SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  FORM 10-QSB/A
                                (Amendment No.3)


(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, 2004

                                       Or

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

              For the transition period from ________ to _________

                       COMMISSION FILE NUMBER: 000-161570

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

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

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

                                 (201) 760-1030
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Check whether the issuer (1), has filed all reports required to be
filed by Section 13 or 15(d) of The Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                 Yes [X] No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of November 9, 2004, the registrant
had 14,205,493 shares of common stock outstanding.

                                EXPLANATORY NOTE


We are filing this amendment to our Quarterly Report on Form 10-QSB, originally
filed with the Securities and Exchange Commission on November 15, 2004 and as
amended on the same date and on July 22, 2005, for the purpose of amending Item
1, Item 3 and the certifications attached as exhibits thereto. On July 22, 2005,
and as amended on July 29, 2005, we filed a Current Report on Form 8-K with
respect to the revision of our accounting for certain exchanges of debt for
equity (please see Note 1 to the financial statements). The filing of this Form
10-QSB/A Amendment No. 3 is to indicate that the financial statements for the
quarter ended September 30, 2004 have been restated and the restatement of our
accounting for these exchanges indicated a significant deficiency and a material
weakness in our internal control over financial reporting relating to such
exchanges. Except as indicated above, no other information included in this
Quarterly Report on Form 10-QSB is amended by this Form 10-QSB/A Amendment No.
3.

<PAGE>


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

<PAGE>

                    VELOCITY ASSET MANAGEMENT SERVICES, INC.


                                  FORM 10-QSB/A
                                (Amendment No.3)


                    For the Quarter Ended September 30, 2004

                            Index                                          Page
                                                                          Number
PART I      FINANCIAL INFORMATION

Item 1   Condensed Consolidated Balance Sheets as at December 31, 2003
         and September 30, 2004 (unaudited for September 30, 2004 period)   1

         Condensed Consolidated Statements of Operations for the
         three and nine month periods ended September 30, 2004 and
         2003 (unaudited)                                                   3

         Condensed Consolidated Statements of Stockholders Equity
         (Deficit) as of December 31, 2003 and for the nine months
         ended September 30, 2004 (unaudited for September 30, 2004)        4

         Consolidated Statements of Cash Flows for the nine month
         periods ended September 30, 2004 and 2003 (unaudited)              5

         Notes to Consolidated Financial Statements                         6

Item 2   Management's Discussion and Analysis or Plan of Operation          15

Item 3   Controls and Procedures                                            18

PART II

Item 1   Legal Proceedings                                                  19
Item 2   Changes in Securities                                              19
Item 3   Defaults Upon Senior Securities                                    19
Item 4   Submission of Matters to a Vote of Security Holders                19
Item 5   Other Information                                                  19
Item 6   Exhibits and Reports on Form 8 - K                                 19
Signature                                                                   21
Exhibit 31.1                                                                22
Exhibit 31.2                                                                23
Exhibit 32.1                                                                24
Exhibit 32.2                                                                25
<PAGE>

FORWARD LOOKING STATEMENTS


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

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


                                       i
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION


Item 1   Financial Statements


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

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                            September 30,  December 31,
                          ASSETS                                                2004          2003
                                                                            (Unaudited)         *
                                                                            (Restated)
                                                                            ------------   ------------

<S>                                                                         <C>            <C>
CURRENT ASSETS
  Cash and Cash Equivalents                                                 $    289,682   $    540,427
  Accounts Receivable                                                             56,113        207,971
  Property Inventory Owned                                                     1,739,360      1,139,670
  Deposits on Properties                                                         120,000        127,500
  Tax Certificates Held and Accrued Interest Receivable, net of discounts        742,378      1,009,073
  Consumer Receivables                                                         2,607,497      1,767,166
                                                                            ------------   ------------

     Total Current Assets                                                      5,555,030      4,791,807

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation                                                                    36,653             --

OTHER ASSETS                                                                      75,000             --
                                                                            ------------   ------------

     Total Assets                                                           $  5,666,683   $  4,791,807
                                                                            ============   ============
</TABLE>

*  Condensed from audited financial statements.

              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


<TABLE>
<CAPTION>
                                                                    September 30,   December 31,
        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                  2004            2003
                                                                     (Unaudited)         *
                                                                     (Restated)
                                                                    ------------    ------------
<S>                                                                 <C>             <C>

CURRENT LIABILITIES
  Accounts Payable and Accrued Expenses                             $     32,269    $    191,622
  Short-Term Borrowings Under Line of Credit                                  --         705,477
  Current Portion of Long-Term Debt                                      250,000       2,306,036
  Income Taxes Payable                                                     2,567           2,567
  Installment Payable                                                     50,746              --
  Current Portion of Obligations Under Capital Leases                    472,291         436,752
                                                                    ------------    ------------

     Total Current Liabilities                                           807,873       3,642,454
                                                                    ------------    ------------

LONG-TERM LIABILITIES
  Obligations Under Capital Leases, less current portion                 391,694         742,413
  Long-Term Debt, less current portion                                        --         499,020
                                                                    ------------    ------------

     Total Long-Term Liabilities                                         391,694       1,241,433
                                                                    ------------    ------------

     Total Liabilities                                                 1,199,567       4,883,887
                                                                    ------------    ------------

STOCKHOLDERS' EQUITY (DEFICIT)
  Common Stock, $0.001 par value, 40,000,000 shares Authorized,
    13,585,345 shares Issued and Outstanding as of September 30,
    2004 and 13,005,000 shares Issued and Outstanding as of
    December 31, 2003 (as Retroactively Restated Prior to Reverse
    Acquisition Pursuant to Recapitalization)                             13,586          13,005
  Additional Paid In Capital                                           7,114,661              --
  Retained Earnings (Deficit)                                         (2,661,131)       (105,085)
                                                                    ------------    ------------

  Total Stockholders' Equity (Deficit)                                 4,467,116         (92,080)
                                                                    ------------    ------------

     Total Liabilities and Stockholders' Equity (Deficit)           $  5,666,683    $  4,791,807
                                                                    ============    ============
</TABLE>

*  Condensed from audited financial statements.

              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)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                               For the Three Months Ended       For the Nine Months Ended
                                                      September 30,                   September 30,
                                               ----------------------------    ----------------------------
                                                   2004            2003            2004            2003
                                                (Restated)                      (Restated)
                                               ------------    ------------    ------------    ------------

<S>                                            <C>             <C>             <C>             <C>
REVENUES
  Sale of Real Property                        $    519,898    $    566,574    $  2,194,471    $  2,205,830
  Collections on Consumer Receivables
     and Interest Income                            643,117         187,085       1,241,519         420,626
                                               ------------    ------------    ------------    ------------

     Total Revenues                               1,163,015         753,659       3,435,990       2,626,456
                                               ------------    ------------    ------------    ------------

OPERATING EXPENSES
  Cost of Real Property                             460,707         557,556       2,104,089       2,011,881
  Consulting Fees                                     3,500          36,838          12,111          76,569
  Professional Fees                                 434,350          96,044         604,750         236,884
  Lien Searches                                       1,810          23,060          12,891          49,298
  Loss on Extinguishment of Debt                  2,859,307              --       2,859,307              --
  General and Administrative Expenses                47,429          29,071         170,760          62,148
                                               ------------    ------------    ------------    ------------

     Total Operating Expenses                     3,807,103         742,569       5,763,908       2,436,780
                                               ------------    ------------    ------------    ------------

     Income from Operations                      (2,644,088)         11,090      (2,327,918)        189,676
                                               ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
  Interest Expense                                 (105,920)        (70,651)       (338,119)       (259,089)
  Other Income                                       84,713          33,725         197,344          33,725
                                               ------------    ------------    ------------    ------------

     Total Other Income (Expense)                   (21,207)        (36,926)       (140,775)       (225,364)
                                               ------------    ------------    ------------    ------------

Income (Loss) Before Tax Provision               (2,665,295)        (25,836)     (2,468,693)        (35,688)

Provision for Income Taxes                            4,730           1,284           8,122           1,284
                                               ------------    ------------    ------------    ------------

Net Income (Loss)                              $ (2,670,025)   $    (27,120)   $ (2,476,815)   $    (36,972)
                                               ============    ============    ============    ============


Weighted Average Common Shares - Basic           13,585,345      13,005,000      31,276,206      13,005,000
                                               ============    ============    ============    ============

Net Income (Loss) per Common Share - Basic     $      (0.20)   $      (0.00)   $      (0.08)   $      (0.00)
                                               ============    ============    ============    ============

Weighted Average Common Shares - Diluted         52,578,845      13,005,000      38,553,162      13,005,000
                                               ============    ============    ============    ============

Net Income (Loss) per Common Share - Diluted   $      (0.05)   $      (0.00)   $      (0.06)   $      (0.00)
                                               ============    ============    ============    ============
</TABLE>

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

                                       3
<PAGE>

          Velocity Asset Management, Inc. (Formerly Tele-Optics, Inc.)

        CONDENSED CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
                For the Nine Months Ended September 30, 2004 and
                        the Year Ended December 31, 2003

<TABLE>
<CAPTION>

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

<S>                                          <C>             <C>               <C>               <C>               <C>
**BALANCES, January 1, 2003                    13,005,000    $       13,005    $           --    $     (134,753)   $       (121,748)

Member Withdrawal                                      --                --                --            (1,000)             (1,000)

Net Income                                             --                --                --            30,668              30,668
                                           --------------    --------------    --------------    --------------    ----------------

*BALANCES, December 31, 2003                   13,005,000            13,005                --          (105,085)            (92,080)

February 3, 2004 - Reverse Acquisition:
---------------------------------------
   Issuance of Stock Pursuant to the
   Reverse Acquisition (See Note 12
   for Details)                                79,682,500            79,683                --                --              79,683

   Net Income of Subsidiary (i.e
   Tele-Optics, Inc.) through February
   3, 2004 (Date of Acquisition)
   and the prior years' accumulated deficit            --                --                --           (79,231)            (79,231)

   Sale of Stock Pursuant to the Private
   Placement (See Note 12 for Details)          7,312,500             7,312           492,688                --             500,000

April 8, 2004 - Reverse Stock Split:
------------------------------------
   Issuance of Stock Pursuant to Right
   to Receive Clause                           23,505,000            23,505           (23,505)               --                  --

   Reverse Stock Split (13:1) (See Note
   13 for Details)                           (114,004,379)         (114,004)          114,004                --                  --

August 12, 2004 - Debt Conversion for
   Stock (See Note 16 for Details)              4,084,724             4,085         6,531,474                --           6,535,559

Net Loss - For the Nine Months Ended
September 30, 2004                                     --                --                --        (2,476,815)         (2,476,815)
                                           --------------    --------------    --------------    --------------    ----------------

***BALANCES, September 30, 2004                13,585,345    $       13,586    $    7,114,661    $   (2,661,131)   $      4,467,116
                                           ==============    ==============    ==============    ==============    ================
</TABLE>


* - Issued as an audited consolidated statement of retained earnings (deficit)
of STB, Inc. prior to the reverse acquisition of Tele-Optics, Inc.

** - Issued as an audited combined statement of retained earnings (deficit) /
members' equity (deficit) of J. Holder, Inc. and VOM, LLC, prior to the reverse
acquisition of Tele-Optics, Inc.

*** - Unaudited

                                       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    For the Nine
                                                                                Months Ended    Months Ended
                                                                                September 30,   September 30,
                                                                                    2004            2003
                                                                                 (Restated)
                                                                                ------------    ------------

<S>                                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net Income (Loss) - As Restated                                               $ (2,476,815)   $    (36,972)

  Adjustments to reconcile net income (loss) to net cash provided from
    (used by) operating activities
    Depreciation                                                                       4,146              --
    Accrued Interest Expense Charged to Additional Paid in Capital                    86,499              --

    Loss on Extinguishment of Debt - As Restated                                   2,859,307              --

    (Increase) Decrease in:
      Accounts Receivable                                                            151,858              --
      Tax Certificates Held and Accrued Interest Receivable, Net of Discounts        266,695         625,892
      Property Inventory Owned                                                      (599,690)        497,781
      Consumer Receivables                                                          (840,331)       (485,193)
      Deposits on Properties                                                           7,500          25,000
      Other Investments                                                                   --          20,000
    Increase (Decrease) in:
      Installment Payable                                                             50,746              --
      Accrued Expenses                                                                69,868          67,694
      Income Taxes Payable                                                                --           1,284
                                                                                ------------    ------------
          Net Cash Provided from (Used by) Operating Activities                     (420,217)        715,486
                                                                                ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of Property and Equipment                                             (40,800)             --
      Cash Received from Reverse Merger                                                  452              --
                                                                                ------------    ------------
          Net Cash Used by Investing Activities                                      (40,348)             --
                                                                                ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Loan Origination Fees                                                              (75,000)             --
  New Borrowings:
      Short-Term                                                                     200,000              --
      Long-Term                                                                           --         911,538
  Debt Reduction:
      Short-Term                                                                          --      (1,175,880)
      Long-Term                                                                     (415,180)             --
  Proceeds Received from Private Placement Stock Sale                                500,000              --
  Capital Withdrawal                                                                      --          (2,000)
                                                                                ------------    ------------
    Net Cash Provided from (Used by) Financing Activities                            209,820        (266,342)
                                                                                ------------    ------------

Net Increase (Decrease) in Cash and Cash Equivalents                                (250,745)        449,144

Cash and Cash Equivalents, Beginning of Period                                       540,427         382,429
                                                                                ------------    ------------

Cash and Cash Equivalents, End of Period                                        $    289,682    $    831,573
                                                                                ============    ============
</TABLE>

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

                                       5
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

The accompanying unaudited condensed consolidated financial statements have been
prepared by Velocity Asset Management, Inc. (the "Company") in accordance with
the rules and regulations of the Securities and Exchange Commission (the "SEC")
for interim financial statements and accordingly do not include all information
and footnotes required under generally accepted accounting principles for
complete financial statements. The financial statements have been prepared in
conformity with the accounting principles and practices disclosed in, and should
be read in conjunction with, the annual financial statements of the Company
included in the Company's Fiscal year 2003 Form 10-KSB filing dated March 12,
2003 (File No. 000-16157) and the Company's Form 8-K filing dated February 18,
2004. In the opinion of management, these interim financial statements contain
all adjustments necessary for a fair presentation of the Company's financial
position at September 30, 2004 and December 31, 2003 and the results of
operations for the nine months ended September 30, 2004 and 2003, respectively.

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

We have restated our consolidated financial statements for the three month
period ended September 30, 2004. The restatement consists 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.

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 $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. This loss generates a permanent timing difference
between book and tax reporting.

The effect of the adjustment for the nine month period ended September 30, 2004
was a decrease from a net income of $382,492 to a net loss of ($2,476,815) which
resulted in a decrease in basic earnings per share for the nine months ended
September 30, 2004 from $0.01 to ($0.08) or a $0.09 decrease and a decrease in
diluted earnings per share from $0.01 to ($0.06) or a $0.07 decrease.

The effect of the adjustment for the three month period ended September 30, 2004
was a decrease from a net income of $189,282 to a net loss of ($2,670,025) which
resulted in a decrease in basic earnings per share for the three months ended
September 30, 2004 from $0.01 to ($0.20) or a $0.21 decrease and a decrease in
diluted earnings per share from $0.00 to ($0.05) or a $0.05 decrease.

The restatement had no impact on our cash position and revenue as previously
reported for the three month period and the nine month period ended September
30, 2004. See Note 6, 7 and 15 for additional details regarding the loss on
extinguishment of debt.

                                       6
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS (Continued)

Nature of Operations
--------------------

On February 3, 2004, Tele-Optics, Inc. (the "Company"), through its wholly owned
subsidiary TLOP Acquisition Company, L.L.C. ("TLOP"), entered into a reverse
acquisition (the "Reverse Merger") with STB, Inc. and its subsidiaries. On
February 3, 2004, STB, Inc. became a wholly owned subsidiary of TLOP. As a
result of the Reverse Merger, the Company operates all of its current business
activities through its wholly-owned subsidiary TLOP.

Effective April 8, 2004, the Company changed its name from Tele-Optics, Inc. to
Velocity Asset Management, Inc. The entities that are included in these
financial statements are as follows:

Velocity Asset Management, Inc. (formerly known as Tele-Optics, Inc). - Velocity
Asset Management, Inc. (the "Company") was incorporated in the state of Delaware
on December 31, 1986. In 1987, the Company issued shares of its common stock
pursuant to a public offering. The Company was engaged in the manufacture of
optical products until 1991 when all assets and operations were sold.

The Company was inactive from 1992 through 1998. Commencing in 1999, the Company
devoted its activities to raising capital, becoming current on all previously
delinquent regulatory reporting obligations, and sought to effect a merger or
acquisition with a company that management believed to have significant growth
potential. On February 3, 2004 (the "Effective Date"), the Company acquired STB,
Inc., a New Jersey corporation ("STB"). Accordingly, the Company was classified
as a Development Stage Enterprise, effective January 1, 1999 through February 3,
2004.

TLOP Acquisition Company, L.L.C. - TLOP Acquisition Company, LLC ("TLOP") was
incorporated in New Jersey as a limited liability company. TLOP is a
wholly-owned subsidiary of the Company and pursuant to the Reverse Merger owns
100% of STB, Inc.

STB, Inc. - STB, Inc. ("STB") was incorporated in New Jersey in 2003. Its
primary purpose was to act as a holding company for three subsidiaries J.
Holder, Inc., VOM, LLC and Velocity Investments, LLC.

J. Holder, Inc. - J. Holder, Inc. ("J. Holder") was formed in 1998 to invest in,
and maximize the return on, real property being sold at sheriff's foreclosure
sales and judgment execution sales, defaulted mortgages, partial interests in
real property and the acquisition of real property with clouded title.

VOM, L.L.C. - VOM, LLC ("VOM") was formed in 2002 to invest in, and maximize the
return on, New Jersey Municipal Tax Liens. VOM focuses on maximization of profit
through legal collections and owned real estate opportunities presented by the
current tax lien environment.

Velocity Investments, L.L.C. - Velocity Investments, LLC ("Velocity") was
established in 2002 to invest in, and maximize the return on, consumer debt
purchased on the secondary market. Velocity purchases consumer debt portfolios
at a discount and then liquidates these portfolios through legal collection
means.

                                       7
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reverse Acquisition
-------------------

For the purposes of these financial statements, the merger of STB, Inc. into
Velocity Asset Management, Inc.'s wholly-owned subsidiary TLOP Acquisition
Company, LLC was treated as a reverse acquisition. The merger of a private
company into a non-operating public shell corporation with nominal net assets
typically results in the owners and management of the private company having
actual or effective operating control of the combined company after the
transaction, with shareholders of the former public shell continuing only as
passive investors. These transactions are considered to be capital transactions
in substance, rather than business combinations. That is, the transaction is
equivalent to the issuance of stock by the private company for the net monetary
assets of the shell corporation, accompanied by a recapitalization. The
acquisition price becomes the net book value of the assets received. No
additional cash or boot was exchanged. No goodwill has been recorded, since the
net assets acquired equals the capital recorded under the reverse acquisition.
Accordingly, the reverse acquisition has been accounted for as a
recapitalization (See Note 11 for details regarding the recapitalization).

For accounting purposes, STB, Inc. is considered the acquirer in the reverse
acquisition. The statement of operations for Velocity Asset Management, Inc. for
the nine months ended September 30, 2004, includes nine months of revenues and
expenses of STB, Inc and its subsidiaries combined with the revenues and
expenses for Tele-Optics, Inc. and its subsidiary for the period from the date
of acquisition, February 3, 2004, through September 30, 2004.

Principles of Consolidation
---------------------------

For the purposes of the accompanying financial statements, STB, Inc. is
considered the accounting "Parent" company and Tele-Optics, Inc. is considered
the subsidiary. Therefore, these financial statements include the combined
assets and liabilities of STB, Inc. and its subsidiaries as of September 30,
2004. The statement of operations includes the income and expenses of STB, Inc.
and its subsidiaries for the complete nine months ended September 30, 2004 and
the income and expenses of Tele-Optics, Inc. for the period from February 3,
2004 through September 30, 2004. All material intercompany payables,
receivables, revenues and expenses have been eliminated for purposes of this
consolidation.

Use of Estimates
----------------

The preparation of the 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 amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Cash Equivalents
----------------

All highly liquid investments purchased with an original maturity of three
months or less are considered to be cash equivalents.

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

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

                                       8
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments and Revenue Recognition - New Jersey Municipal Tax Liens
--------------------------------------------------------------------

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

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

The Company purchases pools of credit card portfolios at a substantial discount
from their face amounts and the portfolios are recorded at the Company's
acquisition cost. In accordance with Practice Bulletin 6 ("PB6"), revenue is
recognized based on the Company's anticipated cash collections and its estimated
rate of return over the useful life of the pool. Revenue is recognized to the
extent that collections exceed the estimated rate of return taken on the
portfolio as a whole. Each pool's estimated useful life is different, but each
pool is generally amortized between 48 and 60 months. As of September 30, 2004,
2003 and 2002 the Company had 12, 4 and 0 pools respectively, under the interest
method of revenue recognition.

Where the future cash collections of a portfolio cannot be reasonably estimated
the Company uses the cost recovery method as prescribed under PB6. Under the
cost recovery method, no revenue is recognized until we have fully collected the
initial acquisition cost of the portfolio. The Company currently has no credit
card portfolios under the cost recovery method.

Allowance for Consumer Receivable Portfolio Losses
--------------------------------------------------

Provisions for credit losses are charged to income in amounts sufficient to
maintain the allowance at a level considered adequate to cover the losses of
principle, net of discount, in the existing portfolio. The Company's charge-off
policy is to charge-off the principle balance of loans when all collection
efforts have been exhausted. In the event that cash collected would be
inadequate to amortize the carrying value, an impairment charge would be taken
with a corresponding write-off to the receivables balance. Therefore, no
allowance has been applied to the credit card portfolio balances at September
30, 2004, 2003 and 2002.

Equipment and Depreciation
--------------------------

Property and equipment are recorded at cost. Depreciation is computed under both
the straight-line and the double-declining balance methods for financial
reporting purposes. Depreciation expense for the nine months ended September 30,
2004 and 2003 was $4,146 and $-0-, respectively.

Fair Value of Financial Instruments
-----------------------------------

Substantially all of the combined Companies' assets and liabilities are carried
at fair value or contracted amounts that approximate fair value except the
investments in real property, carried at the lower of cost or market value, and
the investments in finance receivables, which are carried at cost. Estimates of
fair value are made at a specific point in time, based on relative market
information and information about the financial instrument, specifically, the
value of the underlying financial instrument. Assets that are recorded at fair
value consist largely of property deposits, receivables and other assets, which
are carried at contracted amounts that approximate fair value. Similarly, the
combined Companies' liabilities consist of short term liabilities recorded at
contracted amounts that approximate fair value.

                                       9
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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.

Earnings per Share
------------------

The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS No. 128) which establishes standards for computing
and presenting earnings per share ("EPS") and requires the presentation of both
basic and diluted EPS. As a result, primary and fully diluted EPS have been
replaced by basic and diluted EPS. EPS is calculated by dividing net income by
the weighted-average number of outstanding shares of Common Stock for each year.

Comprehensive Income
--------------------

Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive
Income," (SFAS 130), requires that total comprehensive income be reported in the
financial statements. There were no components of comprehensive income;
consequently, no separate statement of comprehensive income has been presented.


NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment are summarized by major classifications as follows:

                                          September 30,   December 31,
                                              2004            2003
                                          ------------    ------------

         Office Equipment                 $     40,799    $         --
         Less: Accumulated Depreciation         (4,146)             --
                                          ------------    ------------

                                          $     36,653    $         --
                                          ============    ============

NOTE 4 - 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. Purchases of
property have been funded by a line of credit from a shareholder, see Note 6.

                                       10
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 4 - INVESTMENTS (CONTINUED)

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

Investments in New Jersey municipal tax liens consist of the following:

                                     September 30,   December 31,
                                         2004            2003
                                     ------------    ------------

             Tax lien certificates   $    476,828    $    679,528
             Discount on purchase          (4,925)         (4,925)
             Accrued interest             270,475         334,470
                                     ------------    ------------

                                     $    742,378    $  1,009,073
                                     ============    ============

Interest accrues at 18% per annum based on the lien balance.

NOTE 5 - CONSUMER RECEIVABLES

Consumer receivables consist of the following:

                                          September 30,   December 31,
                                              2004            2003
                                          ------------    ------------

         Consumer receivable portfolios   $ 15,556,052    $ 10,171,860
         Discount on portfolios            (12,948,555)     (8,404,694)
                                          ------------    ------------

                                          $  2,607,497    $  1,767,166
                                          ============    ============

The Company does not accrue interest income and discount amortization on
accounts due to the irregularity of collections and no assurance of collections.
All loans are distressed and past due.

NOTE 6 - LINE OF CREDIT

The Company had a $2,000,000 line of credit with a shareholder, which was due to
expire May 2005, for the purpose of financing the Company's investments in real
property. Interest at 10% per annum was due upon sale of the real property,
based on the number of days the funds were committed to the investment. Each
investment was presented on a case-by-case basis for funding approval and, if
approved, the asset purchased was assigned as collateral to the shareholder for
the funds advanced until the property was sold. Funds advanced were held and
disbursed from an attorney trust account. At September 30, 2004 and December 31,
2003, there was $0 and $1,294,523, respectively, available under this line of
credit. Interest expense for the nine months ended September 30, 2004 and the
year ended December 31, 2003 was $124,859 and $66,237, respectively. On August
12, 2004, the Company entered into an agreement under which the line of credit
was exchanged for shares of the Company's common stock, par value $.001 per
share, at a rate of one share per $0.90 of the obligation. The total debt
exchanged, including accrued interest of $79,489, totaled $984,966. The
effective date of this exchange of debt for equity is retroactive to July 1,
2004, which reflects the agreement of the parties that no interest would be
accrued or paid on the debt exchanged since the last interest payment date, June
30, 2004. On August 12, 2004, the Company's stock as traded on the OTCBB had a
market value of $1.60. Paragraph 20 of APB 26 requires that a difference between
the reacquisition price and the net carrying amount of the extinguished debt
should be recognized currently in income of the period of extinguishment as
losses or gains and identified as a separate item. In connection with the
exchange of line of credit, the Company has recorded a non-cash loss on early
extinguishment of debt of $794,349.

                                       11
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 7 - LONG-TERM DEBT

Notes payable consist of the following:

<TABLE>
<CAPTION>
                                                                                  September 30,  December 31,
                                                                                      2004           2003
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
Note payable to an officer and a related trust, interest at 10% per
annum, secured by tax lien certificates and all other assets of the
Company.  Principal and interest  payable quarterly or, if not quarterly,
at such time as the Company's cash flow allows, was due July 17,
2004.  On August 12, 2004, the Company entered into an agreement
under which the above note payable was exchanged for shares of the
Company's common stock, par value $.001 per share at a rate of one
share per $0.90 of the obligation.  The total debt exchanged including
accrued interest of $75,095, totaled $1,581,131.  The effective date of
this exchange of debt for equity is retroactive to July 1, 2004, which
reflects the agreement of the parties that no interest would be accrued
or paid on the debt exchanged since the last interest payment date,
June 30, 2004.  On August 12, 2004, the Company's stock as traded
on the OTCBB had a market value of $1.60.  Paragraph 20 of APB 26
requires that any difference between the reaquisition price and the net
carrying amount of the extinguished debt should be recognized currently
in income of the period of extinguishment as losses or gains and
identified as a separate item.  In connection with this debt exchange,
the Company has recorded a non-cash loss on early extinguishment
of debt of $1,256,470.                                                            $         --   $  1,506,036

Note payable to Michael Kelly, interest at 8% per annum payable semi-
annually; at the expiration of one year, upon 30 days notice to the
Company, the note could have been payable upon demand, secured
by first position upon all corporate assets.  On August 12, 2004, the
Company entered into an agreement under which the above note was
exchanged for shares of the Company's common stock, par value
$.001 per share at a rate of one share per $0.90 of the obligation.  The
total debt exchanged including accrued interest of $11,902, totaled
$3,111,902.  The effective date of this exchange of debt for equity is
July 1, 2004, which reflects the agreement of the parties that no
interest would be accrued or paid on the debt exchanged since the
last interest payment date, June 30, 2004.  On August 12, 2004, the
Company's stock as traded on the OTCBB had a market value of $1.60.
Paragraph 20 of APB 26 requires that any difference between the
reacquisition price and the net carrying amount of the extinguished
debt should be recognized currently in income of the period of
extinguishment as losses or gains and identified as a separate item.
In connection with this debt exchange, the Company has recorded a
non-cash loss on early extinguishment of debt of $241,089.                                  --        300,000
                                                                                  ------------   ------------

                                                                      Subtotal    $         --   $  1,806,036
                                                                                  ------------   ------------
</TABLE>
                                       12
<PAGE>

NOTE 7 - LONG-TERM DEBT (continued)

<TABLE>
<CAPTION>
                                                                                  September 30,  December 31,
                                                                                      2004           2003
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
Balance brought forward                                                           $         --   $  1,806,036

Notes payable to an officer, interest at 8% per annum, unsecured.
All notes originated during the period of January-May of 2003 and
were each due in five years.  Principal and interest was due on the
anniversary of each note except for the first year, which payment
shall be optional and otherwise added to the second year payment.
On August 12, 2004, the Company entered into an agreement
under which the above notes payable were exchanged for shares of
the Company's common stock, par value $.001 per share at a rate
of one share per $0.90 of the obligation.  The total debt exchanged,
including accrued interest of $51,798, totalled $550,818.  The
effective date of this exchange of debt for equity is retroactive to
July 1, 2004, which reflects the agreement of the parties that no
interest would be accrued or paid on the debt exchanged since
the last interest payment date, June 30, 2004.  On August 12,
2004, the Company's stock as traded on the OTCBB had a market
value of $1.60.  Paragraph 20 of APB 26 requires that any difference
between the reacquisition price and the net carrying amount of the
extinguished debt should be recognized currently in income of the
period of extinguishment as losses or gains and identified as a
separate item.  In connection with this debt exchange, the
Company has recorded a non-cash loss on early extinguishment
of debt of $446,832.                                                                        --        499,020

Note payable to Richard Cavanaugh, interest at 8% per annum
payable semi-annually, upon 30 days notice to the Company, the
note may be payable upon demand and is unsecured.  On August
12, 2004, the Company entered into an agreement under which a
$150,000 note payable was exchanged for shares of the Company's
common stock, par value $.001 per share at a rate of one share
per $0.90 of the obligation.  The total debt exchanged, including
accrued interest of $5,015, totalled $155,015.  The effective date
of the exchange of debt for equity is retroactive to July 1, 2004,
which reflects the agreement of the parties that no interest would
be accrued or paid on the debt exchanged since the last interest
payment date, June 30, 2004.  On August 12, 2004, the Company's
stock as traded on the OTCBB had a market value of $1.60.
Paragraph 20 of APB 26 requires that any difference between the
reacquisition price and the net carrying amount of the extinguished
debt should be recognized currently in income of the period of
extinguishment as losses or gains and identified as a separate
item.  In connection with this debt exchange, the Company has
recorded a non-cash loss on early extinguishment of debt of
$120,567.                                                                                   --        500,000
                                                                                  ------------   ------------

                                                                      Subtotal    $         --   $  2,805,056
                                                                                  ------------   ------------
</TABLE>
                                       13
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 7 - LONG-TERM DEBT (continued)

<TABLE>
<CAPTION>
                                                              September 30,  December 31,
                                                                  2004           2003
                                                              ------------   ------------
<S>                                                           <C>            <C>
Balance brought forward                                       $         --   $  2,805,056

Note payable to Richard Cavanaugh, interest at 6% per annum
payable semi-annually, upon 30 days notice to the Company,
the note may be payable upon demand and is unsecured               250,000             --
                                                              ------------   ------------

                                                                   250,000      2,805,056
Less: Current Portion                                              250,000      2,306,036
                                                              ------------   ------------
                                                              $         --   $    499,020
                                                              ============   ============
</TABLE>

Maturities of notes payable are as follows:

          2005                     $    250,000
                                   ============


NOTE 8 - OBLIGATIONS UNDER CAPITAL LEASE

Capital lease obligations consist of the following:

<TABLE>
<CAPTION>
                                                                         September 30,  December 31,
                                                                             2004           2003
                                                                         ------------   ------------
<S>                                                                      <C>            <C>
Capital lease payable to Unifund Portfolio E, LLC, in monthly payments
of $44,834, including interest at 5.75% with a balloon payment due
November 2005, secured by corresponding investment portfolios            $    863,985   $  1,179,165
                                                                         ============   ============
</TABLE>

Minimum lease payments due under capital leases as of September 30, 2004, are as
follows:

     Period Ending September 30, 2005                                $  542,856
     Period Ending September 30, 2006                                   452,380
                                                                     ----------
     Total net minimum capital lease payments                           995,236
     Less amounts representing interest                                 131,251
                                                                     ----------
     Present value of future minimum capital lease payments             863,985
     Less Current Portion of Obligations Under Capital Leases           472,291
                                                                     ----------
     Obligations Under Capital Lease, less current portion           $  391,694
                                                                     ==========

NOTE 9 -RELATED PARTY TRANSACTIONS

Interest payments on the line of credit, Note 5, were made to a director and
shareholder of the Company in the amounts of $124,859 and $66,237 for the nine
months ended September 30, 2004 and the year ended December 31, 2003,
respectively. In addition, the Company paid the director and shareholder
consulting fees of $8,312 and $103,389 for the nine months ended September 30,
2004 and the year ended December 31, 2003, respectively.

The Company paid legal consulting fees to an entity related to a director and
shareholder in the amount of $36,226 and $128,147 for the nine months ended
September 30, 2004 and the year ended December 31, 2003, respectively. This
related entity provided office space and administrative support to the Company
at no cost for 2003.

                                       14
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004

NOTE 9 -RELATED PARTY TRANSACTIONS (Continued)

The Company paid legal research fees to an entity related to a shareholder in
the amount of $96,273 for the year ended December 31, 2003.

At September 30, 2004 and December 31, 2003, the Company had a receivable from a
related party in the amount of $14,950 and $16,872, respectively.

NOTE 10 - INCOME TAXES

The provision for corporate income taxes for the nine months ended September 30,
2004 and 2003 consists of the following:

                                   For the Nine Months Ended:
                                  -----------------------------
                                  September 30,    September 30,
                                      2004             2003
                                  -------------   -------------
                 Current:
                    Federal       $          --   $          --
                    State                 8,122           1,284
                                  -------------   -------------


                          Total   $       8,122   $       1,284
                                  =============   =============

Deferred income taxes relating to the tax benefit of the Company's net operating
loss was offset by a valuation allowance due to the uncertainty of profitable
operations in the future. Also, as a result of the Company's change of control,
the net operating losses which can be utilized each year will be limited under
the provisions of Sections 382 and 383 of the Internal Revenue Code of 1986, as
amended.

The Company's net operating loss carryforward of approximately $1,680,000, which
expires from the year 2006 through 2017, may be carried forward for tax
purposes, to offset taxable income.

NOTE 11 - RECAPITALIZATION

As detailed in Note 2 - Summary of Accounting Policies - Reverse Acquisition,
the merger of STB, Inc. into Velocity Asset Management, Inc.'s wholly-owned
subsidiary TLOP Acquisition Company, LLC was treated as a reverse acquisition
resulting in a recapitalization. The details of the recapitalization are as
follows:

<TABLE>
<CAPTION>
                                                          February 3, 2004
                                     -----------------------------------------------------------
                                         Balance            Adjustments             Balance
                                         Prior to           Pursuant to              After
         Equity Account              Recapitalization    Recapitalization       Recapitalization
---------------------------------    ----------------    ----------------       ----------------
<S>                                  <C>                 <C>                    <C>
Common Stock, Par Value              $            100    $         12,905 (A)   $         13,005

Additional Paid in Capital                        900                (900)(A)                 --

Retained Earnings (Deficit)                  (122,748)            (12,005)(A)           (134,753)
                                     ----------------    ----------------       ----------------

                          Totals     $       (121,748)   $             --       $       (121,748)
                                     ================    ================       ================
</TABLE>

(A)  A recapitalization adjustment was required to convert the equity section of
     STB, Inc. (the accounting acquirer in the reverse merger) immediately prior
     to the reverse merger to the equity section of the newly acquired public
     shell immediately following the reverse merger.

                                       15
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 11 - RECAPITALIZATION (Continued)

This recapitalization adjustment increased the common stock of STB, Inc. from
its former value of $100 to the par value of Velocity Asset Management, Inc.
(the former public shell entity) of $13,005 (which equals the 13,005,000 shares
of outstanding stock times a stated par value of $0.001). The offset of this
$12,905 adjustment eliminated the additional paid in capital of $900 and the
balance of $12,005 was an adjustment to the entity's retained deficit.

NOTE 12 - COMMON STOCK TRANSACTIONS

Concurrent with and pursuant to the reverse merger between Velocity Asset
Management, Inc (formerly Tele-Optics, Inc.) and STB, Inc. (See Note 2 - Summary
of Significant Accounting Policies), the Company issued the following shares of
common stock to the executive officers of the Company:

                  Name of                        Number             Par
             Executive Officers                of Shares *         Value
     -----------------------------------   ----------------   --------------

     Jack C. Kleinert                             3,064,712   $        3,065
     W. Peter Ragan, Sr.                          1,532,356            1,532
     W. Peter Ragan, Jr.                          1,532,356            1,532
                                           ----------------   --------------

                                 Totals           6,129,423   $        6,129
                                           ================   ==============

Additionally, concurrent with the reverse merger, the Company sold the following
shares of common stock pursuant to a private placement to the following
shareholder for $500,000:

                 Name of                       Number              Par
               Shareholder                   of Shares *          Value
        ---------------------------       ---------------     -------------

        David Grantatell                          562,500     $         563
                                          ===============     =============

* The number of shares represents the post reverse stock split quantities and
have been adjusted to reflect the 13:1 reverse stock split, as detailed in Note
13.

NOTE 13 - REVERSE STOCK SPLIT AND CHANGE IN NUMBER OF SHARES OF CAPITAL STOCK
AUTHORIZED

On April 8, 2004, the Company amended its certificate of incorporation to (a)
effect a 13-for-1 reverse split of the Company's then issued and outstanding
shares of common stock and (b) change the total authorized shares of capital
stock to 50,000,000 shares, of which 40,000,000 are classified as common stock,
par value $.001 per share and 10,000,000 are classified as preferred stock, par
value $.001 per share. As of September 30, 2004, the total common stock issued
and outstanding was 13,585,345 with a par value of $13,586 and there was no
preferred stock issued or outstanding. All references to share numbers or
earnings or loss per share contained in the financial statements to which these
notes relate give effect to the Reverse Split.

                                       16
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 14 - OUTSTANDING WARRANTS

At September 30, 2004, the Company had outstanding warrants to purchase
2,999,500 shares of the Company's common stock (as adjusted for the 13:1 reverse
stock split - see Note 13) at a price of $1.04 per share. The warrants were
granted pursuant to the Merger Agreement effective February 3, 2004 and expire
after a period of five years.


NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash was expended for interest in the amount of $105,920 and $262,217 for the
nine months ended September 30, 2004 and the year ended December 31, 2003,
respectively. Cash was expended for income taxes in the amount of $8,122 and
$2,892 for nine months ended September 30, 2004 and the year ended December 31,
2003, respectively.

On August 12, 2004, the Company entered into agreements with an officer and
other creditors in satisfaction of their outstanding loans under which the
Company exchanged $3,676,252 of its existing indebtedness ("the Obligations")
for 4,084,724 shares of the Company's common stock, par value $.001 per share at
a rate of one share per $0.90 of the obligation. The effective date of this
conversion of debt to equity is retroactive to July 1, 2004, which reflects the
agreement of the parties that no interest would be accrued or paid on the debt
exchanged since the last interest payment date, June 30, 2004. On August 12,
2004, the Company's stock as traded on the OTCBB had a market price of $1.60.
Paragraph 20 of APB 26 requires that any difference between the reacquisition
price and the net carrying amount of the extinguished debt should be recognized
currently in income of the period of extinguishment as losses or gains and
identified as a separate item. In connection with this debt exchange, the
Company has recorded a non-cash loss on early extinguishment of debt of
$2,859,307. The non-cash transaction was as follows:

           Number of Shares Issued                         4,084,724
           Times: Corresponding Stock Valuation         $       1.60
                                                        ------------
           Total Stock Value Issued in Exchange         $  6,535,559
                                                        ============

           Total common stock issued                    $      4,085
           Total additional paid in capital                6,531,474
                                                        ------------
           Total                                        $  6,535,559
                                                        ============

           Total Debt Extinguished
           Short-term borrowings under line of credit   $    905,476
           Notes payable                                   2,455,056
           Accrued interest payable                          229,221
           Accrued interest expense                           86,499
                                                        ------------
           Total Debt Extinguished                         3,676,252
           Loss on Extinguishment of Debt                  2,859,307
                                                        ------------

           Total                                        $  6,535,559
                                                        ============

       *   The loss on extinguishment of debt represents the difference in value
           of the stock on August 12, 2004 between the application of APB 26,
           Paragraph 20 for financial statement purposes and the agreement under
           which the transaction was executed. Thus, the difference is 4,084,724
           shares times $0.70 ($1.60 less $0.90) resulting in a loss on
           extinguishment of debt of $2,859,307.

                                       17
<PAGE>

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

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004


NOTE 16 - CONCENTRATIONS OF CREDIT RISK

The consolidated entities maintain cash balances at one institution located in
central New Jersey. The amounts at this institution are insured by the Federal
Deposit Insurance Corporation up to $100,000 per entity. The amount at risk at
September 30, 2004 and December 31, 2003 was $16,778 and $335,948, respectively.
The Company considers the risk to be minimal.

NOTE 17 - SUBSEQUENT EVENTS

On October 4, 2004, the Company sold 620,333 units of its securities for an
aggregate of $930,500 ($2.50 per unit) in a private transaction. Each unit
consists of one share of the Company's Common Stock and a warrant to purchase
one-fifth of a share of the Company's Common Stock at $2.50 per share during a
period of five years.

                                       18
<PAGE>

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

Overview
--------


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

We have restated the consolidated financial statements for the three months
ended September 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
three months ended September 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 Company was incorporated in Delaware under the name Tele-Optics, Inc. in
December 1986 for the purpose of acquiring a company engaged in the development,
manufacture and marketing of a variety of products for use in the medical and
defense industries. In September 1991, the Company sold all of the assets
related to such business to a third party. Since that sale and until February 3,
2004 (the "Effective Date"), when the Company acquired STB, Inc., a New Jersey
corporation ("STB"), the Company has had no active business operations.

On the Effective Date, the Company entered into and consummated an Agreement and
Plan of Merger (the "Merger Agreement") by and among the Company's wholly owned
subsidiary, TLOP Acquisition Company, L.L.C., a New Jersey limited liability
company ("Newco"), STB and the stockholders of STB, John C. Kleinert, W. Peter
Ragan, Sr. and W. Peter Ragan, Jr. (collectively, the Stockholders"). Pursuant
to the Merger Agreement, on the Effective Date, STB was merged with and into
Newco (the "Merger"), and the Company issued to the Stockholders in exchange for
all of the common stock of STB issued and outstanding (a) an aggregate of
79,682,500 shares of the Company's common stock, (b) the right to receive an
aggregate of 23,505,000 additional shares of the Company's common stock upon
amendment to the Company's certificate of incorporation to increase the total
number of shares of capital stock that the Company is authorized to issue, and
(c) warrants to purchase for a period of five years an aggregate of 31,681,000
shares of common stock at an exercise price of $.08 per share. The details of
the Merger are set forth in the Company's Current Report on Form 8-K filed with
the Securities and Exchange Commission on February 18, 2004. The 79,682,500
shares of common stock issued to the Stockholders represented approximately 80%
of the then total issued and outstanding shares of the Company's common stock.
The Merger Agreement also provided that upon amendment to the Company's
certificate of incorporation to authorize the Company to issue a series of
preferred stock having certain terms and conditions, John C. Kleinert would
convert all of the debt owed by the Company to him, including debt under a line
of credit and other secured loans, into shares of such preferred stock.

In connection with the Merger, the Company completed a private placement to an
accredited investor of 7,312,500 shares of the Company's common stock and a
warrant exercisable for five years to purchase an aggregate of 7, 312, 500
shares of common stock at $.08 per share in exchange for $500,000. The proceeds
of such private placement have been used for working capital.

As a result of the Merger, the Company now carries on business through its
wholly owned subsidiary, Newco, which maintains its executive offices at 48 S.
Franklin Turnpike, 3rd Floor, Ramsey, NJ, and its business offices at 3100 Route
138 West, Wall, NJ 07719.

Effective April 8, 2004, the Company amended its certificate of incorporation to
(a) change its corporate name to Velocity Asset Management, Inc., (b) effect a
13 for one reverse split of the Company's then issued and outstanding shares of
common stock, and (c) change the total authorized shares of its capital stock to
50,000,000 shares, of which 40,000,000 are classified as common stock, par value
$.001 per share, and 10,000,000 are classified as preferred stock, par value
$.001 per share, issuable in such series with such powers, designations,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as the Company's Board of

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<PAGE>

Directors may fix from time to time by resolution or resolutions. As a result of
such amendment, the Company had sufficient authorized shares of common stock to
enable it to issue to the Stockholders the additional shares of common stock and
warrants as provided in the Merger Agreement and such shares and warrants have
been issued. In addition, the Company's Board of Directors was authorized to
designate a class of preferred stock into which Mr. Kleinert and two other
parties (holding an aggregate of approximately $2,800,000 of indebtedness as of
March 31, 2004) had agreed to convert all of their indebtedness. In lieu of such
conversion, on August 12, 2004, the Company entered into agreements with an
officer and other creditors in satisfaction of their outstanding loans under
which the Company exchanged $3,676,252 of its existing indebtedness for
4,084,724 shares of the Company's common stock, par value $.001 per share at a
rate of one share per $0.90 of the indebtedness. The effective date of this
conversion of debt to equity is retroactive to July 1, 2004, which reflects the
agreement of the parties that no interest would be accrued or paid on the debt
exchanged since the last interest payment date, June 30, 2004. On August 12,
2004, the Company's stock as traded on the OTCBB had a market price of $1.60.
Paragraph 20 of APB 26 requires that any difference between the reacquisition
price and the net carrying amount of the extinguished debt should be recognized
currently in income of the period of extinguishment as losses or gains and
identified as a separate item. In connection with this debt exchange, the
Company has recorded a non-cash loss on early extinguishment of debt of
$2,859,307 in the three-month period ended September 30, 2004.

Prior to the Merger, STB was a New Jersey corporation that was formed in 2003.
Its primary purpose was to act as a holding company for three subsidiaries, J.
Holder, Inc. ("JHI"), VOM, LLC ("VOM") and Velocity Investments, LLC
("Velocity"). JHJ was formed in 2002 and invests, at a discount from fair market
value, in 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. VOM was formed in 2002 and
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. Velocity was formed in 2002 and invests in consumer debt purchased
on the secondary market at a discount from face value and then liquidates these
debt portfolios through legal collection means.


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

Revenues in the three-month period ended September 30, 2004 (the "2004 Third
Quarter") were $1,163,015 as compared to $753,659 in the same period in the
prior year (the "2003 Third Quarter"), representing a 54% increase. Revenues in
the nine-month period ended September 30, 2004 (the "2004 Period") were
$3,435,990 as compared to $2,626,456 in the same period in the prior year (the
"2003 Period"), representing a 31% increase. The increase in revenues for both
periods was primarily attributable to the increased operations and focused
efforts of Velocity and the maturation of its portfolios. Revenues from the sale
of real property, the collection of credit card receivables and interest income
derived from debt instruments owned by the Company represented approximately 45%
and 55%, respectively, during the 2004 Third Quarter as compared to
approximately 75% and 25% during the 2003 Third Quarter, and approximately 64%
and 36% during the 2004 Period as compared to 84% and 16% during the 2003
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 dates, court decisions and other
similar events the affect the timing of revenue recognition.

Operating Expenses

Total operating expenses in the 2004 Third Quarter were $3,807,103 as compared
to $742,569 in the 2003 Third Quarter. Total operating expenses for the 2004
Period were $2,904,601 as compared to $2,436,780 for the 2003 Period. The
increase in total operating expenses for both periods was primarily attributable
to a non-cash loss on early extinguishment of debt of $2,859,307 in the 2004
Third Quarter.

Other Income (Expense)

Interest Expense in the 2004 Third Quarter was $105,920 as compared to $70,651
in the 2003 Third Quarter, representing a 50% increase. Interest expense in the
2004 Period was $338,119 as compared to $259,089 in the 2003 Period,

                                       20
<PAGE>

representing a 31% increase. The increase in interest expense for both periods
was primarily attributable to increases in the amount and structure of the
Company's debt. During the 2004 Third Quarter and the 2004 Period the Company
recognized other income of $84,713 and $197,344, respectively, all of which was
derived from other JHI operations.

Net Income (Loss)

Net loss in the 2004 Third Quarter was $2,670,025 as compared to net income of
$27,120 in the 2003 Third Quarter. Net loss for the 2004 Period was 2,476,815 as
compared to a net loss of $36,972 in the 2003 Period. The net loss for both
periods is attributable to a non-cash loss on early extinguishment of debt of
$2,859,307 in the 2004 Third Quarter. 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 results may not be meaningful.

The Company is not presently aware of any known trends that may have a material
impact on its revenues from continuing operations. The Company does not believe
that the recent increases in interest rates, and the anticipated continuing
gradual increases in interest rates, has had or will have a material adverse
affect upon the Company's business.

Liquidity and Capital Resources
-------------------------------

         At September 30, 2004, the Company had $289,682 in cash and cash
equivalents and trade accounts payable in the amount of $32,269. Management
believes that such funds, together with the revenues expected to be generated
from operations and the proceeds from the private placement ($930,500) 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 receivables, the Company is seeking to raise additional
capital through the sale of equity or debt instruments or by way of a bank line
of credit. In July 2004, the Company entered into a Letter of Intent with a
national financial institution that provides for a line of credit to the
Company's Velocity subsidiary of $12,500,000 to be used for the purchase of
portfolios of unsecured receivables. The line of credit is subject to the
fulfillment of various conditions, including the execution of definitive
documents, as well as the Company securing significant additional equity
capital. If the line of credit is obtained, the Company may incur significant
increases in interest expense and may be subject to covenants restricting
certain of its activities.

         In October 2004, the Company raised $930,500 of additional equity
capital by the sale of 620,000 units of its securities in a private transaction.
Each unit is comprised of one share of Common Stock and a warrant to purchase
one-fifth of a share of Common Stock for $2.50 per share exercisable for a
period of five years. The Company is negotiating with various parties and
institutions to provide additional equity capital by the sale of additional
units. In accordance with the terms of the line of credit letter of intent, the
Company will need to raise at least $1,500,000 of additional equity capital. No
assurance can be given, however, that such additional equity capital will be
obtained on terms acceptable to the Company or at all and, even if obtained,
that the other conditions precedent to obtaining the line of credit will be
fulfilled. If such conditions are fulfilled, the Company expects that the line
of credit would become available by the end of 2004 or the first quarter of
2005. The raising of additional equity capital through the sale of units or
other securities of the Company may result in dilution of existing stockholders.

         Item 3   Controls and Procedures.
                  -----------------------


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


                                       21
<PAGE>


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


         (b)      Changes in Internal Control Over Financial Reporting.
                  ----------------------------------------------------

         None


                                     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") and not reported on a Current Report on Form 8-K, except as
set forth below. All references to numbers of shares and exercise prices reflect
the 13 for one reverse stock split effected by the Registrant on April 8, 2004.

         1. In August 2004, effective as of June 30, 2004, Registrant issued an
aggregate of 4,084,724 shares of its Common Stock to holders of $3,676,252 of
the Company's indebtedness, including the Company's Chief Executive Officer,
Jack C. Kleinert, in exchange for the cancellation thereof on the basis of one
share per $.90 of indebtedness.

With respect to issuances of securities referred to above, each of the holders
is an "accredited investor" as such term is defined in Regulation D, was
furnished with information about the Registrant and had the opportunity to
verify information supplied. Additionally, Registrant obtained a representation
from each holder of such holder's intent to acquire the securities for the
purpose of investment only, and not with a view toward the subsequent
distribution thereof. The securities bear appropriate restrictive legends, and
Registrant has issued stop transfer instructions to its transfer agent.

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.

                                       22
<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 14, 2004, Registrant filed a Current Report on
Form 8-K reporting the appointment of James J. Mastriani as Chief Financial
Officer and Chief Legal Officer of the Registrant.

                                       23
<PAGE>

                                    SIGNATURE

         In accordance with the requirements of the Securities Exchange Act of
1934 the Registrant has duly caused this amended report to be signed on its
behalf by the undersigned hereunto duly authorized.




                                       VELOCITY ASSET MANAGEMENT, INC.

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


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