SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  FORM 10-QSB/A
                               (Amendment No. 1)


(MARK ONE)

[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 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 [ ]

Indicate by check mark whether the registrant is a shell company (as defined by
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: As of November 8, 2005, the registrant
had 15,972,556 shares of common stock outstanding.
<PAGE>

                    VELOCITY ASSET MANAGEMENT SERVICES, INC.


                                  FORM 10-QSB/A
                               (Amendment No. 1)
                    For the Quarter Ended September 30, 2005


                                      Index
                                                                           Page
                                                                          Number
PART I              FINANCIAL INFORMATION

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

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

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

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

            Notes to Consolidated Financial Statements                       6

Item 2      Management's Discussion and Analysis or Plan of Operation       16

Item 3      Controls and Procedures                                         22

PART II

Item 1      Legal Proceedings                                               23
Item 2      Changes in Securities                                           23
Item 3      Defaults Upon Senior Securities                                 23
Item 4      Submission of Matters to a Vote of Security Holders             23
Item 5      Other Information                                               23
Item 6      Exhibits and Reports on Form 8 - K                              23
Signature                                                                   25
Exhibit 31.1                                                                26
Exhibit 31.2                                                                27
Exhibit 32.1                                                                28
Exhibit 32.2                                                                29

                                       i
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1     Financial Statements


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

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    September 30, 2005 and December 31, 2004
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                           December 31,
                          ASSETS                                            September 30,      2004
                                                                                2005        (Restated)
                                                                            ------------   ------------
<S>                                                                         <C>            <C>
CURRENT ASSETS
  Cash and Cash Equivalents                                                 $    155,510   $  1,423,123
  Accounts Receivable                                                            179,157        815,251
  Property Inventory Owned                                                     5,529,389      2,150,860
  Deposits on Properties                                                         267,500        120,000
  Tax Certificates Held and Accrued Interest Receivable, net of discounts        580,193        702,117
  Consumer Receivables                                                        16,005,805      3,237,852
  Prior Year Income Tax Refund Receivable                                         68,693             --
  Other Current Assets                                                            22,966             --
                                                                            ------------   ------------

      Total Current Assets                                                    22,809,213      8,449,203
                                                                            ------------   ------------

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation                                                                    81,171         47,198
                                                                            ------------   ------------

OTHER ASSETS
  Deferred Income Tax Asset - Non-Current                                        178,000        221,500
  Other Asset                                                                    249,889         75,000
                                                                            ------------   ------------

      Total Other Assets                                                         427,889        296,500
                                                                            ------------   ------------

      Total Assets                                                          $ 23,318,273   $  8,792,901
                                                                            ============   ============
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       1
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

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

<TABLE>
<CAPTION>
                                                                                  December 31,
              LIABILITIES AND STOCKHOLDERS' EQUITY                September 30,       2004
                                                                      2005         (Restated)
                                                                  ------------    ------------
<S>                                                               <C>             <C>
CURRENT LIABILITIES
  Accrued Expenses                                                $    184,258    $      1,937
  Estimated Court and Media Costs                                    3,758,355              --
  Short-Term Borrowings Under Line of Credit                         5,685,194              --
  Notes Payable - Short Term                                         3,700,000              --
  Current Portion of Long-Term Debt                                         --         250,000
  Current Year Income Taxes Payable                                    226,485          13,550
  Deferred Income Tax Liability - Current                               33,000          11,800
  Current Portion of Obligation Under Capital Lease                    354,578         709,157
                                                                  ------------    ------------

      Total Current Liabilities                                     13,941,870         986,444

LONG-TERM LIABILITIES
  Long-Term Debt, less current portion                               1,000,000              --
                                                                  ------------    ------------

      Total Liabilities                                             14,941,870         986,444
                                                                  ------------    ------------

STOCKHOLDERS' EQUITY
  Common Stock, $0.001 par value, 40,000,000 shares Authorized,
    15,972,556 and 15,794,348 shares Issued and Outstanding,
    respectively                                                        15,972          15,795
  Additional Paid In Capital                                        10,765,806      10,680,133
  Retained Deficit                                                  (2,405,375)     (2,889,471)
                                                                  ------------    ------------

  Total Stockholders' Equity                                         8,376,403       7,806,457
                                                                  ------------    ------------

      Total Liabilities and Stockholders' Equity (Deficit)        $ 23,318,273    $  8,792,901
                                                                  ============    ============
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       2
<PAGE>
                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                      (Formerly known as Tele-Optics, Inc.)

               CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
     For the Three and Six Months Ended June 30, 2005 and December 31, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                For the Three Months Ended      For the Nine Months Ended
                                                       September 30,                   September 30,
                                               ----------------------------    ----------------------------
                                                   2005            2004            2005            2004
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>
REVENUES
  Sale of Real Property, Interest Income and
     Mortgage/Judgment Liens                   $  1,687,537    $    519,898    $  3,670,889    $  2,240,484
  Collections on Credit Card Receivables          1,022,131         643,117       2,271,378       1,195,506
  Interest Income - Tax Certificates Held            48,617          84,713         285,169         197,344
                                               ------------    ------------    ------------    ------------

Total Revenues                                    2,758,285       1,247,728       6,227,436       3,633,334
                                               ------------    ------------    ------------    ------------

OPERATING EXPENSES
  Cost of Real Property                           1,260,486         460,707       2,990,019       2,104,089
  Consulting Fees                                        --           3,500              --          12,111
  Professional Fees                                 556,796         434,350       1,303,354         604,750
  Loss on Extinguishment of Debt                         --       2,859,307              --       2,859,307
  General and Administrative Expenses               246,984          49,239         724,259         183,651
                                               ------------    ------------    ------------    ------------

      Total Operating Expenses                    2,064,266       3,807,103       5,017,632       5,763,908
                                               ------------    ------------    ------------    ------------

      Income from Operations                        694,019      (2,559,375)      1,209,804      (2,130,574)
                                               ------------    ------------    ------------    ------------

OTHER EXPENSE
  Interest Expense                                 (257,013)       (105,920)       (364,567)       (338,119)
                                               ------------    ------------    ------------    ------------

      Total Other Expense                          (257,013)       (105,920)       (364,567)       (338,119)
                                               ------------    ------------    ------------    ------------

Income (Loss) Before Tax Provision                  437,006      (2,665,295)        845,237      (2,468,693)


Provision for Income Taxes                          193,529           4,730         361,141           8,122
                                               ------------    ------------    ------------    ------------

Net Income (Loss)                              $    243,477    $ (2,670,025)   $    484,096    $ (2,476,815)
                                               ============    ============    ============    ============



Weighted Average Common Shares - Basic           15,966,217      13,585,345      15,939,214       9,298,185
                                               ============    ============    ============    ============

Net Income (Loss) per Common Share - Basic     $       0.01    $      (0.20)   $       0.03    $      (0.27)
                                               ============    ============    ============    ============

Weighted Average Common Shares - Diluted         19,898,361      16,784,845      19,860,438      11,349,146
                                               ============    ============    ============    ============

Net Income (Loss) per Common Share - Diluted   $       0.01    $      (0.16)   $       0.02    $      (0.22)
                                               ============    ============    ============    ============
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       3
<PAGE>
  VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES (FORMERLY TELE-OPTICS, INC.)

            CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT) /
                         STOCKHOLDERS' EQUITY (DEFICIT)
                  For the Nine Months Ended September 30, 2005
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Common Stock
                                                     --------------------------     Additional      Retained           Total
                                                       Number of                     Paid in        Earnings        Stockholders'
                                                        Shares        Par Value      Capital        (Deficit)     Equity (Deficit)
                                                     ------------   ------------   ------------    ------------   ----------------
<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)

Issuance of Stock Pursuant to Right to
  Receive Clause                                           44,858             44            (44)             --              --

Issuance of Warrants for Services Rendered by
  an Independent Consultant                                    --             --         21,088              --          21,088

Net Income                                                     --             --             --         484,096         484,096
                                                     ------------   ------------   ------------    ------------    ------------

BALANCES, September 30, 2005                           15,972,556         15,972     10,765,806      (2,405,375)      8,376,403
                                                     ============   ============   ============    ============    ============
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       4
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         For the Nine Months Ended
                                                                                                September 30,
                                                                                        ----------------------------
                                                                                            2005            2004
                                                                                        ------------    ------------
<S>                                                                                     <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income (Loss)                                                                     $    484,096    $ (2,476,815)
  Adjustments to reconcile net income (loss) to net cash used by operating activities
    Depreciation and Amortization                                                             30,658           4,146
    Accrued Interest Expense Charged to Additional Paid in Capital                                --          86,499
    Warrants Issued for Services in Lieu of Payment                                           21,088              --
    Loss on Extinguishment of Debt                                                                --       2,859,307
    (Increase) Decrease in:
      Accounts Receivable                                                                    636,094         151,858
      Property Inventory Owned                                                            (3,378,529)       (599,690)
      Deposits on Properties                                                                (147,500)          7,500
      Tax Certificates Held and Accrued Interest Receivable, Net of Discounts                121,924         266,695
      Consumer Receivables                                                               (12,767,953)       (840,331)
      Prior Year Income Tax Refund Receivable                                                (68,693)             --
      Other Current Assets                                                                   (22,966)             --
      Deferred Income Tax Asset - Non-Current                                                 43,500              --
      Other Assets                                                                          (186,000)             --
    Increase (Decrease) in:
      Accrued Expenses                                                                       182,321          69,868
      Estimated Court and Media Costs                                                      3,758,355              --
      Installment Payable                                                                         --          50,746
      Current Year Income Taxes Payable                                                      212,935              --
      Deferred Income Tax Liability - Current                                                 21,200              --
                                                                                        ------------    ------------

        Net Cash Used by Operating Activities                                            (11,059,470)       (420,217)
                                                                                        ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
      Acquisition of Property and Equipment                                                  (53,520)        (40,800)
      Cash Received from Reverse Acquisition                                                      --             452
                                                                                        ------------    ------------

        Net Cash Used by Investing Activities                                                (53,520)        (40,348)
                                                                                        ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Loan Origination Fees                                                                           --         (75,000)
  New Borrowings:
      Short-Term                                                                           5,685,194         200,000
      Long-Term                                                                            4,450,000              --
  Debt Reduction:
      Short-Term                                                                            (354,579)             --
      Long-Term                                                                                   --        (415,180)
  Proceeds Received from Private Placement Stock Sales                                       200,024         500,000
  Commissions Paid on Private Placement                                                     (135,262)             --
                                                                                        ------------    ------------

    Net Cash Provided from Financing Activities                                            9,845,377         209,820
                                                                                        ------------    ------------

Net Decrease in Cash and Cash Equivalents                                                 (1,267,613)       (250,745)

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

Cash and Cash Equivalents, End of Period                                                $    155,510    $    289,682
                                                                                        ============    ============
</TABLE>

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

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 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
September 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, it was 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.

                                       6
<PAGE>
                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

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


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY (Continued)

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 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 receivables portfolios
based on common risk characteristics. Once the static portfolio pools are
created, management estimates the future anticipated cash flows for each pool.
If management can reasonably estimate the expected timing and amount to future
cash flows the interest method is applied. However, if the expected future cash
flows cannot be reasonably estimated, the Company uses the cost recovery method.

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

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

Under the cost recovery method, no revenue is recognized until the Company has
fully collected the cost of the portfolio, or until such time that the Company
considers the collections to be probable and estimable and begins to recognize
income based on the interest method as described above. At September 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 loans. At September 30, 2005, the Company had no valuation
allowance on its finance receivables. Prior to January 1, 2005, in the event
that estimated future cash collections would be inadequate to amortize the
carrying balance, an impairment charge would be taken with a corresponding
write-off of the receivable balance.

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

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


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY (Continued)

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

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

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

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

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

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

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

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

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


NOTE 2 - INVESTMENTS (Continued)

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

Investments in real property consist of the following:

                                                         As of         As of
                                                     September 30,  December 31,
                                                         2005           2004
                                                     ------------   ------------
Total Property Inventory                             $  5,308,820   $  1,524,810
Assignments and Judgments                                 220,569        626,050
                                                     ------------   ------------

  Total Investment in Real Property                  $  5,529,389   $  2,150,860
                                                     ============   ============

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

Investments in municipal tax liens consist of the following:

                                                         As of         As of
                                                     September 30,  December 31,
                                                         2005           2004
                                                     ------------   ------------
Tax Lien Certificates                                $    332,539   $    432,232
Accrued Interest                                          247,654        269,885
                                                     ------------   ------------

  Total Tax Certficates, Net of Discounts            $    580,193   $    702,117
                                                     ============   ============


NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS

As of September 30, 2005 and 2004, the Company had $16,005,805 and $2,607,497,
respectively, remaining of consumer receivable portfolios. Changes in consumer
receivables at September 30, 2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                                     Three Months    Three Months
                                                        Ended           Ended
                                                     September 30,   September 30,
                                                         2005            2004
                                                     ------------    ------------
<S>                                                  <C>             <C>
Balance at beginning of period                       $  9,285,664    $  2,114,791
Acquisitions and Capitalized Costs, net of Returns      7,230,849         344,822

Cash Collections                                       (1,532,839)       (492,319)
Income Recognized on Consumer Receivables               1,022,131         640,203
                                                     ------------    ------------
  Cash Collections Applied to Principal                  (510,708)        147,884
                                                     ------------    ------------

  Total Consumer Receivable Portfolios               $ 16,005,805    $  2,607,497
                                                     ============    ============
</TABLE>
                                       9
<PAGE>
                         VELOCITY ASSET MANAGEMENT, INC.
                          (Formerly Tele-Optics, Inc.)

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


NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS (Continued)

As of September 30, 2005, the Company had $16,005,805 in consumer receivables.
Based upon managements current estimation of future cash collections, principal
reductions will be as follows:

June 30, 2006                                                       $  2,249,472
June 30, 2007                                                          2,999,232
June 30, 2008                                                          3,884,750
June 30, 2009                                                          4,367,141
Thereafter                                                             2,505,210
                                                                    ------------

  Total                                                             $ 16,005,805
                                                                    ============

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

                                                                   Three Months
                                                                      Ended
                                                                   September 30,
                                                                       2005
                                                                   ------------
Balance at Beginning of Period                                     $  8,668,872
Income Recognized on Consumer Receivable Portfolios                  (1,022,131)
Additions                                                             6,184,796
                                                                   ------------

  Balance at End of Period                                         $ 13,831,537
                                                                   ============


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.

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

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


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

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

Pursuant to the Loan Agreement, the Lender has agreed to advance to Velocity up
to $12,500,000 to be used to finance up to 60% of the purchase price of
individual pools of unsecured consumer receivables that are approved by the
Lender under specific eligibility criteria set forth in the Loan Agreement. The
interest rate on the loan is 3.50% above the prime rate of Wells Fargo Bank,
N.A. The maturity date of the facility is January 27, 2008. As of September 30,
2005, the Company had $5,685,194 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 us 90 days prior to April 15, 2006 that
it elects to extend his, her or its note, in which event the entire principal
thereof is payable on April 15, 2007.

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.

Interest expense for the three month periods ended September 30, 2005 and 2004
was $257,013 and $105,920, respectively.

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

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


NOTE 6 - LONG TERM DEBT

On September 21, 2005, the Company's wholly owned J. Holder subsidiary entered
into a $1,000,000 mortgage and security agreement, the proceeds of which are
being used to renovate the Melbourne property. Estimated renovations are
expected to cost approximately $900,000. All principal shall accrue interest at
a fixed annual rate of 12.0% per annum and payments of accrued interest are due
and payable in arrears in equal monthly payments on the outstanding principal
balance of the promissory note. J. Holder is required to make monthly interest
only payments of $10,000 until October 21, 2007 at which time all principal,
accrued interest and other charges are due and payable. Prior to April 1, 2006,
there shall be a prepayment penalty equal to the interest that would have been
accrued and earned for six months from the date of the agreement.


NOTE 7 - RELATED PARTY TRANSACTIONS

In connection with the Company's independent consulting agreement with The Del
Mar Consulting Group Inc., 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 for $2,400, warrants owned by the executive officers to
purchase an aggregate of 15,000 (7,500 from each) share of common stock at $1.04
per share. Both of these options were exercised on March 15, 2005.

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

Under the Retainer Agreement for Legal Services by and between Velocity
Investments, LLC and Ragan & Ragan, P.C., the Company paid legal contingency
fees to Ragan & Ragan, P.C. representing 25% of gross legal collections on
consumer receivable portfolios. In addition, under a separate Retainer Agreement
for Legal Services by and between J. Holder and VOM, LLC and Ragan & Ragan,
P.C., the Company paid legal contingency fees to Ragan & Ragan, P.C. Total legal
fees for the nine month periods ended September 31, 2005 and 2004 were as
follows:

                                                     Nine Months    Nine Months
                                                        Ended          Ended
                                                    September 30,  September 30,
                                                        2005            2004
                                                    ------------   ------------
Legal Services Paid to Ragan & Ragan, PC            $    843,317   $    393,005
                                                    ============   ============

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

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


NOTE 8 - OUTSTANDING WARRANTS

At September 30, 2005, the Company had issued outstanding warrants to purchase
4,126,660 shares of its common stock at prices ranging from $1.04 to $2.50 per
share. The first warrants (2,999,500 shares of common stock, as adjusted for the
13:1 reverse stock split) were granted pursuant to the Merger Agreement
effective February 3, 2004 and expire after a period of five years. The second
warrants (1,077,160 shares of common stock) were granted pursuant to private
offerings and/or in lieu of services rendered and expire after a period of five
years. The remaining warrants (50,000 shares of common stock) were granted as
compensation to an independent consultant in lieu of services rendered and have
an expiration date of March 31, 2009.


NOTE 9 - 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 a "substantial incentives for non-performance" as that
term is defined under EITF 96-18, "Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services", or provisions for the forfeiture of the warrants/option in
the event of non-performance.

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

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


NOTE 9 - STOCK BASED COMPENSATION (Continued)

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

On September 1, 2005, we entered into an Independent Consulting Agreement (the
"Agreement") with Lomond International, Inc., an unrelated North Carolina
corporation (the "Consultant"), pursuant to which the Consultant agreed to
provide certain specified business advisory services for a period of one year.
As compensation for such services, we agreed to sell to the Consultant, as a
commencement bonus, a warrant to purchase 50,000 shares of the Company's common
stock with an exercise price of $2.50 per share, and an expiration date of March
31, 2009, for an aggregate purchase price of $2,500. The warrant will
participate in all forward and reverse stock splits and stock dividends and will
have a one-time piggy-back registration right on the warrant and the shares of
common stock underlying the warrant.


NOTE 10- SUBSEQUENT EVENTS

Financing
---------

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

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

Beginning on April 1, 2006, the Company is obligated to repay the Debenture in
monthly payments equal to 1/12 of the outstanding principal amount, in cash;
provided, however, that upon the satisfaction of certain conditions, such
payment may be made in shares of the Company's common stock based on a
conversion price equal to 85% of the average of the three lowest closing prices
of the Company's common stock during the ten trading days immediately prior to
the applicable monthly payment date.

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

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

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


NOTE 10- SUBSEQUENT EVENTS (Continued)

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

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

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

The Company has agreed to file a registration statement with the Securities and
Exchange Commission in order to register the resale of the shares issuable upon
conversion of the Debenture and the shares issuable upon exercise of the
Warrant.

Pursuant to the Securities Purchase Agreement, the investor has certain rights
to participate in future financings of the Company. In addition, subject to
certain exceptions, for a period of 90 days after the effective date of the
registration statement (described above), the Company may not issue shares of
common stock or common stock equivalents

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

Board Expansion
---------------

The Company expanded its board to five members on November 7, 2005 and appointed
three new directors. The new board members are Mr. Steven Marcus, Dr. Michael
Kelly and Mr. David Granatell. They join existing board members Jack Kleinert,
Chief Executive Officer of the Company, and W. Peter Ragan, Sr., Vice President
of Company. In connection with these appointments the board expects to establish
an audit committee consisting of Steve Marcus, Dr. Michael Kelly and Dave
Granatell. The board has determined that Steve Marcus is an audit committee
financial expert and that each of three new directors is "independent" as that
term is defined in Section 301 of the Sarbanes-Oxley Act of 2002 and Rule
10A-3(b)(1) of the Securities Exchange Act of 1934, as amended. The Company
expects to constitute a compensation committee that will consist solely of its
three new independent directors.

Amendment and Restatement of By-laws
------------------------------------

On November 11, 2005, the Company amended its by-laws and, as so amended,
restated its by-laws in their entirety.

Amendment of Business Advisory Agreement
----------------------------------------

On November 11, 2005, the Business Advisory Agreement, dated September 1, 2005,
between the Company and Lomond International, Inc. was amended, retroactive to
the date of the agreement, to eliminate any compensation payable by the Company
to Lomond International Inc. in connection with any debt or equity investment of
any kind. As consideration for such amendment, Lomond was paid a fee of $25,000.

                                       15
<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.

         The restatement had no impact on our net income, earnings per share,
cash position and revenue for the nine-month period ended September 30, 2005.

Future Operating Results
------------------------

         This Report on Form 10-QSB contains certain forward-looking statements
that are based on current expectations. In light of the important factors that
can materially affect results, including those set forth in this paragraph and
below, the inclusion of forward-looking information herein should not be
regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved. The Company may encounter
competitive, financial and business challenges making it more difficult than
expected to expand its operations; the Company may be unable to retain existing
key management personnel; and there may be other material adverse changes in the
Company's operations or business. Certain important factors affecting the
forward-looking statements made herein include, but are not limited to (i) the
availability for purchase of consumer receivable portfolios, interests in
distressed real property and tax lien certificates that satisfy our criteria,
(ii) competition in the industry, and (iii) the availability of debt and equity
financing. Assumptions relating to budgeting and other management decisions are
subjective in many respects and thus susceptible to interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause the Company to alter its capital expenditure or other budgets,
which may in turn affect the Company's financial position and results of
operations. The reader is therefore cautioned not to place undue reliance on
forward-looking statements contained herein, which speak solely as of the date
of this Form 10-QSB. The Company assumes no responsibility to update any
forward-looking statements as a result of new information, future events, or
otherwise. This information in this Form 10-QSB should be read in conjunction
with the Company's restated audited financial statements included in its Form
10-KSB as of and for the year ended December 31, 2004, filed with the Securities
and Exchange Commission.

Overview
--------

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

                                       16
<PAGE>

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.

Critical Accounting Policies

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

     Purchased Receivable Portfolios and Revenue Recognition

         We purchase pools of consumer receivable accounts at a substantial
discount from their face amounts which are usually discounted from 75% to 97%
and are recorded at our acquisition cost. The portfolios 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 receivable account is to be accounted for individually or
whether such receivables will be assembled into static pools based on common
risk characteristics. We consider expected prepayments and estimate the amount
and timing of undiscounted expected principal, interest and other cash flows for
each acquired portfolio of consumer receivable accounts and subsequently
aggregated pools of consumer receivable accounts. We determine the excess of the
pool's scheduled contractual principal and contractual interest payments over
all cash flows expected at acquisition as an amount that should not be accreted
based on our proprietary acquisition models. The remaining amount, representing
the excess of the loan's cash flows expected to be collected over the amount
paid, is accreted into income recognized on finance receivables over the
remaining life of the loan or pool.

         Prior to January 1, 2005, we accounted for our investment in finance
receivables using the interest method under the guidance of Practice Bulletin 6,
"Amortization of Discounts on Certain Acquired Loans." In accordance

                                       17
<PAGE>

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

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

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

                                       18
<PAGE>

         Under Statement of Position 03-03 (and the amended Practice Bulletin
6), to the extent there are differences in actual difference compared to the
expected performance, increases in 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 lowering the internal rate of return) so that the
pool will amortize over its expected life using the original internal rate of
return.

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

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

         We establish valuation allowances for all acquired 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 September 30, 2005, we had no valuation
allowance on our finance receivables. Prior to January 1, 2005, in the event
that estimated future cash collections would be inadequate to amortize the
carrying balance, an impairment charge would be taken with a corresponding
write-off of the receivable balance.

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

Stock Based Compensation

         We have adopted the disclosure requirements of SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure" effective
December 2002. SFAS 148 amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a

                                       19
<PAGE>

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 nine-month period ended September 30, 2005 was
characterized by a substantial increase in revenues, resulting in net income for
the period of $484,096 as compared to net income of ($2,670,025) during the same
period in the prior year. In the nine-month period ended September 30, 2004 we
had a non-cash operating loss of ($2,859,307) on a loss with respect to the
early extinguishment of debt.

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

         Revenues in the three-month period ended September 30, 2005 (the "2005
Third Quarter) were $2,758,285 as compared to $1,247,728 in the same period in
the prior year (the "2004 Third Quarter"), representing a 121.1% increase.
Revenues in the nine month period ended September 30, 2005 (the "2005 Period")
were $6,227,436 as compared to $3,633,334 in the same period in the prior year
(the "2004 Period"), representing a 71.4% increase. The increase in revenues for
the 2005 Third Quarter as compared to the 2004 Third Quarter was primarily
attributable to increases in revenues at each of Velocity Investments, our
consumer receivables subsidiary, and J Holder, our distressed real property
subsidiary. The increase in revenues for the 2005 Period as compared to the 2004
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 61.2%, 37.0% and 1.8%, respectively during the 2005 Third Quarter
as compared to approximately 41.7%, 36.5%, and 4.5% during the 2004 Third
Quarter, and approximately 59.0%, 36.4% and 12.0% during the 2005 Period as
compared to 61.7%, 32.9% and 5.4% 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 Third Quarter were $2,064,266 as
compared to $3,807,103 in the 2004 Third Quarter, representing a 45.8% decrease.
Total operating expenses for the 2005 Period were $5,017,632 as compared to
$5,763,908 for the 2004 Period, representing a 12.9% decrease. The decrease in
total operating expenses for the 2005 Third Quarter was primarily attributable
to a substantial decrease in loss on extinguishment of debt partially offset by
an increase in professional fees and general administration, costs due to an
expansion of operations at Velocity Investments, and an increase in costs of
distressed real property at J Holder. The decrease in total operating expenses
for the 2005 Period was primarily attributable to a substantial decrease in loss
on extinguishment of debt partially offset by an increase in professional fees
and general and administrative expenses due to an expansion of operations at
Velocity Investments.

                                       20
<PAGE>

Other Income (Expense)

         Interest expense in the 2005 Third Quarter was $257,013 as compared to
$105,920 in the 2004 Third Quarter, representing a 142.6% increase. Interest
expense in the 2005 Period was $364,567 as compared to $338,119 in the 2004
Period, representing an 7.8% increase. The increase in interest expenses for
both periods was primarily attributable to an increase in the amount and
structure of the Company's debt.

Net Income (Loss)

         Net income in 2005 Third Quarter was $224,933 as compared to
($2,670,025) in the 2004 Third Quarter. Net income for the 2005 Period was
$484,096 as compared to ($2,476,815) in the 2004 Period. The increase in net
income for the 2005 Third Period as compared to the 2004 Third Period was
primarily attributable to an expansion of operations at our Velocity Investments
subsidiary and a substantial decrease in loss on extinguishment of debt. The
increase in net income for the 2005 Third Quarter as compared to the 2004 Third
Quarter was primarily attributable to an expansion of operations at our Velocity
Investments subsidiary and a substantial decrease in loss on extinguishment of
debt. 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 September 30, 2005, the Company had approximately $155,510 in cash
and cash equivalents and trade accounts payable in the amount of $184,258.
Management believes that the net of such funds, together with the revenues
expected to be generated from operations, the Company's line of credit with
Wells Fargo Foothill, Inc. as well as the net proceeds from the October 2005
financing with an institutional investor referenced below 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. On October 27, 2005, the
Company and its 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 aggregate
principal amount of $1.8 million, and an associated common stock purchase
warrant to purchase 200,000 shares of the Company's common stock at an exercise
price of $3.10 per share. Net proceeds from the financing ($1,780,000) are to be
used primarily for working capital purposes including, but not limited to, the
purchase of distressed real property interests and distressed consumer
receivable portfolios.

         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.

                                       21
<PAGE>

         Item 3            Controls and Procedures.

         (a) Disclosure Controls. As of the end of the period covered by this
report, with the participation of our Chief Executive Officer and Chief
Financial Officer, we evaluated the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934). Based upon that evaluation, our Chief
Executive Officer and our Chief Financial Officer concluded that as of the end
of such period, our disclosure controls and procedures were effective as of the
period covered by this report in timely alerting them to material information
relating to Velocity Asset Management, Inc. required to be disclosed in our
periodic reports with the Securities and Exchange Commission.

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

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

         None.

                                       22
<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 September 1, 2005, Registrant sold to Lomond International,
Inc., an unrelated, accredited investor, a warrant to purchase 50,000 shares of
its common stock, par value $.001 per share, with an exercise price of $2.50 per
share and an expiration date of March 31, 2009, for an aggregate purchase price
of $2,500.

With respect to issuance of the security referred to above, the investor was
furnished with information regarding Registrant and the offering and issuance,
and had the opportunity to verify information supplied. Additionally, Registrant
obtained a representation from the investor of its intent to acquire the
security for the purpose of investment only, and not with a view toward the
subsequent distribution thereof. The security bears an appropriate restrictive
legend.

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    Amendment No. 1 to Business Advisory Agreement, dated
                    November 11, 2005 between Registrant and Lomond
                    International.

             4.2    Director Indemnification Agreement dated November 7, 2005
                    between the Registrant and Steven E. Marcus.

             4.3    Amended and Restated Bylaws of the Registrant.

             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.

                                       23
<PAGE>

             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.

             (b)  Reports on Form 8-K

                  1.  On September 7, 2005, Registrant filed a Current Report on
                      Form 8-K reporting the entry into a definitive agreement
                      with Lomond International, Inc. and the sale to Lomond
                      International, Inc. of a warrant to purchase 50,000 shares
                      of Registrant's common stock.

                                       24
<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:  November 18, 2005              By: /s/ JOHN C. KLEINERT
                                           -------------------------------------
                                           John C. Kleinert
                                           Chief Executive Officer and President

                                       25