SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(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, 2006

                                       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) 760-1030
                (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 [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: The Issuer had 15,972,321 shares of
common stock issued and outstanding as of March 31, 2006.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>

                    VELOCITY ASSET MANAGEMENT SERVICES, INC.

                                   FORM 10-QSB
                      For the Quarter Ended March 31, 2006

                                      Index
                                                                           Page
                                                                          Number
PART I   FINANCIAL INFORMATION

Item 1   Condensed Consolidated Balance Sheets as at December 31, 2005
         and March 31, 2006 (unaudited for March 31, 2006 period)            3

         Condensed Consolidated Statements of Operations for the
         three month periods ended March 31, 2006 and 2005 (unaudited)       4

         Condensed Consolidated Statements of Stockholders Equity
         (Deficit) as of December 31, 2005 and for the three months
         ended March 31, 2006 (unaudited for March 31, 2006)                 5

         Consolidated Statements of Cash Flows for the three month
         periods ended March 31, 2006 and 2005 (unaudited)                   6

         Notes to Consolidated Financial Statements                          7

Item 2   Management's Discussion and Analysis or Plan of Operation          18

Item 3   Controls and Procedures                                            24

PART II

Item 1   Legal Proceedings                                                  25
Item 2   Unregistered Sales of Equity Securities and Use of Proceeds        25
Item 3   Defaults Upon Senior Securities                                    25
Item 4   Submission of Matters to a Vote of Security Holders                25
Item 5   Other Information                                                  25
Item 6   Exhibits                                                           25
Signatures                                                                  26
Certifications                                                           27-30

<PAGE>
<TABLE>
<CAPTION>

                                     PART I
                              FINANCIAL INFORMATION

Item 1 Financial Statements

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

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                             March 31,     December 31,
                                                               2006           2005
                                                            (unaudited)         *
                                                           ------------    ------------
<S>                                                        <C>             <C>
                          ASSETS

CURRENT ASSETS
  Cash and Cash Equivalents                                $     79,767    $     90,624
  Accounts Receivable                                           134,313          30,000
  Property Inventory Owned                                    6,167,985       6,439,240
  Deposits on Properties                                          1,000         241,000
  Tax Certificates Held and Accrued Interest Receivable         453,936         538,926
  Consumer Receivables                                       17,185,462      17,758,661
  Other Current Assets                                           89,850          14,924
                                                           ------------    ------------
     Total Current Assets                                    24,112,313      25,113,375
                                                           ------------    ------------
PROPERTY AND EQUIPMENT, net of accumulated
  depreciation                                                   81,645          87,222
                                                           ------------    ------------
OTHER ASSETS
  Deferred Income Tax Asset - Non-Current                       160,000         178,000
  Security Deposit                                               26,500          87,500
  Other Assets                                                  214,414         108,333
                                                           ------------    ------------

     Total Other Assets                                         400,914         373,833
                                                           ------------    ------------

     Total Assets                                          $ 24,594,872    $ 25,574,430
                                                           ============    ============
</TABLE>
*  Condensed from audited financial statements.

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


                                       3
<PAGE>
<TABLE>
<CAPTION>

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

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                       March 31,     December 31,
                                                                         2006            2005
                                                                      (unaudited)         *
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accrued Expenses                                                   $    525,221    $    447,971
  Estimated Court and Media Costs                                       3,084,320       3,799,646
  Short-Term Borrowings Under Line of Credit                            5,656,666       6,094,462
  Short-Term Borrowings from Related Parties                            2,430,000         260,000
  Current Portion of Long-Term Debt                                     2,550,000         220,000
  Income Taxes Payable                                                     12,809         133,132
  Deferred Income Tax Liability - Current                                  27,500          30,200
                                                                     ------------    ------------

     Total Current Liabilities                                         14,286,516      10,985,411
                                                                     ------------    ------------

LONG-TERM LIABILITIES
  Secured Debenture                                                     1,800,000       1,800,000
  Long-Term Debt, Related Parties                                              --       2,170,000
  Long-Term Debt, less current portion                                         --       2,180,000
                                                                     ------------    ------------

     Total Long-Term Liabilities                                        1,800,000       6,150,000
                                                                     ------------    ------------

     Total Liabilities                                                 16,086,516      17,135,411
                                                                     ------------    ------------

STOCKHOLDERS' EQUITY
  Common Stock, $0.001 par value, 40,000,000 shares Authorized,
    15,972,321 and 15,972,321 shares Issued and Outstanding,
    respectively                                                           15,972          15,972
  Additional Paid In Capital                                           10,838,651      10,838,651
  Retained Deficit                                                     (2,346,267)     (2,415,604)
                                                                     ------------    ------------

  Total Stockholders' Equity                                            8,508,356       8,439,019
                                                                     ------------    ------------

     Total Liabilities and Stockholders' Equity                      $ 24,594,872    $ 25,574,430
                                                                     ============    ============
</TABLE>
*  Condensed from audited financial statements.

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

                                        4
<PAGE>
<TABLE>
<CAPTION>

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

               CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                  (UNAUDITED)


                                                        For the Three Months Ended
                                                               March 31,
                                                      ----------------------------
                                                          2006            2005
                                                      ------------    ------------
<S>                                                   <C>             <C>
REVENUES
  Sale of Real Property                               $    371,312    $  1,216,478
  Collections on Consumer Receivables                    1,454,647         498,855
  Interest Income - Tax Certificates Held and Other         30,196          60,258
                                                      ------------    ------------

    Total Revenues                                       1,856,155       1,775,591
                                                      ------------    ------------

OPERATING EXPENSES
  Cost of Real Property                                    301,153         991,196
  Professional Fees                                        743,995         356,249
  General and Administrative Expenses                      397,685         251,109
                                                      ------------    ------------

    Total Operating Expenses                             1,442,833       1,598,554
                                                      ------------    ------------

Income from Operations                                     413,322         177,037
                                                      ------------    ------------
OTHER INCOME (EXPENSE)
  Interest Expense                                        (320,564)         (8,103)
                                                      ------------    ------------

    Total Other Income (Expense)                          (320,564)         (8,103)
                                                      ------------    ------------

Income Before Tax Provision                                 92,758         168,934

Provision for Income Taxes                                  23,421         104,032
                                                      ------------    ------------

Net Income                                            $     69,337    $     64,902
                                                      ============    ============

Weighted Average Common Shares - Basic                  15,972,321      15,923,244
                                                      ============    ============

Net Income per Common Share - Basic                   $       0.00    $       0.00
                                                      ============    ============

Weighted Average Common Shares - Diluted                20,298,981      19,838,203
                                                      ============    ============

Net Income per Common Share - Diluted                 $       0.00    $       0.00
                                                      ============    ============
</TABLE>

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

                                        5
<PAGE>
<TABLE>
<CAPTION>

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

          CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the
                        Three Months Ended March 31, 2006
                                   (UNAUDITED)


                                          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, December 31, 2005       $ 15,972,321   $     15,972   $ 10,838,651   $ (2,415,604)  $  8,439,019

Net Income                                  --             --             --         69,337         69,337
                                  ------------   ------------   ------------   ------------   ------------

BALANCES, March 31, 2006          $ 15,972,321   $     15,972   $ 10,838,651   $ (2,346,267)  $  8,508,356
                                  ============   ============   ============   ============   ============
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.
                                       6
<PAGE>
<TABLE>
<CAPTION>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                                For the Three Months Ended
                                                                                        March 31,
                                                                               ----------------------------
                                                                                   2006            2005
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net Income                                                                    $     69,337    $     64,902
 Adjustments to reconcile net income to net cash
   Depreciation                                                                       7,794          18,186
   (Increase) Decrease in:
     Accounts Receivable                                                           (104,313)        780,935
     Property Inventory Owned                                                       271,255         387,597
     Deposits on Properties                                                         240,000          (2,000)
     Tax Certificates Held and Accrued Interest Receivable, Net of Discounts         84,990          23,077
     Consumer Receivables                                                           573,199      (3,957,165)
     Other Current Assets                                                           (74,926)        (68,611)
     Deferred Income Tax Asset - Non-Current                                         18,000          43,500
     Security Deposit                                                                61,000              --
     Other Assets                                                                  (106,081)       (150,000)
   Increase (Decrease) in:
     Accrued Expenses                                                                77,250         101,350
     Estimated Court and Media Costs                                               (715,326)             --
     Income Taxes Payable                                                          (120,323)        (31,737)
     Deferred Income Tax Liability - Current                                         (2,700)          4,200
                                                                               ------------    ------------
       Net Cash Provided from (Used by) Operating Activities                        279,156      (2,785,766)
                                                                               ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Acquisition of Property and Equipment                                           (2,217)         (3,895)
                                                                               ------------    ------------
       Net Cash Used by Investing Activities                                         (2,217)         (3,895)
                                                                               ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
 New Borrowings:
   Short-Term                                                                       150,000              --
   Long-Term                                                                             --       3,178,726
 Short-Term                                                                        (437,796)       (118,192)
 Proceeds Received from Private Placement Stock Sales                                    --         200,024
 Commissions Paid on Private Placement                                                   --        (135,262)
                                                                               ------------    ------------
   Net Cash Provided from Financing Activities                                     (287,796)      3,125,296
                                                                               ------------    ------------

Net Increase in Cash and Cash Equivalents                                           (10,857)        335,635

Cash and Cash Equivalents, Beginning of Year                                         90,624       1,423,123
                                                                               ------------    ------------

Cash and Cash Equivalents, End of Year                                         $     79,767    $  1,758,758
                                                                               ============    ============
</TABLE>

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

                                       7
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES

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, 2006 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 Subsidiaries (the "Company") for the year ended December
31, 2005 have been omitted.

Investments and Revenue Recognition - Investments in Real Property
------------------------------------------------------------------

Investments in real property consist of investments in real property purchased
by the Company for resale and are 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 and Revenue Recognition - Investments in 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.

Investments and Revenue Recognition - Consumer Receivables
----------------------------------------------------------

The Company purchases consumer 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 portfolios. Income is
recognized using either the interest method or cost recovery method. Upon
acquisition, the Company reviews each consumer receivable portfolio to determine
whether each such portfolio is to be accounted for individually or whether such
portfolio will be assembled into static pools of consumer receivable portfolios
based on common risk characteristics. Once the static portfolio 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
receivables 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." SOP 03-03 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 the internal rate of return ("IRR") while
decreases in expected cash flows should be recognized as impairment.

                                       8
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

Investments and Revenue Recognition - Consumer Receivables (Continued)
---------------------------------------------------------------------

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 03-03 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, 2006, the
Company had no consumer receivable portfolios accounted for under the cost
recovery method.

The Company establishes 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 receivables. At March 31, 2006, the Company had no
valuation allowance on its 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.

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".

                                       9
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

Reclassification
----------------

Certain balances in the prior year financial statements have been reclassified
for comparative purposes to conform to the presentation in the current year
financial statements. These reclassifications have not had any impact on net
income.

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. Investments in
real property consist of the following:
<TABLE>
<CAPTION>

                                                           Three Months
                                                               Ended        Year Ended
                                                             March 31,      December 31,
                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>             <C>
Total Property Inventory                                   $  6,162,701    $  6,024,038
Assignments and Judgments                                         5,284         415,202
                                                           ------------    ------------

  Total Investment in Real Property                        $  6,167,985    $  6,439,240
                                                           ============    ============
<CAPTION>


Investments in Municipal Tax Liens

Investments in municipal tax liens consist of the following:

                                                           Three Months
                                                               Ended        Year Ended
                                                             March 31,      December 31,
                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>             <C>
Tax Lien Certificates                                      $    248,698    $    302,228
Accrued Interest                                                205,238         236,698
                                                           ------------    ------------

  Total Tax Certficates, Net of Discounts                  $    453,936    $    538,926
                                                           ============    ============
</TABLE>

                                       10
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 3 - CONSUMER RECEIVABLES

As of March 31, 2006 and December 31, 2005, the Company had $17,185,462 and
$17,758,661, respectively, remaining of consumer receivable portfolios. Changes
in consumer receivables at March 31, 2006 and December 31, 2005 were as follows:
<TABLE>
<CAPTION>
                                                           Three Months
                                                               Ended        Year Ended
                                                             March 31,      December 31,
                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>             <C>

Balance at beginning of period                             $ 17,758,661    $  3,237,852
Acquisitions and Capitalized Costs, net of Returns              367,928      16,291,794

Cash Collections                                             (2,395,774)     (5,404,930)
Income Recognized on Consumer Receivables                     1,454,647       3,633,945
                                                           ------------    ------------
  Cash Collections Applied to Principal                        (941,127)     (1,770,985)
                                                           ------------    ------------

  Total Consumer Receivable Portfolios                     $ 17,185,462    $ 17,758,661
                                                           ============    ============
<CAPTION>

As of March 31, 2006, the Company had $17,185,462 in consumer receivables. Based
upon management's current estimation of future cash collections, principal
reductions will be as follows:

<S>   <C> <C>                                                              <C>
March 31, 2007                                                             $  2,810,092
March 31, 2008                                                                3,742,070
March 31, 2009                                                                4,681,165
March 31, 2010                                                                5,144,751
March 31, 2011                                                                  807,384
                                                                           ------------

Total                                                                      $ 17,185,462
                                                                           ============

<CAPTION>

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, 2006. Changes in the accretable yield are as follows:

                                                                           Three Months
                                                                               Ended
                                                                             March 31,
                                                                               2006
                                                                           ------------
<S>                                                                        <C>
Balance at Beginning of Period                                             $ 15,618,641
Income Recognized on Consumer Receivable Portfolios                          (1,454,647)
Additions                                                                       396,076
                                                                           ------------

  Balance at End of Period                                                 $ 14,560,070
                                                                           ============
</TABLE>

                                       11
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 4 - SHORT TERM BORROWINGS UNDER LINE 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 was 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.

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 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 Company, 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.

On February 27, 2006, the Company's Velocity subsidiary entered into a First
Amendment to the Loan and Security Agreement (the "Amended and Restated Loan
Agreement") with the Lender, pursuant to which the Lender agreed to amend the
Loan and Security Agreement dated January 27, 2005 (the "Original Loan
Agreement"). Pursuant to the Amended and Restated Loan Agreement, the Lender
extended the Credit Facility until January 27, 2009 and agreed to increase the
advance rate under the credit facility to 67.5% (up from 60%) of the purchase
price of individual pools of unsecured consumer receivables that are approved by
the Lender. The Lender also agreed to reduce the interest rate on the loan from
3.50% above the prime rate of Wells Fargo Bank, N.A. to 2.50% above such prime
rate. In addition, the amortization schedule for each portfolio has been
extended from twenty-four to thirty months. The Lender also agreed to reduce the
limited personal guarantees of John Kleinert, W. Peter Ragan Sr. and W. Peter
Ragan Jr. from $1,000,000 to $500,000. See Note 11 - Subsequent Events for
additional disclosure related to the amended senior credit facility.

As of March 31, 2006 and December 31, 2005, the Company had $5,656,666 and
$6,094,462 outstanding on the line.

                                       12
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 5 - NOTES PAYABLE - SHORT TERM

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 September 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. As of March 31, 2006, the maturity of each
of the notes had been extended to April 17, 2007. Cornelia Yoke, a related party
of the president and CEO, is a holder of one of the $100,000 promissory notes.

On June 2, 2005, J. Holder, a wholly owned subsidiary of Velocity Asset
Management, Inc., acquired a residential property in Melbourne, Florida, (the
"Melbourne Property") through a joint venture with Groveland Estates, LLC, an
unrelated party. The property was purchased for $3.25 million from Detroit-based
Comerica Bank, which had acquired the property through a foreclosure.
Acquisition financing of $3,350,000 was provided by a group of investors,
including J. Holder (the "Investor Group") which invested approximately
$125,000, that will receive 10% per annum and 2.0% of the loaned amount along
with a pro rata share of 20% of the net profit realized by J. Holder upon the
sale of the property. Under the terms of its joint venture agreement with
Groveland Estates, LLC, the Investor Group will receive 100% return of all
capital including acquisition and carrying costs, plus the above cost of funds.
In addition, J. Holder will receive 60% of the net profit of the proceeds upon
the sale of the property, 20% of which will be shared pro rata among the
Investor Group, and Groveland Estates, LLC will receive 40% of the net profit,
plus 20% of the actual cost, if any, of the property's renovation, as a project
management fee. Although the Melbourne property was appraised in March 2005 at
$8.5 million, there can be no assurance that the sale of the property will
result in a profit. Of the $3,350,000 provided by the Investor Group, $1,270,000
was provided by Dr. Michael Kelly and Mr. David Granatell, each a member of the
Board of Directors. Neither individual was a member of the Board of Directors at
the time of the investment. Additionally, Mr. Robert Kleinert and Ms. Cornelia
Yoke, related parties of the President and CEO of the Company, provided an
additional $900,000 of acquisition financing in connection with the Melbourne
Property.

On January 13, 2006, and February 10, 2006, the Company sold two promissory
notes in the respective principal amounts of $100,000 and $50,000 to an
accredited investor in a private placement. Each of the notes bears interest at
the rate of 10% per annum. The entire principal and accrued interest of each
note is payable in one lump sum payment on January 13, 2007 and February 10,
2007, respectively, unless the holder thereof gives written notice to the
Company thirty days prior to its maturity date that it elects to extend the
note, in which event the entire principal thereof is payable on January 13, 2008
and February 10, 2008, as applicable.

Interest expense for the three month periods ended March 31, 2006 and 2005 was
$320,564 and $8,103, respectively.

NOTE 6 - LONG TERM DEBT

On September 21, 2005, J. Holder entered into a $1,000,000 mortgage and security
agreement, the proceeds of which are being used to renovate the Melbourne
property. Estimated renovations are expected to cost approximately $900,000. All
principal shall accrue interest at a fixed annual rate of 12.0% per annum and
payments of accrued interest are due and payable in arrears in equal monthly
payments on the outstanding principal balance of the promissory note. J. Holder
is required to make monthly interest only payments of $10,000 until October 21,
2007 at which time all principal, accrued interest and other charges are due and
payable.

                                       13
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 7 - 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 consulting
group, 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.

Until June 1, 2005, the Company's business office at 3100 Route 138 West, Wall,
NJ 07719 had been leased for a two year period from a company owned by Messrs.
Ragan & Ragan and total lease payments of $0 and $1,500 for the three month
periods ended March 31, 2006 and 2005.

The Company engages Ragan & Ragan, PC an entity owned by Messrs. Ragan & Ragan,
to pursue legal collection of its receivable portfolios with respect to obligors
and properties located in the State of New Jersey. The fee arrangements between
the Company's 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 the
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.

The legal fees paid to Ragan and Ragan, P.C. were as follows:

                                             Three Months       Three Months
                                                Ended              Ended
                                            March 31, 2006     March 31, 2005
                                            --------------     --------------
Legal Services Paid to Ragan & Ragan, PC    $      338,952     $      223,437
                                            ==============     ==============

On October 5, 2005, the Company sold a promissory note in the principal amount
of $60,000 to Ragan & Ragan, PC, a related entity, in a private placement. The
note bears interest at the rate of 7% per annum. The entire principal and
accrued interest of the note is payable in one lump sum payment on October 5,
2006 unless the holder thereof gives written notice to the Company 30 days prior
to October 5, 2006 that it elects to extend its note, in which event the entire
principal thereof is payable on October 5, 2007.

Interest paid to related parties for the three months ended March 31, 2006 and
2005 was $57,750 and $0.

NOTE 8 - OUTSTANDING WARRANTS AND OPTIONS

At March 31, 2006, the Company had issued outstanding warrants to purchase
4,076,660 shares of its common stock at prices ranging from $1.04 to $3.10 per
share. The first warrants (3,199,500 shares of common stock, as adjusted for the
13:1 reverse stock split) were granted pursuant to the Merger Agreement
effective February 3, 2004 and expire after a period of five years. The second
warrants (677,160 shares of common stock) were granted pursuant to private
offerings and/or in lieu of services rendered and expire on March 31, 2009. The
remaining warrant to purchase (200,000 shares of common stock) was granted in
connection with the October 2005 convertible debt financing and has an
expiration date of October 10, 2010.

                                       14
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE 8 - OUTSTANDING WARRANTS AND OPTIONS (Continued)

At March 31, 2006, the Company also had issued an option to an independent
consultant in exchange for services rendered for 250,000 shares of common stock
at an exercise price per share of $2.50.


NOTE 9 - STOCK BASED COMPENSATION

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

On September 1, 2005, the Company entered into an Independent Consulting
Agreement (the "Agreement") with Lomond International, Inc., an unrelated
corporation (the "Consultant"), pursuant to which the Consultant agreed to
provide certain specified business advisory services for a period of one year.
As compensation for such services, we agreed to sell to the Consultant, as a
commencement bonus, a warrant to purchase 50,000 shares of the Company's common
stock with an exercise price of $2.50 per share, and an expiration date of March
31, 2009, for an aggregate purchase price of $2,500. The warrant will
participate in all forward and reverse stock splits and stock dividends and will
have a one-time piggy-back registration right on the warrant and the shares of
common stock underlying the warrant. On November 11, 2005, the Business Advisory
Agreement, dated September 1, 2005, between the Company and Lomond
International, Inc. was amended, retroactive to the date of the agreement, to
eliminate any compensation payable by the Company to Lomond International Inc.
in connection with any debt or equity investment of any kind. As consideration
for such amendment, Lomond was paid a fee of $25,000.

Stock Based Compensation for Employees
--------------------------------------

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. The Company has adopted the disclosure-only provisions
of Statement of Financial Accounting SFAS" No. 123, "Accounting for Stock-Based
Compensation" and SFAS No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure", which was released in December 2002 as an amendment
of SFAS No. 123.

NOTE 10 - SECURED DEBENTURE

On October 27, 2005, the Company and J. Holder entered into a Securities
Purchase Agreement with an institutional investor relating to a sale of a 10%
Secured Convertible Debenture, due April 27, 2007, in the aggregate principal
amount of $1.8 million (the "Debenture"), and an associated common stock
purchase warrant (the "Warrant") to purchase 200,000 shares of the Company's
common stock at an exercise price of $3.10 per share. Net proceeds from the
financing ($1,770,000) have been used primarily for working capital purposes
including, but not limited to, the purchase of distressed real property
interests and distressed consumer receivable portfolios.

                                       15
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE - SECURED DEBENTURE (Continued)

The Debenture was issued with an initial conversion price of $4.00 per share and
provides for full ratchet anti-dilution protection (in certain circumstances).
At the initial conversion price, the Debenture is convertible into an aggregate
of 450,000 shares of common stock. The Debenture bears interest at 10% per
annum, payable monthly on the first day of each calendar month, beginning on
November 1, 2005. Interest is payable in cash or, at the Company's option, in
shares of common stock provided certain conditions are satisfied. On or after
April 1, 2006, the Debenture will be convertible into shares of common stock at
a price equal to $2.525 per share (125% of the 5 day average closing price
immediately prior to the closing date).

Beginning on April 1, 2006, the Company is obligated to repay the Debenture in
monthly payments equal to 1/12 of the outstanding principal amount, in cash;
provided, however, that upon the satisfaction of certain conditions, such
payment may be made in shares of the Company's common stock based on a
conversion price equal to 85% of the average of the three lowest closing prices
of the Company's common stock during the ten trading days immediately prior to
the applicable monthly payment date. The Company is currently in negotiations
with the debenture holder to amend the debenture and extend the initial
principal payment due date, however there can be no assurance that such
amendment will ever be executed.

At any time after the issuance date and prior to March 31, 2006, the Debenture
may be redeemed at the election of the Company at the principal amount, plus
accrued but unpaid interest, subject to the satisfaction of certain conditions.
Upon the occurrence of a change of control, a fundamental transaction or the
sale of certain specified assets as set forth in the Debenture, the holder may
require the Company to redeem the Debenture at the principal amount, plus
accrued and unpaid interest, subject to the satisfaction of certain conditions.

The purchaser of the Debenture was granted (i) a security interest in the assets
of the Company and the assets of the Company's subsidiaries, J. Holder, TLOP
Acquisition Company, L.L.C., VOM, L.L.C. and SH Sales, Inc. (the "Subsidiary
Guarantors"), and (ii) a pledge of the Company's direct and indirect ownership
of its subsidiaries, each of which are subject to the liens of holders of
existing indebtedness, permitted liens and permitted indebtedness. Additionally,
the Subsidiary Guarantors have agreed to guarantee the obligations of the
Company under the Debenture and the other transaction documents. See Note 11 -
Subsequent Events.

The Debenture is also guaranteed personally by each of John C. Kleinert, the
Company's President and Chief Executive Officer, W. Peter Ragan, Sr., the
Company's Vice President and W. Peter Ragan, Jr., President of the Company's
wholly owned Velocity Investments, L.L.C. subsidiary.

The Warrant was issued with an exercise price of $3.10 per share, provides for
full ratchet anti-dilution protection in certain circumstances and contains a
cashless exercise provision. The Warrant is exercisable for an aggregate of
200,000 shares of common stock, and if fully exercised for cash at the initial
exercise price, the Warrant would yield approximately $620,000 of additional
proceeds to the Company.

The Company filed a registration statement with the Securities and Exchange
Commission in order to register the resale of the shares issuable upon
conversion of the Debenture and the shares issuable upon exercise of the
Warrant. Such registration was declared effective on December 29, 2005.

                                       16
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)

NOTE - SECURED DEBENTURE (Continued)

Pursuant to the Securities Purchase Agreement, the investor has certain rights
to participate in future financings of the Company. In addition, subject to
certain exceptions, for a period of 90 days (through March 29, 2006) after the
effective date of the registration statement (described above), the Company may
not issue shares of common stock or common stock equivalents. See Note 11 below
for additional disclosure with respect to Debenture.

The holder may not convert the Debenture or exercise the Warrant to the extent
that, after giving effect to such conversion or exercise, as the case may be,
the holder would beneficially own in excess of 4.99% of the number of shares of
common stock of the Company outstanding immediately after giving effect to such
conversion, calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder. See Note 11 below for additional disclosure with respect to
Debenture.

The offering, sale and issuance of the Debenture and the Warrant were effected
pursuant to the exemption from registration provided by Rule 506 promulgated
under the Securities Act of 1933, as amended.

NOTE 11 - SUBSEQUENT EVENTS

On May 18, 2006, the Company consummated its public offering of 1,200,000 shares
of Series A Convertible Preferred Stock resulting in gross proceeds of
$12,000,000 to the Company (the "Offering"). The offering was underwritten by
Anderson & Strudwick, Incorporated. The underwriters were granted an option to
purchase up to an additional 180,000 shares of Series A Convertible Preferred
Stock from the Company to cover over-allotments. The underwriters were also
issued a warrant to purchase 120,000 shares of the Series A Convertible
Preferred Stock. Net proceeds from the Offering amounted to approximately $10.89
million. The public price per share for the offering was $10.00. The shares of
Series A Convertible Preferred Stock are listed on the American Stock Exchange
under the symbol JVI.PR.

The shares of Series A Convertible Preferred Stock are convertible into common
stock at a conversion rate of $2.50 per share. The Company will use the net
proceeds for working capital and expansion of the business and payment of
certain debt as discussed below.

On May 19, 2006, the Company entered into an amendment to the Securities
Purchase Agreement, pursuant to which it extended the initial payment due date
of its outstanding Debenture and issued to the holder thereof an additional
warrant to purchase 50,000 shares of the Company's common stock at an exercise
price of $3.10 per share. On such date, the Company used $1,823,000 of the
proceeds of the Offering to repay in full the interest and principal under the
terms of the Debenture.

On May 19, 2006, as a result of the Offering, Wells Fargo Foothill, Inc. agreed
to reduce the interest rate on the Company's Velocity subsidiary's senior credit
facility from 2.50% to 1.50% above the prime rate of Wells Fargo Bank, N.A.
immediately and increase the advance rate on the senior credit facility to 75.0%
of the outstanding purchase price of individual pools of unsecured consumer
receivables, effective June 1, 2006.

                                       17
<PAGE>

Item 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our financial
statements and notes thereto and the other financial information included
elsewhere in this prospectus.

Restatement

         We have previously restated the consolidated financial statements for
the year ended December 31, 2004. The 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 our 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 the prior 2004 year restatement, we have adjusted 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 no impact on our net income, earnings per
share, cash position and revenue for the year ended December 31, 2005.

Overview

         Velocity, previously known as Tele-Optics, Inc., was organized in the
State of Delaware in December 1986. We were inactive until February 3, 2004,
when we acquired STB, Inc., a New Jersey corporation. Since that acquisition, we
have engaged in the business of acquiring, managing and servicing distressed
assets consisting of consumer receivable portfolios, interests in distressed
real property and tax lien certificates. The business is carried on by our three
wholly-owned subsidiaries: Velocity Investments, LLC, which invests in
non-performing 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 realization of
value through legal collection and owned real estate opportunities presented by
the current tax environment.

         Our consumer receivable portfolios are purchased at a discount from the
amount actually owed by the obligor. 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 as
a company 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.

                                       18
<PAGE>

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.

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 97%
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 consumer receivable portfolios. The
discounted amount paid for a pool of consumer receivable 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
contractual terms of the accounts. If both conditions exist, we determine
whether each such loan is to be accounted for individually or whether such
receivables will be assembled into static pools 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 consumer receivable accounts and subsequently
aggregated pools of consumer receivable accounts. 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
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.

         Prior to January 1, 2005, we accounted for our investment in consumer
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 the 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
consumer receivables using the interest method under the guidance of American
Institute of Certified Public Accountants Statement of Position 03-03,
"Accounting for Loans or Certain Securities Acquired in a Transfer." For
portfolios of consumer receivables acquired in fiscal years beginning prior to
December 15, 2004, Practice Bulletin 6 is still effective; however, Practice
Bulletin 6 was amended by Statement of Position 03-03. For portfolios of
consumer receivables acquired in fiscal years beginning after December 15, 2004,
Statement of Position 03-03 is effective. In accordance with Statement of
Position 03-03 (and the amended Practice Bulletin 6), revenue is recognized
based on our anticipated gross cash collections and the estimated rate of return
over the useful life of the pool.

         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
Statement of Position 03-03 (and the amended Practice Bulletin 6). Such belief

                                       19
<PAGE>

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. Statement of Position 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 Statement of
Position 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 Statement of Position 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 of 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 lowering 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
re-evaluated 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 consumer receivable
portfolios subject to Statement of Position 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, 2006, we had no valuation allowance on our consumer receivables. Prior to
January 1, 2005, if 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 Statement of Position 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.

                                       20
<PAGE>

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. 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 Revenue

         Comparison of the 2006 First Quarter to the 2005 First Quarter

         Total revenues for the three month period ended March 31, 2006 (the
"2006 First Quarter") were $1,856,155 as compared to $1,775,591 during the three
month period ended March 31, 2005 (the "2005 First Quarter"), representing a
4.5% increase. The increase in revenues was primarily attributable to a
significant increase in collections on consumer receivables at our Velocity
Investments subsidiary that was partially offset by a decrease 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 20.0%, 78.4% and 1.6%, respectively, during the 2006
First Quarter as compared to 68.5%, 28.1%, and 3.4% during the 2005 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.

         Total Operating Expenses

         Comparison of the 2006 First Quarter to the 2005 First Quarter

         Total operating expenses for the 2006 First Quarter were $1,442,833 as
compared to $1,598,544 during the 2005 First Quarter, representing a 9.7%
decrease. The decrease in total operating expenses was primarily attributable to
a decrease in the cost of real property at our J. Holder subsidiary that was
partially offset by increased professional fees incurred as a result of the
Company's registration obligations as a reporting issuer and the expansion of
operations at our Velocity Investments' subsidiary. 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 an increase in
payroll expense.

         Other Income (Expense)

         Comparison of the 2006 First Quarter to the 2005 First Quarter

         Interest expense in the 2006 First Quarter was $320,564 as compared to
$8,103 in the 2005 First Quarter. The increase in interest expense was primarily
attributable to increases in short term borrowings, specifically with respect to
a single residential property owned by our J. Holder subsidiary.

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<PAGE>

         Net Income (Loss)

         Comparison of the 2006 First Quarter to the 2005 First Quarter

         Net income for the 2006 First Quarter was $69,337 as compared to net
income for the 2005 First Quarter of $64,902, a 6.8% increase. 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, 2006, the Company had approximately $79,767 in cash and
cash equivalents and trade accounts payable in the amount of $525,221.
Management believes that the revenues expected to be generated from operations,
the Company's line of credit and the proceeds of the convertible preferred stock
offering discussed below, will be sufficient to finance operations for the
foreseeable future.

         In order to expand operations by, among other things, purchasing
additional portfolios of distressed receivables, we have been seeking to raise
additional capital by way of the sale of equity securities, debt instruments and
obtaining a bank line of credit. From October 2004 through January 3, 2005, we
raised an aggregate of $3,363,529.50 (approximately $3,200,000 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 our common stock and a warrant to purchase
one-fifth of a share of our common stock for $2.50 per share exercisable for a
period of five years.

         On January 27, 2005, 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 two
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
Investments' 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
and all our membership interests in Velocity Investments and VOM; and a
Subordination Agreement, in which all sums owing to us by Velocity Investments
as an intercompany payable for advances or loans made or property transferred to
Velocity Investments 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.

         On February 27, 2006, Velocity Investments entered into a First
Amendment to the Loan and Security Agreement, pursuant to which, Wells Fargo
Foothill extended the credit facility until January 27, 2009 and agreed to
increase the advance rate under the senior credit facility to 67.5% (up from
60%) of the purchase price of individual pools of unsecured consumer receivables
that are approved by the lender. As a result of the Series A Offering
(hereinafter defined) discussed below, Wells Fargo has agreed to further
increase the advance rate to 75% effective June 1, 2006. Under the First
Amendment to the Loan and Security Agreement, Wells Fargo Foothill also agreed
to reduce the interest rate on the loan from 3.50% above the prime rate of Wells
Fargo Bank, N.A. to 2.50% above such prime rate. In addition, the amortization
schedule for each portfolio has been extended from twenty-four to thirty months.
Wells Fargo Foothill also agreed to reduce the personal limited guarantees from
$1,000,000 to $500,000. On May 19, 2006, as a result of the Series A Offering,
Wells Fargo Foothill agreed to further reduce the interest rate on the loan to
1.50% above the prime rate of Wells Fargo Bank, N.A.

         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

                                       22
<PAGE>

Velocity Investment's ordinary business; and a restriction on making payments to
us 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,
2005. The entire principal of each note is payable on April 15, 2007.

         On October 5, 2005, we sold two promissory notes in the principal
amount of $60,000 and $70,000, each to a related party entity. Each of the notes
bears interest at the rate of 7% per annum and principal and accrued interest is
payable on October 5, 2006.

         On October 27, 2005, we and our wholly owned subsidiary, J. Holder,
Inc., entered into a Securities Purchase Agreement with an institutional
investor relating to a sale of 10% Secured Convertible Debenture, due April 27,
2007, in the aggregate principal amount of $1.8 million, and an associated
common stock purchase warrant to purchase 200,000 shares of our common stock at
an exercise price of $3.10 per share (the "Debenture Placement"). Proceeds from
the financing ($1,780,000) have been used primarily for working capital purposes
including, but not limited to, the purchase of distressed real property
interests and distressed consumer receivable portfolios. We entered into an
amendment to the Securities Purchase Agreement, dated April 1, 2006, pursuant to
which the initial payment due date of the Convertible Debenture was extended and
we issued an additional warrant to purchase 50,000 shares of our common stock at
an exercise price of $3.10 per share. Copies of the Amendment to Securities
Purchase Agreement, the Amended Convertible Debenture and the Warrant to
purchase 50,000 shares of common stock are attached as exhibits to this Form
10-QSB.

         On May 18, 2006, we consummated a public offering of 1,200,000 shares
of Series A Convertible Preferred Stock resulting in gross proceeds of
$12,000,000 to us (the "Series A Offering"). The Series A Offering was
underwritten by Anderson & Strudwick, Incorporated. The underwriters were
granted an option to purchase up to an additional 180,000 shares of Series A
Convertible Preferred Stock from us to cover over-allotments. The underwriters
were also issued a warrant to purchase 120,000 shares of the Series A
Convertible Preferred Stock at an exercise price of $12.00 per share. Net
proceeds from the Series A Offering amounted to approximately $10,890,000. The
public price per share for the Series A Offering was $10.00. The shares of
Series A Convertible Preferred Stock are listed on the American Stock Exchange
under the symbol JVI.PR. The shares of Series A Convertible Preferred Stock are
convertible into common stock at a conversion rate of $2.50 per share. The
Series A Convertible Preferred Stock bears dividends at the rate of 10% per
annum, and the initial dividend date is June 30, 2006. On May 19, 2006, we used
$1,823,000 of the proceeds to repay in full the interest and principal under the
Debenture Placement. We will use the remainder of the proceeds for working
capital and expansion of the business.

Trends

         As a result of our line of credit, we anticipate that we 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. We
believe that our available borrowing capacity and net cash provided by
operations will be adequate to fund the payment of dividends with respect to the
Series A Convertible Preferred Stock. We are not presently aware of any other
known trends that may have a material impact on its revenues. We do 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 our business.

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<PAGE>

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, our Chief
Executive Officer and our Chief Financial Officer concluded that as of the end
of such period, our disclosure controls and procedures were 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.

         (b) Changes in Internal Controls.
             ----------------------------

         None.


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<PAGE>
                                     PART II
                                OTHER INFORMATION

Item 1   Legal Proceedings

         None.

Item 2   Unregistered Sales of Securities and Use of Proceeds

         None.

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

(a)      Exhibits

         1.1      Form of Underwriting Agreement (1)
         1.2      Amendment to Underwriting Agreement dated May 18, 2006*
         3.1      Certificate of Designation of Convertible Preferred Stock (2)
         4.1      Form of Warrant to Purchase Shares of Series A Convertible
                  Preferred Stock issued to Anderson & Strudwick,
                  Incorporated(1)
         4.2      Warrant to Purchase Shares of Common Stock dated as of April
                  1, 2006*
         4.3      Amended Convertible Debenture dated as of April 1, 2006*
         10.1     Amendment to Securities Purchase Agreement dated as of April
                  1, 2006*
         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.

         * Filed herewith

(1)  Incorporated by reference to Registrant's Amendment No. 1 to the
     Registration Statement on Form SB-2 filed with the Securities and Exchange
     Commission on April 18, 2006.

(2)  Incorporated by reference to Registrant's Amendment No. 3 to the
     Registration Statement on Form SB-2 filed with the Securities and Exchange
     Commission on May 12, 2006.

                                       25
<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:  May 22, 2006                   By: /s/ JOHN C. KLEINERT
                                           -------------------------------------
                                           John C. Kleinert
                                           Chief Executive Officer and President

                                       26