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 June 30, 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) 760-1030
                ------------------------------------------------
                (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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of August 12, 2005, the registrant
had 15,972,320 shares of common stock outstanding.
<PAGE>

                    VELOCITY ASSET MANAGEMENT SERVICES, INC.

                                   FORM 10-QSB
                       For the Quarter Ended June 30, 2005

                                      Index
                                                                           Page
                                                                          Number
                                                                          ------
PART I       FINANCIAL INFORMATION

Item 1       Condensed Consolidated Balance Sheets as at
             December 31, 2004 and June 30, 2005
             (unaudited for June 30, 2005 period)                            1

             Condensed Consolidated Statements of Operations
             for the three and six month periods ended
             June 30, 2005 and 2004 (unaudited)                              3

             Condensed Consolidated Statements of Stockholders Equity
             (Deficit) as of December 31, 2004 and for the
             six months ended June 30, 2005
             (unaudited for June 30, 2005)                                   4

             Consolidated Statements of Cash Flows for the six month
             Periods ended June 30, 2005 and 2004 (unaudited)                5

             Notes to Consolidated Financial Statements                      6

Item 2       Management's Discussion and Analysis or Plan of Operation      13

Item 3       Controls and Procedures                                        18

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                                                                   21
Exhibit 31.1                                                                22
Exhibit 31.2                                                                23
Exhibit 32.1                                                                24
Exhibit 32.2                                                                25

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1     Financial Statements

<TABLE>
<CAPTION>

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

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       June 30, 2005 and December 31, 2004
                                   (UNAUDITED)
                                                                                            December 31,
                       ASSETS                                                 June 30,         2004
                                                                                2005        (Restated)
                                                                            ------------   ------------
<S>                                                                            <C>            <C>
CURRENT ASSETS
  Cash and Cash Equivalents                                                 $    967,002   $  1,423,123
  Accounts Receivable                                                             81,224        815,251
  Property Inventory Owned                                                     5,502,434      2,150,860
  Deposits on Properties                                                          65,385        120,000
  Tax Certificates Held and Accrued Interest Receivable, net of discounts        616,631        702,117
  Prepaid Income Taxes                                                            18,737             --
  Consumer Receivables                                                         9,285,665      3,237,852
  Other Current Assets                                                            44,776             --
                                                                            ------------   ------------

     Total Current Assets                                                     16,581,854      8,449,203
                                                                            ------------   ------------
PROPERTY AND EQUIPMENT, net of accumulated
  depreciation                                                                    66,717         47,198
                                                                            ------------   ------------
OTHER ASSETS
  Deferred Income Tax Asset - Non-Current                                        178,000        221,500
  Other Asset                                                                    276,389         75,000
                                                                            ------------   ------------

     Total Other Assets                                                          454,389        296,500
                                                                            ------------   ------------

     Total Assets                                                           $ 17,102,960   $  8,792,901
                                                                            ============   ============
</TABLE>

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

                                       1
<PAGE>
<TABLE>
<CAPTION>

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

                    CONDENSED CONSOLIDATED BALANCE SHEETS
                       June 30, 2005 and December 31, 2004
                                   (UNAUDITED)

                                                                                            December 31,
              LIABILITIES AND STOCKHOLDERS' EQUITY                            June 30,         2004
                                                                                2005        (Restated)
                                                                            ------------   ------------
<S>                                                                         <C>            <C>
CURRENT LIABILITIES
  Accrued Expenses                                                          $    114,534   $      1,937
  Estimated Court and Media Costs                                              1,345,366             --
  Short-Term Borrowings Under Line of Credit                                   3,342,450             --
  Notes Payable - Short Term                                                   3,700,000             --
  Current Portion of Long-Term Debt                                                   --        250,000
  Income Taxes Payable                                                                --         13,550
  Deferred Income Tax Liability - Current                                         16,000         11,800
  Current Portion of Obligation Under Capital Lease                              472,772        709,157
                                                                            ------------   ------------

     Total Current Liabilities                                                 8,991,122        986,444
                                                                            ------------   ------------
STOCKHOLDERS' EQUITY
  Common Stock, $0.001 par value, 40,000,000 shares Authorized,
   15,927,698 and 15,794,348 shares Issued and Outstanding,
   respectively                                                                   15,928         15,795
  Additional Paid In Capital                                                  10,744,762     10,680,133
  Retained Deficit                                                            (2,648,852)    (2,889,471)
                                                                            ------------   ------------

     Total Stockholders' Equity                                                8,111,838      7,806,457
                                                                            ------------   ------------

       Total Liabilities and Stockholders' Equity                           $ 17,102,960   $  8,792,901
                                                                            ============   ============
</TABLE>

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

                                       2
<PAGE>
<TABLE>
<CAPTION>

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

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            For the Three and Six Months Ended June 30, 2005 and 2004
                                   (UNAUDITED)

                                                             For the Three Months             For the Six Months
                                                                 Ended June 30,                 Ended June 30,
                                                         ----------------------------    ----------------------------
                                                             2005            2004            2005            2004
                                                         ------------    ------------    ------------    ------------
<S>                                                      <C>             <C>             <C>             <C>
REVENUES
  Sale of Real Property                                  $    832,449    $  1,511,207    $  2,048,927    $  1,674,573
  Collections on Consumer Receivables                         750,392         383,361       1,249,247         598,402
  Interest Income - Tax Certificates Held and Other           110,719          88,294         170,977         112,631
                                                         ------------    ------------    ------------    ------------

    Total Revenues                                          1,693,560       1,982,862       3,469,151       2,385,606
                                                         ------------    ------------    ------------    ------------
OPERATING EXPENSES
  Cost of Real Property                                       738,337       1,444,258       1,729,533       1,643,382
  Consulting Fees                                                  --           1,000              --           8,611
  Professional Fees                                           390,309          61,895         746,558         170,400
  General and Administrative Expenses                         226,165          48,054         477,275         133,074
                                                         ------------    ------------    ------------    ------------

    Total Operating Expenses                                1,354,811       1,555,207       2,953,366       1,955,467
                                                         ------------    ------------    ------------    ------------

Income from Operations                                        338,749         427,655         515,785         430,139
                                                         ------------    ------------    ------------    ------------
OTHER EXPENSE
  Interest Expense                                            (99,451)       (135,449)       (107,554)       (232,199)
                                                         ------------    ------------    ------------    ------------

    Total Other Expense                                       (99,451)       (135,449)       (107,554)       (232,199)
                                                         ------------    ------------    ------------    ------------

Income Before Tax Provision                                   239,298         292,206         408,231         197,940

Provision for Income Taxes                                     63,581           4,730         167,612           4,730
                                                         ------------    ------------    ------------    ------------

Net Income                                               $    175,717    $    287,476    $    240,619    $    193,210
                                                         ============    ============    ============    ============

Weighted Average Common Shares - Basic                     15,927,698      17,456,610      15,925,488      40,268,247
                                                         ============    ============    ============    ============
Net Income per Common Share - Basic                      $       0.01    $       0.02    $       0.02    $       0.00
                                                         ============    ============    ============    ============
Weighted Average Common Shares - Diluted                   19,843,537      53,022,110      19,840,885      58,149,244
                                                         ============    ============    ============    ============
Net Income per Common Share - Diluted                    $       0.01    $       0.01    $       0.01    $       0.00
                                                         ============    ============    ============    ============
</TABLE>

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

                                       3
<PAGE>
<TABLE>
<CAPTION>

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

            CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT) /
                            MEMBERS EQUITY (DEFICIT)
                     For the Six Months Ended June 30, 2005
                                   (UNAUDITED)


                                                                   Common Stock
                                                           ---------------------------    Additional                      Total
                                                             Number of                     Paid in        Retained     Stockholders'
                                                              Shares        Par Value      Capital        Deficit         Equity
                                                           ------------   ------------   ------------   ------------   ------------
<S>                                                          <C>                <C>        <C>            <C>             <C>
BALANCES, December 31, 2004 - 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                                                           --             --             --        240,619        240,619
                                                           ------------   ------------   ------------   ------------   ------------

BALANCES, June 30, 2005                                      15,927,698   $     15,928   $ 10,744,762   $ (2,648,852)  $  8,111,838
                                                           ============   ============   ============   ============   ============
</TABLE>

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

                                       4
<PAGE>
<TABLE>
<CAPTION>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                  For the Six Months Ended
                                                                          June 30,
                                                                ---------------------------
                                                                    2005           2004
                                                                ------------   ------------
<S>                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income                                                    $    240,619   $    193,210
  Adjustments to reconcile net income to net cash
    used by operating activities
    Depreciation and Amortization                                     23,915          1,146
    (Increase) Decrease in:
      Accounts Receivable                                            734,027        193,027
      Property Inventory Owned                                    (3,351,574)      (576,540)
      Deposits on Properties                                          54,615         97,500
      Tax Certificates Held and Accrued Interest Receivable,
       Net of Discounts                                               85,486        219,998
      Finance Receivables                                         (6,047,813)      (347,625)
      Other Current Assets                                           (44,776)            --
      Deferred Income Tax Asset - Non-Current                         43,500             --
      Other Assets                                                  (212,500)            --
    Increase (Decrease) in:
      Accrued Expenses                                               112,597         83,293
      Estimated Court and Media Costs                              1,345,366             --
      Installment Payable                                                 --         41,121
      Income Taxes Payable                                           (32,287)            --
      Deferred Income Tax Liability - Current                          4,200             --
                                                                ------------   ------------

        Net Cash Used by Operating Activities                     (7,044,625)       (94,870)
                                                                ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
      Acquisition of Property and Equipment                          (32,323)       (12,895)
      Cash Received from Reverse Acquisition                              --            452
                                                                ------------   ------------
        Net Cash Used by Investing Activities                        (32,323)       (12,443)
                                                                ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  New Borrowings:
    Short-Term                                                     3,442,450        450,000
    Long-Term                                                      3,350,000        500,000
  Debt Reduction:
    Short-Term                                                      (236,385)            --
    Long-Term                                                             --       (546,988)
Proceeds Received from Private Placement Stock Sales                 200,024        500,000
Commissions Paid on Private Placement                               (135,262)            --
                                                                ------------   ------------
   Net Cash Provided from Financing Activities                     6,620,827        903,012
                                                                ------------   ------------

Net Increase in Cash and Cash Equivalents                           (456,121)       795,699

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

Cash and Cash Equivalents, End of Year                          $    967,002   $  1,336,126
                                                                ============   ============
</TABLE>

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

                                       5
<PAGE>
                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 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 June 30,
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.

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.

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

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 consumer receivable 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 receivable is to be accounted for individually or
whether such receivables will be assembled into static pools of receivables
based on common risk characteristics.

                                       6
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY (Continued)

Investments and Revenue Recognition - Consumer Receivable Portfolios (Continued)
--------------------------------------------------------------------------------

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 of 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 an 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 capable of being estimated and
begins to recognize income based on the interest method as described above. At
June 30, 2005, 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 consumer receivables. At June 30, 2005, the Company had no
valuation allowance on its 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.

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY (Continued)

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 six months ended June 30, 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.

Investments in real property consist of the following:

                                             Six Months     Six Months
                                               Ended          Ended
                                              June 30,       June 30,
                                                2005           2004
                                            ------------   ------------
Total Property Inventory                    $  5,051,085   $  1,716,210
Assignments and Judgments                        451,349             --
                                            ------------   ------------

Total Investment in Real Property           $  5,502,434   $  1,716,210
                                            ============   ============

                                       8
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (UNAUDITED)

NOTE 2 - INVESTMENTS (Continued)

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

                                                  Six Months     Six Months
                                                    Ended          Ended
                                                   June 30,       June 30,
                                                     2005           2004
                                                 ------------   ------------
Tax Lien Certificates                            $    362,106   $    522,420
Discount on Purchase                                       --         (4,925)
Accrued Interest                                      254,525        271,580
                                                 ------------   ------------

  Total Tax Certficates, Net of Discounts        $    616,631   $    789,075
                                                 ============   ============

NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS

As of June 30, 2005 and 2004, the Company had $9,285,665 and $2,114,791,
respectively, remaining of consumer receivable portfolios. Changes in consumer
receivables are at June 30, 2005 and 2004 were as follows:

                                                  Six Months     Six Months
                                                    Ended          Ended
                                                   June 30,       June 30,
                                                     2005           2004
                                                 ------------   ------------
Balance at beginning of period                   $  3,237,852   $  1,767,166
Acquisitions and Capitalized Costs,
 net of Returns                                     6,763,393        625,193

Cash Collections                                   (1,964,827)      (832,871)
Income Recognized on Consumer Receivables           1,249,247        555,303
                                                 ------------   ------------
  Cash Collections Applied to Principal              (715,580)      (277,568)
                                                 ------------   ------------

  Total Consumer Receivable Portfolios           $  9,285,665   $  2,114,791
                                                 ============   ============

As of June 30, 2005 the Company had $9,285,665 in consumer receivables. Based
upon management's current estimation of future cash collections, principal
reductions will, be as follows:

June 30, 2006                                                   $  1,302,241
June 30, 2007                                                      1,752,521
June 30, 2008                                                      1,911,869
June 30, 2009                                                      1,872,366
June 30, 2010                                                      2,446,668
                                                                ------------

Total                                                           $  9,285,665
                                                                ============

                                       9
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (UNAUDITED)

NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS (Continued)

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 June 30, 2005. Changes in the accretable yield are as follows:


                                                                    Six Months
                                                                      Ended
                                                                     June 30,
                                                                       2005
                                                                   ------------
Balance at Beginning of Period                                     $  2,879,823
Income Recognized on Consumer Receivable Portfolios                  (1,249,247)
Additions                                                             7,038,296
Reclassification From Nonaccretable Difference                               --
                                                                   ------------

  Balance at End of Period                                         $  8,668,872
                                                                   ============

NOTE 4 - SHORT TERM BORROWINGS UNDER LINES 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 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 Guarantee, 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 June 30, 2005
and December 31, 2004, the Company had $3,342,450 and $-0-, respectively,
outstanding on the line.

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 June 30,
2005. The entire principal of each note is payable on April 15, 2006 unless the
holder thereof gives written notice to the Company 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.

                                       10
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (UNAUDITED)

NOTE 5 - NOTES PAYABLE - SHORT TERM (Continued)

On June 2, 2005, J. Holder, a wholly owned subsidiary of Velocity Asset
Management, Inc., acquired a residential property in Melbourne, Florida 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 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.

NOTE 6 - 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 for $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 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 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 six month periods ended June 30, 2005 and 2004 were as follows:

                                                  Six Months     Six Months
                                                    Ended          Ended
                                                   June 30,       June 30,
                                                     2005           2004
                                                 ------------   ------------
Legal Services Paid to Ragan & Ragan, PC         $    491,751   $    128,147
                                                 ============   ============

                                       11
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (UNAUDITED)

NOTE 7 - OUTSTANDING WARRANTS

At June 30, 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) 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) was granted pursuant to private
offerings and/or in lieu of services rendered and expire after a period of five
years.

NOTE 8 - 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.

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, 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 "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 six months ended June 30, 2005.

                                       12
<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 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 six month period ended June 30, 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

                                       13
<PAGE>

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.

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% due to a
deterioration of credit quality between the origination and our acquisition of
the accounts. 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.
Income is recognized using either the interest method or the cost recovery
method. 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 receivable's contractual terms. If both
conditions exist, we determine whether each such receivable is to be accounted
for individually or whether such receivables will be assembled into pools of
receivables 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
receivables and subsequently aggregated pools of receivables. 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 receivable or
pool (accretable yield).

                                       14
<PAGE>

         Prior to January 1, 2005, we accounted for our investment in consumer
receivable portfolios 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 each pool of consumer receivables' estimated rate of return over
the useful life of such 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
("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 each
pool of consumer receivables' estimated rate of return over the useful life of
such 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
balance of each static pool of accounts. Each static pool is analyzed quarterly

                                       15
<PAGE>

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.

         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 June 30, 2005, we had no valuation allowance on
our consumer 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.

                                       16
<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".

         As discussed below, the six-month period ended June 30, 2005 was
characterized by a substantial increase in revenues offset by a substantial
increase in operating expenses, resulting in net income for the period of
$240,619 as compared to net income of $193,210 during the same period in the
prior year.

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

         Revenues in the three-month period ended June 30, 2005 (the "2005
Second Quarter) were $1,693,660 as compared to $1,982,862 in the same period in
the prior year (the "2004 Second Quarter"), representing a 14.6% decrease.
Revenues in the six month period ended June 30, 2005 (the "2005 Period") were
$3,469,151 as compared to $2,385,606 in the same period in the prior year (the
"2004 Period"), representing a 45.4% increase. The decrease in revenues for the
2005 Second Quarter as compared to the 2004 Second Quarter was primarily
attributable to a decrease in revenues at J. Holder, our distressed real
property subsidiary, due to significant revenue from a real property sale during
the 2004 Second Quarter. The increase in revenues for the 2005 Period was
primarily attributable to an increase in revenues at Velocity Investments, our
consumer receivables 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 49.1%, 44.3% and 6.6%, respectively during the 2005 Second Quarter
as compared to approximately 76.2%, 19.3%, and 4.5% during the 2004 Second
Quarter, and approximately 59.1%, 36% and 4.9% during the 2005 Period as
compared to 70.2%, 25.1% and 4.7% during the 2004 Period. 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 or sale dates, court decisions and other similar
events that affect the timing of revenue recognition.

Operating Expenses

         Total operating expenses in the 2005 Second Quarter were $1,354,811 as
compared to $1,555,207 in the 2004 Second Quarter, representing a 12.9%
decrease. Total operating expenses for the 2005 Period were $2,953,366 as
compared to $1,955,467 for the 2004 Period, representing a 51% increase. The
decrease in total operating expenses for the 2005 Second Quarter was primarily
attributable to an increase in professional fees and general and administrative
expenses offset by a decrease in real property expense. The increase in total
operating expenses for the 2005 Period was primarily attributable to an increase
in professional fees and general and administrative expenses due to an expansion
of operations at Velocity Investments.

                                       17
<PAGE>

Other Income (Expense)

         Interest expense in the 2005 Second Quarter was $99,451 as compared to
$135,449 in the 2004 Second Quarter, representing a 26.6% decrease. Interest
expense in the 2005 Period was $107,554 as compared to $232,199 in the 2004
Period, representing a 53.7% decrease. The decrease in interest expense for
both periods was primarily attributable to decreases in the amount and structure
of the Company's debt.

Net Income (Loss)

         Net income in 2005 Second Quarter was $175,717 as compare to $287,476
in the 2004 Second Quarter, representing a 38.9% decrease. Net income for the
2005 Period was $240,619 as compared to $193,210 in the 2004 Period,
representing a 24.5% increase. The decrease in net income for the 2005 Second
Quarter as compared to the 2004 Second Quarter was primarily attributable to
decreased revenues at J. Holder, our distressed real property subsidiary, which
sold a property during the 2004 Second Quarter. The increase in net income for
the 2005 Second Period as compared to the 2004 Second Period was primarily
attributable to an expansion of operations at our Velocity Investments
subsidiary. Results of operations are likely to fluctuate from quarter to
quarter depending on the mix of revenue sources and other factors beyond the
Company's control as indicated above. Accordingly, comparisons of quarter to
quarter may not be meaningful.

Liquidity and Capital Resources

         At June 30, 2005, the Company had approximately $967,000 in cash and
cash equivalents and trade accounts payable in the amount of $114,534.
Management believes that net of such amounts, together with the revenues
expected to be generated from operations as well as the Company's 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 is seeking to raise additional
capital through the sale of equity or debt instruments. Although the Company is
negotiating with various parties and institutions, no assurance can be given
that additional capital will be obtained on terms acceptable to the Company or
at all.

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

                                       18
<PAGE>

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 consolidated financial statements for the year ended December
31, 2004 and the three months ended March 31, 2005. We have also undertaken
remedial action to address and correct the weakness in our internal controls
over this process.

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

         None.

                                       19
<PAGE>
                                     PART II
                                OTHER INFORMATION

Item 1   Legal Proceedings

         None

Item 2   Changes in Securities

                  During the period covered by this Report, no securities were
         sold by the Registrant that were not registered under the Securities
         Act of 1933, as amended (the "Act"), except as set forth below.

                  1. On April 15, 2005, Registrant sold three of its promissory
         notes in the principal amount of $100,000, $150,000 and $100,000 each
         to three accredited investors in a private placement.

         The above securities were sold in alliance upon the exemption provided
         in Section 4(2) of the Act. The investors were furnished with
         information regarding the Registrant and the offering and issuance, and
         each had the opportunity to verify information supplied. Additionally,
         Registrant obtained a representation from each investor of such
         investor's intent to acquire the securities for the purpose of
         investment only, and not with a view toward the subsequent distribution
         thereof. The securities bear appropriate restrictive legends.

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

         4.1      Form of promissory note dated April 15, 2005.*

         4.2      Real Estate Joint Venture Agreement, dated June 2, 2005,
                  executed by J. Holder, Inc. and Groveland Estates, LLC.**

         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.
         ----------------------
         *   Incorporated by reference to Registrant's Current Report on Form
             8-K/A filed with the Securities and Exchange Commission on April
             19, 2005.
         **  Incorporated by reference to Registrant's Current Report on Form
             8/A filed with the Securities and Exchange Commission on June 22,
             2005.

         (b)     Reports on Form 8-K

                  1.   On April 19, 2005, Registrant filed a Current Report on
                       Form 8-K reporting the creation of a direct financial
                       obligation or an obligation under an off balance sheet
                       arrangement and the issuance of a press release.

                  2.   On April 19, 2005, registrant filed an amendment to its
                       Current Report on Form 8-K filed earlier that day to
                       correct the description of a term of the financial
                       obligation described therein.

                  3.   On June 22, 2005, Registrant filed a Current Report on
                       Form 8-K reporting the entry into a material definitive
                       agreement by its subsidiary, J. Holder, Inc. under which
                       such subsidiary acquired, through a joint venture, a real
                       property located in Melbourne, Florida.

                                       20
<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 18, 2005                By: /s/  JOHN C. KLEINERT
                                           -------------------------------------
                                           John C. Kleinert
                                           Chief Executive Officer and President


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