Vestin Realty Mortgage II, Inc - FORM 8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 30, 2014

Vestin Realty Mortgage II, Inc.

(Exact name of registrant as specified in its charter)

Maryland	000-51892	61-1502451
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

8880 WEST SUNSET ROAD, SUITE 200

LAS VEGAS, NEVADA 89148

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (702) 227-0965

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Vestin Realty Mortgage II, Inc. (the “Company,” or “VRTB”) hereby amends the Current Report on Form 8-K filed on May 7, 2014 to provide the required financial information relating to completing the exchange of their interests in certain parking and storage properties held by VRTB and Vestin Realty Mortgage I, Inc. (“VRTA”) for interests in certain office buildings held by MVP REIT, Inc. (“MVP”), as described in such Current Report.

Item 9.01 Financial Statements and Exhibits.

The following financial statements are being file in connection with the acquisition of certain Properties as described in Item 2.01 as required by Sections 210.3-14 and 210.11-01 of Regulation S-X.

(a)	Financial Statements of Properties Acquired
	Report of Independent Registered Public Accounting Firm
	Statements of Revenues and Certain Operating Expenses for the Three Months Ended March 31, 2014 (unaudited) and the Year Ended December 31, 2013
	Notes to the Statements of Revenues and Certain Operating Expenses for the Three Months Ended March 31, 2014 (unaudited) and the Year Ended December 31, 2013

(b)	Unaudtied Pro Forma Financial Information
	Pro Forma Consolidated Balance Sheet as of March 31, 2014
	Pro Forma Consolidated Statement of Operations (unaudited) for the Three Months Ended March 31, 2014
	Pro Forma Consolidated Statement of Operations (unaudited) for the Year Ended December 31, 2013

(c)	Shell Company Transactions
	None

(d)	Exhibits
	None

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Vestin Realty Mortgage II, Inc.

We have audited the accompanying combined statement of revenues and certain operating expenses for combined office buildings previously held by MVP REIT, Inc. (the “Properties”) as of December 31, 2013. The Properties’ management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Properties are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined statement of revenues and certain operating expenses referred to above present fairly, in all material respects, of the combined office buildings previously held by MVP REIT, Inc. as of December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

/s/ De Joya Griffith, LLC

Henderson, Nevada

July 16, 2014

Combined Office Buildings

Previously held by MVP REIT, Inc.

Combined Statement of Revenues and Certain Operating Expenses

For the Three Months ended March 31, 2014

(Unaudited)


Revenues:
Revenue	$	588,706
Total revenues		588,706
Certain operating expenses:
Association fees		22,996
Insurance		2,851
Management fees		32,281
Porter fees		5,635
Repairs		7,213
Security expense		2,642
Taxes		17,290
Utilities		21,067
Total certain operating expenses		111,975
Revenues in excess of certain operating expenses	$	476,731

See Accompanying Notes to Statement of Revenues and Certain Operating Expenses.

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Combined Office Buildings

Previously held by MVP REIT, Inc.

Combined Statement of Revenues and Certain Operating Expenses

For the Year Ended December 31, 2013


Revenues:
Revenue	$	2,100,917
Total revenues		2,100,917
Certain operating expenses:
Association fees		54,018
Insurance		19,150
Management fees		95,711
Porter fees		21,341
Repairs		31,840
Security expense		11,210
Taxes		72,577
Utilities		64,097
Total certain operating expense		369,944
Revenues in excess of certain operating expenses	$	1,730,973

See Accompanying Notes to Statement of Revenues and Certain Operating Expenses.

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Combined Office Buildings

Previously held by MVP REIT, Inc.

Notes to Statement of Revenues and Certain Operating Expenses

For the Three Months Ended March 31, 2014 (unaudited)

And the Year Ended December 31, 2013

BUSINESS

On April 30, 2014, we acquired four two-story, 87.90% occupied by professional tenants, 88,000 square-foot office buildings built in 2008 in Las Vegas, Nevada located at 8860 W. Sunset Road, 8925 W. Post Road, 8905 W. Post Road and 8945 W. Post Road (the “Properties”). The lease terms range from 4 to 10 years remaining on its leases. The $11 million net asset acquisition closed on April 30, 2014.

2.	BASIS OF PRESENTATION

The combined statements of revenues and certain operating expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (the "SEC"), including Rule 3-14 of Regulation S-X. Accordingly, the accompanying combined statements of revenues and certain operating expenses is not intended to be a complete presentation of the Properties' revenues and expenses, and certain expenses such as depreciation, amortization, and interest expenses are not reflected in the combined statements of revenue and certain operating expenses in accordance with Rule 3-14. Consequently, the combined statements of revenues and certain operating expenses for the periods presented is not representative of the actual operations for the periods presented, as certain expenses which may not be in the proposed future operations of the Properties have been excluded. The combined statements of revenues and certain operating expenses have been prepared on the accrual basis of accounting.

The unaudited combined statement of revenues and certain operating expenses for the three months ended March 31, 2014 has been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, it does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The unaudited combined statement of revenues and certain operating expenses for the three months ended March 31, 2014 is not necessarily indicative of the expected results for the entire year ended December 31, 2014.

A combined statement of revenues and certain operating expenses is being presented for the most recent year available instead of the three most recent years based on due diligence of the Properties conducted by the Company, management is not aware of any material factors relating to the Properties that would cause this financial information to not be indicative of future operating results.

REVENUE

The Properties lease office space to ten (10) tenants under triple net leases. All leases are accounted for as non-cancelable operating leases. The Properties recognize rental revenue on a straight-line basis over the term of the lease. Rental income related to the leases is recognized on an accrual basis in accordance with the terms of the leases. The leases are leased with terms of generally four (4) to ten (10) years. Advanced receipts of rental income are deferred and classified as liabilities until earned.

4.	USE OF 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. Management makes significant estimates regarding revenue recognition and purchase price allocations to record investments in real estate, as applicable.

5.	REPAIRS AND MAINTENANCE

Significant improvements, renovations or betterments that extend the economic useful life of the asset are capitalized. Expenditures for repairs and maintenance are expensed to operations as incurred.

6.	SUBSEQUENT EVENTS

Subsequent to March 31, 2014 and through July 16, 2014, management did not identify any subsequent events requiring additional disclosure.

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Vestin Realty Mortgage II, Inc.

Pro Forma Financial Information

The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2014, the accompanying Unaudited Consolidated Statement of Operations for the three months ended March 31, 2014 and the accompanying Unaudited Consolidated Statement of Operations for the year ended December 31, 2013 present the results of operations of the Company as if the transactions described in the Notes to the Unaudited Pro Forma Consolidated Financial Statements had been completed on January 1, 2013.

The accompanying Unaudited Pro Forma Consolidated Financial Statements are subject to a number of estimates, assumptions, and other uncertainties, and do not purport to be indicative of the actual results of operations that would have occurred had the acquisitions reflected therein in fact occurred on the dates specified, nor do such financial statements purport to be indicative of the results of operations that may be achieved in the future. In addition, the Unaudited Pro Forma Consolidated Financial Statements include pro forma allocations of the purchase price for the properties discussed in the accompanying notes based upon preliminary estimates of the fair values of the assets acquired and liabilities assumed in connection with the acquisitions and are subject to change.

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Vestin Realty Mortgage II, Inc.

Pro Forma Consolidated Balance Sheet

March 31, 2014

	VRTB			Pro Forma Adjustments			Pro Forma
	(A)			(B)
ASSETS
Cash and cash equivalents (C)	$	10,022,000		$	(901,000	)	$	9,121,000
Investment in marketable securities – related party		833,000						833,000
Interest and other receivables, net of allowance		5,000						5,000
Notes receivable, net of allowance		--						--
Real estate owned held for sale		1,234,000						1,234,000
Real estate loans, net of allowance for loan loss		10,663,000						10,663,000
Investments in real estate and fixed assets (D)
Land and improvements		--			6,275,000			6,275,000
Buildings and improvements		--			18,521,000			18,521,000
Tenant improvements		--			165,000			165,000
Total investments in real estate and fixed assets, net		--			24,961,000			24,961,000
Investment in equity method investee		3,000,000						3,000,000
Investment in equity method investee–held for sale (E)		1,210,000			(1,210,000	)		--
Investment in and note receivable from MVP Realty Advisors, LLC, net of allowance		--			--			--
Assets held for sale (E)		12,123,000			(12,123,000	)		--
Other assets (D)		161,000			23,000			184,000
Total assets	$	39,251,000		$	10,750,000		$	50,001,000


Liabilities
Accounts payable and accrued liabilities (D)	$	994,000		$	58,000		$	1,052,000
Due to related parties		368,000						368,000
Liabilities related to assets held for sale (E)		4,293,000			(4,293,000	)		--
Notes payable (F)		--			14,335,000			14,335,000
Total liabilities		5,655,000			10,100,000			15,755,000

Stockholders’ equity
Preferred stock		--						--
Common stock		--						--
Additional paid-in capital		267,743,000						267,743,000
Accumulated deficit (G)		(238,038,000	)		1,279,000			(236,759,000	)
Accumulated other comprehensive income		240,000			--			240,000
Total stockholders’ equity		29,945,000			1,279,000			31,224,000
Non-controlling interest (H)		3,651,000			(629,000	)		3,022,000
Total stockholders’ equity		33,596,000			650,000			34,246,000
Total liabilities and stockholders’ equity	$	39,251,000		$	10,750,000		$	50,001,000

See notes to pro forma consolidated statements of operations.

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Vestin Realty Mortgage II, Inc.

Pro Forma Consolidated Statement of Operations

For the three months ended March 31, 2014

	VRTB		Pro Forma Adjustments		Pro Forma
	(A)		(B)
Revenue:
Interest income from investment in real estate loans	$	167,000	$		$	167,000
Advisor fee – related party		134,000				134,000
Rental income		--		589,000		589,000
Total revenue		301,000		589,000		890,000
Operating expenses:
Management fees – related party		274,000				274,000
Wages and benefits		253,000				253,000
Acquisition expense		19,000				19,000
Forgiveness of debt – related party		312,000				312,000
Operations and maintenance		--		112,000		112,000
Professional fees		295,000				295,000
Consulting fees		145,000				145,000
Insurance		69,000				69,000
Travel		125,000				125,000
Rent		81,000				81,000
Other		322,000				322,000
Depreciation expense (D)		--		123,000		123,000
Total operating expenses		1,895,000		235,000		2,130,000
Income (loss) from operations	$	(1,594,000)	$	354,000	$	(1,240,000)
Interest expense (F)		--		216,000		216,000
Total other expense		--		216,000		216,000
Net income (loss)	$	(1,594,000)	$	138,000	$	(1,456,000)
Non-controlling interest		--		38,000		38,000
Net income (loss) attributed to Vestin Realty Mortgage II, Inc.	$	(1,594,000)	$	100,000	$	(1,494,000)

See notes to pro forma consolidated statements of operations.

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Vestin Realty Mortgage II, Inc.

Pro forma Consolidated Statement of Operations for the

Year Ended December 31, 2013

	VRTB		Pro Forma Adjustments		Pro Forma
	(A)		(B)
Revenue:
Interest income from investment in real estate loans	$	1,151,000	$		$	1,151,000
Advisor fee – related party		17,000				17,000
Gain related to pay off of real estate loan, including recovery of allowance for loan loss		50,000				50,000
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable		339,000				339,000
Rental revenue		205,000		2,762,000		2,967,000
Total revenue		1,762,000		2,762,000		4,524,000
Operating expenses:
Management fees – related party		1,089,000				1,089,000
Impairment of MVP Realty Advisors		6,162,000				6,162,000
Acquisition expense		162,000				162,000
Forgiveness of debt		20,000				20,000
Operations and maintenance		--		458,000		458,000
Professional fees		1,228,000				1,228,000
Consulting fees		191,000				191,000
Insurance		290,000				290,000
Other		320,000				320,000
Depreciation expense (D)		127,000		488,000		615,000
Total operating expenses		9,589,000		946,000		10,535,000
Income (loss) from operations	$	(7,827,000)	$	1,816,000	$	(6,011,000)
Interest expense (F)		5,000		950,000		955,000
Net income (loss)	$	(7,832,000)	$	866,000	$	(6,966,000)
Non-controlling interest		--		242,000		242,000
Net income (loss) attributed to Vestin Realty Mortgage II, Inc.	$	(7,832,000)	$	624,000	$	(7,208,000)

See notes to pro forma consolidated statements of operations.

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Vestin Realty Mortgage II, Inc.

Notes to Pro Forma Consolidated Financial Statements

(Unaudited)

Reflects the Company’s balance sheet as of March 31, 2014 and the statements of operations for the year ended December 31, 2013 and the three months ended March 31, 2014. Please refer to the Company’s historical financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2014.

Figures reflect the financial position as of April 30, 2014 and the results of the operations for the year ended December 31, 2013 and for the period from January 1, 2014 through March 31, 2014, unless otherwise noted.

Cash consideration paid to MVP REIT, Inc. in addition to interests in certain parking and storage properties held by VRTB and cash received through asset transfer.

The figures for the Investments in real estate and fixed assets include the acquisition based on the purchase price as if the Company had acquired the Properties on January 1, 2013. The depreciation expense of the buildings (over 39 years) is based on the purchase price allocation in accordance with U.S. generally accepted accounting principles, as if the Company had acquired the Properties on January 1, 2013.

Amounts representing the assets and related liabilities of parking facilities and storage units paid as part of consideration for acquisition of four two-story office buildings.

The notes payable balance and related interest expense is reflective of the Company's assumption of the existing Properties debt of $14,335,000 at annual interests rate from 5.875% to 7.00%.

Gain recorded due to the property exchange.

Change in non-controlling interest portion of investments consolidated due to exchange.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Assets
Cash	$	101,000
Other assets		23,000
Land and improvements		6,275,000
Building and improvements		18,521,000
Tenant improvements		165,000
Total assets acquired		25,084,000
Liabilities
Accounts payable and accrued liabilities		58,000
Note payable		14,335,000
Total liabilities assumed		14,393,000
Net assets and liabilities acquired	$	10,691,000

The following table summarizes the estimated fair values of the assets and liabilities of certain parking and storage properties that transferred to MVP as consideration given at the acquisition date:

Assets
Investment in equity method invest – held for sale	$	(1,210,000	)
Assets held for sale		(12,123,000	)
Total assets transferred		(13,333,000	)
Liabilities
Liabilities related to assets held for sale		(4,293,000	)
Total liabilities transferred		(4,293,000	)
Net assets and liabilities transferred	$	(9,040,000	)

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SIGNATURE

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 hereunto duly authorized.

Dated: July 22, 2014

Vestin Realty Mortgage II, Inc.

By: __/S/ Tracee Gress____

Tracee Gress

Chief Financial Officer

Vestin Realty Mortgage II, Inc - FORM 8-K/A - July 22, 2014

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