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U.S. SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

COMMISSION FILE NUMBER 333-32800

VESTIN FUND I, LLC

Registrant’s Telephone Number:

      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 þ          No o

      Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)     Yes þ          No o

      As of January 31, 2005, the Issuer had 7,619,193 of its Units outstanding.

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Vestin Fund I, LLC

The accompanying notes are an integral part of these statements.

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VESTIN FUND I, LLC

The accompanying notes are an integral part of these statements.

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VESTIN FUND I, LLC

The accompanying notes are an integral part of these statements.

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VESTIN FUND I, LLC

The accompanying notes are an integral part of these statements.

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VESTIN FUND I, LLC

NOTE A — ORGANIZATION

      We operate as a Nevada limited liability company for the purpose of investing in mortgage loans. We invest in loans secured by real estate through deeds of trust and mortgages. We were organized in December 1999 and commenced our business operations in June 2001. We will continue our operations until December 31, 2019 unless dissolved prior thereto or extended by vote of the members under the provisions of the Company’s operating agreement. Our manager is Vestin Mortgage, Inc., a licensed mortgage company in the State of Nevada (“Vestin Mortgage,” or “Manager”). Vestin Mortgage is a wholly-owned subsidiary of Vestin Group, Inc., a Delaware corporation (“Vestin Group”). In January 2005, Vestin Group received notice from NASDAQ that it no longer meets the minimum requirements for continued listing on the Nasdaq SmallCap Market. On February 2, 2005, Vestin Group was notified that the NASD’s OTC Compliance Unit has requested further information regarding the application to include Vestin Group’s common stock for quotation on the OTC Bulletin Board (“OTCBB”). Accordingly, Vestin Group’s common stock has not started trading on the OTCBB, and Vestin Group can give no assurance as to if and when the application to the OTCBB will be approved. Vestin Group’s common stock has been delisted from The Nasdaq SmallCap Market. Through its subsidiaries, Vestin Group is engaged in asset management, real estate lending and other financial services. In this quarterly report, from time to time, we will refer to our company, Vestin Fund I, LLC, as the “Company.”

      We invest in mortgage loans throughout the areas in which Vestin Mortgage and its correspondents have experience, primarily Arizona, California, Hawaii, New York, and Nevada. The loans we invest in are selected for us by Vestin Mortgage from among loans originated by Vestin Mortgage or non-affiliated mortgage brokers. When Vestin Mortgage or a non-affiliated mortgage broker originates a loan for us, that entity identifies the borrower, processes the loan application, makes or invests in the loan, and brokers or sells the loan to us. We believe that our loans are attractive to borrowers because of the expediency of Vestin Mortgage’s loan approval process, which takes about ten to twenty days.

      Vestin Mortgage, Inc. is also the manager of Vestin Fund II, LLC, (“Fund II”), Vestin Fund III, LLC (“Fund III”) and inVestin Nevada, Inc., entities that are in a business similar to us.

      The financial statements have been prepared in accordance with Securities and 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 of America (“GAAP”) for complete financial statements. The financial statements should be read in conjunction with the financial statements and notes thereto contained in our annual report on Form 10-K for the year ended September 30, 2004.

      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.

      Certain reclassifications have been made to the prior year’s financial statements to conform with the current year presentation.

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      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

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NOTES TO FINANCIAL STATEMENTS — (Continued)

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 materially from those estimates.

      Investments in mortgage loans are secured by trust deeds and mortgages. Generally, all of our mortgage loans require interest only payments with a balloon payment of the principal at maturity. We have both the intent and ability to hold mortgage loans until maturity and therefore, mortgage loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan to value ratios are based on appraisals obtained at the time of loan origination and may not reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower. The appraisals may be for the current estimate of the “as-if developed” value of the property, which approximates the post-construction value of the collateralized property assuming that such property is developed. As-if developed values on raw land loans or acquisition and development loans often dramatically exceed the immediate sales value and may include anticipated zoning changes and timely successful development by the purchaser. As most of the appraisals will be prepared on an as-if developed basis, if a loan goes into default prior to any development of a project, the market value of the property may be substantially less than the appraised value. As a result, there may be less security than anticipated at the time the loan was originally made. If there is less security and a default occurs, we may not recover the full amount of the loan.

      We maintain an allowance for loan losses on our investments in mortgage loans for estimated credit impairment in our investment in mortgage loans portfolio. The Manager’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Subsequent recoveries of amounts previously charged off are added back to the allowance or included in income when the asset is disposed of.

      Real estate held for sale includes real estate acquired through foreclosure and is carried at the lower of cost or the property’s estimated fair value, less estimated costs to sell. We seek to sell properties acquired through foreclosure as quickly as circumstances permit. The carrying values of real estate held for sale are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers.

      Seller financed real estate held for sale includes real estate acquired through foreclosure and resold to independent third parties where we have provided the financing and the borrower has not met certain criteria in accordance with Statement of Financial Accounting Standards (FAS) No. 66. FAS 66 requires the borrower to have a certain percentage equity ownership (typically 20%) to allow us to record the sale of a property. In addition, the borrower must maintain a minimum commitment in the property on a continuing basis. Therefore, until the borrower meets these requirements, the real estate is retained as real estate held for sale.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

      Loans in which third party investors have participated through inter-creditor agreements (“Inter-creditor Agreements”) are accounted for as secured borrowings in accordance with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (“SFAS No. 140”). The Inter-creditor Agreements provide us additional funding sources for mortgage loans whereby a third party investor (the “Investor”) may participate in certain mortgage loans with us and/or Fund II and/or Fund III (collectively, the “Lead Lenders”). In the event of borrower non-performance, the Intercreditor Agreements provide that the Lead Lenders must repay the Investor’s loan amount either by (i) continuing to remit to the Investor the interest due on the participated loan amount; (ii) substituting an alternative loan acceptable to the Investor; or (iii) repurchasing the participation from the Investor for the outstanding balance plus accrued interest.

      Additionally, an Investor may participate in certain loans with the Lead Lenders through participation agreements. In the event of borrower non-performance, the participation agreement allows the Investor to be repaid up to the amount of the Investor’s investment prior to the Lead Lenders being repaid. Mortgage loan financing under the participation agreements are also accounted for as a secured borrowing in accordance with SFAS No. 140.

NOTE C — INVESTMENTS IN MORTGAGE LOANS

      Investments in mortgage loans as of December 31, 2004 are summarized below:

      Investment in mortgage loans as of September 30, 2004 are summarized below:

(1)

The following table reconciles the balance of the loan portfolio to the amount shown on the accompanying Balance Sheet. The contra accounts represent the amount of real estate held for sale sold to third parties where we provided financing. GAAP requires the borrower to have a certain percentage equity ownership (typically 20%) to allow us to record the sale of a property. In addition, the borrower must maintain a minimum commitment in the property on a continuing basis. Therefore, until the borrower

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NOTES TO FINANCIAL STATEMENTS — (Continued)

	meets these requirements, the investment in the new loan is reduced by the amount originally invested in the real estate held for sale.

(2)

Loan to value ratios are based on appraisals obtained at the time of loan origination and may not reflect subsequent changes in value estimates. Such appraisals, which may be commissioned by the borrower, are generally dated no greater than 12 months prior to the date of loan origination. The appraisals may be for the current estimate of the “as-if developed” value of the property, which approximates the post-construction value of the collateralized property assuming that such property is developed. As-if developed values on raw land loans or acquisition and development loans often dramatically exceed the immediate sales value and may include anticipated zoning changes, selection by a purchaser against multiple alternatives, and successful development by the purchaser; upon which development is dependent on availability of financing. As most of the appraisals will be prepared on an as-if developed basis, if a loan goes into default prior to any development of a project, the market value of the property may be substantially less than the appraised value. As a result, there may be less security than anticipated at the time the loan was originally made. If there is less security and a default occurs, we may not recover the full amount of the loan.

**	Generally, our second mortgages are junior to a first trust deed position held by either us or our Manager.

      The following is a schedule of contractual maturities of investments in mortgage loans as of December 31, 2004*:

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NOTES TO FINANCIAL STATEMENTS — (Continued)

      The following is a schedule by geographic location of investments in mortgage loans:

*	Refer to footnote (1) above

      We have six mortgage loan products consisting of bridge, commercial, construction, acquisition and development, land, and residential loans. The effective interest rates on all product categories range from 5% to 14%. Revenue by product will fluctuate based upon relative balances during the period.

      At December 31, 2004, five of our loans totaling $8.4 million were non-performing (more than 90 days past due on interest payments or past due on principal). These loans have been placed on non-accrual of interest status. We have commenced foreclosure proceedings on these loans. Our Manager evaluated all of these loans and concluded that the underlying collateral is sufficient to protect us against a loss of principal or interest. Accordingly, no specific allowance for loan losses was deemed necessary for these loans which are summarized below:

(1)	Non-performing loans sold subsequent to quarter end:

	During February 2005, we received a payoff on the South Mountain, LLC property in Utah, including all delinquent interest, extension, and related fees. The borrowers had been making forbearance payments equal to 1% per month of the outstanding principal balance for 18 consecutive months on the property set for in an agreement by the courts.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

	Our Manager periodically reviews and makes a determination as to whether the allowance for loan losses is adequate to cover any potential losses. Additions to the allowance for loan losses are made by charges to the provision for loan losses. Recoveries of previously charged off amounts are credited to the allowance for loan losses or included as income when the asset is disposed of. As of December 31, 2004, we have provided a general allowance for loan losses of approximately $0.6 million. Our Manager evaluated the loans and concluded that the underlying collateral was sufficient to protect us against further losses of principal or interest. Our Manager will continue to evaluate these loans in order to determine if any other allowance for loan losses should be recorded.
	Because any decision regarding the allowance for loan losses reflects a judgment about the probability of future events, there is an inherent risk that such judgments will prove incorrect. In such event, actual losses may exceed (or be less than) the amount of any reserve. To the extent that we experience losses greater than the amount of our reserves, we may incur a charge to our earnings that will adversely affect our operating results and the amount of any distributions payable to our Members.

      The following is a roll-forward of the allowance for loan losses for the three months ended December 31, 2004:

      In addition, our Manager had granted extensions on 10 loans pursuant to the terms of the original loan agreements, which permit extensions by mutual consent. Such extensions are generally provided on loans where the original term was 12 months or less and where a borrower requires additional time to complete a construction project or negotiate take out financing. However, our Manager only grants extensions when a borrower is in full compliance with the terms of the loan, including, but not limited to the borrower’s obligation to make interest payments on the loan. The aggregate amount due from borrowers whose loans had been extended as of December 31, 2004 was approximately $4.9 million. Our Manager concluded that no allowance for loan loss was necessary with respect to these loans as of that date.

NOTE D — RELATED PARTY TRANSACTIONS

      For the three months ended December 31, 2004 and 2003, we recorded management fees to our Manager of approximately $64,000 for both periods. Additionally, for the three months ended December 31, 2004, we recorded pro rata distributions owed to our Manager of approximately $15,000 based upon the total of 100,000 units owned by our Manager.

      As of December 31, 2004 we owed Fund II approximately $1,504,000 primarily related to payments made on our behalf for the maintenance of real estate owned.

      As of December 31, 2004, we owed the Manager approximately $778,000 related to unpaid management fees, our Manager’s pro-rata share of distributions, and for expenses paid on our behalf related to the maintenance of real estate held for sale.

      From time to time we may acquire or sell investments in mortgage loans from/to the Manager or other related parties pursuant to the terms of our Operating Agreement provided the price does not exceed the original cost. No gain or loss is recorded on these transactions as it is not our intent to make a profit on the purchase or sale of such investments. The purpose is to either free up capital to make new investments or place excess capital in investments to maximize the use of our capital.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

      During the three months ended December 31, 2003, we purchased $350,000 in investments in mortgage loans from a company wholly owned by our Chief Executive Officer.

NOTE E — REAL ESTATE HELD FOR SALE

      At December 31, 2004, we held 5 properties with a total carrying value of $11.2 million, which were acquired through foreclosure and recorded as investments in real estate held for sale. The summary below includes our percentage ownership in each property. These investments in real estate held for sale are accounted for at the lower of cost or fair value less costs to sell with fair value based on appraisals or knowledge of local market conditions. It is not our intent to invest in or own real estate as a long-term investment. We seek to sell properties acquired through foreclosure as quickly as circumstances permit. The following is a roll-forward of investments in real estate held for sale for the three months ended December 31, 2004:

(1)	Foreclosures for the three months ended December 31, 2004:

During October 2004, we foreclosed and took title to 32% of a 126 unit Ramada Inn Hotel in Mesquite, NV. Vestin Fund II owns the other 68%. In January 2005, we and Fund II entered into an agreement to sell the property for $5,750,000 of which we expect our consideration to be approximately $1.9 million. Additionally, in February 2005, we and Fund II received a settlement from the guarantors of the original loan in the amount of $2,500,000 of which our consideration will be approximately $800,000 which

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NOTES TO FINANCIAL STATEMENTS — (Continued)

	consists of cash of $96,000 and a 3 year promissory note in the amount of approximately $704,000. The note is interest free and is payable in semi-annual principal installments. After imputing interest at a discount rate of 7%, the discounted present value of the note is approximately $625,000.

(2)	Sales of real estate held for sale for the three months ended December 31, 2004:

	During October 2004, we and Fund II sold the Castaways Hotel/ Casino in Las Vegas, Nevada of which our portion of the net cash proceeds totaled approximately $2.1 million. We originally sold this property under a 100% seller financing arrangement. The borrowers then sold the property to an unrelated third party which resulted in a payoff of the note and also allowed us to record the sale and remove the asset from seller financed real estate held for sale. In addition, during September 2004, we received a promissory note from the guarantors of the loan in the amount of $160,000 in exchange for a release of their personal guarantees. Since payments on the note do not begin for 18 months from the date of the note, we discounted the face value of the note to $119,299 which is based on a discount rate of 8%. The transaction did not result in any gains or losses in the current period as we wrote down our investment in this property during the year ended September 30, 2004 to the expected net realizable value.
	During November 2004, we and Fund II sold the 140 Unit/224 bed senior facility in Mesa, Arizona, of which consideration received totaled $1,009,989. We received cash of $141,309 and held back a promissory note and first deed of trust totaling $867,680. This transaction resulted in a loss of $11,121.
	During September 2004 we and Fund II entered into an agreement to sell the remaining 29 acres of raw land in Mesquite, Nevada for $6.2 million. Prior to September 2004, $145,000 was released from escrow representing an early release of funds. The transaction was finalized in December of 2004 and resulted in a gain of $1,049,031.
	During November 2004 we sold the 30 unit condominium complex in Las Vegas, NV. The transaction did not result in any gain or loss.
	Events subsequent to quarter-end:

(3)	As of February 9, 2005, this property is in escrow to be sold for $860,000 of which our proceeds are expected to be approximately $800,000 if the sale is finalized. We do not expect to have any further gains or losses on the sale of this property.

NOTE F — REAL ESTATE HELD FOR SALE — SELLER FINANCED

      At December 31, 2004, we held 5 properties with a total carrying value of $10.8 million which have been sold in transactions where we provided the financing to the purchaser. GAAP requires us to include these properties in real estate held for sale until the borrower has met and maintained a certain percentage of equity ownership, which is typically 20%. We may share ownership of such properties with Fund II, the Manager, or other unrelated parties. The summary below includes our percentage ownership in each property. These investments in real estate held for sale are accounted for at the lower of cost or fair value less costs to sell with

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NOTES TO FINANCIAL STATEMENTS — (Continued)

fair value based on appraisals and knowledge of local market conditions. The following is a roll-forward of seller financed real estate held for sale for the three months ended December 31, 2004:

NOTE G — NOTE RECEIVABLE

      As of December 31, 2004, note receivable consisted of a promissory note totaling $160,000 which is discounted to a present value of $119,299 as further discussed in Note E.

NOTE H — SECURED BORROWINGS

      Inter-creditor agreements (the “Inter-creditor Agreements”) provide us additional funding sources for mortgage loans whereby a third party investor (the “Investor”) may participate in certain mortgage loans with Vestin Mortgage, Fund II, Fund III and the Company (collectively, the “Lead Lenders”). In the event of borrower non-performance, the Inter-creditor Agreements provide that the Lead Lenders must repay the Investor’s loan amount either by (i) continuing to remit to the Investor the interest due on the participated loan amount; (ii) substituting an alternative loan acceptable to the Investor; or (iii) repurchasing the participation from the Investor for the outstanding balance plus accrued interest.

      Additionally, an Investor may participate in certain loans with Lead Lenders through participation agreements. In the event of borrower non-performance, the participation agreement allows the Investor to be repaid up to the amount of the Investor’s investment prior to the Lead Lenders being repaid.

      As of December 31, 2004, funds being used under intercreditor and participation agreements where we have potential obligations as defined above totaled $3.2 million.

NOTE I — RECENT ACCOUNTING PRONOUNCEMENTS

      In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material and requires that such items be recognized as current-period charges regardless of whether they meet the “so abnormal” criterion outlined in ARB No. 43. SFAS No. 151 also introduces the concept of “normal capacity” and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period incurred. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. While we are still evaluating the impact of this statement, we do not currently believe it will have a material impact on our consolidated financial statements.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

      In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-based Payment” which replaces the prior SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. SFAS 123 (revised 2004) requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. This new standard will become effective for us July 8, 2005, and we are still evaluating the impact of this statement.

NOTE J — LEGAL MATTERS INVOLVING THE MANAGER

      Vestin Group, Vestin Mortgage, and Del Mar Mortgage, Inc., a company wholly owned by Michael Shustek, the largest shareholder and CEO of Vestin Group are defendants in a civil action entitled Desert Land, L.L.C. et al. v. Owens Financial Group, Inc. et al (the “Action”). The Action was initiated by Desert Land, L.L.C. (“Desert Land”) on various loans arranged by Del Mar Mortgage, Inc. and/or Vestin Mortgage. On April 10, 2003, the United States District Court for the District of Nevada (the “Court”) entered judgment jointly and severally in favor of Desert Land against Vestin Group, Vestin Mortgage and Del Mar Mortgage, Inc. Judgment was predicated upon the Court’s finding that Del Mar Mortgage, Inc. received an unlawful penalty fee from the plaintiffs.

      Defendants subsequently filed a motion for reconsideration. The Court denied the motion and, on August 13, 2003, held that Vestin Group, Vestin Mortgage, and Del Mar Mortgage, Inc. are jointly and severally liable for the judgment in the amount of $5,683,312 (which amount includes prejudgment interest and attorney’s fees). On August 27, 2003, the Court stayed execution of the judgment against Vestin Group and Vestin Mortgage based upon the posting of a bond in the amount of $5,830,000. The bond was arranged by Michael Shustek and was posted without any cost or obligation to Vestin Group and Vestin Mortgage. Additionally, Del Mar Mortgage, Inc. has indemnified Vestin Group and Vestin Mortgage for any losses and expenses in connection with the Action, and Mr. Shustek has guaranteed the indemnification. On September 12, 2003, all of the defendants held liable to Desert Land appealed the judgment to the Ninth Circuit United States Court of Appeals. We are not a party to the Action.

      Our Manager is involved in a number of legal proceedings concerning matters arising in connection with the conduct of their business activities. The Manager believes it has meritorious defenses to each of these actions and intends to defend them vigorously. The Manager believes that it is not a party to any pending legal or arbitration proceedings that would have a material adverse effect on the 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 J — LEGAL MATTERS INVOLVING THE COMPANY

      The staff of the Pacific Regional Office of the Securities and Exchange Commission (“SEC”) has been conducting an informal inquiry into certain matters related to us, Vestin Group, Fund II and Fund III. We have fully cooperated during the course of the informal inquiry. On January 6, 2005, we received from the SEC an “Order Directing Private Investigation and Designating Officers to Take Testimony” which appears to focus on the financial reporting of us, Fund II and Fund III. We intend to continue to cooperate fully in this matter and believe that we have complied with SEC disclosure requirements. We cannot at this time predict the outcome of this matter.

      We are involved in a number of legal proceedings concerning matters arising in connection with the conduct of our business activities. We believe we have meritorious defenses to each of these actions and intend to defend them vigorously. We believe that we are not a party to any pending legal or arbitration proceedings

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NOTES TO FINANCIAL STATEMENTS — (Continued)

that would have a material adverse effect on the our 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 our net income in any particular period.

NOTE K — REDEMPTION LIMITATION

      In order to comply with our Operating Agreement and Internal Revenue Code, we may redeem no more than 10% of the members’ capital in any calendar year. As of December 31, 2004, the total of redemptions made from inception was $31.1 million. Balances in Members’ capital accounts as of January 1, 2004 was $85.4 million, which limited redemptions to $8.5 million for calendar 2004. As of December 31, 2004, remaining requests to redeem approximately $8.1 million in 2005, $7.2 million in 2006, $6.5 million in 2007, $5.9 million in 2008, $5.3 million in 2009, $4.8 million in 2010, $4.3 million in 2011, $3.9 million in 2012, and $1.3 million in 2013 had been logged.

      During January 2005, we redeemed approximately $5.5 million of the scheduled $8.1 million in redemptions for the calendar year 2005.

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BACKGROUND

      We operate as a Nevada limited liability company for the purpose of investing in mortgage loans. We invest in loans secured by real estate through deeds of trust and mortgages. We commenced our business operations in June 2001. We were organized in December 1999 and commenced our business operations in June 2001. We will continue until December 31, 2019 unless dissolved prior thereto or extended by vote of the members under the provisions of the Company’s operating agreement. Our manager is Vestin Mortgage, Inc., a licensed mortgage company in the State of Nevada (“Vestin Mortgage,” or “Manager”). Vestin Mortgage is a wholly-owned subsidiary of Vestin Group, Inc., a Delaware corporation (“Vestin Group”). In January 2005, Vestin Group received notice from NASDAQ that it no longer meets the minimum requirements for continued listing on the Nasdaq SmallCap Market. On February 2, 2005, Vestin Group was notified that the NASD’s OTC Compliance Unit has requested further information regarding the application to include Vestin Group’s common stock for quotation on the OTC Bulletin Board (“OTCBB”). Accordingly, Vestin Group’s common stock has not started trading on the OTCBB, and Vestin Group can give no assurance as to if and when the application to the OTCBB will be approved. Vestin Group’s common stock has been de-listed from The Nasdaq SmallCap Market. Through its subsidiaries, Vestin Group is engaged in asset management, real estate lending and other financial services. In this quarterly report, from time to time, we will refer to our company, Vestin Fund I, LLC, as the “Company.”

      We invest in mortgage loans throughout the areas in which Vestin Mortgage and its correspondents have experience, primarily Arizona, California, Hawaii, New York, and Nevada. The loans we invest in are selected for us by Vestin Mortgage from among loans originated by Vestin Mortgage or non-affiliated mortgage brokers. When Vestin Mortgage or a non-affiliated mortgage broker originates a loan for us, that entity identifies the borrower, processes the loan application, makes or invests in the loan, and brokers or sells the loan to us. We believe that our loans are attractive to borrowers because of the expediency of Vestin Mortgage’s loan approval process, which takes about ten to twenty days.

      The following is a financial review and analysis of our financial condition and results of operations for the three month periods ended December 31, 2004 and 2003. This discussion should be read in conjunction with our financial statements and accompanying notes and other detailed information appearing elsewhere in this Form 10-Q and our report on Form 10-K for the year ended September 30, 2004.

OVERVIEW

      Our operating results are affected primarily by (i) the amount of capital we have to invest in mortgage loans, (ii) the level of real estate lending activity in the markets we service, (iii) our ability to identify and work with suitable borrowers, (iv) the interest rates we are able to charge on our loans and (v) the level of non-performing assets and loan losses which we experience.

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Summary of Financial Results

(a)	The annualized rate of return to members is calculated based upon the net income allocated to members per weighted average units as of December 31, 2004 and 2003 divided by the number of months during the period and multiplied by twelve (12) months, then divided by ten (the $10 cost per unit).

      Total Revenues. For the three months ended December 31, 2004 and 2003, revenues totaled $2.3 million and $2.0 million, respectively, an increase of $0.3 million or 15%. The increase was partially due to a gain on sale of real estate held for sale. During September 2004 we and Vestin Fund II, LLC (“Fund II”) entered into an agreement to sell the remaining 29 acres of raw land in Mesquite, Nevada for $6.2 million. Prior to September 2004, $145,000 was released from escrow representing an early release of funds. The transaction was finalized in December of 2004 and resulted in a gain of approximately $1.0 million.

      The increase in revenue was partially offset by the declining amount of investments in mortgage loans from approximately $50.8 million as of December 31, 2003 to approximately $41.0 million at December 31, 2004, a decrease of approximately $9.8 million or 13.3%. The decrease is primarily related to member redemptions for the calendar year ended December 31, 2004. In addition, the average interest rate on our loans as of December 31, 2004 was 9.9%, compared to 12.5% at December 31, 2003. The total decrease in interest income for the three months ended December 31, 2004 compared to the same period in 2003 was approximately $0.7 million. In addition, there has been an increase in competition from more conventional mortgage lenders and mortgage loan investors, such as commercial banks, thrifts, and mortgage brokers, due to the overall decline in interest rates. It is not clear yet if and when the recent, modest increases in federal funds rates will enable us to charge higher interest rates on our future loans.

      During the past year, our Manager has experienced less demand for loans. While we cannot be certain as to the reason for the lower demand, our Manager believes that the pending SEC inquiry has harmed our reputation among potential borrowers. The continuation of the SEC inquiry, and any resulting proceedings or penalties, could have a further adverse impact upon our ability to compete for borrowers.

      Approximately $0.4 million of our interest revenue for the three months ended December 31, 2004 and 2003 was derived from interest reserves.

      As of December 31, 2004, our Manager had granted extensions on 10 loans pursuant to the terms of the original loan agreements, which permit extensions by mutual consent. Such extensions are generally provided on loans where the original term was 12 months or less and where a borrower requires additional time to complete a construction project or negotiate take out financing. However, our Manager only grants extensions when a borrower is in full compliance with the terms of the loan, including, but not limited to the borrower’s

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      Total Expenses. For the three months ended December 31, 2004, expenses totaled $0.7 million compared to $1.3 million for the same period in 2003, a decrease of $0.6 million which is primarily related to the following:

	•	We did not record any provisions for loan losses during the three months ended December 31, 2004 as our Manager has determined that the current allowance is sufficient to cover any inherent losses in our loan portfolio.
	•	Interest expenses decreased by approximately $0.4 million due to a decrease in the amount of secured borrowings.
	•	Write down on the real estate held for sale decreased from $0.5 million to $0.3 million, respectively as of December 31, 2004 when compared to prior year.

      Net Income. Overall, the net income for the three months ended December 31, 2004 totaled $1.6 million compared to $0.8 million for the same period in 2003, an increase of $0.8 million or 100%.

      Annualized Rate of Return to Members. For the three months ended December 31, 2004, annualized rate of return to members totaled 7.6% as compared to 3.5% for the same period in 2003.