**UNITED          STATES**

**SECURITIES          AND EXCHANGE COMMISSION**

**FORM          10-QSB**

**September          30, 2005**

**2-76219-NY**

**VICTORY          CAPITAL HOLDINGS CORPORATION**

| **NEVADA**                                                                        | **87-0564472**                                   |
|-----------------------------------------------------------------------------------|--------------------------------------------------|
| (State                    or other jurisdiction of incorporation or organization) | (I.R.S.                    Employer I.D. Number) |

**27762          Antonio Parkway, Suite L1-497, Ladera Ranch, CA          92694**

**(866)        279-9265**

**INDEX**

|                                                                                                                                                                                                                                                                                                                                | Page                      No. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                                                                                                                                                                                                                                                                                |                               |
| **PART                      1. FINANCIAL INFORMATION**                                                                                                                                                                                                                                                                              |                          |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      1. Financial                      Statements                                                                                                                                                                                                                                               | 3                             |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Consolidated                          Balance Sheet, September 30, 2005 (unaudited) and December                          31, 2004                          (restated)                                                                                                                                                              | 3                             |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Consolidated                      Statement of Operations, for the three months ended September                      30, 2005 and                      2004; for the nine months ended September 30, 2005 and 2004,                      and cumulative                      from inception to September 30, 2005 (unaudited)  | 4                        |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Consolidated                      Statement of Stockholders’ Equity (Deficit) for the period from January 7,                      1982 (inception) through September 30, 2005 (unaudited)                                                                                                                           | 5                             |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Consolidated                            Statements of Cash Flows, for the six months ended September                            30, 2005 and                            2004 and cumulative from inception (Jan. 7, 1982)                            to                                                                             |                          |
| September                      30, 2005 (unaudited)                                                                                                                                                                                                                                                                                 | 6                             |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Notes                      to Condensed Financial Statements (unaudited)                                                                                                                                                                                                                                                  | 7                             |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      2. Management’s                      Discussion and Analysis or Plan of Operation                                                                                                                                                                                                         | 13                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      3. Controls                      and Procedures                                                                                                                                                                                                                                                 | 15                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| **PART                      II. OTHER INFORMATION**                                                                                                                                                                                                                                                                                 |                          |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      1. Legal                      Proceedings                                                                                                                                                                                                                                                       | 15                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      2. Unregistered                      Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                             | 15                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      3. Defaults                      Upon Senior Securities                                                                                                                                                                                                                                         | 15                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      4. Submission                      of Matters to a Vote of Security Holders                                                                                                                                                                                                                     | 16                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      5. Other                      Information                                                                                                                                                                                                                                                       | 16                            |
|                                                                                                                                                                                                                                                                                                                                |                          |
| Item                      6. Exhibits                      and Reports on Form 8-K                                                                                                                                                                                                                                        | 16                            |

| VICTORY                  CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES |   |
|------------------------------------------------------------------------|--------|
| (A                  Development Stage Company)                         |   |
| Consolidated                  Balance Sheets                           |   |

| ASSETS                                                                                                |   |   |   |                                                 |   |       |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------------------------|--------|------------|--------|
|                                                                                                  |   |   |   |                  September                  30, |   |       |   |                  December                  31, |   |
|                                                                                                  |   |   |   |  2005                                           |   |       |   | 2004 |   |
|                                                                                                  |   |   |   |                                                      |   |       |   |  |   |
|                                                                                                  |   |   |   |  (Unaudited)                                    |   |       |   | (Restated) |   |
| CURRENT                  ASSETS                                                                       |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| Cash                  and Cash Equivalents                                                            |   |   |   |                                                 | $      | 12,786     |   |   |   |   | $ | -- |   |
| Short-term                  Investments                                                               |   |   |   |                                                 |   | 88,300     |   |   |   |   |   |   |   |
| Prepaid                  Expenses                                                                     |   |   |   |                                                 |   | --         |   |   |   |   |   | 246 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| Total                  Current Assets                                                                 |   |   |   |                                                 |   | 101,086    |   |   |   |   |   | 246 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| FIXED                  ASSETS, net of accumulated depreciation of $599                                |   |   |   |                                                 |   | 16,636     |   |   |   |   |   | 1,924 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| OTHER                  ASSETS                                                                         |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| Deposits                                                                                              |   |   |   |                                                 |   | 2,020      |   |   |   |   |   | -- |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| Total                  Other Assets                                                                   |   |   |   |                                                 |   | 2,020      |   |   |   |   |   | -- |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| TOTAL                  ASSETS                                                                         |   |   |   |                                                 | $      | 119,742    |   |   |   |   | $ | 2,170 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| LIABILITIES                  AND STOCKHOLDERS' EQUITY (DEFICIT)                                       |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| CURRENT                  LIABILITIES                                                                  |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| Accounts                  Payable                                                                     |   |   |   |                                                 | $      | 330,970    |   |   |   |   | $ | 18,070 |   |
| Accrued                  Liabilities                                                                  |   |   |   |                                                 |   | 11,000     |   |   |   |   |   | 11,000 |   |
| Accrued                  Payroll and payroll taxes                                                    |   |   |   |                                                 |   | 369,792    |   |   |   |   |   | 137,792 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| Total                  Current Liabilities                                                            |   |   |   |                                                 |   | 711,762    |   |   |   |   |   | 166,862 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| LONG                  TERM LIABILITIES                                                                |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| Notes                  Payable                                                                        |   |   |   |                                                 |   | 157,531    |   |   |   |   |   | -- |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| OTHER                  LIABILITIES                                                                    |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| Accounts                  Payable - Related Party                                                     |   |   |   |                                                 |   | 172,179    |   |   |   |   |   | 147,927 |   |
| Accrued                  Liabilites - Related                                                         |   |   |   |                                                 |   | 110,000    |   |   |   |   |   | 110,000 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| Total                  Other Liabilities                                                              |   |   |   |                                                 |   | 282,179    |   |   |   |   |   | 257,927 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| Total                  Liabilities                                                                    |   |   |   |                                                 |   | 1,151,472  |   |   |   |   |   | 424,789 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| SHAREHOLDERS'                  EQUITY (DEFICIT)                                                       |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| Common                  Stock authorized 100,000,000 shares at                                        |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| $0.001                  par value; 22,100,258                  and 22,100,258                  shares |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| issued                  and outstanding, respectively                                                 |   |   |   |                                                 |   | 22,100     |   |   |   |   |   | 22,100 |   |
| Additional                  paid-in-capital                                                           |   |   |   |                                                 |   | 2,116,164  |   |   |   |   |   | 1,977,463 |   |
| Deficit                  accumulated during the development stage                                     |   |   |   |                                                 |   | (3,169,994 | )      |   |   |   |   | (2,422,182 | ) |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| Total                  Stockholders' Equity (Deficit)                                                 |   |   |   |                                                 |   | (1,031,730 | )      |   |   |   |   | (422,619 | ) |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |
| TOTAL                  LIABILITIES AND STOCKHOLDERS'                                                  |   |   |   |                                                 |   |       |   |   |   |   |   |   |   |
| EQUITY                  (DEFICIT)                                                                     |   |   |   |                                                 | $      | 119,742    |   |   |   |   | $ | 2,170 |   |
|                                                                                                  |   |   |   |                                                 |        |       |   |   |   |  |   |

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

| VICTORY                    CAPiTAL HOLDINGS CORPORATION AND SUBSUDIARIES |
|--------------------------------------------------------------------------|
| (A                    Development Stage Company)                         |
| Consolidated                    Statement of Operations                  |
| (Unaudited)                                                              |

|                                                       |   | For                    the              |       | For                    the             |   | From                    Inception  |   |
|------------------------------------------------------------|--------|---------------------------------------------------|------------|--------------------------------------------------|--------|-----------------------------------------|--------|
|                                                       |   | Three                    Months Ended   |       | Nine                    Months Ended   |   | January                    1982    |   |
|                                                       |   | September                    30,        |       | September                    30,       |   | Through                            |   |
|                                                       |   | 2005                                              |       |  2004                                       |   | 2005                                    |   |  2004 |   | Sep.                    30, 2005  |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| REVENUES                                                   |   | $                                                 | 2,515      |                                             |   | 1,228                                   |   |   | 34,722 |   |   | 1,228 |   |   | 34,722 |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| EXPENSES                                                   |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
| Consulting                    expense                      |   |                                              | 133,970    |                                             |   | 5,000                                   |   |   | 444,106 |   |   | 970,450 |   |   | 2,116,368 |   |
| Wages                    and salaries                      |   |                                              | 180,000    |                                             |   |                                    |   |   | 180,000 |   |   | 144,000 |   |   | 660,112 |   |
| General                    and administrative expenses     |   |                                              | 87,180     |                                             |   | 31,369                                  |   |   | 158,429 |   |   | 85,074 |   |   | 381,970 |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| Total                    Expenses                          |   |                                              | 401,150    |                                             |   | 36,369                                  |   |   | 782,535 |   |   | 1,199,524 |   |   | 3,158,450 |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| LOSS                    FROM OPERATIONS                    |   |                                              | (398,635   | )                                                |   | (35,141                                 | )      |   | (747,813 | ) |   | (1,198,296 | ) |   | (3,123,728 | ) |
|                                                       |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
| OTHER                    INCOME (EXPENSE)                  |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
| Gain/(Loss)                    from extinguishment of debt |   |                                              |       |                                             |   |                                    |   |   |   |   |   | (48,363 | ) |   | (48,363 | ) |
| Interest                    expense                        |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   | (625 | ) |
| Other                    income                            |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   | 2,096 |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| Total                    other income (expenses)           |   |                                              | 0          |                                             |   | 0                                       |   |   | 0 |   |   | (48,363 | ) |   | (46,892 | ) |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| NET                    LOSS                                |   | $                                                 | (398,635   | )                                                | $      | (35,141                                 | )      | $ | (747,813 | ) | $ | (1,246,659 | ) | $ | (3,170,620 | ) |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |  |   |
| BASIC                    LOSS PER SHARE                    |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
| OF                    COMMON STOCK                         |   |                                              | (0.02      | )                                                |   | (0.00                                   | )      |   | (0.03 | ) | $ | (0.06 | ) |   |   |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |   |   |   |
| WEIGHTED                    AVERAGE NUMBER                 |   |                                              |       |                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |
| OF                    SHARES OUTSTANDING                   |   |                                              | 22,100,258 |                                             |   | 21,200,258                              |   |   | 22,100,258 |   |   | 19,387,291 |   |   |   |   |
|                                                       |   |                                                   |       |                                                  |   |                                         |   |  |   |   |   |   |

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

| VICTORY                    CAPITAL HOLDINGS AND SUBSIDIARIES                |
|-----------------------------------------------------------------------------|
| (A                    Development Stage Company)                            |
| Consolidated                    Statement of Stockholders' Equity (Deficit) |

|                                                                                |   |                            |       |    |   |        |   | Accumulated |      |   |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------|------------|---------|--------|-------------|--------|-------------|-----------|--------|--------|
|                                                                                |   |                            |       |    |   |        |   | Deficit     |      |   |   |
|                                                                                |   |                            |       |    |   | Additional  |   | During      |      |   |   |
|                                                                                |   | Common                    Stock |       | Paid-in |   | Development |   |        |      |
|                                                                                |   | Shares                          |       | Amount  |   | Capital     |   | Stage       |      | Total  |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at January 7, 1982                                      |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
| Common                    stock issued for cash at $7.50 per share                  |   |                            | 6,000      |    |   | 6           |   |        | 45,000    |   |   | - |   |   | 45,006 |   |
| Common                    stock issued for cash at $0.39 per share                  |   |                            | 168,503    |    |   | 169         |   |        | 65,819    |   |   | - |   |   | 65,988 |   |
| Net                    loss from inception on January 7, 1982 through Dec. 31, 1982 |   |                            | -          |    |   | -           |   |        | -         |   |   | (39,597 | ) |   | (39,597 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1982                                        |   |                            | 174,503    |    |   | 175         |   |        | 110,819   |   |   | (39,597 | ) |   | 71,397 |   |
| Net                    loss for the year ended Dec. 31, 1983                        |   |                            | -          |    |   | -           |   |        | -         |   |   | (71,397 | ) |   | (71,397 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1983                                        |   |                            | 174,503    |    |   | 175         |   |        | 110,819   |   |   | (110,994 | ) |   | (0 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Common                    stock issued for cash at $25.00 per share                 |   |                            | 57         |    |   | 0           |   |        | 1,425     |   |   | - |   |   | 1,425 |   |
| Common                    stock issued for cash at $25.00 per share                 |   |                            | 3          |    |   | 0           |   |        | 75        |   |   | - |   |   | 75 |   |
| Common                    stock issued for cash at $0.025 per share                 |   |                            | 1,580,000  |    |   | 1,580       |   |        | 38,373    |   |   | - |   |   | 39,953 |   |
| Net                    loss - FYE 12/31/84                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1984                                        |   |                            | 1,754,563  |    |   | 1,755       |   |        | 150,692   |   |   | (110,994 | ) |   | 41,453 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Cancellation                    of common stock                                     |   |                            | (1,296,132 | )       |   | (1,297      | )      |        |      |   |   |   |   |   | (1,297 | ) |
| Net                    loss - FYE 12/31/85                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1985                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/86                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1986                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/87                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1987                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/88                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1988                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/89                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1989                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/90                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1990                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/91                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1991                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/92                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1992                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/93                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | - |   |   | - |   |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1993                                        |   |                            | 458,431    |    |   | 458         |   |        | 150,692   |   |   | (110,994 | ) |   | 40,156 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Cancellation                    of common stock                                     |   |                            | (316,000   | )       |   | (316        | )      |        |      |   |   |   |   |   | (316 | ) |
| Net                    loss - FYE 12/31/94                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (6,656 | ) |   | (6,656 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1994                                        |   |                            | 142,431    |    |   | 142         |   |        | 150,692   |   |   | (117,650 | ) |   | 33,184 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Common                    stock issued for cash at $0.001 per share                 |   |                            | 2,357,895  |    |   | 2,359       |   |        | -         |   |   | - |   |   | 2,359 |   |
| Net                    loss - FYE 12/31/95                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (49,097 | ) |   | (49,097 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1995                                        |   |                            | 2,500,326  |    |   | 2,500       |   |        | 150,692   |   |   | (166,747 | ) |   | (13,555 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Common                    stock issued for cash at $0.001 per share                 |   |                            | 120,000    |    |   | 120         |   |        | -         |   |   | - |   |   | 120 |   |
| Net                    loss - FYE 12/31/96                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (1,681 | ) |   | (1,681 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1996                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 150,692   |   |   | (168,428 | ) |   | (15,116 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/97                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (3,517 | ) |   | (3,517 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1997                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 150,692   |   |   | (171,945 | ) |   | (18,633 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/98                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (2,479 | ) |   | (2,479 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1998                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 150,692   |   |   | (174,424 | ) |   | (21,112 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/99                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (6,307 | ) |   | (6,307 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 1999                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 150,692   |   |   | (180,731 | ) |   | (27,419 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/00                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (9,011 | ) |   | (9,011 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 2000                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 150,692   |   |   | (189,742 | ) |   | (36,430 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Net                    loss - FYE 12/31/01                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (19,461 | ) |   | (19,461 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 2001                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 150,692   |   |   | (209,203 | ) |   | (55,891 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Contributed                    capital for rent and other compensation              |   |                            | -          |    |   | -           |   |        | 1,950     |   |   | - |   |   | 1,950 |   |
| Net                    loss - FYE 12/31/02                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (13,960 | ) |   | (13,960 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 2002                                        |   |                            | 2,620,326  |    |   | 2,620       |   |        | 152,642   |   |   | (223,163 | ) |   | (67,901 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Contributed                    capital for rent and officer compensation            |   |                            | -          |    |   | -           |   |        | 488       |   |   | - |   |   | 488 |   |
| Capital                    contributed by shareholders through forgiveness          |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| of                    accounts payable and interest                                 |   |                            |       |    |   | -           |   |        | 77,415    |   |   | - |   |   | 77,415 |   |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Common                    stock issued for services $0.025 per share                |   |                            | 13,389,932 |    |   | 13,390      |   |        | 321,358   |   |   | - |   |   | 334,748 |   |
| Common                    stock issued for legal services at $0.61 per share        |   |                            | 100,000    |    |   | 100         |   |        | 60,900    |   |   | - |   |   | 61,000 |   |
| Common                    stock issued for consulting services at $0.47 per share   |   |                            | 10,000     |    |   | 10          |   |        | 4,690     |   |   | - |   |   | 4,700 |   |
| Net                    loss - FYE 12/31/03                                          |   |                            | -          |    |   | -           |   |        | -         |   |   | (592,962 | ) |   | (592,962 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 2003                                        |   |                            | 16,120,258 |    |   | 16,120      |   |        | 617,493   |   |   | (816,125 | ) |   | (182,512 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Common                    stock issued for services at $0.16 per share              |   |                            | 1,000,000  |    |   | 1,000       |   |        | 159,000   |   |   | - |   |   | 160,000 |   |
| Common                    stock issued for services at $0.17 per share              |   |                            | 1,800,000  |    |   | 1,800       |   |        | 304,200   |   |   | - |   |   | 306,000 |   |
| Common                    stock issued for services at $0.165 per share             |   |                            | 800,000    |    |   | 800         |   |        | 131,200   |   |   | - |   |   | 132,000 |   |
| Common                    stock issued for services at $0.215 per share             |   |                            | 30,000     |    |   | 30          |   |        | 6,420     |   |   | - |   |   | 6,450 |   |
| Common                    stock issued for debt at $0.45 per share                  |   |                            | 150,000    |    |   | 150         |   |        | 67,350    |   |   | - |   |   | 67,500 |   |
| Common                    stock issued for services at $0.40 per share              |   |                            | 300,000    |    |   | 300         |   |        | 119,700   |   |   | - |   |   | 120,000 |   |
| Common                    stock issued for services at $0.34 per share              |   |                            | 700,000    |    |   | 700         |   |        | 237,300   |   |   | - |   |   | 238,000 |   |
| Common                    stock issued for services at $0.41 per share              |   |                            | 300,000    |    |   | 300         |   |        | 122,700   |   |   | - |   |   | 123,000 |   |
| Common                    stock issued for services at $0.27 per share              |   |                            | 300,000    |    |   | 300         |   |        | 80,700    |   |   | - |   |   | 81,000 |   |
| Common                    stock issued for services at $0.22 per share              |   |                            | 600,000    |    |   | 600         |   |        | 131,400   |   |   | - |   |   | 132,000 |   |
| Net                    loss - FYE 12/31/04                                          |   |                            |       |    |   |        |   |        |      |   |   | (1,606,057 | ) |   | (1,606,057 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at Dec. 31, 2004                                        |   |                            | 22,100,258 |    |   | 22,100      |   |        | 1,977,463 |   |   | (2,422,182 | ) |   | (422,619 | ) |
|                                                                                |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |
| Contributed                    capital for general and administrative expenses      |   |                            |       |    |   |        |   |        | 138,701   |   |   |   |   |   | 138,701 |   |
| Net                    loss for the nine months ended September 30, 2005            |   |                            |       |    |   |        |   |        |      |   |   | (747,812 | ) |   | (747,812 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| Balances                    at June 30, 2005                                        |   |                            | 22,100,258 |    |   | 22,100      |   |        | 2,116,164 |   |   | (3,169,994 | ) |   | (1,031,730 | ) |
|                                                                                |   |                                 |       |         |   |             |   |             |      |        |   |
| (Unaudited)                                                                         |   |                            |       |    |   |        |   |        |      |   |   |   |   |   |   |   |

| VICTORY                    CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES |
|--------------------------------------------------------------------------|
| (A                    Development Stage Company)                         |
| Consolidated                    Statements of Cash Flows                 |
| (Unaudited)                                                              |

|                                                                                 |   |   |   |                                                  |   |                                |   | From                        Inception on |       |
|--------------------------------------------------------------------------------------|--------|--------|--------|-------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------------|------------|
|                                                                                 |   |   |   |  For                        the Six Months Ended |   | Jan.                        7, 1982 |   |
|                                                                                 |   |   |   |  September                        30,            |   | Through                             |   |
|                                                                                 |   |   |   |  2005                                            |   | 2004                                |   | Sep.                        30, 2005     |       |
|                                                                                 |   |   |   |                                                       |   |                                     |   |                                          |       |
| CASH                        FLOWS FROM OPERATING ACTIVITIES:                         |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| Net                        Loss                                                      |   |   |   |                                                  |   | (747,812                            | )      |                                     | (1,246,659 | ) |   | (3,218,356 | ) |
| Adjustments                        to reconcile net loss to net cash                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| used                        by operating activities:                                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| Depreciation                                                                    |   |   |   |                                                  |   | 229                                 |   |                                     | 90         |   |   | 598 |   |
| Loss                        on extinguishment of debt                           |   |   |   |                                                  |   |                                |   |                                     | 48,363     |   |   | 48,363 |   |
| Decrease                        in Prepaid Expenses                             |   |   |   |                                                  |   | 246                                 |   |                                     |       |   |   |   |   |
| Increase                        in Deposits                                     |   |   |   |                                                  |   | (2,020                              | )      |                                     |       |   |   | (2,020 | ) |
| Increase                        in accounts payable                             |   |   |   |                                                  |   | 312,900                             |   |                                     |       |   |   | 330,970 |   |
|  and                        accounts payable - related party                    |   |   |   |                                                  |   | 24,253                              |   |                                     | 88,613     |   |   | 172,179 |   |
| Increase                        in Note Payable                                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| Increase                        to accrued liabilities                          |   |   |   |                                                  |   | 232,000                             |   |                                     | 25,836     |   |   | 380,792 |   |
| Increase                        in Note Payable-Related Entity                  |   |   |   |                                                  |   | 0                                   |   |                                     |       |   |   | 110,000 |   |
| Incrrese                        in Note Payable                                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
|  Net                        Cash used by Operating Activities                   |   |   |   |                                                  |   | (180,204                            | )      |                                     | (1,083,757 | ) |   | (2,177,474 | ) |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
|                                                                                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| CASH                        FLOWS FROM INVESTING ACTIVITIES                          |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| Purchase                        of Fixed Assets                                      |   |   |   |                                                  |   | (14,941                             | )      |                                     | (1,693     | ) |   | (17,234 | ) |
| Purchase                        of Marketable Securities                             |   |   |   |                                                  |   | (88,300                             | )      |                                     |       |   |   | (88,300 | ) |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
|  Net                        Cash used by Investing Activities                   |   |   |   |                                                  |   | (103,241                            | )      |                                     | (1,693     | ) |   | (105,534 | ) |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
| CASH                        FLOWS FROM FINANCING ACTIVITIES                          |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| Borrowing:                        Note Payable                                       |   |   |   |                                                  |   | 157,531                             |   |                                     |       |   |   | 157,531 |   |
| Issuance                        of common stock for cash                             |   |   |   |                                                  |   |                                |   |                                     |       |   |   | 150,773 |   |
| Stock                        issued for srevices                                     |   |   |   |                                                  |   |                                |   |                                     | 1,085,450  |   |   | 1,085,450 |   |
| Contributed                        capital from Stockholders                         |   |   |   |                                                  |   | 138,700                             |   |                                     |       |   |   | 902,040 |   |
| Loan                        proceeds                                                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
|  Net                        Cash provided by Financing Activities               |   |   |   |                                                  |   | 296,231                             |   |                                     | 1,085,450  |   |   | 2,295,794 |   |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
| NET                        INCREASE IN CASH                                          |   |   |   |                                                  |   | 12,786                              |   |                                     | 0          |   |   | 12,786 |   |
| CASH                        AT BEGINNING OF PERIOD                                   |   |   |   |                                                  |   | --                                  |   |                                     | --         |   |   | -- |   |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
| CASH                        AT END OF PERIOD                                         |   |   |   |                                                  |   | 12,786                              |   |                                     | --         |   |   | 12,786 |   |
|                                                                                 |   |   |   |                                                  |        |                                |        |                                     |            |   |
| CASH                        PAID FOR:                                                |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
|  Interest                                                                       |   |   |   |                                                  |   | --                                  |   |                                     | --         |   |   | -- |   |
|  Income                        Taxes                                            |   |   |   |                                                  |   | --                                  |   |                                     | --         |   |   | -- |   |
|                                                                                 |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
| SCHEDULE                        OF NON CASH FINANCING ACTIVITIES                     |   |   |   |                                                  |   |                                |   |                                     |       |   |   |   |   |
|  Stock                        issued for services                               |   |   |   |                                                  |   | --                                  |   |                                     | 1,085,450  |   |   | 1,085,450 |   |
|  Contributed                        capital for rent and officer compenmsation' |   |   |   |                                                  |   |                                |   |                                     |       |   |   | 150,773 |   |
|  Contributed                        Capital by shareholders                     |   |   |   |                                                  |   | 138,700                             |   |                                     | --         |   |   | 903,040 |   |

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

**ITEM      1: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      (unaudited)**

|                                                   | 2005                                           | 2004                           |
|--------------------------------------------------------|------------------------------------------------|--------------------------------|
|                                                   |                                                |                                |
| Numerator:                                             |                                           |                           |
|                                                   |                                           |                           |
| Basic                  and diluted net loss per share: |                                           |                           |
| Net                  Loss                              | $                  (                  747,813) | $                  (1,246,659) |
|                                                   |                                           |                           |
| Denominator                                            |                                           |                           |
|                                                   |                                           |                           |
| Basic                  and diluted weighted average    |                                           |                           |
| number                  of shares outstanding          | 22,100,258                                     | 19,996,024                     |
|                                                   |                                           |                           |
|                                                   |                                           |                           |
| Basic                  and Diluted Net Loss Per Share  | $                  (0.02)                      | $                  (0.06)      |

| Description                                   | Years |
|-----------------------------------------------|-------|
| Furniture                and fixtures         | 7     |
| Computer                hardware and software | 3-5   |

| a. | L                  & M Resources, Inc. is a jobber in the clothing business, obtaining                  orders for U.S. clothing manufacturers for partially finished apparel                  and                  securing manufacture for the orders. The Company acquired 100%                  of the                  outstanding common stock of the acquired company. There were no                  other                  classes of shares outstanding. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b. | The                  primary reason for the acquisition was to develop a reliable source                  of                  revenues. The Company will use its resources to finance and promote                  the                  business. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c. | The                  period for which the results of operations of L & M Resources, Inc.                  are included in the income statement of the combined entity is                  the first                  six months of 2005, which dates from the beginning of the financial                  year                  of L & M Resources, Inc. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d. | The                  cost of the acquired entity was 30% of the outstanding common stock                  of                  Victory Apparel, Inc., a dormant corporation which is a wholly                  owned                  subsidiary of Victory Capital, Inc. The cost was the de minimus                  value of                  the Victory Apparel stock. The net worth at fair market value of                  L & M                  Resources, Inc. was $10,000, which was assigned as the value of                  its common                  shares. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e. | The                    following is the Balance Sheet of L & M Resources, Inc. at the date of                    acquisition,                    May 27, 2005 showing the amount assigned to each major asset                    and                    liability                    caption. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ASSETS                                                              |   |   |   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|
| CURRENT                    ASSETS                                   |   |   |   |   |
| Supplies                                                       |   | $      | 10,000 |   |
|                                                                |   |        |   |
| Total                    Assets                                |   | $      | 10,000 |   |
|                                                                |   |        |   |
| LIABILITIES                    AND STOCKHOLDERS’ EQUITY       |   |   |   |   |
|                                                                |   |   |   |   |
| LIABILITIES                                                         |   |   |   |   |
|                                                                |   |   |   |   |
| Total                    Liabilities                           |   | $      | --     |   |
| STOCKHOLDERS’                    EQUITY                       |   |   |   |   |
|                                                                |   |   |   |   |
| Common                    Stock                                |   | $      | 10,000 |   |
| Retained                    Earnings                                |   |   | --     |   |
|                                                                |   |   |   |   |
| Total                    Liabilities and Stockholders’ Equity |   | $      | 10,000 |   |
|                                                                |   |        |   |

**ITEM        2.**
**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF        OPERATIONS**
** **

**Forward-Looking        Information**

**Plan        of Operation**

**Results        of Operations**

**Item        3 -- Controls and Procedures **

**PART          II - OTHER INFORMATION**

**Item          1. Legal Proceedings**

**Item          2. Unregistered Sales of Equity Securities and Use of Proceeds**

**Item          3. Defaults Upon Senior Securities**

**Item          4. Submission of Matters to a Vote of Security Holders**

**Item          5. Other Information.**

**Item          6. Exhibits and Reports on Form 8-K**

**Exhibit          No.**
**Description          of Exhibit**

**SIGNATURE**

**Victory          Capital Holdings Corporation**