================================================================================

                       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, 2007

                                       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 16,154,321 shares of
common stock issued and outstanding as of May 11, 2007.

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, 2007

                                      Index

<TABLE>
<CAPTION>
                                                                                        Page
                                                                                        Number
                                                                                        ------
<S>                 <S>                                                                  <C>
PART I              FINANCIAL INFORMATION

Item 1              Condensed Consolidated Balance Sheets as at December 31, 2006
                     and March 31, 2007 (unaudited at March 31, 2007)                     2

                    Condensed Consolidated Statements of Income for the three
                     Month periods ended March 31, 2007 and 2006 (unaudited)              4

                    Condensed Consolidated Statements of Stockholders' Equity
                     for the three months ended March 31, 2007 (unaudited)                5

                    Condensed Consolidated Statements of Cash Flows for the
                     three month periods ended March 31, 2007 and 2006 (unaudited)        6

                    Notes to the Condensed Consolidated Financial Statements              7

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

Item 3              Controls and Procedures                                              21

PART II
Item 1              Legal Proceedings                                                    22
Item 2              Unregistered Sales of Equity Securities and Use of Proceeds          22
Item 3              Defaults Upon Senior Securities                                      22
Item 4              Submission of Matters to a Vote of Security Holders                  22
Item 5              Other Information                                                    22
Item 6              Exhibits                                                             22
Signatures                                                                               23
Certifications
</TABLE>

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1     FINANCIAL STATEMENTS

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  March 31,    December 31,
                                                                    2007           2006
                                                                ------------   ------------
                                                                 (Unaudited)
<S>                                                             <C>            <C>
                           ASSETS

Cash and cash equivalents                                       $    598,026   $  2,444,356
Properties held for sale                                           6,757,223      6,314,346
Deposits on properties                                               309,330        240,000
Tax certificates held and accrued interest receivable                394,366        472,071
Consumer receivables                                              40,537,990     38,327,926
Property and equipment, net of accumulated depreciation               69,628         68,619
Deferred income tax asset                                            281,200        306,900
Security deposit                                                      30,100         30,100
Other assets                                                         289,925        229,841
                                                                ------------   ------------

  Total assets                                                  $ 49,267,788   $ 48,434,159
                                                                ============   ============
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       -2-
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     March 31,        December 31,
                                                                       2007               2006
                                                                   -------------      -------------
                                                                    (Unaudited)
<S>                                                                <C>                <C>
              LIABILITIES AND STOCKHOLDERS' EQUITY


Accounts payable and accrued expenses                              $   1,114,610      $     873,507
Estimated court and media costs                                        8,116,719          8,446,319
Line of credit                                                        14,558,921         13,791,388
Notes payable to related parties                                       2,370,000          2,370,000
Notes payable and mortgage                                               780,000            780,000
Income taxes payable                                                     515,759            600,974
                                                                   -------------      -------------

  Total liabilities                                                   27,456,009         26,862,188
                                                                   -------------      -------------
                      STOCKHOLDERS' EQUITY
Convertible preferred stock, $0.001 par value, 10,000,000 shares
 authorized, 1,380,000 shares issued and outstanding
 (liquidation value of Preferred Stock of 13,800,000 at
 March 31, 2007 and December 31, 2006)                                     1,380              1,380
Common stock, $0.001 par value, 40,000,000 shares authorized,
 16,154,321 and 16,129,321 shares issued and outstanding,
 respectively                                                             16,154             16,129
Additional paid-in-capital                                            23,557,356         23,502,381
Accumulated deficit                                                   (1,763,111)        (1,947,919)
                                                                   -------------      -------------

Total stockholders' equity                                            21,811,779         21,571,971
                                                                   -------------      -------------

  Total liabilities and stockholders' equity                       $  49,267,788      $  48,434,159
                                                                   =============      =============
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       -3-
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         For the Three Months Ended
                                                                                                 March 31,
                                                                                        -----------------------------
                                                                                            2007             2006
                                                                                        -------------   -------------
<S>                                                                                     <C>             <C>
REVENUES
  Sale of real property                                                                 $      55,012   $     371,312
  Income on consumer receivables                                                            3,056,043       1,454,647
  Interest income on tax certificates held                                                     59,685          30,196
                                                                                        -------------   -------------

    Total revenues                                                                          3,170,740       1,856,155
                                                                                        -------------   -------------
OPERATING EXPENSES
  Cost of real property                                                                        62,151         301,153
  Professional fees (including fees paid to related parties of
   $337,751 and $338,952 for the periods ended March 31, 2007 and 2006,
   respectively)                                                                              952,855         743,995
  General and administrative expenses                                                         825,732         397,685
                                                                                        -------------   -------------

    Total operating expenses                                                                1,840,738       1,442,833
                                                                                        -------------   -------------

    Income from operations                                                                  1,330,002         413,322

OTHER EXPENSE
  Interest expense (including interest paid to related parties of
   $57,750 and $57,750 for the periods ended March 31, 2007 and 2006,
   respectively)                                                                             (419,068)       (320,564)
                                                                                        -------------   -------------

Income before provision for income taxes                                                      910,934          92,758

Provision for income taxes                                                                    381,126          23,421
                                                                                        -------------   -------------

Net income                                                                                    529,808          69,337

Preferred dividend                                                                           (345,000)              -
                                                                                        -------------   -------------
Net income attributable to common stockholders                                          $     184,808   $      69,337
                                                                                        =============   =============

Weighted average common shares - basic                                                     16,138,210      15,972,321
                                                                                        =============   =============

Net income per common share - basic                                                     $        0.01   $        0.00
                                                                                        =============   =============

Weighted average common shares - diluted                                                   17,885,494      17,393,627
                                                                                        =============   =============

Net income per common share - diluted                                                   $        0.01   $        0.00
                                                                                        =============   =============
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       -4-
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 2007
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                       Preferred Stock               Common Stock
                                  -------------------------   -------------------------    Additional                     Total
                                   Number of                   Number of                    Paid in     Accumulated   Stockholders'
                                    Shares       Par Value      Shares       Par Value      Capital       Deficit        Equity
                                  -----------   -----------   -----------   -----------   ------------  ------------  -------------
<S>                                 <C>         <C>            <C>          <C>           <C>           <C>           <C>
BALANCES, December 31, 2006         1,380,000   $     1,380    16,129,321   $    16,129   $ 23,502,381  $ (1,947,919) $  21,571,971

Dividends declared on preferred
 stock                                      -             -             -             -              -      (345,000)      (345,000)

Stock based compensation                    -             -        25,000            25         54,975             -         55,000

Net Income                                  -             -             -             -              -       529,808        529,808
                                  -----------   -----------   -----------   -----------   ------------  ------------  -------------

BALANCES, March 31, 2007            1,380,000   $     1,380    16,154,321   $    16,154   $ 23,557,356  $ (1,763,111) $  21,811,779
                                  ===========   ===========   ===========   ===========   ============  ============  =============
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       -5-
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  For the Three Months Ended
                                                                                           March 31,
                                                                                  ---------------------------
                                                                                      2007           2006
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                        $    529,808   $     69,337
Adjustments to reconcile net income to net cash used in operating activities
  Depreciation and amortization                                                         44,440          7,794
  Non-cash expenses relating to stock compensation                                      55,000              -
  Deferred income tax benefit                                                           25,700         15,300
  (Increase) decrease in:
    Accounts receivable                                                                      -       (104,313)
    Properties held for sale                                                          (442,877)       271,255
    Deposits on properties                                                             (69,330)       240,000
    Tax certificates held and accrued interest receivable                               77,705         84,990
    Consumer receivables                                                            (2,224,863)       573,199
    Security deposit                                                                         -         61,000
    Other assets                                                                       (81,357)      (181,007)
  Increase (decrease) in:
    Accounts payable and accrued expenses                                              241,103         77,250
    Estimated court and media costs                                                   (329,600)      (715,326)
    Income taxes payable                                                               (85,215)      (120,323)
                                                                                  ------------   ------------
Net cash (used in) provided by operating activities                                 (2,259,486)       279,156
                                                                                  ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of property and equipment                                                 (9,377)        (2,217)
                                                                                  ------------   ------------
Net cash used in investing activities                                                   (9,377)        (2,217)
                                                                                  ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowings                                                             767,533        150,000
  Repayments of borrowings                                                                   -       (437,796)
  Payment of dividends                                                                (345,000)             -
                                                                                  ------------   ------------
Net cash provided by (used in) financing activities                                    422,533       (287,796)
                                                                                  ------------   ------------

Net decrease in cash and cash equivalents                                           (1,846,330)       (10,857)

Cash and cash equivalents, beginning of year                                         2,444,356         90,624
                                                                                  ------------   ------------

Cash and cash equivalents, end of year                                            $    598,026   $     79,767
                                                                                  ============   ============

Supplemental disclosure of cash flow information:
  Cash paid for interest                                                          $    345,317   $    730,674
  Cash paid for income taxes                                                      $    451,445   $    510,141
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       -6-
<PAGE>

                VELOCITY ASSET MANANGEMENT, INC. AND SUBSIDIARIES

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND BUSINESS

The condensed consolidated financial statements of Velocity Asset Management,
Inc. ("VAMI") and its wholly-owned subsidiaries, Velocity Investments, LLC
("Velocity"), J. Holder, Inc. ("J. Holder"), VOM, LLC, ("VOM"), TLOP Acquisition
Company, LLC ("TLOP") and SH Sales, Inc. ("SH") (the "Subsidiaries", and
together with Velocity Asset Management, Inc., the "Company") included herein
have been prepared by the Company and are unaudited; however, such information
is in accordance with Security and Exchange Commission regulations and reflects
all adjustments (consisting solely of normal recurring adjustments), which are,
in the opinion of management, necessary for a fair presentation of the financial
position, results of operations, and cash flows for the interim periods to which
the report relates. The results of operations for the periods ended March 31,
2007 and 2006 are not necessarily indicative of the operating results that may
be achieved for the full year.

Certain information and footnote disclosures, normally included in consolidated
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America, have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the audited, consolidated financial statements and notes
thereto included in the Company's Form 10-KSB for the year ended December 31,
2006.

The Company has one continuing industry segment - the acquisition, management,
collection, and servicing of distressed assets.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTIES HELD FOR SALE

Properties held for sale consist of 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 present the
property ready for resale. The Company recognizes income and related expenses
from the sale of real property at the date the sale closes.

TAX CERTIFICATES HELD AND ACCRUED INTEREST RECEIVABLE

The Company records its New Jersey municipal tax liens at cost plus accrued
interest. Interest income is recognized using the effective interest method
("interest method").

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 time
of 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 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 ("PB-6")."
Effective January 1, 2005, the Company adopted and began to account for its
investment in consumer receivable portfolios using the interest method under the
guidance of American Institute of Certified Public Accountants ("AICPA")
Statement of Position ("SOP") 03-3, "Accounting for Loans or Certain Securities
Acquired in a Transfer." SOP 03-3 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 are recognized prospectively through adjustment of the internal rate of
return ("IRR") while decreases in expected cash flows are recognized as
impairment.

                                       -7-
<PAGE>

                VELOCITY ASSET MANANGEMENT, INC. AND SUBSIDIARIES

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 03-3 requires that the expected decrease be recognized as
impairment by decreasing the carrying value of the affected pool (rather than
lowering 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, 2007 and
December 31, 2006, the Company had no consumer receivable portfolios accounted
for under the cost recovery method.

The Company estimates and capitalizes certain fees paid to third parties related
to the direct acquisition of a portfolio of accounts. These fees are added to
the cost of the individual portfolio and amortized over the life of the
portfolio using the interest method. An offsetting liability is included as
"Estimated court and media costs" on the balance sheet. The balance of these
estimated costs at March 31, 2007 and December 31, 2006 was $8,116,719, and
$8,446,319, respectively.

The Company establishes valuation allowances for all acquired loans subject to
SOP 03-3 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, 2007 and December 31, 2006, the
Company had no valuation allowance on its consumer receivables.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

With respect to income recognition under the interest method, significant
estimates have been made by management with respect to the collectibility of
future cash flows of portfolios. The Company takes into consideration the
relative credit quality of the underlying receivables constituting the portfolio
acquired, the strategy implemented to maximize collections thereof as well as
other factors to estimate the anticipated cash flows. Actual results could
differ from these estimates making it reasonably possible that a change in these
estimates could occur within one year. On a quarterly basis, management reviews
the estimate of future cash collections, and whether it is reasonably possible
that its assessment of collectibility may change based on actual results and
other factors.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115." This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, "Fair Value Measurements." Management has not
determined whether the Company will voluntarily choose to measure any of its
financial assets and financial liabilities at fair value. Management has not
determined whether the adoption of this statement will affect its reported
results of operations or financial condition.

                                       -8-
<PAGE>

                VELOCITY ASSET MANANGEMENT, INC. AND SUBSIDIARIES

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)

NOTE 3 - INVESTMENTS

PROPERTIES HELD FOR SALE

Properties held for sale consist of the following:

                                        March 31,       December 31,
                                          2007              2006
                                      ------------      ------------
Real property inventory               $  6,657,526      $  6,289,649
Assignments and judgments                   99,697            24,697
                                      ------------      ------------

  Total properties held for sale      $  6,757,223      $  6,314,346
                                      ============      ============

TAX CERTIFICATES HELD AND ACCRUED INTEREST RECEIVABLE

                                                      March 31,    December 31,
                                                        2007           2006
                                                    ------------   ------------
Tax certificates held                               $    194,634   $    243,796
Accrued interest                                         199,732        228,275
                                                    ------------   ------------

  Total tax certficates held and accrued interest   $    394,366   $    472,071
                                                    ============   ============

NOTE 4 - CONSUMER RECEIVABLES

Consumer receivable activity for the three months ended March 31, 2007 and 2006
were as follows:

<TABLE>
<CAPTION>
                                                        Three Months     Three Months
                                                            Ended            Ended
                                                          March 31,        March 31,
                                                            2007             2006
                                                       --------------   --------------
<S>                                                    <C>              <C>
Balance at beginning of period                         $   38,327,926   $   17,758,661

Acquisitions and capitalized costs, net of returns          2,850,623          367,928
Amortization of capitalized costs                             (14,799)               -
                                                       --------------   --------------
                                                            2,835,824          367,928
                                                       --------------   --------------

Cash collections                                           (3,681,803)      (2,395,774)
Income recognized on consumer receivables                   3,056,043        1,454,647
                                                       --------------   --------------
  Cash collections applied to principal                      (625,760)        (941,127)
                                                       --------------   --------------

  Balance at end of period                             $   40,537,990   $   17,185,462
                                                       ==============   ==============
</TABLE>

                                       -9-
<PAGE>

                VELOCITY ASSET MANANGEMENT, INC. AND SUBSIDIARIES

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)

NOTE 4 - CONSUMER RECEIVABLES (Continued)

As of March 31, 2007, the Company had $40,537,990 in consumer receivables. Based
upon management's current estimation of projected future collections, principal
reductions will be as follows:

                  March 31,
               --------------
    2008       $    6,892,799
    2009            8,787,931
    2010           10,623,748
    2011            8,999,603
    2012            5,233,909
               --------------

Total          $   40,537,990
               ==============

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, 2007 and 2006. Changes in the accretable yield are as
follows:

                                               Three Months     Three Months
                                                   Ended            Ended
                                                 March 31,        March 31,
                                                   2007             2006
                                              --------------   --------------
Balance at beginning of year                  $   29,643,803   $   15,618,641
Income recognized on consumer receivables         (3,056,043)      (1,454,647)
Additions                                          2,405,503          396,076
                                              --------------   --------------

Balance at end of year                        $   28,993,263   $   14,560,070
                                              ==============   ==============

NOTE 5 - LINE OF CREDIT

On February 23, 2007, Velocity entered into a Third Amendment to the Loan and
Security Agreement (the "Loan Agreement") with Wells Fargo Foothill, Inc., a
California corporation (the "Lender") dated January 27, 2005. Pursuant to such
agreement, the Lender agreed to permanently increase the credit facility up to
$17,500,000. In addition, Velocity 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 at least
$6,500,000 in member's equity plus 50% of Velocity's net income for each
calendar quarter that ends on or after March 31, 2007. The Company also agreed
to maintain at least $21,000,000 in stockholder's equity plus 50% of the net
income of the Company for each calendar quarter that ends on or after March 31,
2007.

As of March 31, 2007 and December 31, 2006, the Company had $14,558,921 and
$13,791,388 outstanding on the credit facility, respectively. The maturity date
of the credit facility is January 27, 2009.

                                      -10-
<PAGE>

                VELOCITY ASSET MANANGEMENT, INC. AND SUBSIDIARIES

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company has note payables with various related parties. Total interest
expense to related parties for the three month period ended March 31, 2007 and
2006 was $57,750 and $57,750, respectively.

The Company engages Ragan & Ragan, PC, an entity owned by Messrs. Ragan & Ragan,
to service its consumer receivable portfolios, interests in distressed real
property and tax lien certificates 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.

Ragan & Ragan, P.C. routinely advances their court costs associated with
the servicing of the consumer receivables portfolios, which are subsequently
reimbursed by the Company.  These costs are included in the estimated court
and media costs in the condensed consolidated balance sheets.

Legal fees paid to Ragan & Ragan, P.C., by the individual subsidiaries were as
follows:

                               Three Months     Three Months
                                   Ended            Ended
                                 March 31,        March 31,
                                   2007             2006
                              --------------   --------------
Velocity Investments, LLC     $      337,584   $      328,674
J. Holder, Inc.                            -           10,139
VOM, LLC                                 167              139
                              --------------   --------------

                              $      337,751   $      338,952
                              ==============   ==============

NOTE 7 - STOCK BASED COMPENSATION

STOCK BASED CONSIDERATION TO EMPLOYEES

The 2004 Equity Incentive Program of the Company, (the "Employee Plan")
authorizes the issuance of up to 1,000,000 shares of common stock in connection
with the grant of options or issuance of restricted stock awards.

To the extent that the Company derives a tax benefit from options exercised by
employees, if any, such benefit will be credited to additional paid-in capital
when realized on our income tax return. There were no tax benefits realized by
the Company during the three months ended March 31, 2007 or the year ended
December 31, 2006. No options have been granted to date.

During the year ended December 31, 2006, the Company issued restricted stock
awards. Prior to the year ended December 31, 2006, the Company had not issued
any restricted stock awards. As part of these restricted stock awards Mr.
Mastriani was granted 200,000 shares to be vested incrementally. As of March 31,
2007, 150,000 shares of Mr. Mastriani's stock had vested. The following
summarizes the transactions of shares of common stock under the Employee Plan
during the three month period ended March 31, 2007. There were no transactions
during the three months ended March 31, 2006.

                      Number of Shares                     Compensation
     Employee             Vesting         Market Value        Expense
------------------   -----------------   --------------   --------------
James J. Mastriani              25,000   $         2.20   $       55,000

Mr. Mastriani's remaining shares will vest in increments of 25,000 shares on May
27, 2007 and August 27, 2007, provided that he is employed by the Company on
each date.

In accordance with SFAS 123(R), the Company recorded approximately $55,000 of
expense related to grants of common stock which vested during the three months
ended March 31, 2007.

As of March 31, 2007, approximately $77,500 of unrecognized stock compensation
expense on 50,000 shares of Common Stock related to unvested restricted stock
awards (net of estimated forfeitures) is expected to be recognized through
August 2007.

                                      -11-
<PAGE>

                VELOCITY ASSET MANANGEMENT, INC. AND SUBSIDIARIES

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)

NOTE 8 - EARNINGS PER SHARE

Basic earnings per share are computed using the weighted average number of
shares outstanding during each period. Diluted earnings per share are computed
using the weighted average number of shares outstanding during each period, plus
the incremental shares outstanding assuming the conversion of preferred shares
and convertible debt to common shares and the exercise of dilutive stock
options. Outstanding options and warrants to non-employees convertible into
1,177,160 shares of common stock at March 31, 2007 were not included in the
income per share calculation because their effect would have been anti-dilutive.
Convertible preferred stock, convertible into 5,520,000 shares of common stock
at March 31, 2007 were not included in the income per share because their
effects would have been anti-dilutive. Convertible notes, convertible into
112,500 shares of common stock at March 31, 2006 were not included in the income
per share calculation because their effect would have been anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                     Three Months     Three Months
                                                         Ended            Ended
                                                       March 31,        March 31,
                                                         2007             2006
                                                    --------------   --------------
<S>                                                 <C>              <C>
Numerator:
  Net income                                        $      529,808   $       69,337
  Preferred dividend                                      (345,000)               -
                                                    --------------   --------------

  Net income attributable to common shareholders
  - Basic and Diluted                               $      184,808   $       69,337
                                                    ==============   ==============

Denominator:
  Weighted average shares - Basic                       16,138,210       15,972,321
  Effect of dilutive instruments:
    Stock options                                        1,747,284        1,421,306
                                                    --------------   --------------

  Weighted average shares - Diluted                     17,885,494       17,393,627
                                                    ==============   ==============

Net income per common share - Basic                 $         0.01   $         0.00
                                                    ==============   ==============

Net income per common share - Diluted               $         0.01   $         0.00
                                                    ==============   ==============
</TABLE>

NOTE 9 - SUBSEQUENT EVENTS

On May 2, 2007, the Company signed a lease with Donato at Wall 4, LLC (the
"Donato Lease") with respect to its new business office (the "Office") located
at 1800 Route 34, Wall, New Jersey 07719. The Donato Lease consists of 2,450
square feet of office space and commences on July 1, 2007 with an initial term
of five years (the "Term"). The Company will have two options to extend the Term
for two additional terms of five years each. The total annual lease payment is
$43,487.50, payable in equal monthly installments on or before the first of each
month.

                                      -12-
<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 quarterly report.

NOTE ON FORWARD LOOKING STATEMENTS

     This quarterly report on Form 10-QSB includes and incorporates by reference
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934
with respect to our financial condition, results of operations, plans,
objectives, future performance and business, which are usually identified by the
use of words such as "will," "may," "anticipates," "believes," "estimates,"
"expects," "projects," "plans," "predicts," "continues," "intends," "should,"
"would," or similar expressions. We intend for these forward-looking statements
to be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, and are
including this statement for purposes of complying with these safe harbor
provisions.

     These forward-looking statements reflect our current views and expectations
about our plans, strategies and prospects, which are based on the information
currently available and on current assumptions.

     We cannot give any guarantee that these plans, intentions or expectations
will be achieved. Investors are cautioned that all forward-looking statements
involve risks and uncertainties, and actual results may differ materially from
those discussed in the forward-looking statements as a result of various
factors, including those Risk Factors set forth in our Form 10-KSB for the year
ended December 31, 2006. Listed below and discussed elsewhere in this quarterly
report are some important risks, uncertainties and contingencies that could
cause our actual results, performances or achievements to be materially
different from the forward-looking statements included or incorporated by
reference in this quarterly report. These risks, uncertainties and contingencies
include, but are not limited to, the following:

     o    the availability for purchase of consumer receivable portfolios,
interests in distressed real property and tax lien certificates that satisfy our
criteria;

     o    competition in the industry;

     o    the availability of debt and equity financing;

     o    future acquisitions;

     o    the availability of qualified personnel;

     o    international, national, regional and local economic and political
changes;

     o    general economic and market conditions;

     o    changes in applicable laws;

     o    trends affecting our industry, our financial condition or results of
operations;

     o    the timing and amount of collections on our consumer receivable
portfolios;

                                      -13-
<PAGE>

     o    the timing of sales of interests in distressed real property and
redemption of tax lien certificates; and

     o    increases in operating expenses associated with the growth of our
operations.

     You should read this quarterly report and the documents that we incorporate
by reference in this quarterly report completely and with the understanding that
our actual future results may be materially different from what we expect. We
may not update these forward-looking statements, even though our situation may
change in the future. We qualify all of our forward-looking statements by these
cautionary statements.

Overview

         Velocity Asset Management, Inc., 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 in the secondary market
at a discount from face value and then seeks to liquidate 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. Most of our revenue is
derived from the consumer receivables business and it is our primary operating
focus.

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 accounting principles generally accepted 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 consumer receivables, the fair value of
properties held for sale and the reported amounts of revenues and expenses. On
an on-going basis, we evaluate our estimates, including those related to the
recognition of revenue, future estimated cash flows and income taxes. We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results could differ
from those estimates. We believe the following critical accounting policies
affect the significant judgment and estimates used in the preparation of our
consolidated financial statements.

                                      -14-
<PAGE>

Purchased Consumer Receivable Portfolios and Revenue Recognition

We purchase pools of consumer receivable accounts at a substantial discount from
their face amounts, usually discounted at 75% to 97% from face value, and are
recorded by us at our acquisition cost, including the estimated cost of court
filing fees and account media. 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 consumer receivables over the
remaining life of the loan or pool using the interest method.

We acquire these consumer receivable portfolios at a significant discount to the
amount actually owed by the borrowers. We acquire these portfolios after a
qualitative and quantitative analysis of the underlying receivables and
calculate the purchase price so that our estimated cash flow provides us with a
sufficient return on our acquisition costs and servicing expenses. After
purchasing a portfolio, we actively monitor its performance and review and
adjust our collection and servicing strategies accordingly.

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 03-3,
"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 03-3. For portfolios of consumer
receivables acquired in fiscal years beginning after December 15, 2004,
Statement of Position 03-3 is effective. In accordance with Statement of
Position 03-3 (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 consumer receivables prescribed by
Statement of Position 03-3. Such 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. Statement of
Position 03-3 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 03-3.
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 that are accounted for under the cost recovery method.

                                      -15-
<PAGE>

Under Statement of Position 03-3, to the extent that there are differences in
actual performance versus expected performance, increases in expected cash flows
are recognized prospectively through adjustment of the internal rate of return
while decreases in expected cash flows are recognized as impairment. Under both
the guidance of Statement of Position 03-3 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
03-3 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 have no consumer
receivable portfolios that are accounted for under the cost recovery method.

We establish valuation allowances for all acquired consumer receivable
portfolios subject to Statement of Position 03-3 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
December 31, 2006 and March 31, 2007, 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 03-3 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.

The following table shows the changes in consumer receivables, including amounts
paid to acquire new portfolios of consumer receivables for the three months
ended March 31, 2007 and 2006:

                                      -16-
<PAGE>

<TABLE>
<CAPTION>
                                                        Three Months     Three Months
                                                            Ended            Ended
                                                          March 31,        March 31,
                                                            2007             2006
                                                       --------------   --------------
<S>                                                    <C>              <C>
Balance at beginning of period                         $   38,327,926   $   17,758,661

Acquisitions and capitalized costs, net of returns          2,850,623          367,928

Amortization of capitalized costs                             (14,799)               -
                                                       --------------   --------------

                                                            2,835,824          367,928
                                                       --------------   --------------

Cash collections                                           (3,681,803)      (2,395,774)

Income recognized on consumer receivables                   3,056,043        1,454,647
                                                       --------------   --------------
Cash collections applied to principal
                                                             (625,760)        (941,127)
                                                       --------------   --------------


Balance at end of period                               $   40,537,990   $   17,185,462
                                                       ==============   ==============
</TABLE>

Stock Based Compensation

         We account for stock based compensation utilizing the fair value
recognition provisions of SFAS No. 123 (revised 2004), "Share-Based Payment"
(SFAS No. 123R). The statement addresses the accounting for share-based payment
transactions with employees and other third parties and requires that the
compensation costs relating to such transactions be recognized in the
consolidated financial statements. SFAS No. 123R requires additional disclosures
relating to the income tax and cash flow effects resulting from share-based
payments. 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".

New Accounting Pronouncements

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115." This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, "Fair Value Measurements." Management has not
determined whether the Company will voluntarily choose to measure any of its
financial assets and financial liabilities at fair value. Management has not
determined whether the adoption of this statement will affect its reported
results of operations or financial condition.

Results of Operations

         Total Revenues

         Total revenues for the three month period ended March 31, 2007 (the
"2007 First Quarter") were $3,170,740 as compared to $1,856,155 during the three
month period ended March 31, 2006 (the "2006 First Quarter"), representing a
70.8% increase. The increase in revenues was primarily attributable to a
significant increase in collections on consumer receivables at our Velocity
Investments subsidiary that

                                      -17-
<PAGE>

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 1.7%, 96.4% and 1.9%, respectively, during the 2007 First Quarter
as compared to 20.0%, 78.4% and 1.6% during the 2006 First Quarter. Although
management believes that the mix of revenues on a comparative basis will vary
from reporting period to reporting period partly as a result of factors beyond
its control, such as maturity dates, court decisions and other similar events
that affect the timing of revenue recognition, it also believes that the
increase in consumer receivables revenues in the 2007 First Quarter is
reflective of the continued growth in its consumer receivables business.

         Total Operating Expenses

         Total operating expenses for the 2007 First Quarter were $1,840,738 as
compared to $1,442,833 during the 2006 First Quarter, representing a 27.6%
increase. The increase in total operating expenses was primarily attributable to
increased professional fees incurred as a result of an increase in collections
and a corresponding increase in legal commission expenses as a result of an
expansion of operations at our Velocity Investments' subsidiary. General and
administrative expenses increased in the 2007 First Quarter as a result of our
increasing due diligence expenses and electronic search fees for Velocity
Investments and an increase in payroll expense.

Other Income (Expense)

         Interest expense in the 2007 First Quarter was $419,068 as compared to
$320,564 in the 2006 First Quarter, representing a 30.7% increase. The increase
in interest expense was primarily attributable to an expansion of Velocity
Investments' line of credit with Wells Fargo Foothill, Inc.

Net Income (Loss)

         Net income for the 2007 First Quarter was $529,808 as compared to net
income for the 2006 First Quarter of $69,337, a 664.1% 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, 2007, the Company had approximately $598,000 in cash and
cash equivalents and trade accounts payable of approximately $1,100,000.
Management believes that the revenues expected to be generated from operations,
the Company's line of credit and the remaining proceeds of the preferred stock
financing 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 consumer 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. If, for any reason, our
available cash otherwise proves to be insufficient to fund operations (because
of future changes in the industry, general economic conditions, unanticipated
increases in expenses, or other factors, including acquisitions), we will be
required to seek additional funding.

         Net cash used in operating activities was approximately $2,259,000
during the 2007 First Quarter, as compared to net cash provided by operating
activities of approximately $279,000 in the 2006 First Quarter. The increase in
net cash used in operating activities was primarily due to a significant
increase in the purchase of portfolios of consumer receivables and a small
increase in the purchases of properties held for sale during the 2007 First
Quarter. Net cash provided by financing activities was

                                      -18-
<PAGE>

approximately $423,000 during the 2007 First Quarter, as compared to net cash
used in financing activities of approximately $288,000 in the 2006 First
Quarter. The increase in net cash provided by financing activities was primarily
due to the increase in the Velocity Investments senior credit facility discussed
below.

         On January 27, 2005, Velocity Investments, LLC 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, LLC with a
three year $12,500,000 senior credit facility to finance the acquisition of
individual pools of unsecured consumer receivables that are approved by Wells
Fargo Foothill under specific eligibility criteria set forth in the Loan and
Security Agreement.

         Simultaneous with the Loan and Security Agreement, the following
agreements were also entered into with Wells Fargo Foothill: a Continuing
Guaranty, in which we unconditionally and irrevocably guaranteed Velocity's
obligations under the Loan and Security Agreement; a Security and Pledge
Agreement, in which we pledged all of our assets to secure the credit facility,
including, but not limited to, all of our stock ownership of J. Holder and all
our membership interests in Velocity Investments, LLC and VOM; and a
Subordination Agreement, in which all sums owing to us by Velocity Investments,
LLC as an intercompany payable for advances or loans made or property
transferred to Velocity Investments, LLC will be subordinated to the credit
facility to the extent that such sums, when added to Velocity Investments, LLC
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, LLC 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 facility to 75% (up from 60%) of the
purchase price of individual pools of unsecured consumer receivables that are
approved by the lender. 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 1.50% 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 $250,000.

         Use of the senior credit facility is subject to Velocity Investments,
LLC 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, LLC; a
restriction on entering into transactions with affiliates outside the course of
Velocity Investment's ordinary business; and a restriction on making payments to
us in compliance with the Subordination Agreement. In addition, Velocity
Investments, LLC 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.

         On February 23, 2007, Velocity entered into a Third Amendment to the
Loan and Security Agreement. Pursuant to such amendment, the Lender agreed to
permanently increase the credit facility up to $17,500,000. In addition,
Velocity 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 at least $6,500,000 in member's
equity plus 50% of Velocity's net income for each calendar quarter that ends on
or after March 31, 2007. The Company has also agreed to maintain at least
$21,000,000 in stockholder's equity plus 50% of the net income of the Company
for each calendar quarter that ends on or after March 31, 2007.

         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 a 10% Secured Convertible Debenture, due April
27, 2007, in the principal amount of $1.8 million, and an associated

                                      -19-
<PAGE>

common stock purchase warrant to purchase 200,000 shares of our common stock at
an exercise price of $3.10 per share. Proceeds from the financing ($1,780,000)
were used primarily for working capital purposes including, but not limited to,
the purchase of distressed real property interests and distressed consumer
receivable portfolios. On May 19, 2006, we entered into an amendment to the
Securities Purchase Agreement pursuant to which we extended the initial maturity
date of the Convertible Debenture and issued an additional warrant to purchase
50,000 shares of our common stock at a purchase price of $3.10. On May 19, 2006,
we used $1,823,000 from proceeds of the preferred offering of our Series A stock
(as described in the next paragraph) to repay in full interest and principal
under the Convertible Debenture.

         On May 18, 2006, we consummated our public offering of 1,200,000 shares
of our Series A Convertible Preferred Stock. 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 to cover over-allotments which they exercised on May 31, 2006. The public
price per share for the offering was $10.00. Net proceeds of the offering
amounted to approximately $12.4 million. As of March 31, 2007, approximately
$6.5 million of the proceeds of the offering have been used for the purchase of
distressed consumer receivable portfolios, $1.823 million has been used to repay
the convertible debenture, $1.0 million has been used to redeem a mortgage and a
note on an investment property in Florida, $2.6 million has been used for
general corporate expenses and approximately $810,000 has been used to redeem
certain short term notes. The remaining proceeds of approximately $600,000 have
been placed in an interest bearing account at Commerce Bank, N.A.

Supplementary Information on Consumer Receivables Portfolios:

                         Portfolio Purchases/Collections

                          (dollar amounts in thousands)

<TABLE>
<CAPTION>
                  Outstanding                   Cumulative     Cumulative     Gross Cash
  Reporting        Principal     Portfolios      Purchase         Gross       Collections
    Period          Amount       Purchased         Price      Collections     Per Period
--------------   ------------   ------------   ------------   ------------   ------------
 <S>             <C>                      <C>  <C>            <C>            <C>
 12/31/2005      $    154,112             37   $     14,939   $      8,001   $      5,405
  3/31/2006      $    156,243              3   $     15,193   $      9,456   $      1,455
 12/31/2006      $    353,154             63   $     30,306   $     18,779   $     10,778
  3/31/2007      $    395,015              6   $     32,058   $     22,454   $      3,682
</TABLE>

The prices we pay for our consumer receivable portfolios are dependent on many
criteria, including the age of the portfolio, the type of receivable, our
analysis of the percentage of obligors who owe debt that is collectible through
legal collection means and the geographical distribution of the portfolio. When
we pay higher prices for portfolios which may have a higher percentage of
obligors whose debt we believe is collectible through legal collection means, we
believe it is not at the sacrifice of our expected returns. Price fluctuations
for portfolio purchases from quarter to quarter or year over year are indicative
of the overall mix of the types of portfolios we are purchasing.

During the three months ended March 31, 2007, we acquired six portfolios of
consumer receivables aggregating approximately $42 million in initial
outstanding principal amount at a purchase price of approximately $1.75 million
dollars, bringing the aggregate initial outstanding principal amount of consumer
receivables under management as of March 31, 2007 to approximately $395 million,
an increase of 154% as compared to approximately $156 million as of March 31,
2006. For the three month period ended March 31, 2007, we posted gross
collections of approximately $3.68 million a 153% increase as compared to gross
collections of $1.45 million in the three month period ended March 31, 2006.

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<PAGE>

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. As a
result of our line of credit and Preferred Stock offering, we anticipate that we
will incur significant increases in interest expense and dividend payments
offset, over time, by expected increased revenues from consumer receivable
portfolios purchased utilizing funds under such line of credit and the proceeds
from the Preferred Stock offering. No assurance can be given that the expected
revenues from such purchased portfolios will exceed the additional interest
expense or dividends. We are not presently aware of any other known trends that
may have a material impact on our 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 effect upon our
business.

ITEM 3            CONTROLS AND PROCEDURES.

         (a) Disclosure Controls. As of the end of the period covered by this
report, with the participation of our Chief Executive Officer and Chief
Financial Officer, we evaluated the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934). Based upon that evaluation, 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.'s required to be disclosed in our
periodic reports with the Securities and Exchange Commission. In addition, our
Chief Executive Officer and our Chief Financial Officer concluded that as of the
end of such period, our disclosure controls and procedures are also effective to
ensure that information required to be disclosed in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
There were no changes in our disclosure controls during the period covered by
the Report on Form 10-QSB.

                                      -21-
<PAGE>

                                     PART II
                                OTHER INFORMATION

         ITEM 1       LEGAL PROCEEDINGS

                  In the ordinary course of our business we are involved in
numerous legal proceedings. We regularly initiate collection lawsuits against
consumers using our network of third party law firms. Also, consumers may
occasionally initiate litigation against us in which they allege that we have
violated a Federal or state law in the process of collecting on their account.
We do not believe that these ordinary course matters are material to our
business and financial condition.

         As of March 31, 2007, there are presently no material pending legal
proceedings to which we or any of our subsidiaries is a party or to which any of
our property is the subject and, to the best of our knowledge, no such actions
against us is contemplated or threatened.

         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

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.

                                      -22-
<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 21, 2007                   By: /s/  John C. Kleinert
                                           -------------------------------------
                                           John C. Kleinert
                                           Chief Executive Officer and President

                                      -23-