments approximates their fair values due to their short-term nature.

Financial instruments with concentration of credit and market risk include cash, notes receivable, accounts payable and accrued liabilities, and due to/from related parties.

We maintain cash deposit accounts and certificates of deposit, which, at times, may exceed federally insured limits. To date, we have not experienced any losses. As of March 31, 2016 we had $0.2 million funds in excess of the federally insured limits. As of December 31, 2015 we had no funds in excess of federally insured limits.

NOTE D — RELATED PARTY TRANSACTIONS

Transactions with the Manager

Our manager is entitled to receive from us a management (acquisition and advisory) fee up to 2.5% of the gross offering proceeds and up to 3% of our rental income. No management fees were recorded during the three months ended March 31, 2016.

In 2006, in connection with the sale of an office building located in Las Vegas, Nevada, we arranged for a $985,000 letter of credit in favor of the purchaser of the building (the “Purchaser”), an unrelated party, which could be drawn upon by the Purchaser should Vestin Group default on its lease obligations and was supported by our restricted cash. Vestin Group did not pay certain amounts allegedly due under its lease. In 2009, $285,000 of the letter of credit was drawn by the Purchaser. In November 2010, the Purchaser drew the final $700,000 from the letter of credit. As of March 31, 2016, we have a receivable from Vestin Group and deferred gain of approximately $581,000. In February 2015, Mr. Shustek and the Company entered into an Extension Agreement extending the due date of the obligation until August 31, 2016. Mr. Shustek paid to the Company an extension fee of $10,120, which is equal to one and one-half percent (1.50%) of the outstanding obligation. In addition, Mr. Shustek agreed to pay interest on the outstanding balance at the rate of one percent (1%) per month, retroactive to September 2014. As of March 31, 2016, Mr. Shustek has paid interest in the amount of $133,000 in connection with the Extension Agreement. Mr. Shustek has assigned all future liquidating distributions for the 292,681 of our units that he holds directly and indirectly to the Company to commence paying such obligation. In May and December 2015 distributions payable directly and indirectly to Mr. Shustek in the amount of approximately $57,000 and $47,000, respectively, were applied to decrease the receivable discussed above. In January 2014, June 2014 and September 2014, distributions payable directly and indirectly to Mr. Shustek in the amounts of approximately $42,000, $42,000 and $157,000, respectively, were applied to decrease the receivable discussed above. See also “Transactions with Other Related Parties” below.

As of March 31, 2016 and December 31, 2015, our manager owned 54,863 of our units. During the three months ended March 31, 2015 we made no distributions.

As of March 31, 2016 and December 31, 2015, we had receivables from our manager totaling approximately $0.6 million and $0.6 million, respectively, primarily related to the withdrawal of the letter of credit referred to above.

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Transactions with Other Related Parties

As of March 31, 2016 and December 31, 2015, there were approximately $2,000 and $1,000 due from VRM II, respectively.

The net changes in the amounts due to/from related parties have been classified as operating activities on the accompanying statements of cash flows. These activities are primarily related to expenses being incurred from operations and maintenance of investments that are co-owned by related parties. These balances are satisfied in subsequent periods under terms consistent with the underlying vendor terms.

As of March 31, 2016 and December 31, 2015, inVestin Nevada Inc., a company wholly owned by Mr. Shustek, our manager’s CEO, (“inVestin”), owned 34,856 of our membership units representing approximately 1.7% of our total membership units. During the three months ended March 31, 2016, we made no distributions.

As of March 31, 2016 and December 31, 2015, Shustek Investments, Inc., a company wholly owned by Mr. Shustek, our manager’s CEO, owned 200,000 of our membership units representing approximately 9.9% of our total membership units. During the three months ended March 31, 2015, we made no distributions.

As of March 31, 2016 and December 31, 2015, Mr. Shustek’s spouse owned 2,963 of our membership units, representing less than 1.0% of our total membership units. During the three months ended March 31, 2016, we made no distributions.

On February 25, 2016, the Company, sold 27,718 shares of our investment in MVP REIT, Inc. (“MVP REIT”) to JNL Parking for approximately $244,000. The principals of JNL Parking are officers of an affiliate of MVP REIT. There was no gain or loss recognized with this sale. The transaction was entered into in order to increase our holdings of cash to facilitate our dissolution.

Accounting services

Through February 29, 2016, the Company had an accounting services agreement with Strategix Solutions, LLC (“Strategix Solutions”), a Nevada limited liability company from which our CFO and other members of our accounting staff were employed. As of March 1, 2016, Ms. Gress and certain members of our accounting staff are no longer employed by Strategix Solutions and are now employed by MVP Realty Advisors. Ms. Gress and the accounting staff also provide accounting and financial reporting services to MVP REIT, MVP REIT II, VRM I, and VRM II. During the three months ended March 31, 2016 and 2015, Strategix Solutions received fees of approximately $6,000 and $4,000 respectively.

NOTE E — MEMBERS’ EQUITY

Allocations and Distributions

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

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Contingency Reserve

In accordance with the Plan, we attempt to maintain a contingency reserve of approximately $300,000 for the payment of ongoing expenses, any contingent liabilities or to account for loan or other investment losses: however, the amount of the reserve may fluctuate based on cash expenditure requirements. Our manager has the discretion to increase or decrease the amount of the reserve, but will endeavor to ensure that the reserve is adequate to pay our outstanding obligations. The amount of the contingency reserve is based upon estimates and opinions of our manager or through consultation with an outside expert, if our manager determines that it is advisable to retain such expert. In determining the size of the reserve, our manager reviewed among other things, the value of our non-performing assets and the likelihood of repayment, our estimated contingent liabilities and our estimated expenses, including without limitation, estimated professional, legal and accounting fees, rent, payroll and other taxes, miscellaneous office expenses, facilities costs and expenses accrued in our financial statements.

Value of Members’ Capital Accounts

In accordance with Section 7.8 of our Operating Agreement, our manager reviewed the value of our assets during the three months ended March 31, 2016. Based on this review, no adjustment to the value of members’ capital accounts was necessary as of as of April 1, 2016.

Liquidating Distributions

Redemption Limitation

In accordance with the Plan, our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

NOTE F — INVESTMENT IN MARKETABLE SECURITIES – RELATED PARTY

As of March 31, 2016 and December 31, 2015, we owned 6,679 and 34,297 shares of common stock, respectively, of MVP REIT. The shares were assigned to us by SERE Holdings, LLC in consideration of the cancellation of certain unsecured notes. During the three months ended March 31, 2015 we received approximately $10,000 in distribution income from distribution. There were no distributions for the three months ended March 31, 2016.

On February 25, 2016, the Company, sold 27,718 shares of our investment in MVP REIT to JNL Parking for approximately $243,000. The principals of JNL Parking are officers of an affiliate of MVP REIT. There was no gain or loss recognized with this sale. The transaction was entered into in order to increase our holdings of cash to facilitate our dissolution.

NOTE G — RECENT ACCOUNTING PRONOUNCEMENTS

No new accounting pronouncements have been defined that would materially impact our financial statements.

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NOTE H— LEGAL MATTERS INVOLVING THE MANAGER

The United States Securities and Exchange Commission (the “Commission”), conducted an investigation of certain matters related to us, our manager, Vestin Capital, VRM I, and VRM II. We fully cooperated during the course of the investigation. On September 27, 2006, the investigation was resolved through the entry of an Administrative Order by the Commission (the “Order”). Our manager, Vestin Mortgage and its Chief Executive Officer, Michael Shustek, as well as Vestin Capital (collectively, the “Respondents”), consented to the entry of the Order without admitting or denying the findings therein.

In the Order, the Commission found that the Respondents violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 through the use of certain slide presentations in connection with the sale of our units and units in Fund II, the predecessor to VRM II. The Respondents consented to the entry of a cease and desist order, the payment by Mr. Shustek of a fine of $100,000 and Mr. Shustek’s suspension from association with any broker or dealer for a period of six months, which expired in March 2007. In addition, the Respondents agreed to implement certain undertakings with respect to future sales of securities. We are not a party to the Order.

Our manager believes that it is not a party to any other pending legal or arbitration proceedings that would have a material adverse effect on our manager’s financial condition or results of operations or cash flows, although it is possible that the outcome of any such proceedings could have a material impact on the manager’s net income in any particular period.

NOTE I — LEGAL MATTERS INVOLVING THE COMPANY

From time to time, we may become involved in litigation in the ordinary course of business. We do not believe that any pending legal proceedings are likely to have a material adverse effect on our financial condition or results of operations or cash flows. It is not possible to predict the outcome of any such proceedings.

NOTE J — SUBSEQUENT EVENTS

The following subsequent events have been evaluated through the date of this filing with the SEC.

The Company, along with VRM I and VRM II filed a lawsuit against a law firm in connection with that law firms representation of the Company, VRM I and VRM II and other related companies in association with a loan, a loan default and bankruptcy matter. The lawsuit alleged malpractice, negligence and other claims. On May 4, 2016, the parties agreed to a settlement of the action whereby the company will receive approximately $1.3 million of which our portion is $22,000.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a financial review and analysis of our financial condition and results of operations for the three months ended March 31, 2016 and 2015. This discussion should be read in conjunction with our financial statements and accompanying notes and other detailed information regarding us appearing elsewhere in this report on Form 10-Q and our report filed on Form 10-K, Part II, Item 7 for the year ended December 31, 2015.

FORWARD-LOOKING STATEMENTS

Certain statements in this report, including, without limitation, matters discussed under this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” should be read in conjunction with the financial statements, related notes, and other detailed information included elsewhere in this report on Form 10-Q. We are including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “assumes,” “may,” “should,” “will,” or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements. These forward-looking statements are based on our current beliefs, intentions and expectations. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described in this Quarterly Report on Form 10-Q, our annual report on Form 10-K and in our other securities filings with the SEC. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and involve inherent risks and uncertainties. Our estimates of the value of collateral securing our loans may change, or the value of the underlying property could decline subsequent to the date of our evaluation. As a result, such estimates are not guarantees of the future value of the collateral. The forward-looking statements contained in this report are made only as of the date hereof. We undertake no obligation to update or revise information contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

RESULTS OF OPERATIONS

OVERVIEW

As a result, we have commenced an orderly liquidation and we no longer invest in new real estate loans. As of March 31, 2016, our remaining non-cash assets consist of (i) a receivable in the amount of $581,000 relating to Vestin Group’s indemnity obligations as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Related Party Transactions” and (ii) shares of MVP REIT, Inc. common stock. We had anticipated that the liquidation would be substantially completed by the second half of 2014. However, the orderly sale of each of our remaining assets will take longer to complete than we had anticipated. We will not complete the liquidation before the end of 2016. The exact timing for completion of the liquidation will be impacted by the payment of Vestin Group’s indemnity obligation and other matters beyond our control. In addition, other events and conditions may arise that may impact our ability and timing to complete the liquidation. Thus, no assurances can be given that we will be able to complete the liquidation within a particular date or by the anticipated time frame.

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Because the liquidation of the Fund was not imminent, as of March 31, 2016, the financial statements are presented assuming the Fund will continue as a going concern.

Pursuant to the Plan, we will make liquidating distributions to members as funds become available, subject to a reasonable reserve established to provide for payment of the Company’s ongoing expenses and contract liabilities. Our manager has established a reserve to cover our ongoing expenses and future obligations. As of March 31, 2016, our cash was approximately $0.4 million.

On May 13, 2015 and December 18, 2015, we made liquidation distributions to all Fund members in the aggregate amount of approximately $0.4 million and $0.3 million, respectively, in accordance with the Plan. These distributions follow liquidation distributions we made on January 26, 2010, April 8, 2010, September 17, 2010, May 25, 2011, June 15, 2012, January 14, 2014, June 30, 2014, and September 15, 2014 in the aggregate amount of approximately $1.0 million, $0.9 million, $0.3 million, $0.3 million, $0.4 million, $0.3 million, $0.3 million and $1.1 million, respectively, in accordance with the Plan. The amounts distributed to each member of the Fund were calculated based upon the percentage ownership interest of such member in the Fund. See Note E – Members’ Equity of the Notes to the Financial Statements included in Part I, Item 1 Financial Statements of this Quarterly Report on Form 10-Q.

Under the terms of the Plan adopted by a majority of our members, our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

Prior to the approval of the Plan, our primary business objective was to generate income while preserving principal by investing in loans secured by real estate. The loan underwriting standards utilized by our manager and MVP Mortgage or affiliates were less strict than those used by many institutional real estate lenders. In addition, one of our competitive advantages was our ability to approve loan applications more quickly than many institutional lenders. As a result, in certain cases, we made real estate loans that were riskier than real estate loans made by many institutional lenders such as commercial banks. However, in return, we sought a higher interest rate and our manager took steps to mitigate the lending risks such as imposing a lower loan-to-value ratio. While we may have assumed more risk than many institutional real estate lenders, in return, we sought to generate higher yields from our real estate loans.

SUMMARY OF FINANCIAL RESULTS

Comparison of Operating Results for the three months ended March 31, 2016, to the three months ended March 31, 2015.

Total Revenue:	2016		2015		$ Change		% Change
Recovery of allowance for doubtful notes receivable	$	4,000	$	4,000	$	--		--
Total	$	4,000	$	4,000	$	--		--

Total Operating Expenses:	2016		2015		$ Change			% Change
Professional fees	$	18,000	$	20,000	$	2,000			10	%
Consulting		5,000		--		5,000			100	%
Other		2,000		9,000		(7,000	)		(78	%)
Total	$	25,000	$	29,000	$	(4,000	)		(14	%)

Total Non-operating income:	2016		2015		$ Change			% Change
Other income	$	17,000	$	58,000	$	(41,000	)		(71	%)
Dividend income – related party		5,000		10,000		(5,000	)		(50	%)
Total	$	22,000	$	68,000	$	(46,000	)		(68	%)

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During the three months ended March 31, 2015 and 2016, we received approximately $17,000 and $58,000, respectively, in interest and fees from Michael Shustek based on the extension agreement related to the letter of credit. During the three months ended March 31, 2016 and 2015, we received dividend income of approximately $5,000 and $10,000, respectively, on our shares in MVP REIT. The decrease is due to the sale of some shares to JNL Parking during 2016. The principals of JNL Parking are officers of an affiliate of MVP REIT. There was no gain or loss recognized with this sale. The transaction was entered into in order to increase our holdings of cash to facilitate our dissolution.

Total Discontinued Operations	2016			2015			$ Change		% Change
Expenses related to real estate held for sale	$	(1,000	)	$	(2,000	)	$	1,000		50	%
Total	$	(1,000	)	$	(2,000	)	$	1,000		50	%

Stated Unit Value Adjustment. In accordance with Section 7.8 of our Operating Agreement, our manager reviewed the value of our assets during the three months ended March 31, 2016. Based on this review, no adjustment was necessary to the value of members’ capital accounts as of April 1, 2016. The periodic review of the estimated net unit value includes an analysis of unrealized gains that our manager reasonably believes exist at the time of the review, but that cannot be added to net asset value under GAAP.

Redemptions: At a special meeting of our members held on July 2, 2009, a majority of the members voted to approve the dissolution and winding up of the Fund, in accordance with the Plan as set forth in Annex A of the Fund’s proxy statement filed with the SEC on May 11, 2009. The Plan became effective upon its approval by the members on July 2, 2009. Our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009. As of July 2, 2009, the total redemptions made from inception were approximately $10.4 million. For additional information regarding members redemptions, see Note E – Members’ Equity of the Notes to the Financial Statements included in Part I, Item 1 Financial Statements of this Quarterly Report on Form 10-Q.

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 general operating purposes. As a result of the decision to liquidate the Company, we no longer invest in new loans. Hence, subject to retaining sufficient funds to meet our obligations and conduct wind down operations, all available funds will be paid out to our members. We do not anticipate the need for hiring any employees, acquiring fixed assets such as office equipment or furniture, or incurring material office expenses during the next twelve months because our manager will manage our affairs.

During the three months ended March 31, 2016, net cash flows used in operating activities totaled approximately $13,000. Cash flows provided by investing activities for the three months ended March 31, 2016 totaled approximately $0.3 million and include proceeds from the partial sale of shares in MVP REIT.

At March 31, 2016, we had approximately $0.4 million in unrestricted cash and approximately $1.1 million in total assets. We believe we have sufficient working capital to meet our operating needs during the next 12 months.

Investments in Real Estate Loans Secured by Real Estate Portfolio

As of March 31, 2016 and December 31, 2015, we had no investments in real estate loans. In accordance with the Plan, we will no longer invest in new loans.

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RELATED PARTY TRANSACTIONS

In 2006, in connection with the sale of an office building located in Las Vegas, Nevada, we arranged for a $985,000 letter of credit in favor of the purchaser of the building (the “Purchaser”), an unrelated party, which could be drawn upon by the Purchaser should Vestin Group default on its lease obligations and was supported by our restricted cash. Vestin Group did not pay certain amounts allegedly due under its lease. In 2009, $285,000 of the letter of credit was drawn by the Purchaser. In November 2010, the Purchaser drew the final $700,000 from the letter of credit. In February 2015, Mr. Shustek and the Company entered into an Extension Agreement extending the due date of the obligation until August 31, 2016. Mr. Shustek paid to the Company an extension fee of $10,120, which is equal to one and one-half percent (1.50%) of the outstanding obligation. In addition, Mr. Shustek agreed to pay interest on the outstanding balance at the rate of one percent (1%) per month, retroactive to September 2014. As of March 2016, Mr. Shustek has paid interest in the amount of $133,000 in connection with the Extension Agreement. Mr. Shustek has assigned all future liquidating distributions for the 292,681 of our units that he holds directly and indirectly to the Company to commence paying such obligation. In May and December 2015, distributions payable directly and indirectly to Mr. Shustek in the amount of approximately $47,000 and $57,000, respectively, were applied to decrease the receivable discussed above. In January 2014, June 2014 and September 2014, distributions payable directly and indirectly to Mr. Shustek in the amounts of approximately $42,000, $42,000 and $157,000, respectively, were applied to decrease the receivable discussed above. As of March 31, 2016, the receivable’s remaining balance was approximately $0.6 million.

For additional information regarding this and other related party transactions, please see Note D – Related Party Transactions of the Notes to the Financial Statements included in Part I, Item I Financial Statements of this Quarterly Report on Form 10-Q.

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2016, we do not have any interests in off-balance sheet special purpose entities nor do we have any interests in non-exchange traded commodity contracts.

CRITICAL ACCOUNTING ESTIMATES

The carrying value of Due from Related Parties and Investment in Marketable Securities – related party are reported at their historical cost and fair market value, respectively, however actual results of these assets could differ from these values.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note G– Recent Accounting Pronouncements of the Notes to the Financial Statements included in Part I, Item 1 Financial Statements of this Quarterly Report on Form 10-Q.

ITEM 4.

CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the first quarter of 2016, that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Please refer to Note H - Legal Matters Involving The Manager and Note I - Legal Matters Involving The Company in Part I, Item 1 Financial Statements of this Quarterly Report on Form 10-Q for information regarding legal proceedings, which discussion is incorporated herein by reference.

ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

Market Information

There is no established public trading market for the trading of units.

Holders

As of May 16, 2016, approximately 512 unit holders held 2,024,424 units in the Company.

Liquidation Distribution Policy

We intend to make liquidating distributions in accordance with the Plan as set forth in Annex A of the Fund’s proxy statement filed with the SEC on May 11, 2009. We will distribute to our members the net proceeds we receive from the sale of our real estate held for sale, less a reasonable reserve established to provide for payment of the Company’s ongoing expenses and contingent liabilities. A final liquidating distribution will be made after we have completed the winding up of our business operations and made appropriate provision for any remaining obligations.

We are now targeting completion of the liquidation by the end of 2016. There are a number of factors that could delay our anticipated timetable, including the following:

•

Delays in the disposition of our shares of MVP REIT common stock and other non-cash assets;

•

Payment of Vestin Group’s indemnity obligations as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Related Party Transactions.”

•

Lawsuits or other claims asserted by or against us;

•

Unanticipated legal, regulatory or administrative requirements; and

•

Delays in settling our remaining obligations.

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In addition, real estate market conditions and other matters beyond our control, and other events and conditions that may arise, may impact our ability and timing to complete the liquidation. Thus, no assurances can be given that we will be able complete the liquidation within a particular date or by the anticipated time frame. Because the liquidation of the Fund was not imminent, as of March 31, 2016, the financial statements are presented assuming the Fund will continue as a going concern.

Recent Sales of Unregistered Securities

None.

Equity Compensation Plan Information

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

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SIGNATURES

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

Vestin Fund III, LLC
By:		Vestin Mortgage, LLC., its sole Manager

By:		/s/ Michael V. Shustek
		Michael V. Shustek
		Chief Executive Officer and Sole Director of the Manager
		(Principal Executive Officer of Manager)

By:		/s/ Tracee Gress
		Tracee Gress
		Chief Financial Officer of the Manager
		(Principal Financial and Accounting Officer of the Manager)

Date: May 16, 2016

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EXHIBIT INDEX

Exhibit No.		Description of Exhibits
2.1(1)		Plan of Complete Liquidation and Dissolution
3.1(2)		Articles of Organization
3.2(3)		Certificate of Amendment to Articles of Organization
3.3(4)		Amended and Restated Operating Agreement (included as Exhibit A to the prospectus)
4.4(5)		Distribution Reinvestment Plan
10.9(6)		Office lease agreement dated March 31, 2003 by and between Luke Properties, LLC and Vestin Group, Inc.
10.10(7)		Indemnification agreement dated March 25, 2009 by and between Vestin Group, Inc. and Vestin Fund III, LLC
10.11 (8)		Agreement between Strategix Solutions, LLC and Vestin Fund III, LLC for accounting services.
10.12 (9)		Plan of Complete Liquidation and Dissolution
10.13 (10)		Deed in Lieu Agreement, dated February 7, 2012
31.1*		Section 302 Certification of Michael V. Shustek
31.2*		Section 302 Certification of Tracee Gress
32*		Certification Pursuant to 18 U.S.C. Sec. 1350
101**		The following material from the Company's quarterly report on Form 10-Q for the three months ended March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheets as of March 31, 2016 and December 31, 2015 (unaudited), (ii) Statements of Operations for the three months ended March 31, 2016 and 2015 (unaudited) (iii) Statement of Equity for the three months ended March 31, 2016 (unaudited) (iv) Statements of Cash Flows for the three months ended March 31,2016 and 2015 (unaudited) and (v) Notes to the Financial Statements (unaudited)

(1)		Incorporated herein by reference to our Schedule 14A Definitive Proxy Statement filed on May 11, 2009 (File No. 000-51301)
(2)		Incorporated herein by reference to our Pre-Effective Amendment No. 3 to Form S-11 Registration Statement filed on September 2, 2003 (File No. 333-105017)
(3)		Incorporated herein by reference to our Form 10-Q filed on August 16, 2004 (File No. 333-105017)
(4)		Incorporated herein by reference to our Schedule 14A Definitive Proxy Statement filed on January 29, 2007 (File No. 000-51301)
(5)		Incorporated herein by reference to Exhibit 4.4 of our Post-Effective Amendment No. 5 to Form S-11 Registration Statement filed on April 28, 2006 (File No. 333-105017)
(6)		Incorporated herein by reference to our Form 10-KSB filed on March 30, 2005 (File No. 333-105017)
(7)		Incorporated herein by reference to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on March 27, 2009 (File No. 000-51301)
(8)		Incorporated herein by reference to the Quarterly Report on Form 10-Q filed on May 14, 2009 (File No. 000-51301)
(9)		Incorporated herein by reference to the Proxy Statement dated May 11, 2009 (File No. 000-51301)
(10)		Incorporated herein by reference to the Annual Report on Form 10-K filed on May 16, 2012 (File No. 000-51301)
*		Filed concurrently herewith.
**		As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Section 11 an d 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934

VESTIN FUND III LLC 10-Q