DESERT CAPITAL REIT, INC.

Consolidated Statements of Operations

For the Three Months

For the Three Months

Ended March 31,

Ended December 31,

2005

2004

(Unaudited)

(Unaudited)

INTEREST INCOME:

Mortgage notes receivable

$

592,473

$

393,998

Other interest

997

142

Total interest income

593,470

394,140

INTEREST EXPENSE:

Mortgage borrowings

91,818

64,104

Other borrowings

7,345

15,420

Total interest expense

99,164

79,524

Net interest income

494,306

314,616

Provision for loan losses

19,016

17,315

Net interest income after provision for loan loss

475,291

297,301

NON-INTEREST INCOME:

Income from investment in subsidiary

748,519

126,047

Other Income

2,584

410

Total non-interest income

751,103

126,457

NON-INTEREST EXPENSE:

Management fees

77,259

29,910

Compensation expense

63,167

30,805

Insurance expense

76,500

76,500

Professional fees

116,934

83,478

Other

25,822

50,320

Total non-interest expense

359,681

271,013

Net income before taxes

866,712

152,745

Federal income tax expense for taxable REIT subsidiary

168,736

29,085

Net income (loss)

$

697,976

$

123,660

Net earnings (loss) per share - basic and diluted

0.27

0.10

See accompanying notes to financial statements.