-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LifFORrMTPHCqc6quV/xsJmcPhYt7qjh81ZIlbyHFBcF69UYi+SMH6bYjST2Hrko Q9+DFl0wqpQJsVlB2w4oHQ== 0000950147-01-502034.txt : 20020413 0000950147-01-502034.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950147-01-502034 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20011214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VESTIN FUND I LLC CENTRAL INDEX KEY: 0001108948 STANDARD INDUSTRIAL CLASSIFICATION: LOAN BROKERS [6163] IRS NUMBER: 880446244 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-32800 FILM NUMBER: 1813852 BUSINESS ADDRESS: STREET 1: 2901 EL CAMINO AVENUE CITY: LAS VEGAS STATE: NV ZIP: 89102 BUSINESS PHONE: 7022270965 MAIL ADDRESS: STREET 1: 2901 EL CAMINO AVENUE CITY: LAS VEGAS STATE: NV ZIP: 89102 FORMER COMPANY: FORMER CONFORMED NAME: DM MORTGAGE INVESTORS LLC DATE OF NAME CHANGE: 20000310 10-Q/A 1 e-7858.txt AMENDMENT NO. 1 TO QTRLY REPORT DATED 3-31-01 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 MARCH 31, 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) 702.227.0965 (Registrant's Telephone Number) 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 April 30, 2001, the Issuer had 8,232,412 of its Units outstanding. ITEM 1. FINANCIAL STATEMENTS Page ---- Balance Sheets as of March 31, 2001 (unaudited) and December 31, 2000.......................................................... 3 Statements of Income for the Three Months Ended March 31, 2001 and 2000 (unaudited)........................................ 4 Statement of Members' Equity (unaudited).................................... 5 Statements of Cash Flows for the Three Months ended March 31, 2001 and 2000 (unaudited)........................................ 6 Notes to Financial Statements............................................... 7 2 VESTIN FUND I, LLC BALANCE SHEETS March 31, 2001 December 31, 2000 (Unaudited) (Audited) -------------- ----------------- (Restated) ASSETS Cash $ 815,499 $ 370,304 Certificates of deposit 1,675,000 1,200,000 Due from Managing Member 172,014 199,396 Interest and other receivables 628,249 491,122 Investment in mortgage loans 60,013,923 39,376,619 ----------- ----------- $63,304,685 $41,637,441 =========== =========== LIABILITIES AND MEMBERS' EQUITY Liabilities Distribution payable to Managing Member $ 27,711 $ -- Deferred revenues $ 169,520 $ 256,230 ----------- ----------- Total liabilities 197,231 256,230 ----------- ----------- Members' equity - authorized 10,000,000 units; 6,327,479 and 4,173,991 units issued and outstanding at $10 per unit at March 31, 2001 and December 31, 2000, respectively 63,107,454 41,381,211 ----------- ----------- Total members' equity 63,107,454 41,381,211 ----------- ----------- Total liabilities and members' equity $63,304,685 $41,637,441 =========== =========== The accompanying notes are an integral part of these statements. 3 VESTIN FUND I, LLC STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) Three Months Ended March 31, ---------------------------- 2001 2000 ---------- ---------- (Restated) REVENUES Interest income from investment in mortgage loans $1,646,508 $ 0 Loan origination fees 86,711 0 Other interest income 43,023 0 ---------- ---------- Total revenues 1,776,242 0 ---------- ---------- OPERATING EXPENSES Management fees to Managing Member 7,184 0 Other 21,125 0 ---------- ---------- Total operating expenses 28,309 0 ---------- ---------- NET INCOME $1,747,933 $ 0 ========== ========== Net income allocated to members $1,747,933 $ 0 ========== ========== Net income allocated to members per weighted average membership units $ .34 $ 0 ========== ========== Weighted average membership units 5,089,337 115,500 ========== ========== The accompanying notes are an integral part of these statements. 4 VESTIN FUND I, LLC STATEMENT OF MEMBERS' EQUITY (RESTATED) Units Amount ------------ ------------ Members' equity at December 31, 2000 (Audited) 4,173,991 $ 41,381,211 Issuance of units (net of offering costs) 2,129,312 21,247,826 Distributions -- (1,483,568) Reinvestments of distributions 24,176 241,763 Declared distribution to Managing Member -- (27,711) Net income -- 1,747,933 ---------- ------------ Members' equity at March 31, 2001 (unaudited) 6,327,479 $ 63,107,454 ========== ============ The accompanying notes are an integral part of this statement. 5 VESTIN FUND I, LLC STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2001 and 2000 (UNAUDITED) Three Months Ended March 31, ------------------------------ 2001 2000 ------------ ------------ (Restated) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,747,933 $ 0 Adjustments to reconcile net income to net cash provided by operating activities: Decrease in due from Managing Member 27,382 0 Increase in interest and other receivables (137,127) 0 Decrease in deferred revenues (86,710) 0 ------------ ------------ Net cash provided by operating activities 1,551,478 0 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments in mortgage loans (21,720,458) 0 Proceeds from loan payoff 1,083,154 0 Investment in certificates of deposit (475,000) 0 ------------ ------------ Net cash used in investing activities (21,112,304) 0 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of membership units 21,247,826 0 Members' distribution reinvestments 241,763 0 Members' distributions (1,483,568) 0 ------------ ------------ Net cash provided by financing activities 20,006,021 0 ------------ ------------ NET INCREASE IN CASH 445,195 0 CASH, BEGINNING 370,304 0 ------------ ------------ CASH, ENDING $ 815,499 $ 0 ============ ============ Supplemental Non-Cash Financing Activities: Declared distribution to Managing Member $ 27,711 $ 0 ============ ============ The accompanying notes are an integral part of these statements. 6 VESTIN FUND I, LLC NOTES TO FINANCIAL STATEMENTS MARCH 31, 2001 (UNAUDITED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. ORGANIZATION Vestin Fund I, 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. Prior to September 1, 2000, the Company was a development stage company. On August 23, 2000, the Company's Form S-11/A, as filed with the Securities and Exchange Commission, became effective for the initial public offering of 10,000,000 units of the Company at $10 per unit. Consequently, the Company commenced operations on September 1, 2000. As of March 31, 2001, the Company sold 6,327,479 units of the total 10,000,000 units offered. The Company will continue to offer its remaining unsold units to the public for a period of two years following the effective date of its Form S-11/A. 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 Small Cap Market under the symbol "VSTN." The Company's 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 generally accepted accounting principles 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. NOTE B - INVESTMENT IN MORTGAGE LOANS Investment in mortgage loans as of March 31, 2001 are as follows: Bridge $ 4,497,400 7.49% Commercial 11,451,340 19.08% Construction 8,477,040 14.13% Acquisition and development 21,856,039 36.42% Land 13,732,104 22.88% Residential -- --% ----------- ------ $60,013,923 100.00% =========== ====== First mortgages $59,763,923 99.58% Second mortgages 250,000 .42% ----------- ------ $60,013,923 100.00% =========== ====== 7 VESTIN FUND I, LLC NOTES TO FINANCIAL STATEMENTS MARCH 31, 2001 (UNAUDITED) The following is a schedule of maturities of investment in mortgage loans as of March 31, 2001 for the following years ending December 31: 2001 $46,049,133 2002 13,964,790 ----------- $60,013,923 =========== The following is a schedule by geographic location of investment in mortgage loans as of March 31, 2001: Arizona $ 2,650,000 4.42% California 9,458,749 15.76% Hawaii 8,534,910 14.22% Nevada 11,173,958 18.62% Texas 16,891,111 28.15% Utah 9,705,195 16.16% Washington 1,600,000 2.67% ----------- ------ $60,013,923 100.00% =========== ====== As of March 31, 2001, the majority of all mortgage loan payments are current and the 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 12% 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 - SUBSEQUENT EVENT Subsequent to March 31,2001, the Company raised approximately $18,684,000 from the sale of its units through April 30, 2001. 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 March 31, 2001, the Managing Member had a weighted average membership units in the Company of approximately 83,000 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 $27,711 as of March 31, 2001 for distributions of the same amount entitled to for the three months ended March 31, 2001. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BACKGROUND Vestin Fund I, 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"). The Manager is a wholly-owned subsidiary of Vestin Group, Inc., a Delaware corporation, whose common stock is publicly held and traded on the Nasdaq Small Cap Market under the ticker symbol "VSTN." The following financial review and analysis discusses the Company's financial condition and results of operations for the three-month period ended March 31, 2001. Prior to September 1, 2000, the Company was 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. 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 of the Company's units at $10 per unit. The Company commenced operations on September 1, 2000. As of March 31, 2001, the Company sold approximately 6,205,000 units of the total 10,000,000 units offered. Additionally, the Company issued approximately 84,000 units to its Manager for offering costs paid by them on the Company's behalf, and approximately 38,000 units for members' distribution reinvested with the Company. The Company will continue to offer unsold units to the public for a period of up to two years following the effective date of the Registration Statement. SUMMARY OF FINANCIAL RESULTS For the Quarter Ended March 31, 2001 -------------- Total revenues $1,776,000 Total expenses $ 28,000 Net income $1,748,000 Earnings per unit: Net income allocated to members per weighted average membership units $ .34 Annualized net interest yield to members (a) 13.74% Weighted average membership units 5,089,337 - ---------- (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 March 31, 2001 divided by 3 (number of months from January 2001 through March 2001) and multiplied by twelve (12) months, then divided by ten (the $10 cost per unit). Net income for the quarter ended March 31, 2001 was derived primarily from interest income on mortgage loans approximating $1.6 million, interest income of approximately $43 thousand earned on cash and cash equivalents held at bank institutions and $87 thousand from mortgage origination fees earned. The weighted average yield for the three-month period ended March 31, 2001 for the Company's mortgage loans was 13.25%. 9 INVESTMENT IN MORTGAGE LOANS SECURED BY REAL ESTATE PORTFOLIO As of March 31, 2001, the Company invested approximately $60,014,000 in mortgage loans secured by real estate. Such loans consisted of twenty-seven (27) loans of which twenty-six (26) loans are secured through first deeds of trust and one (1) loan is secured through second deeds of trust. The following is a summary of the Company's investment in mortgage loans as of March 31, 2001: Andre Tatibouet Enchantment Condos Red Hills Oasis Art Collection, Inc. Golden Nugget Holdings RTA Desert, Inc. Arvada Ranch LLC HHG Partners South Mountain, LLC Bridge Aina Le'a, LLC Intercapital of Texas, Inc. Sunset-Pecos LP Brugnara Properties V, LLC Lakeside Village, LLC The Ranches California Property Inv. LV RV Resort LLC Car Spa Norco Malibu Development Corona Partnership Mesquite 643 LLC Donald Zeiter Peace Plaza LLC Emerald Suites, LLC Q Summerlin As of March 31, 2001, investment in loans secured by real estate had a weighted average interest yield of 13.87% with all loans maturing within the next twelve (12) to twenty-four (24) 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. 10 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 March 31, 2001, the Manager determined that no allowances for loan losses was necessary. The Manager may evaluate the following in using its professional judgment to determine the adequacy of allowance for loan losses: economic conditions, a borrower's financial condition, industry trends, and the loss potential involved with a loan. The Manager's loan committee may also conduct a quarterly review or the adequacy of loan losses. 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 Manager may elect to receive 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 in the first quarter of 2001 was $32,000. As of March 31, 2001, the Manager elected to receive $7,200 in management fees. During the quarter ended March 31, 2001, cash flows provided by operating activities approximated $1.6 million. Investing activities consisted of investment in loans secured by real estate in the amount of $21 million (net of proceeds from payoffs of mortgage loans), and investment in certificate of deposits of $475 thousand. Financing activities consisted of proceeds from the sale of units in the amount of $21 million, and distributions of $1.2 million to the Company's unit holders (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. The Company will continue to offer to sell its remaining unsold units up to a maximum of 10,000,000 units. As of March 31, 2001, the Company has sold approximately 6.3 million units with proceeds approximating $63 million. Proceeds from future sale of the Company's units will be used to provide capital for investments in loans. There can be no assurance how many units will be sold. At March 31, 2001, the Company had about $815 thousand in cash and cash equivalents, $1.7 million in certificates of deposit and $63 million in total assets. On the same date, total liabilities of the Company approximated $170 thousand. Accordingly, it appears the Company has sufficient working capital to meet its operating needs in the near term. 11 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. For the three month period ended March 31, 2001, the Company's aggregate investment in mortgage loans was $60,014,000 with a weighted average effective interest rate of 13.87%. These mortgage loans have a term of 1 to 2 years. All of the outstanding mortgage loans at March 31, 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 first fiscal quarter of 2001, the Company invested $1,675,000 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. 12 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 March 31, 2001, the Company had sold approximately 6,205,000 of its units for a total of approximately $62,000,000. 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. The offering will continue until the earlier of selling 10,000,000 units, December 31, 2001 or the Manager determines to end the offering. Investors in the Company must satisfy applicable state requirements in order to purchase units in the Company. Pursuant to the Company's Distribution Reinvestment Plan, members elected to reinvest their distributions and receive 24,000 units in the Company, totaling $240,000. In exchange for services provided by the Manager, it has received approximately $7,200 in management fees during the first fiscal quarter of 2001. The Company also credited the Manager with 4,500 units valued at $45,000 for offering expenses paid by the Manager to nonaffiliates on behalf of the Company. 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 first quarter of 2001. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2.1 Articles of Organization* 10.1 Operating Agreement* - ---------- * Previously filed. 13 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 14 -----END PRIVACY-ENHANCED MESSAGE-----