SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  FORM 10-QSB/A
                                (Amendment No. 2)


(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, 2005

                                       Or

[ ]  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: 000-161570

                         VELOCITY ASSET MANAGEMENT, INC.
        -----------------------------------------------------------------
        (Exact name of Small Business Issuer as Specified in its Charter)

                   DELAWARE                                 65-0008442
        ---------------------------------               -------------------
          (State or Other Jurisdiction                    (IRS Employer
        of Incorporation or Organization)               Identification No.)

              48 S. Franklin Turnpike, 3rd Floor, Ramsey, NJ 07446
              ----------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (201) 760-6306
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Check whether the issuer (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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of May 17, 2005, the registrant had
15,927,506 shares of common stock outstanding.


                                EXPLANATORY NOTE

We are filing this amendment to our Quarterly Report on Form 10-QSB, originally
filed with the Securities and Exchange Commission on May 20, 2005 and as amended
on July 22, 2005, for the purpose of amending Items 1, 2 and 3, and the
certifications attached hereto as exhibits. On July 22, 2005, we filed a Current
Report on Form 8-K with respect to the revision of our accounting for certain
exchanges of debt for equity in the third quarter of 2004 (please see Note 1 to
the financial statements). The filing of this Form 10-QSB/A Amendment No. 2 is
to mark as restated the audited financial information as of December 31, 2004,
to explain such restatement in management's discussion and analysis and to
clarify that the restatement of our accounting for these exchanges indicated a
significant deficiency and a material weakness in our internal control over
financial reporting relating to such exchanges. Except as indicated above, no
other information included in this Quarterly Report on Form 10-QSB is amended by
this Form 10-QSB/A Amendment No. 2.

We have not modified or updated the disclosures in the original Quarterly Report
on /Form 10-QSB and subsequent amendment thereto except as required to give
effect to the restatement. As a result, this Quarterly Report on Form 10-QSB/A
contains forward looking information that has not been updated for events
subsequent to the date of the original filing and subsequent amendment thereto,
and all information contained in this amended Quarterly Report on Form 10-QSB/A
and the original Quarterly Report on Form 10-QSB and subsequent amendment
thereto is subject to updating and supplementing as provided in the periodic
reports that we have filed and will file with the Securities and Exchange
Commission after the original filing date of the Quarterly Report on Form 10-QSB
and subsequent amendments thereto.

<PAGE>

                    VELOCITY ASSET MANAGEMENT SERVICES, INC.

                                   FORM 10-QSB
                      For the Quarter Ended March 31, 2005

                                      Index
                                                                           Page
                                                                          Number
PART I   FINANCIAL INFORMATION

Item 1   Condensed Consolidated Balance Sheets as of December 31, 2004
         and March 31, 2005 (unaudited for March 31, 2005 period)            1

         Condensed Consolidated Statements of Income (Loss) for the
         three months ended March 31, 2005 and 2004 (unaudited)              3

         Condensed Consolidated Statements of Stockholders Equity
         (Deficit) as of December 31, 2004 and for the three months ended
         March 31, 2005 (unaudited for March 31, 2005)                       4

         Condensed Consolidated Statements of Cash Flows for the three
         months ended March 31, 2005 and 2004 (unaudited)                    5

         Notes to Condensed Consolidated Financial Statements                6

Item 2   Management's Discussion and Analysis or Plan of Operation          14

Item 3   Controls and Procedures                                            19

PART II

Item 1   Legal Proceedings                                                  20
Item 2   Changes in Securities                                              20
Item 3   Defaults Upon Senior Securities                                    20
Item 4   Submission of Matters to a Vote of Security Holders                20
Item 5   Other Information                                                  20
Item 6   Exhibits and Reports on Form 8 - K                                 20
Signature                                                                   22
Exhibit 31.1                                                                23
Exhibit 31.2                                                                25
Exhibit 32.1                                                                27
Exhibit 32.2                                                                28
<PAGE>

FORWARD LOOKING STATEMENTS

This Form 10-QSB and other reports filed by the Company from time to time with
the Securities and Exchange Commission (collectively the "Filings") contain or
may contain forward looking statements and information that are based upon
beliefs of and information currently available to the Company's management as
well as estimates and assumptions made by the Company's management.

When used in the Filings the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions as they relate to
the Company or the Company's management identify forward looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations and any businesses that may be
acquired by the Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
intended or planned.

                                       i
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1   Financial Statements


                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
ASSETS                                                       March 31,     December 31,
                                                               2005           2004
                                                                            (Restated)
                                                           ------------   ------------
<S>                                                        <C>            <C>

CURRENT ASSETS
  Cash and Cash Equivalents                                $  1,758,758   $  1,423,123
  Accounts Receivable                                            34,316        815,251
  Property Inventory Owned                                    1,763,261      2,150,860
  Deposits on Properties                                        122,000        120,000
  Tax Certificates Held and Accrued Interest Receivable,
   net of discounts                                             679,040        702,117
  Finance Receivables                                         7,195,017      3,237,852
  Other Current Assets                                           68,611             --
                                                           ------------   ------------

    Total Current Assets                                     11,621,003      8,449,203
                                                           ------------   ------------
PROPERTY AND EQUIPMENT, net of accumulated
 depreciation                                                    44,018         47,198
                                                           ------------   ------------
OTHER ASSETS
  Deferred Income Tax Asset - Non-Current                       178,000        221,500
  Other Asset                                                   213,889         75,000
                                                           ------------   ------------

    Total Other Assets                                          391,889        296,500
                                                           ------------   ------------

    Total Assets                                           $ 12,056,910   $  8,792,901
                                                           ============   ============
</TABLE>

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

                                       1
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

                      CONDENSED CONSOLIDATED BALANCE SHEETS


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)               March 31,     December 31,
                                                               2005           2004
                                                                           (Restated)
                                                           ------------   ------------

<S>                                                        <C>            <C>
CURRENT LIABILITIES
  Accrued Expenses                                         $    103,285   $      1,937
  Short-Term Borrowings Under Line of Credit                  3,178,726             --
  Current Portion of Long-Term Debt                             250,000        250,000
  Income Taxes Payable                                          (18,187)        13,550
  Deferred Income Tax Liability - Current                        16,000         11,800
  Current Portion of Obligation Under Capital Lease             590,965        709,157
                                                           ------------   ------------

    Total Current Liabilities                                 4,120,789        986,444
                                                           ------------   ------------

    Total Liabilities                                         4,120,789        986,444
                                                           ------------   ------------
STOCKHOLDERS' EQUITY (DEFICIT)
  Common Stock, $0.001 par value, 40,000,000 shares
   Authorized, 15,927,689 and 15,794,348 shares Issued
   and Outstanding, respectively                                 15,928         15,795
  Additional Paid In Capital                                 10,744,762     10,680,133
  Retained Equity (Deficit)                                  (2,824,569)    (2,889,471)
                                                           ------------   ------------

  Total Stockholders' Equity (Deficit)                        7,936,121      7,806,457
                                                           ------------   ------------

    Total Liabilities and Stockholders' Equity (Deficit)   $ 12,056,910   $  8,792,901
                                                           ============   ============
</TABLE>

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

                                       2
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

               CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

                                                       For the Three Months Ended
                                                                March 31,
                                                      ----------------------------
                                                          2005            2004
                                                      ------------    ------------
<S>                                                   <C>             <C>
REVENUES
  Sale of Real Property                               $  1,216,478    $    163,366
  Collections on Credit Card Receivables                   498,855         161,378
  Interest Income - Tax Certificates Held and Other         60,258          53,573
                                                      ------------    ------------

    Total Revenues                                       1,775,591         378,317
                                                      ------------    ------------
OPERATING EXPENSES
  Cost of Real Property                                    991,196         199,124
  Consulting Fees                                               --           7,611
  Professional Fees                                        356,249          50,746
  General and Administrative Expenses                      251,109          83,578
                                                      ------------    ------------

    Total Operating Expenses                             1,598,554         341,059
                                                      ------------    ------------

    Income from Operations                                 177,037          37,258
                                                      ------------    ------------
OTHER INCOME (EXPENSE)
  Interest Expense                                          (8,103)        (98,668)
  Other Income                                                  --          24,337
                                                      ------------    ------------

    Total Other Income (Expense)                            (8,103)        (74,331)
                                                      ------------    ------------

Income (Loss) Before Tax Provision                         168,934         (37,073)

Provision for Income Taxes                                 104,032              --
                                                      ------------    ------------

Net Income (Loss)                                     $     64,902    $    (37,073)
                                                      ============    ============

Weighted Average Common Shares - Basic                  15,923,244      63,333,345
                                                      ============    ============

Net Income (Loss) per Common Share - Basic            $       0.00    $      (0.00)
                                                      ============    ============

Weighted Average Common Shares - Diluted                19,838,203      63,333,345
                                                      ============    ============

Net Income (Loss) per Common Share - Diluted          $       0.00    $      (0.00)
                                                      ============    ============

</TABLE>

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

                                       3
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS TELE-OPTICS, INC.)

            CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT) /
                         STOCKHOLDERS' EQUITY (DEFICIT)
                    For the Three Months Ended March 31, 2005


                                                              Common Stock                                           Total
                                                        -------------------------    Additional    Retained      Stockholders'
                                                         Number of                    Paid in       Earnings        Equity
                                                          Shares       Par Value      Capital       (Deficit)      (Deficit)
                                                        -----------   -----------   -----------    -----------    -----------
<S>                                                      <C>          <C>           <C>            <C>            <C>
BALANCES, January 1, 2005 - As Restated (See Note 1)     15,794,348   $    15,795   $10,680,133    $(2,889,471)   $ 7,806,457

Private Offering of Up to 3,500,000 Units
Each Unit is comprised of one share of common
stock and a warrant to purchase one-fifth of one
share of common stock for $2.50 per share within
the next five years:

   January 5, 2005 - Fourth Tranche Closing                 133,350           133       199,891             --        200,024

Commissions Paid in Conjunction with Private Offering            --            --      (135,262)            --       (135,262)

Net Income                                                       --            --            --         64,902         64,902
                                                        -----------   -----------   -----------    -----------    -----------


BALANCES, March 31, 2005 (As Restated)                   15,927,698   $    15,928   $10,744,762    $(2,824,569)   $ 7,936,121
                                                        ===========   ===========   ===========    ===========    ===========
</TABLE>


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

                                       4
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                 For the Three Months Ended
                                                                         March 31,
                                                                ---------------------------
                                                                    2005           2004
                                                                ------------   ------------
<S>                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income (Loss)                                             $     64,903   $    (94,356)
  Adjustments to reconcile net income (loss) to net cash
   used by operating activities
   Depreciation and Amortization                                      18,186             --
   (Increase) Decrease in:
     Accounts Receivable                                             780,935        193,024
     Tax Certificates Held and Accrued Interest Receivable,
      Net of Discounts                                                23,077        116,263
     Property Inventory Owned                                        387,597       (719,614)
     Finance Receivables                                          (3,957,165)        52,078
     Deposits on Properties                                           (2,000)        55,000
     Other Current Assets                                            (68,611)       (13,000)
     Deferred Income Tax Asset - Non-Current                          43,500             --
     Other Asset                                                    (150,000)            --
   Increase (Decrease) in:
     Accounts Payable                                                     --         39,999
     Accrued Expenses                                                101,349        (16,818)
     Deferred Income Tax Liability - Current                           4,200             --
     Income Taxes Payable                                            (31,737)            --
                                                                ------------   ------------
       Net Cash Used by Operating Activities                      (2,785,766)      (387,424)
                                                                ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Acquisition of Property and Equipment                            (3,895)            --
     Cash Received from Reverse Acquisition                               --            452
                                                                ------------   ------------
       Net Cash Provided from (Used by) Investing Activities          (3,895)           452
                                                                ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  New Borrowings:
     Short-Term                                                           --        200,000
     Long-Term                                                     3,178,726             --
  Debt Reduction:
     Short-Term                                                     (118,192)            --
     Long-Term                                                            --       (428,796)
  Proceeds Received from Private Placement Stock Sales               200,024        500,000
  Commissions Paid on Private Placement                             (135,262)            --
                                                                ------------   ------------
       Net Cash Provided from Financing Activities                 3,125,296        271,204
                                                                ------------   ------------

Net Increase (Decrease) in Cash and Cash Equivalents                 335,635       (115,768)

Cash and Cash Equivalents, Beginning of Period                     1,423,123        540,427
                                                                ------------   ------------

Cash and Cash Equivalents, End of Period                        $  1,758,758   $    424,659
                                                                ============   ============
</TABLE>

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

                                       5

<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY

The interim condensed consolidated financial statements furnished herein reflect
all adjustments which were, in the opinion of management, necessary to present
fairly the financial position, results of operations, and cash flows at March
31, 2005 and for all periods presented. All adjustments made in the interim
period were of a normal recurring nature. Certain footnote disclosures which
would substantially duplicate the disclosures contained in the audited financial
statements and notes thereto included in the annual report of Velocity Asset
Management, Inc. and its Subsidiaries (the "Company") for the year ended
December 31, 2004 have been omitted.

Restatement
-----------

We have restated the consolidated financial statements for the year ended
December 31, 2004. This restatement consisted of an adjustment to include a loss
on debt extinguishment recorded in the third quarter of 2004 to comply with APB
26, "Early Extinguishment of Debt." The restatement had no impact on net cash
used in operating activities in the statement of cash flows for the year ended
December 31, 2004.

The addition of the loss on debt extinguishment resulted from the need to apply
the accounting principles in paragraph 20 of APB 26 in determining the
difference between the reacquisition price and the net carrying amount of the
extinguished debt related to the August 12, 2004 exchange in which $3,676,252 in
outstanding debt was exchanged for 4,084,724 shares of the Company's Common
Stock at $0.90 per share. After further evaluation, we determined that APB 26
requires that a loss be computed using the August 12, 2004 OTCBB market price of
$1.60 for VCYA.ob common stock, resulting in a non-cash loss of $2,859,307 due
to the difference between the $1.60 OTCBB market price and the $0.90 per share
used in the negotiated exchange. This loss generates a permanent timing
difference between book and tax reporting.

As a result of this prior year restatement, we have restated the condensed,
consolidated financial statements for the three months ended March 31, 2005. The
restatement consists of adjusting the beginning balances for both additional
paid in capital and retained earnings (deficit). The effect of this adjustment
was an increase in additional paid in capital of $2,859,307 and a decrease to
retained earnings (deficit) of $(2,859,307). The restatement had not impact on
our net income, earnings per share, cash position and revenue as previously
reported for the three month period ended March 31, 2005.

Investments and Revenue Recognition - Property Inventory Owned
--------------------------------------------------------------

Property Inventory Owned consists of investments in real property purchased by
the Company for resale and is carried at the lower of cost or market value. This
includes the cost to purchase the property and repairs or other costs required
to get the property ready for resale. The Company recognizes income and related
expenses from the sale of real property investments at the date the sale closes.

Investment in Revenue Recognition - New Jersey Municipal Tax Liens
------------------------------------------------------------------

The Company records its investments in New Jersey municipal tax liens at cost
plus accrued interest. Interest revenue is recognized on the accrual basis of
accounting, based on the face value of the tax certificates at the stated rate
of 18% per annum. The initial portfolios of liens were purchased at a 2%
discount. As required by Accounting Principals Board, Opinion No. 21, "Interest
on Receivables and Payables," the discount is recognized over the estimated life
of the liens using the interest method.

                                       6
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY (Continued)

Investments and Revenue Recognition - Consumer Receivable Portfolios
--------------------------------------------------------------------

The Company purchases receivable portfolios at a substantial discount from their
face amount due to a deterioration of credit quality between the origination and
the Company's acquisition of the receivables. Income is recognized using either
the interest method or cost recovery method. Upon acquisition, the Company
reviews each loan portfolio to determine whether each such receivable is to be
accounted for individually or whether such receivables will be assembled into
static pools of receivables based on common risk characteristics. Once the
static loan pools are created, management estimates the future anticipated cash
flows for each pool. If management can reasonably estimate the expected timing
and amount to future cash flows the interest method is applied. However, if the
expected future cash flows cannot be reasonably estimated, the Company uses the
cost recovery method.

Prior to January 1, 2005, the Company accounted for its investment in consumer
receivable portfolios using the interest method under the guidance of Practice
Bulletin 6, "Amortization of Discounts on Certain Acquired Loans." Effective
January 1, 2005, the Company adopted and began to account for its investment in
consumer receivable portfolios using the interest rate method under the
guidance of American Institute of Certified Public Accountants ("AICPA)
Statement of Position ("SOP") 03-03, "Accounting for Loans or Certain Securities
Acquired in a Transfer." This Statement of Position ("SOP") addresses accounting
for differences between contractual cash flows and cash flows expected to be
collected from an investor's initial investment in loans or debt if those
differences are attributable, at least in part, to credit quality. Increases in
expected cash flows should be recognized prospectively through adjustment of
Internal Rate of Return ("IRR") while decreases in expected cash flows should be
recognized as impairment.

Under both the guidance of SOP 03-3 and PB-6, as amended, when expected cash
flows are higher than prior projections, the increase in expected cash flows
results in an increase in the IRR and therefore, the effect of the cash flow
increase is recognized as increased revenue prospectively over the remaining
life of the affected pool. However, when expected cash flows are lower than
prior projections, SOP 03-3 requires that the expected decrease be recognized as
impairment by decreasing the carrying value of the affected pool (rather than
lower the IRR) so that the pool will amortize over its expected life using the
original IRR. A pool can become fully amortized (zero carrying balance on the
balance sheet) while still generating cash collections. In this case, all cash
collections are recognized as revenue when received.

Under the cost recovery method, no revenue is recognized until the Company has
fully collected the cost of the portfolio, or until such time that the Company
considers the collections to be probable and estimable and begins to recognize
income based on the interest method as described above. At March 31, 2005, the
Company had no consumer receivable portfolios accounted for under the cost
recovery method.

The Company establishes valuation allowances for all acquired receivables
subject to SOP 03-03 to reflect only those losses incurred after acquisition
(that is, the present value of cash flows initially expected at acquisition that
are no longer expected to be collected). Valuation allowances are established
only subsequent to acquisition of the receivables. At March 31, 2005, the
Company had no valuation allowance on its finance receivables. Prior to January
1, 2005, in the event that estimated future cash collections would be inadequate
to amortize the carrying balance, an impairment charge would be taken with a
corresponding write-off of the receivable balance.

                                       7
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY (Continued)

Income Taxes
------------

The Company follows the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.

Stock Based Compensation
------------------------

The Company has adopted the disclosure requirements of SFAS No. 148, "Accounting
for Stock-Based Compensation -- Transition and Disclosure" effective December
2002. SFAS 148 amends FASB Statement No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based compensation
and also amends the disclosure requirements of SFAS 123 to require prominent
disclosures in both annual and interim financial statements about the methods of
accounting for stock-based employee compensation and the effect of the method
used on reported results.

Additionally, regarding the treatment of non-employee stock based compensation,
the Company followed the guidance of EITF 96-18, "Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services".

Recent Accounting Pronouncements
--------------------------------

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123 (revised 2004), "Share Based
Payment" ("SFAS 123R"). This statement revises and supersedes FASB Statement No.
123, "Accounting for Share-Based Compensation" and requires that the cost of all
share-based payments be recognized in the financial statements. For public
entities that file as small business issuers--as of the beginning of the first
interim or annual reporting period that begins after December 15, 2005. The
effective date for implementation of SFAS 123R for the Company will be January
1, 2006. For the three months ended March 31, 2005 and 2004 the company had no
equity based compensation.

NOTE 2 - INVESTMENTS

Investments in Real Property
----------------------------

As discussed in Note 1, investments in real property are made at a discount to
fair market value with the focus on acquiring the property for resale or to
perfect the partial interest and/or clouded title for resale.

                                       8
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 2 - INVESTMENTS (Continued)

Investments in Real Property (Continued)
----------------------------------------

Investments in real property consist of the following:

                                                  Three Months   Three Months
                                                     Ended          Ended
                                                    March 31,      March 31,
                                                      2005           2004
                                                  ------------   ------------
   Total Property Inventory                       $  1,382,378   $  1,136,159
   Assignments and Judgments                           380,883        723,125
                                                  ------------   ------------

      Total Investment in Real Property           $  1,763,261   $  1,859,284
                                                  ============   ============

Investments in Municipal Tax Liens
----------------------------------

                                                  Three Months   Three Months
                                                     Ended          Ended
                                                    March 31,      March 31,
                                                      2005           2004
                                                  ------------   ------------
   Tax Lien Certificates                          $    409,932   $    585,500
   Discount on Purchase                                     --         (4,925)
   Accrued Interest                                    269,108        312,235
                                                  ------------   ------------

      Total Tax Certficates, Net of Discounts     $    679,040   $    892,810
                                                  ============   ============

NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS

As of March 31, 2005 and 2004, the Company had $7,195,017 and $1,715,089,
respectively, remaining of consumer receivable portfolios. Changes in finance
receivables are at March 31, 2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                                        Three Months    Three Months
                                                           Ended           Ended
                                                          March 31,       March 31,
                                                            2005            2004
                                                        ------------    ------------
<S>                                                     <C>             <C>
   Balance at beginning of period                       $  3,237,852    $  1,767,166
   Acquisitions and Capitalized Costs, net of Returns      4,265,931          35,833

   Cash Collections                                         (807,621)       (249,288)
   Income Recognized on Consumer Receivables                 498,855         161,378
                                                        ------------    ------------
      Cash Collections Applied to Principal                 (308,766)        (87,910)
                                                        ------------    ------------

      Total Consumer Receivable Portfolios              $  7,195,017    $  1,715,089
                                                        ============    ============
</TABLE>

                                       9
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS (Continued)

As of March 31, 2005 the company had $7,195,017 in finance receivables. Based
upon managements current estimation of future cash collections, principal
reductions will be as follows:

   March 31, 2006                                                $ 4,019,928
   March 31, 2007                                                  2,765,892
   March 31, 2008                                                    269,376
   March 31, 2009                                                    110,944
   March 31, 2010                                                     26,844
   Thereafter                                                          2,033
                                                                 -----------

      Total                                                      $ 7,195,017
                                                                 ===========

The accretable yield represents the amount of income the Company can expect to
generate over the remaining life of its existing portfolios based on estimated
cash flows as of March 31, 2005. Changes in the accretable yield are as follows:

                                                                Three Months
                                                                   Ended
                                                                  March 31,
                                                                    2005
                                                                ------------
   Balance at Beginning of Period                               $  2,879,823
   Income Recognized on Consumer Receivable Portfolios              (498,855)
   Additions                                                       7,197,837
   Reclassification From Nonaccretable Difference                         --
                                                                ------------

      Balance at End of Period                                  $  9,578,805
                                                                ============

NOTE 4 - SHORT TERM BORROWINGS UNDER LINES OF CREDIT

The Company had a $2,000,000 line of credit with a shareholder, which was due to
expire May 2005, for the purpose of financing the Company's investments in real
property. On August 12, 2004, the above line of credit was exchanged for shares
of the Company's common stock, par value $.001 per share, at a rate of one share
per $0.90 of the obligation. The total debt exchanged, including accrued
interest of $79,489, totaled $984,966. The effective date of this exchange for
equity is retroactive to July 1, 2004. Interest at 10% per annum was due upon
sale of the real property, based on the number of days the funds were committed
to the investment. Each investment was presented on a case-by-case basis for
funding approval and, if approved, the asset purchased was assigned as
collateral to the shareholder for the funds advanced until the property was
sold. Funds advanced were held and disbursed from an attorney trust account. At
March 31, 2005 and 2004, there was $-0- and $1,094,523, respectively, available
under this line of credit.

On January 27, 2005 (the "Closing Date"), the Company's wholly owned subsidiary,
Velocity Investments, LLC ("Velocity"), entered into a Loan and Security
Agreement (the "Loan Agreement") with Wells Fargo Foothill, Inc., a California
corporation (the "Lender"), pursuant to which the Lender agreed to provide
Velocity with a two year $12,500,000 credit facility to finance the acquisition
of individual pools of unsecured

                                       10
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 4 - SHORT TERM BORROWINGS UNDER LINES OF CREDIT (Continued)

consumer receivables that are approved by the Lender under specific eligibility
criteria set forth in the Loan Agreement.

On the Closing Date, the following agreements were also entered into with the
Lender: a Continuing Guaranty, under which the Company provides a secure
guaranty of Velocity's obligations under the Loan Agreement; a Security and
Pledge Agreement, by and among the Registrant and the Lender, under which the
Company pledged all of the Company's assets to secure the credit facility; and a
Subordination Agreement, by and among the Registrant, the Lender and Velocity,
under which the Company agreed to subordinate certain sums of the intercompany
payable due and owing from Velocity to the payments owed under the credit
facility.

Pursuant to the Loan Agreement, the Lender has agreed to advance to Velocity up
to $12,500,000 to be used to finance up to 60% of the purchase price of
individual pools of unsecured consumer receivables that are approved by the
Lender under specific eligibility criteria set forth in the Loan Agreement. The
interest rate on the loan is 3.50% above the prime rate of Wells Fargo Bank,
N.A. The maturity date of the facility is January 27, 2008. As of March 31,
2005, the Company had $3,178,726 outstanding on the line.

Interest expense for the three month periods ended March 31, 2005 and 2004 was
$8,103 and $98,668, respectively.

NOTE 5 - RELATED PARTY TRANSACTIONS

In connection with the Company's independent consulting agreement with The Del
Mar Consulting Group Inc. agreement, two of the Company's executive officers, W.
Peter Ragan, Sr. and W. Peter Ragan, Jr. granted an option to RB & AJ Associated
Holdings, Inc., a corporation majority owned by the President of the Consultant,
to purchase $13,600 warrants owned by the executive officers to purchase an
aggregate of 85,000 (42,500 from each) shares of common stock at $1.04 per
share. In addition, the executive officers granted an employee of the Consultant
an option to purchase $2,400 warrants owned by the executive officers to
purchase an aggregate of 15,000 (7,500 from each) share of common stock at $1.04
per share. Both of these options were exercised on March 15, 2005.

The Company engages Ragan & Ragan, P.C., an entity owned by Messrs. Ragan &
Ragan, to pursue legal collection of our receivable portfolios with respect to
obligors and properties located in the State of New Jersey. The fee arrangements
between our subsidiaries Velocity, J. Holder and VOM and Ragan & Ragan, P.C.,
each dated as of January 1, 2005, have been reviewed and approved by all of
members of a committee appointed by the Board of Directors other than Mr. Ragan,
Sr. who abstained. John C. Kleinert and James J. Mastriani comprised the
committee.

Under the Retainer Agreement for Legal Services by and between Velocity
Investments, LLC and Ragan & Ragan, P.C., the Company paid legal contingency
fees to Ragan & Ragan, P.C. representing 25% of gross legal collections on
consumer receivable portfolios. In addition, under a separate Retainer Agreement
for Legal Services by and between J. Holder and VOM, LLC and Ragan & Ragan,
P.C., the Company paid legal contingency fees to Ragan & Ragan, P.C. Total legal
fees for the three month periods ended March 31,

                                       11
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)

2005 and 2004 were as follows:

                                                   Three Months   Three Months
                                                      Ended          Ended
                                                     March 31,      March 31,
                                                       2005           2004
                                                   ------------   ------------
   Legal Services Paid to Ragan & Ragan, PC        $    223,437   $     42,906
                                                   ============   ============

NOTE 6 - OUTSTANDING WARRANTS

At March 31, 2005, the Company had issued outstanding warrants to purchase
3,915,839 shares of its common stock at a prices ranging from $1.04 to $2.50 per
share. A portion of the warrants (3,199,500 shares of common stock, as adjusted
for the 13:1 reverse stock split - see Note 13) were granted pursuant to the
Merger Agreement effective February 3, 2004 and expire after a period of five
years. The balance of the warrants (716,339 shares of common stock) were grant
pursuant to private offerings and/or in lieu of services rendered and expire
after a period of five years.

NOTE 7 - STOCK BASED COMPENSATION

Stock Based Compensation to Non-Employees
-----------------------------------------

On January 30, 2004, we entered into a Business Advisory Agreement with Lomond
International, Inc., ("Lomond") an unrelated corporation, pursuant to which we
issued warrants exercisable for a five year period to purchase an aggregate of
200,000 shares of common stock at an exercise price of $1.04 per share in
exchange for business advisory services for a period of one year. The principal
service of which was our acquisition of Tele - Optics, Inc. on February 3, 2004.
As required by EITF 96-18, the warrants were valued as of the date in which
significant performance required by the contract was completed. The fair value
of the common stock at the measurement date was $0.08 per share, the closing bid
price of Velocity Asset Management, Inc.'s common stock reported by the OTC
Bulletin Board on February 3, 2005. Using the Black-Scholes model the total
compensation charge for the service contract with Lomond was $5,134 and the fair
value of each equity instrument at the February 3, 2004 measurement date is
$0.03. The expense recorded for this contract is $5,134 and is included in
consulting fee expense.

Stock Based Compensation to Non-Employees
-----------------------------------------

On December 16, 2004, the Company entered into an independent consulting
agreement with The Del Mar Consulting Group, Inc., an unrelated California
corporation ("Del Mar"). The Consultant agreed to provide specified public
relations services for a period of one year. As compensation for such services
the Company agreed to issue as a commencement bonus, 100,000 shares of common
stock and a non-qualified stock option exercisable for five years to purchase
250,000 shares of common stock at a price of $2.50 per share. The total
compensation charge for the common stock issued to Del Mar was $150,000 and the
fair value of the common stock at the December 16, 2004 measurement date was
$1.50 per share, the closing bid price of Velocity Asset Management, Inc.'s
common stock reported by the OTC Bulletin Board on December 16,

                                       12
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)


NOTE 7 - STOCK BASED COMPENSATION (Continued)

Stock Based Compensation to Non-Employees (Continued)
-----------------------------------------------------

2004. As required by EITF 96-18, the non-qualified stock option was valued as of
the inception of the contract. Using the Black-Scholes model the total
compensation charge for the non-qualified stock option issued under the service
contract with Del Mar was $249,041 and the fair value of each share subject to
the option at the December 16, 2004 measurement date is $1.00. The expense
recorded for this contract is $399,041 and is included in consulting fee
expense.

Neither contract contains a "substantial incentives for non-performance" as that
term is defined under EITF 96-18, "Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services", or provisions for the forfeiture of the warrants/option in
the event of non-performance.

The Company did not issue any warrants or options as stock based compensation
for the three months ended March 31, 2005.

NOTE 8- SUBSEQUENT EVENTS

On April 15, 2005, the Company sold three promissory notes in the principal
amount of $100,000, $150,000 and $100,000 each to three accredited investors in
a private placement. Each of the notes bears interest at the rate of 7% per
annum and interest is payable in quarterly installments commencing June 30,
2005. The entire principal of each note is payable on April 15, 2006 unless the
holder thereof gives written notice to us 90 days prior to April 15, 2006 that
it elects to extend his, her or its note, in which event the entire principal
thereof is payable on April 15, 2007.

                                       13
<PAGE>

Item 2   Management's Discussion and Analysis or Plan of Operation.


Restatement

         We have restated the consolidated financial statements for the year
ended December 31, 2004. This restatement consisted of an adjustment to include
a loss on debt extinguishment recorded in the third quarter of 2004 to comply
with APB 26, "Early Extinguishment of Debt." The restatement had no impact on
net cash used in operating activities in the statement of cash flows for the
year ended December 31, 2004.

         The addition of the loss on debt extinguishment resulted from the need
to apply the accounting principles in paragraph 20 of APB 26 in determining the
difference between the reacquisition price and the net carrying amount of the
extinguished debt related to the August 12, 2004 exchange in which $3,676,252 in
outstanding debt was exchanged for 4,084,724 shares of the Company's Common
Stock at $0.90 per share. After further evaluation, we determined that APB 26
requires that a loss be computed using the August 12, 2004 OTCBB market price of
$1.60 for VCYA.ob common stock, resulting in a non-cash loss of $2,859,307 due
to the difference between the $1.60 OTCBB market price and the $0.90 per share
used in the negotiated exchange. This loss generates a permanent timing
difference between book and tax reporting.

         As a result of this prior year restatement, we have restated the
condensed, consolidated financial statements for the three months ended March
31, 2005. The restatement consists of adjusting the beginning balances for both
additional paid in capital and retained earnings (deficit). The effect of this
adjustment was an increase in additional paid in capital of $2,859,307 and a
decrease to retained earnings (deficit) of ($2,859,307). The restatement had not
impact on our net income, earnings per share, cash position and revenue as
previously reported for the three month period ended March 31, 2005.


Overview
--------

         The Company, previously known as Tele-Optics, Inc., was organized in
the State of Delaware in December 1986. The Company was inactive until February
3, 2004, when the Company acquired STB, Inc., a New Jersey corporation. Since
that acquisition, the Company has engaged in the business of acquiring, managing
and servicing distressed assets consisting of consumer receivable portfolios,
interests in distressed real estate and tax lien certificates. The business is
carried on by the Company's three wholly owned subsidiaries: Velocity
Investments, LLC, which invests in consumer debt purchased on the secondary
market at a discount from face value and then liquidates these debt portfolios
through legal collection means; J. Holder, Inc., which invests in distressed
real property interests, namely, real property being sold at sheriff's
foreclosure and judgment execution sales, defaulted mortgages, partial interests
in real property and the acquisition of real property with clouded title; and
VOM, LLC, which invests in New Jersey municipal tax liens with the focus on
profit through legal collection and owned real estate opportunities presented by
the current tax environment.

         Our consumer receivable portfolios are purchased at a discount from
face or fair market value. Our interests in distressed real property are
purchased following an extensive due diligence process concerning the legal
status of each property and a market analysis of the value of the property or
underlying property. Our tax lien certificates are purchased at a discount from
par following a due diligence analysis similar to that performed in connection
with the purchase of interests in distressed real property. Our profitability
depends upon our ability to purchase and collect on a sufficient volume of our
consumer receivables, the sale of our interests in distressed real property and
the collection of taxes and accrued interest on our tax lien certificates to
generate revenue that exceeds our cost.

Critical Accounting Policies

         Our discussion and analysis of financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States. The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the fair value of finance contract receivables and the reported
amounts of revenues and expenses. On an on-going basis, we evaluate our
estimates, including those related to the recognition of revenue, future
estimated cash flows and income taxes. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results could differ from those
estimates. We believe the following critical accounting policies affect the
significant judgment and estimates used in the preparation of our consolidated
financial statements.

                                       14
<PAGE>

     Purchased Receivable Portfolios and Revenue Recognition

         We purchase pools of consumer receivable accounts at a substantial
discount from their face amounts which are usually discounted from 75% to 99%
and are recorded at our acquisition cost. The pools of consumer receivables
contain accounts that have experienced deterioration of credit quality between
origination and our acquisition of the loans. The discounted amount paid for a
pool of consumer receivables accounts reflects our determination that it is
probable we will be unable to collect all amounts due according to the
contractual terms of the accounts. At acquisition, we review the consumer
receivable accounts in the portfolio to determine whether there is evidence of
deterioration of credit quality since origination and if it is probable that we
will be unable to collect all amounts due according to the loan's contractual
terms. If both conditions exist, we determine whether each such loan is to be
accounted for individually or whether such loans will be assembled into pools of
loans based on common risk characteristics. We consider expected prepayments and
estimate the amount and timing of undiscounted expected principal, interest and
other cash flows for each acquired portfolio of loans and subsequently
aggregated pools of loans. We determine the excess of the pool's scheduled
contractual principal and contractual interest payments over all cash flows
expected at acquisition as an amount that should not be accreted (nonaccretable
difference) based on our proprietary acquisition models. The remaining amount,
representing the excess of the loan's cash flows expected to be collected over
the amount paid, is accreted into income recognized on finance receivables over
the remaining life of the loan or pool (accretable yield).

         Prior to January 1, 2005, we accounted for our investment in finance
receivables using the interest method under the guidance of Practice Bulletin 6,
"Amortization of Discounts on Certain Acquired Loans." In accordance with
Practice Bulletin 6, revenue was recognized based on our anticipated cash
collections and its estimated rate of return over the useful life of the pool.
Effective January 1, 2005, we adopted and began to account for our investment in
finance receivables using the interest method under the guidance of American
Institute of Certified Public Accountants ("AICPA") Statement of Position
("SOP") 03-03, "Accounting for Loans or Certain Securities Acquired in a
Transfer." For loans acquired in fiscal years beginning prior to December 15,
2004, Practice Bulletin 6 is still effective; however, Practice Bulletin 6 was
amended by SOP 03-03 as described further in this note. For loans acquired in
fiscal years beginning after December 15, 2004, SOP 03-03 is effective. In
accordance with SOP 03-03 (and the amended Practice Bulletin 6), revenue is
recognized based on our anticipated cash collections and its estimated rate of
return over the useful life of the pool. Revenue is recognized to the extent
that collections exceed the estimated rate of return taken on the portfolio as a
whole. Each pool's estimated useful life is different, but each pool is
generally amortized over a period of between 48 and 60 months.

         We believe that the amounts and timing of cash collections for our
purchased receivables can be reasonably estimated and, therefore, we utilize the
interest method of accounting for our purchased receivables prescribed by SOP
03-03 (and the amended Practice Bulletin 6). This belief is predicated on our
historical results and our knowledge of the industry. Each static pool of
receivables is statistically modeled to determine its projected cash flows based
on historical cash collections for pools with similar risk characteristics. SOP
03-03 (and the amended Practice Bulletin 6) requires that the accrual basis of
accounting be used at the time the amount and timing of cash flows from an
acquired portfolio can be reasonably estimated and collection is probable.

         Where the future cash collections of a portfolio cannot be reasonably
estimated we use the cost recovery method as prescribed under SOP 03-03 (and the
amended Practice Bulletin 6). Under the cost recovery method, no revenue is
recognized until we have fully collected the initial acquisition cost of the
portfolio. We have no consumer receivable portfolios under the cost recovery
method.

         Under SOP 03-03 (and the amended Practice Bulletin 6), static pools of
accounts are established. These pools are aggregated based on certain common
risk criteria. Each static pool is recorded at cost, which includes certain
direct costs of acquisition paid to third parties, and is accounted for as a
single unit for the recognition of income, principal payments and loss
provision. Once a static pool is established, individual receivable accounts are
not added to the pool (unless replaced by the seller) or removed from the pool
(unless sold or returned to the seller). An internal rate of return is
established for each static pool of receivables based on the projected cash
flows and applied to the balance of the static pool. The resulting revenue
recognized is based on the internal rate of return applied to the remaining

                                       15
<PAGE>

balance of each static pool of accounts. Each static pool is analyzed quarterly
to assess the actual performance compared to the expected performance. Under SOP
03-03 (and the amended Practice Bulletin 6), to the extent there are differences
in actual performance versus expected performance, increases in expected cash
flows should be recognized prospectively through adjustment of internal rate of
return while decreases in expected cash flows should be recognized as
impairment. Under both the guidance Statement of Position 03-03 (and the amended
Practice Bulletin 6), when expected cash flows are higher than prior
projections, the increase in expected cash flows results in an increase in the
internal rate of return and therefore, the effect of the cash flow increase is
recognized as increased revenue prospectively over the remaining life of the
affected pool. However, when expected cash flows are lower than prior
projections, Statement of Position 03-03 requires that the expected decrease be
recognized as an impairment by decreasing the carrying value of the affected
pool (rather than lower the internal rate of return) so that the pool will
amortize over its expected life using the original internal rate of return.

         Generally, these portfolios are expected to amortize over a five year
period based on our estimated future cash flows. Historically, a majority of the
cash we ultimately collect on a portfolio is received during the first 36 months
after acquiring the portfolio, although additional amounts are collected over
the remaining period. The estimated future cash flows of the portfolios are
reevaluated quarterly.

         The internal rate of return is estimated and periodically recalculated
based on the timing and amount of anticipated cash flows using our proprietary
collection models. A pool can become fully amortized (zero carrying balance on
the balance sheet) while still generating cash collections. In this case, all
cash collections are recognized as revenue when received. Additionally, we use
the cost recovery method when collections on a particular pool of accounts
cannot be reasonably predicted. Under the cost recovery method, no revenue is
recognized until we have fully collected the cost of the portfolio, or until
such time that we consider the collections to be probable and estimable and
begin to recognize income based on the interest method as described above.

         We establish valuation allowances for all acquired loans subject to SOP
03-03 to reflect only those losses incurred after acquisition (that is, the
present value of cash flows initially expected at acquisition that are no longer
expected to be collected). Valuation allowances are established only subsequent
to acquisition of the loans. At March 31, 2005, we had no valuation allowance on
our finance receivables. Prior to January 1, 2005, in the event that estimated
future cash collections would be inadequate to amortize the carrying balance, an
impairment charge would be taken with a corresponding write-off of the
receivable balance.

         Application of SOP 03-03 (and the amended Practice Bulletin 6) requires
the use of estimates to calculate a projected internal rate of return for each
pool. These estimates are based on historical cash collections. If future cash
collections are materially different in amount or timing than projected cash
collections, earnings could be affected either positively or negatively. Higher
collection amounts or cash collections that occur sooner than projected cash
collections will have a favorable impact on yield and revenues. Lower collection
amounts or cash collections that occur later than projected cash collections
will have an unfavorable impact on internal rate of return and revenues.

Stock Based Compensation

         We have adopted the disclosure requirements of SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure" effective
December 2002. SFAS 148 amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
compensation and also amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
methods of accounting for stock-based employee compensation and the effect of
the method used on reported results.

                                       16
<PAGE>

         Additionally, regarding the treatment of non-employee stock based
compensation, we have followed the guidance of EITF 96-18, "Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services".

Results of Operations
---------------------

         Total revenues for the three month period ended March 31, 2005 (the
"2005 First Quarter") were $1,775,591 as compared to $378,317 during the three
month period ended March 31, 2004 (the "2005 First Quarter"), representing a
369% increase. The increase in revenues was primarily attributable to an
increase in collections on consumer receivables at our Velocity Investments
subsidiary and an increase in revenues from the sale of real property at our J.
Holder subsidiary. Revenues from the sale of real property, the collection of
consumer receivables and the collection of taxes and interest derived from tax
lien certificates owned by the Company represented approximately 68.5%, 28.1%
and 3.4%, respectively, during the 2005 First Quarter as compared to 43.2%,
42.7%, and 14.1% during the 2004 First Quarter. Management does not believe that
the mix of revenues on a comparative basis is necessarily indicative of any
trend but is more related to factors beyond the Company's control, such as
maturity dates, court decisions and other similar events that affect the timing
of revenue recognition.

Operating Expenses
------------------

         Total operating expenses for the 2005 First Quarter were $1,598,554 as
compared to $341,059 during the 2004 First Quarter, representing a 369%
increase. The increase in total operating expenses was primarily attributable to
increased professional fees incurred as a result of the Company's registration
obligations as a reporting issuer and an increase in the cost of real property
that was offset partially by a decrease in sales commissions. General and
administrative expenses increased in the 2005 First Quarter as a result of our
increasing collection fees and lien searches for Velocity Investments and the
commencement of payroll.

Other Income (Expense)

         Interest expense in the 2005 First Quarter was $8,103 as compared to
$98,668 in the 2004 First Quarter. The decrease in interest expense was
primarily attributable to decreases in long term borrowings. During the 2005
First Quarter, the Company recognized no other income as compared to other
income of $24,337 in the 2004 First Quarter, all of which was derived from other
J. Holder operations.

Net Income (Loss)

         Net income for the 2005 First Quarter was $64,902 as compared to a net
loss for the 2004 First Quarter of $37,073. The increase in net income is
primarily attributable to an increase in revenue from operations at Velocity
Investments, our consumer receivables subsidiary.

Liquidity and Capital Resources

         At March 31, 2005, the Company had $1,758,758 in cash and cash
equivalents and trade accounts payable in the amount of $103,285. Management
believes that such funds, together with the proceeds from the private placement
discussed below, the revenues expected to be generated from operations and its
recent line of credit will be sufficient to finance operations for the
foreseeable future.

         In order to expand operations by, among other things, purchasing
additional portfolios of receivables, the Company has been seeking to raise
additional capital by way of the sale of equity securities and obtaining a bank

                                       17
<PAGE>

line of credit. From October 2004 through January 3, 2005, the Company raised an
aggregate of $3,363,529.50 (approximately $3,100,000 after deducting expenses
and commissions associated with the sale) of additional equity capital by the
sale of 2,242,353 units of its securities in private placement. Each unit is
comprised of one share of Common Stock and a warrant to purchase one-fifth of a
share of Common Stock for $2.50 per share exercisable for a period of five
years.

         On January 27, 2005, our wholly owned subsidiary, Velocity Investments,
entered into a Loan and Security Agreement with Wells Fargo Foothill, Inc., a
California corporation, in which Wells Fargo Foothill agreed to provide Velocity
Investments with a three year $12,500,000 senior credit facility to finance the
acquisition of individual pools of unsecured consumer receivables that are
approved by Wells Fargo Foothill under specific eligibility criteria set forth
in the Loan and Security Agreement.

         Simultaneous with the Loan and Security Agreement, the following
agreements were also entered into with Wells Fargo Foothill: a Continuing
Guaranty, in which we unconditionally and irrevocably guaranteed Velocity's
obligations under the Loan and Security Agreement; a Security and Pledge
Agreement, in which we pledged all of our assets to secure the credit facility,
including, but not limited to, all of our stock ownership of J. Holder, Inc. and
all our membership interests in Velocity Investments and VOM, LLC; and a
Subordination Agreement, in which all sums owing to the Company by Velocity as
an intercompany payable for advances or loans made or property transferred to
Velocity will be subordinated to the credit facility to the extend that such
sums, when added to Velocity Investment's membership interest in the parent does
not exceed $3,250,000. In addition, three of our executive officers, John C.
Kleinert, W. Peter Ragan, Sr. and W. Peter Ragan, Jr., provided joint and
several limited guarantees of Velocity Investment's obligations under the Loan
and Security Agreement.

         In the Loan and Security Agreement, Wells Fargo Foothill has agreed to
advance to Velocity Investments up to $12,500,000 to be used to finance up to
60% of the purchase price of individual pools of unsecured consumer receivables
that are approved by Wells Fargo Foothill under specific eligibility criteria
set forth in the Loan and Security Agreement. The interest rate on the loan is
3.50% above the prime rate of Wells Fargo Bank, N.A. The maturity date of the
facility is January 27, 2008.

         Use of the senior credit facility is subject to Velocity Investments
complying with certain restrictive covenants under the Loan and Security
Agreement, including but not limited to: a restriction on incurring additional
indebtedness or liens; a change of control of Velocity Investments; a
restriction on entering into transactions with affiliates outside the course of
Velocity Investment's ordinary business; and a restriction on making payments to
the Company in compliance with the Subordination Agreement. In addition,
Velocity Investments has agreed to maintain certain ratios with respect to
outstanding advances on the credit facility against the estimated remaining
return value on Wells Fargo Foothill financed portfolios, and, until Velocity
Investment's member's equity equals or exceeds $3,250,000, Velocity Investments
has agreed to maintain at least $3,250,000 in member's equity and subordinated
debt. We have also agreed to maintain at least $6,000,000 in stockholder's
equity and subordinated debt for the duration of the facility.

         On April 15, 2005, we sold three promissory notes in the principal
amount of $100,000, $150,000 and $100,000 each to three accredited investors in
a private placement. Each of the notes bears interest at the rate of 7% per
annum and interest is payable in quarterly installments commencing June 30,

                                       18
<PAGE>

2005. The entire principal of each note is payable on April 15, 2006 unless the
holder thereof gives written notice to us 90 days prior to April 15, 2006 that
it elects to extend his, her or its note, in which event the entire principal
thereof is payable on April 15, 2007.

Trends

         As a result of the Company's recent line of credit, the Company
anticipates it will incur significant increases in interest expense offset, over
time, by expected increased revenues from consumer receivable portfolios
purchased utilizing funds under such line of credit. No assurance can be given
that the expected revenues from such purchased portfolios will exceed the
additional interest expense. The Company is not presently aware of any other
known trends that may have a material impact on its revenues. The Company does
not believe that the recent increases in interest rates, and the anticipated
continuing gradual increases in interest rates, has had or will have a material
adverse affect upon the Company's business.

Item 3   Controls and Procedures.


         (a) Disclosure Controls. As of the end of the period covered by this
report, with the participation of our Chief Executive Officer and Chief
Financial Officer, we evaluated the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934). Based upon that evaluation and for the reasons
stated below, our Chief Executive Officer and our Chief Financial Officer
concluded that as of the end of such period, our disclosure controls and
procedures were not effective as of the period covered by this report in timely
alerting them to material information relating to Velocity Asset Management,
Inc. required to be disclosed in our periodic reports with the Securities and
Exchange Commission.

         As a result of an evaluation of the effectiveness of our disclosure
controls and procedures as of the end of the period covered by our Annual Report
on Form 10-K for the year ended December 31, 2004, with the participation of our
Chief Executive Officer and Chief Financial Officer, we identified a material
weakness in our internal controls over financial reporting relating to the
process of accounting for the August 12, 2004 debt exchange in which $3,676,252
in outstanding debt was exchanged for 4,084,724 shares of the Company's Common
Stock at $0.90 per share in compliance with APB 26, "Early Extinguishment of
Debt." After further evaluation, we determined that APB 26 requires that a loss
be computed using the August 12, 2004 $1.60 OTCBB market price of VCYA.ob common
stock, resulting in a non-cash loss of $2,859,307 due to the difference between
the $1.60 OTCBB market price and the $0.90 per share used in the negotiated
exchange. As a result, and as set forth in Note 1 to the Consolidated Financial
Statements and the "Restatement" section included in Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations, we
have restated our unaudited consolidated financial statements for the periods
covered by this report. We have also undertaken remedial action to address and
correct the weakness in our internal controls over this process.

           (b) Changes in Internal Control Over Financial Reporting

               None.


                           FORWARD LOOKING STATEMENTS
                           --------------------------

This Form 10-QSB and other reports filed by the Company from time to time with
the Securities and Exchange Commission (collectively the "Filings") contain or
may contain forward looking statements and information that are based upon
beliefs of and information currently available to the Company's management as
well as estimates and assumptions made by the Company's management.

When used in the Filings the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions as they relate to
the Company or the Company's management identify forward looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations and any businesses that may be
acquired by the Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
intended or planned.

                                       19
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1   Legal Proceedings

         None

Item 2   Changes in Securities

         During the period covered by this Report, no equity securities were
         sold by the Registrant that were not registered under the Securities
         Act of 1933, as amended (the "Act") except as follows:

               1. On January 3, 2005, Registrant sold an aggregate of 133,350
                  units of its securities to three accredited investors in a
                  private placement, each unit consisting of one share of
                  Registrant's common stock and a warrant to purchase one-fifth
                  of one share of Registrant's common stock at a $2.50 per share
                  for a period of five years. The purchase price for each unit
                  was $1.50.

Item 3   Defaults Upon Senior Securities

         None

Item 4   Submission of Matters to a Vote of Security Holders

         None

Item 5   Other Information

         None

Item 6   Exhibits and Reports on Form 8-K

         1.       Exhibits

         31.1. Certification of Principal Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002

         31.2  Certification of Principal Financial Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

         32.1  Certification of Principal Executive Officer pursuant to 18
               U.S.C. Section 1350

         32.2  Certification of Principal Financial Officer pursuant to 18
               U.S.C. Section 1350.

                                       20
<PAGE>

         (b)      Reports on Form 8-K

         1.       On January 5, 2005, Registrant filed a Current Report on Form
         8-K reporting the entry into material definitive agreements and the
         unregistered sales of equity securities in connection with a private
         placement and a consulting agreement.

         2.       On February 2, 2005, Registrant filed a Current Report on Form
         8-K reporting the entry into material definitive agreements in
         connection with a line of credit.

                                       21
<PAGE>

                                   SIGNATURES

         In accordance with 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.


                                       VELOCITY ASSET MANAGEMENT, INC.



Dated:  August 10, 2005                By: /s/ JOHN C. KLEINERT
                                           -------------------------------------
                                           John C. Kleinert
                                           Chief Executive Officer and President


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