UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q


(Mark
One)





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





For
      the quarterly period ended September 30,
2009





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





For the
transition period from ____________ to ______________





Commission
file number: 333-146405





VELOCITY OIL & GAS,
INC.


(Exact
name of registrant as specified in its charter)





Nevada
                1311
                20-5465816(State
      or jurisdiction of incorporation or organization)
                (Primary
      Standard Industrial Classification Code Number)
                (IRS
      Employer Identification
No.)





Graha  Mandiri,
Floor 18


Jl
lman Bonjol No. 61


Jakarta
Pusat 10310


Indonesia


(Address
of principal executive offices)





3500
Washington Ave, Suite 200


Houston, Texas
77007


(Address
of former principal executive offices)





+62 813 812
18069


(Registrant's
telephone number)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes  x    No   ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).   Yes   ̈    No   ̈





Indicate
by check mark whether the registrant is a large accelerated filer, and
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large
      accelerated filer   ̈
            Accelerated
      filer    ̈Non-accelerated
      filer   ̈
            Smaller
      reporting company  x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act. Yes    ̈No   x





The
number of shares outstanding of each of the issuer’s classes of equity as of
November 19, 2009 is 12,620,500 shares of common stock, par value $0.001 per
share, and 1 share of Series A Preferred Stock, par value $0.001 per
share.





PART
I. FINANCIAL INFORMATION





ITEM 1. FINANCIAL
STATEMENTS





VELOCITY
OIL & GAS, INC.


(An
Exploration Stage Company)


CONSOLIDATED
BALANCE SHEETS


(Unaudited)





September
      30,
                              
                              
                              December
      31,2009
                              
                              
                              2008ASSETSCURRENT
      ASSETSCash
                              
                              $
                              897
                              
                              
                              $
                              5,716Total
      current assets
                              
                              
                              897
                              
                              
                              
                              5,716Property,
      plant and equipment, net of accumulateddepreciation
      of $3,727 and $2,583, respectively
                              
                              
                              3,726
                              
                              
                              
                              4,870Unproved
      oil and gas properties
                              
                              
                              -
                              
                              
                              
                              12,500TOTAL
      ASSETS
                              
                              $
                              4,623
                              
                              
                              $
                              23,086LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable
                              
                              $
                              18,141
                              
                              
                              $
                              16,938Accounts
      payable – related party
                              
                              
                              1,207
                              
                              
                              
                              1,207Accrued
      liabilities
                              
                              
                              117,977
                              
                              
                              
                              52,406Total
      current liabilities
                              
                              
                              137,325
                              
                              
                              
                              70,551Long-term
      advances - related party
                              
                              
                              101,932
                              
                              
                              
                              55,286Note
      payable to shareholder, net of unamortized discountsof
      $10,443 and $0, respectively
                              
                              
                              1,321
                              
                              
                              
                              12,764Total
      liabilities
                              
                              
                              240,578
                              
                              
                              
                              138,601STOCKHOLDERS’
      DEFICITPreferred
      stock, $0.001 par value; 10,000,000 sharesauthorized;
      none issued and outstanding
                              
                              
                              -
                              
                              
                              
                              -Series
      A Preferred stock, $0.001 par value; 1,000 sharesauthorized;
      none issued and outstanding
                              
                              
                              -
                              
                              
                              
                              -Series
      B Preferred stock, $2.50 par value; 2,000,000 sharesauthorized;
      none issued and outstanding
                              
                              
                              -
                              
                              
                              
                              -Common
      stock, $0.001 par value; 100,000,000 sharesauthorized;
      12,620,500 and 11,620,500 shares issued and outstanding,
      respectively
                              
                              
                              12,621
                              
                              
                              
                              11,621Additional
      paid-in capital
                              
                              
                              172,612
                              
                              
                              
                              159,848Deficit
      accumulated during the exploration stage
                              
                              
                              (421,188
                              )
                              
                              
                              (286,984
                              )Total
      stockholders' deficit
                              
                              
                              (235,955
                              )
                              
                              
                              (115,515
                              )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                              
                              $
                              4,623
                              
                              
                              $
                              23,086See
      notes to consolidated financial statements.


F-1


VELOCITY
OIL & GAS, INC.


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF EXPENSES


(Unaudited)





May
      16, 2006(Inception)Three
      Months Ended
                              
                              
                              Nine
      Months Ended
                              
                              
                              ThroughSeptember
      30,
                              
                              
                              September
      30,
                              
                              
                              September
      30,2009
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              2008
                              
                              
                              2009Operating
      expenses:General
      and administrative
                              
                              $
                              40,476
                              
                              
                              $
                              14,553
                              
                              
                              $
                              116,969
                              
                              
                              $
                              84,370
                              
                              
                              $
                              379,876Impairment
      of oil and gas properties
                              
                              
                              -
                              
                              
                              
                              20,020
                              
                              
                              
                              12,500
                              
                              
                              
                              20,020
                              
                              
                              
                              32,520Depreciation
                              
                              
                              382
                              
                              
                              
                              372
                              
                              
                              
                              1,144
                              
                              
                              
                              921
                              
                              
                              
                              3,727Total
      operating expenses
                              
                              
                              40,858
                              
                              
                              
                              34,945
                              
                              
                              
                              130,613
                              
                              
                              
                              105,311
                              
                              
                              
                              416,123Operating
      loss
                              
                              
                              (40,858
                              )
                              
                              
                              (34,945
                              )
                              
                              
                              (130,613
                              )
                              
                              
                              (105,311
                              )
                              
                              
                              (416,123
                              )Interest
      expense
                              
                              
                              (2,759
                              )
                              
                              
                              (399
                              )
                              
                              
                              (3,591
                              )
                              
                              
                              (888
                              )
                              
                              
                              (5,065
                              )Net
      loss
                              
                              $
                              (43,617
                              )
                              
                              $
                              (35,344
                              )
                              
                              $
                              (134,204
                              )
                              
                              $
                              (106,199
                              )
                              
                              $
                              (421,188
                              )Basic
      and diluted net loss per share
                              
                              $
                              (0.00
                              )
                              
                              $
                              (0.00
                              )
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.01
                              )Weighted
      average common sharesoutstanding
                              
                              
                              12,066,152
                              
                              
                              
                              11,620,500
                              
                              
                              
                              11,770,683
                              
                              
                              
                              11,550,062See
      notes to consolidated financial statements.


F-2


VELOCITY
OIL & GAS, INC.


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


May
16, 2006 (Inception) Through September 30, 2009


(Unaudited)





DeficitAccumulated
                          
                          
                          TotalAdditional
                          
                          
                          During
      the
                          
                          
                          Stockholders'Common
      Stock
                          
                          
                          Paid-in
                          
                          
                          Exploration
                          
                          
                          EquityShares
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Stage
                          
                          
                          (Deficit)Common
      shares issued for cash
                          
                          
                          10,360,500
                          
                          
                          $
                          10,361
                          
                          
                          $
                          35,689
                          
                          
                          $
                          -
                          
                          
                          $
                          46,050Common
      shares issued for services
                          
                          
                          300,000
                          
                          
                          
                          300
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          300Warrants
      granted
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          19,119
                          
                          
                          
                          -
                          
                          
                          
                          19,119Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (43,745
                          )
                          
                          
                          (43,745
                          )Balances
      at December 31, 2006
                          
                          
                          10,660,500
                          
                          
                          
                          10,661
                          
                          
                          
                          54,808
                          
                          
                          
                          (43,745
                          )
                          
                          
                          21,724Common
      shares issued for cash
                          
                          
                          250,000
                          
                          
                          
                          250
                          
                          
                          
                          24,750
                          
                          
                          
                          -
                          
                          
                          
                          25,000Common
      shares issued for services
                          
                          
                          10,000
                          
                          
                          
                          10
                          
                          
                          
                          990
                          
                          
                          
                          -
                          
                          
                          
                          1,000Common
      shares issued as finder's fees
                          
                          
                          500,000
                          
                          
                          
                          500
                          
                          
                          
                          49,500
                          
                          
                          
                          -
                          
                          
                          
                          50,000Cancellation
      of common shares
                          
                          
                          (100,000
                          )
                          
                          
                          (100
                          )
                          
                          
                          100
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (74,766
                          )
                          
                          
                          (74,766
                          )Balances
      at December 31, 2007
                          
                          
                          11,320,500
                          
                          
                          
                          11,321
                          
                          
                          
                          130,148
                          
                          
                          
                          (118,511
                          )
                          
                          
                          22,958Common
      shares issued for services
                          
                          
                          300,000
                          
                          
                          
                          300
                          
                          
                          
                          29,700
                          
                          
                          
                          -
                          
                          
                          
                          30,000Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (168,473
                          )
                          
                          
                          (168,473
                          )Balances
      at December 31, 2008
                          
                          
                          11,620,500
                          
                          
                          
                          11,621
                          
                          
                          
                          159,848
                          
                          
                          
                          (286,984
                          )
                          
                          
                          (115,515
                          )Common
      shares issued for conversionof
      shareholder loan
                          
                          
                          1,000,000
                          
                          
                          
                          1,000
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,000Debt
      discount from beneficialconversion
      feature
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          12,764
                          
                          
                          
                          -
                          
                          
                          
                          12,764Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (134,204
                          )
                          
                          
                          (134,204
                          )Balances
      at September 30, 2009
                          
                          
                          12,620,500
                          
                          
                          $
                          12,621
                          
                          
                          $
                          172,612
                          
                          
                          $
                          (421,188
                          )
                          
                          $
                          (235,955
                          )See
      notes to consolidated financial statements.


F-3


VELOCITY
OIL & GAS, INC.


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)


May
      16, 2006(Inception)Nine
      Months Ended
                        
                        
                        ThroughSeptember
      30,
                        
                        
                        September
      30,2009
                        
                        
                        2008
                        
                        
                        2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                        
                        $
                        (134,204
                        )
                        
                        $
                        (106,199
                        )
                        
                        $
                        (421,188
                        )Adjustments
      to reconcile net loss to cash usedin
      operating activities:Depreciation
                        
                        
                        1,144
                        
                        
                        
                        921
                        
                        
                        
                        3,727Amortization
      of debt discount
                        
                        
                        2,321
                        
                        
                        
                        -
                        
                        
                        
                        2,321Debt
      issued for interest
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        264Impairment
      of oil and gas properties
                        
                        
                        12,500
                        
                        
                        
                        20,020
                        
                        
                        
                        32,520Stock
      issued for services
                        
                        
                        -
                        
                        
                        
                        30,000
                        
                        
                        
                        31,300Warrant
      expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        19,119Changes
      in assets and liabilities:Prepaid
      expenses and other receivables
                        
                        
                        -
                        
                        
                        
                        3,000
                        
                        
                        
                        -Accounts
      payable
                        
                        
                        1,203
                        
                        
                        
                        (383
                        )
                        
                        
                        5,641Accounts
      payable – related party
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,207Accrued
      liabilities
                        
                        
                        65,571
                        
                        
                        
                        507
                        
                        
                        
                        117,977NET
      CASH USED IN OPERATING ACTIVITIES
                        
                        
                        (51,465
                        )
                        
                        
                        (52,134
                        )
                        
                        
                        (207,112
                        )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of fixed assets
                        
                        
                        -
                        
                        
                        
                        (2,917
                        )
                        
                        
                        (7,453
                        )Proceeds
      from sale of oil and gas properties
                        
                        
                        -
                        
                        
                        
                        29,980
                        
                        
                        
                        29,980NET
      CASH PROVIDED BY INVESTING ACTIVITIES
                        
                        
                        -
                        
                        
                        
                        27,063
                        
                        
                        
                        22,527CASH
      FLOWS FROM FINANCING ACTIVITIESAdvances
      from related party
                        
                        
                        46,646
                        
                        
                        
                        53,500
                        
                        
                        
                        131,648Proceeds
      from note payable to shareholder
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        12,500Repayments
      of advances from related party
                        
                        
                        -
                        
                        
                        
                        (26,750
                        )
                        
                        
                        (29,716
                        )Proceeds
      from issuance of common stock
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        71,050NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        46,646
                        
                        
                        
                        26,750
                        
                        
                        
                        185,482NET
      CHANGE IN CASH
                        
                        
                        (4,819
                        )
                        
                        
                        1,679
                        
                        
                        
                        897Cash,
      beginning of period
                        
                        
                        5,716
                        
                        
                        
                        1,286
                        
                        
                        
                        -Cash,
      end of period
                        
                        $
                        897
                        
                        
                        $
                        2,965
                        
                        
                        $
                        897CASH
      PAID FOR:Interest
                        
                        $
                        -
                        
                        
                        $
                        -Income
      taxes
                        
                        
                        -
                        
                        
                        
                        -NONCASH
      INVESTING AND FINANCING ACTIVITIES:Debt
      discount from beneficial conversion feature
                        
                        $
                        12,764
                        
                        
                        
                        -Common
      shares issued for conversion of shareholder loan
                        
                        
                        1,000
                        
                        
                        
                        -See
      notes to consolidated financial statements.


F-4


VELOCITY
OIL & GAS, INC.


(An
Exploration Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Nature of
Business. Velocity Oil and Gas, Inc. (“Velocity”) was incorporated in the State
of Nevada on May 16, 2006. Since inception, Velocity is a start-up entity with
the intention of being involved in oil and gas exploration and development with
a geographic focus in Texas and Louisiana.





Basis of
Presentation. The accompanying unaudited interim financial statements of
Velocity and its wholly- owned subsidiary, South Marsh LLC, have been prepared
in accordance with accounting principles generally accepted in the United States
of America and the rules of the Securities and Exchange Commission, and should
be read in conjunction with the audited financial statements and notes thereto
contained in Velocity’s Form 10-K. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements that would substantially
duplicate the disclosures contained in the audited financial statements for
fiscal 2008 as reported in the Form 10-K, have been omitted.





Use of
Estimates. In preparing financial statements, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities in the
balance sheet and expenses in the statement of expenses. Actual results could
differ from those estimates.





Recently
Issued Accounting Pronouncements. Velocity does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on
Velocity’s results of operations, financial position or cash flow.





In July
2009, the Financial Accounting Standards Board (“FASB”) issued new guidance
relating to the “FASB Accounting Standards Codification” at FASB ASC 105, as the
single source of authoritative nongovernmental U.S. generally accepted
accounting principles (GAAP). The codification is effective for interim periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in FASB ASC 105. All other accounting literature not
included in the Codification is nonauthoritative. The adoption of FASB ASC 105
did not impact Velocity’s results of operations, financial position or cash
flows.





Effective
this quarter, Velocity implemented FASB ASC 855, Subsequent Events. This
standard establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued. The adoption of FASB ASC 855 did not impact Velocity’s financial
position or results of operations. Velocity evaluated all events or transactions
that occurred after September 30, 2009 until November 20, 2009. During this
period, Velocity did not have any material recognizable subsequent
events.





NOTE 2 –
GOING CONCERN





As shown
in the accompanying financial statements, Velocity incurred a net loss of
$134,204 for the nine months ended September 30, 2009, and has an accumulated
deficit of $421,188 and a working capital deficit of $136,428 as of September
30, 2009.  These conditions raise substantial doubt as to Velocity’s
ability to continue as a going concern.  Management is trying to raise
additional capital through sales of common and preferred stock.  The
financial statements do not include any adjustments that might be necessary if
Velocity is unable to continue as a going concern.


F-5


NOTE 3 –
UNPROVED PROPERTIES





In
December 2008, Velocity, through its ownership in South Marsh LLC, acquired a
40% working interest in South Marsh Island Block 138 which is located off the
Louisiana coast in the Gulf of Mexico.  Velocity’s lease on this
property expired on June 30, 2009 and the $12,500 book value of the property was
written-off through impairment of oil and gas properties during the nine months
ended September 30, 2009.





NOTE 4 –
ADVANCES FROM RELATED PARTY





Velocity
borrows advances from a shareholder periodically.  The advances are
non-interest bearing and due on demand with twelve months and one day’s
notice.  At September 30, 2009 and December 31, 2008, there was an
outstanding balance of $101,932 and $55,286, respectively, due the
shareholder.





NOTE 5 –
NOTES PAYABLE TO SHAREHOLDER





Velocity
borrowed $8,000 from a shareholder in June 2007. The note is due on demand with
twelve months and one day’s notice and bears interest at 6% per annum. The loan
was originally convertible into common shares at $0.10 per share. During 2007,
the accrued interest of $264 was converted to debt and at December 31, 2008, the
then outstanding balance on the note was $12,764. Velocity evaluated the
original loan for derivative accounting consideration under FASB ASC 815-15 and
FASB ASC 815-40. Velocity determined the embedded conversion option in the
original convertible note met the criteria for classification in stockholders’
equity under FASB ASC 815-15 and FASB ASC 815-40. Therefore, derivative
accounting was not applicable for the note. Velocity then evaluated the original
conversion option under FASB ASC 470-20 for a beneficial conversion feature and
determined none existed.





During
August 2009, Velocity amended the conversion option of the above note whereby
the conversion rate was changed from $0.10 to $0.001 per share. Velocity
evaluated the modification under FASB ASC 470-50 and determined the modification
to be substantial and thus qualify as an extinguishment of debt. Velocity
evaluated the modified loan for derivative accounting consideration under FASB
ASC 815-15 and FASB ASC 815-40. Velocity determined the embedded conversion
option in the modified convertible note met the criteria for classification in
stockholders’ equity under FASB ASC 815-15 and FASB ASC 815-40. Therefore,
derivative accounting was not applicable for the note. Velocity then evaluated
the modified conversion option under FASB ASC 470-20 for a beneficial conversion
feature and determined the conversion option contained a beneficial conversion
feature.





Velocity
calculated the intrinsic value of the conversion feature of the modified note
and recorded a discount on the debt of $12,764. The discount is being amortized
over the life of the loan using the effective interest rate method. During the
nine months ended September 30, 2009, an aggregate of $2,321 of amortization was
recorded on the debt discount.





During
August 2009, the holder of the modified note above elected to convert $1,000 of
the loan to common stock. Velocity issued the note holder 1,000,000 common
shares. Velocity recorded amortization of $1,000 on the discount related to the
portion of the note converted.





NOTE 6 –
PREFERRED STOCK





Series A Preferred
Stock





On March
2, 2009, Velocity’s Board of Directors unanimously agreed to adopt a Certificate
of Designations for the creation of a Series A preferred stock, which was filed
with the Secretary of State of Nevada on June 10, 2009.


F-6


The
Series A Preferred Stock has a par value of $0.001 per share and consists of one
thousand (1,000) shares, each having no dividend rights, no liquidation
preference, and no conversion or redemption rights.  The shares of
Series A Preferred Stock have the right, voting in aggregate, to vote on all
shareholder matters equal to fifty-one percent (51%) of the total
vote.





Series B Preferred
Stock





On May 5,
2009, Velocity’s Board of Directors unanimously agreed to adopt a Certificate of
Designations for the creation of a Series B preferred stock, which was filed
with the Secretary of State of Nevada on June 11, 2009.





The
Series B Preferred Stock has a par value of $2.50 per share and consists of two
million (2,000,000) shares, each having no dividend rights, no liquidation
preference, no voting right and no redemption rights.





NOTE 7 –
SUBSEQUENT EVENTS





In  November
2009, Travel Engine Solutions, LLC subscribed for 1,000 shares of Velocity’s
Series A Preferred Stock for aggregate consideration of $175,000.  A
total of $50,000 of the funds for the Series A Shares was received immediately
and pursuant to the terms of the Subscription Agreement, Velocity issued Travel
Engine one share of the Series A Preferred Stock. The share is to be held in
trust until such time as Travel Engine has paid the remaining $125,000 due
pursuant to the terms of the Subscription Agreement.  In the event the
Additional Consideration is not paid, other than because Velocity failed to meet
the requirements described below, the Series A Preferred Share is to be redeemed
for $100 and Velocity is entitled to retain the $50,000 initial payment in
liquidated damages.  While held in trust, Travel Engine has the right
to vote the Series A Preferred Share (which has the right to vote 51% of the
Company’s outstanding voting securities).





The
requirements which must be met by Velocity prior to Travel Engine paying the
additional consideration include that Velocity shall have no liabilities, shall
not be party to any litigation (threatened or pending), shall not have any
convertible securities outstanding (other than a convertible note currently held
by Capersia Pte. Ltd.), Velocity shall have filed this Form 10-Q (the “Form
10-Q”), Velocity shall not have indicated that it is a “shell company” in the
Form-Q, Velocity shall have obtained the resignation of its current officers and
Directors (along with representations from such officers and Directors that no
fees or other compensation are due to such officers and Directors), and Frank
Jacobs, Velocity’s current Director shall have entered into a lock-up agreement,
approved by Travel Engine, pursuant to which Mr. Jacobs will agree not to sell
any Company securities for a period of one (1) year.


F-7


ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS





CERTAIN
STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q (THIS "FORM 10-Q"), CONSTITUTE
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH
FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD", OR "ANTICIPATES", OR
THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR
BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
VELOCITY OIL & GAS, INC. ("THE COMPANY", "VELOCITY", "WE", "US" OR "OUR") TO
BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM
10-Q, UNLESS ANOTHER DATE IS STATED, ARE TO SEPTEMBER 30, 2009.





History





We were
formed as a Nevada corporation on May 16, 2006.  We have 110,000,000
shares of authorized stock, consisting of 100,000,000 shares of common stock,
$0.001 par value and 10,000,000 shares of preferred stock, $0.001 par
value.  We are an exploration stage company with limited operations,
which has not generated any revenues to date, and does not anticipate being able
to generate revenues until we can raise substantial additional
capital.





We
previously held oil and gas exploration assets, which have since expired or have
been relinquished. The financial crisis of 2008 and the subsequent collapse of
the natural gas prices have made drilling in the Gulf of Mexico
unattractive.





The
Company recently has formed an alliance with PT. SUMBER DAYA KELOLA (SDK) with
which the Company will pursue a geothermal project in Indonesia. The Company is
also evaluating the potential acquisition of a gas processing project. A
suitable gas plant has been identified and negotiations on its purchase have
commenced.  The Company does not currently have any agreements in
place with SDK.





Assuming
we acquire these properties in the future, we will need to raise substantial
additional capital either though the sale of debt or equity securities or by
entering into joint ventures with more established companies and/or
institutional investors to move forward with our business plan.





Our goal
is to expand or build our business through a variety of efforts. We are
considering ongoing offerings of securities under Private Placements, possible
debt instruments, joint ventures with other companies public and private and
other activities to generate capital to grow and undertake our business plan
(for example, obtain, if possible, loans).




We have
no lines of credit or other bank financing arrangements. However, we are working
out a possible formal line of credit with Frank Jacobs, our officer and
Director, who has advanced monies to us from time to time. Generally, we have
financed operations to date through the proceeds of the private placement of
equity and debt securities and loans from our shareholders.





In
connection with our business plan, management will try and delay additional
increases in operating expenses and capital expenditures. We will need to raise
additional capital and revenues to meet both short-term and long-term operating
requirements.


-2-


We have
undertaken certain actions and continue to implement changes designed to improve
our financial results and operating cash flows. The actions involve certain
cost-saving initiatives and growing strategies. For example, we do not have a
seasoned staff of public company officers beyond the extent of experience and
abilities of our Chief Executive Officer and Secretary.





Our
financial statements contain information expressing substantial doubt about our
ability to continue as a going concern. The consolidated financial statements
have been prepared "assuming that we will continue as a going concern," which
contemplates that we satisfy our liabilities and commitments in the ordinary
course of business.




MATERIAL
EVENTS:





On June
1, 2007, we issued Capersia Pte. Ltd. (“Capersia”), a shareholder of the
Company, an $8,000 Promissory Note to evidence an $8,000 loan we received from
Capersia (the “Note”).  The Note had an effective date of June 13,
2007, and bears interest at the rate of 6% per annum until paid in
full.  The Note is payable on demand with one year and one day prior
written notice, and any amounts not paid when due accrue interest at the rate of
15% per annum.  Capersia had the right at any time prior to the date
such Note is repaid to convert any or all of the outstanding principal amount of
the Note into shares of the Company’s common stock at a conversion price of
$0.10 per share.





On or
around November 7, 2008, the Promissory Note was amended to reflect an increased
amount owed to the Company of $12,764.





On or
around August 20, 2009, we entered into an amendment to the Note, pursuant to
which we agreed to amend the conversion price of the Note to $0.001 per share,
and to allow Capersia to convert $1,000 of the amount owed under the Note into
1,000,000 shares of our common stock. If the remaining approximately $11,764 of
principal was converted into shares of the Company’s common stock, such
Promissory Note would convert into 11,764,000 shares of common stock,
representing approximately 48% of the Company’s then outstanding common
stock.





On or
around November 10, 2009, Capersia sold its entire interest in the Note to
Cascata Equity Management, Inc. (50%) and Seven Palm Investments, LLC
(50%).





Purchase and Sale Agreement
with Entek





In
November 2007, we entered into a Purchase and Sale Agreement with Entek USA Inc.
(the “Purchase Agreement” and “Entek”) and an Assignment of Membership Interests
(the “Assignment”), pursuant to which we purchased all of the outstanding
membership interests in South Marsh LLC, a Delaware limited liability company
(“South Marsh”).   Through the Purchase Agreement, we obtained
all of the interests in oil and gas leases acquired by South Marsh pursuant to
an Amended and Restated Participation Agreement, dated December 8, 2006, by and
between, South Marsh, Ridgelake Energy, Inc., a Louisiana corporation
(“Ridgelake”), and GulfX, LLC, a Delaware limited liability company, which was
later amended by an Amended and Restated Participation Agreement entered into in
September 2007 (the “Participation Agreement”).  Pursuant to the terms
of this participation agreement, South Marsh acquired the right to earn (a) a
10% working interest in Block 79, Viosca Knoll Area covering approximately 5,760
acres of submerged lands within the Outer Continental Shelf (“VK 79”); (b) a 10%
working interest in Block A 307, High Island Area, covering approximately 5,760
acres of submerged lands within the Outer Continental Shelf (“HI A 307”); (c) a
10% working interest in the Block 317, Vermillion Area, covering approximately
5,000 acres of submerged lands within the Outer Continental Shelf (“VM 317”);
(d) an 11.25% working interest in Block 138, South Marsh Island Area, covering
approximately 5,000 acres of submerged lands within the Outer Continental Shelf
(“SMI 138”); and (e) a 15% working interest in Block 152, South Marsh Island
Area, covering approximately 2,500 acres of submerged lands within the Outer
Continental Shelf (“SMI 152”), which interest expired on July 31, 2008 as the
Company elected not to participate in drilling on SMI 152 as management deemed
the project to have limited economic potential.  All of the leases are
located in the Gulf of Mexico, off the coast of Texas and
Louisiana.  The effective date of the Purchase Agreement was November
8, 2007.


-3-


As a
result of the Purchase Agreement and the Assignment, South Marsh became a
wholly-owned subsidiary of the Company. We have not paid any consideration to
date, including cash and/or securities, to Entek in connection with the Purchase
Agreement.





On July
1, 2008, Ridgelake proposed to drill a well on the SMI 152 lease whereby the
Company would be required to pay Ridgelake a cash-call within 30 days and share
in the expenses of such well, if the Company desired to
participate.  Upon Ridgelake’s proposal, the Company elected not to
participate in this lease as management deemed the project to have limited
economic potential.  As such, the Company’s interest in the SMI 152
lease expired on July 31, 2008, and the Company has forfeited its right to earn
any interest on this lease in the future.





Purchase of Ownership
Interest in SMI 138





On or
about September 29, 2008, South Marsh entered into an Assignment agreement with
Ridgelake to acquire a 40% working interest in SMI 138 (as defined
above).  Pursuant to the Assignment agreement between Ridgelake, South
Marsh and Offset Leo LLC, a Delaware limited liability company (“Offset”), which
agreement has an effective date of June 1, 2008, Ridgelake assigned a 40%
interest to South Marsh and a 40% interest to Offset.  Jacobs Oil
& Gas, Ltd., which is controlled by our officer and Director, Frank Jacobs,
is a shareholder of Offset.





The
assignment of the interests to South Marsh was approved by the Minerals
Management Service of the United States Department of the Interior (the
“MMS”).  South Marsh is qualified by the MMS to own any oil and gas
lease of submerged lands under the Outer Continental Lands Act. South Marsh
previously held the right to an 11.25% working interest in SMI 138, which rights
have lapsed as of the date of this filing.  Prior to its entry into
the Assignment agreement, Offset provided a payment of $25,000 to Ridgelake as
consideration for the assignment, of which we were responsible for repaying
$12,500 of such payment to Offset.





On or
around June 30, 2009, the last of the Company’s other oil and gas rights located
in the Gulf of Mexico expired and as such, the Company does not currently hold
any oil and gas interests or rights as of the date of this filing. Moving
forward, the Company is currently planning to focus its attention on geothermal
energy, producing liquefied petroleum gas (“LPG”) and possibly other downstream
energy/engineering projects, funding permitting, of which there can be no
assurance.





Series A Preferred
Stock





On March
2, 2009, the Company's Board of Directors unanimously agreed by a written
consent to action without a meeting, to adopt a Certificate of Designations for
the creation of a Series A preferred stock (the "Series A Preferred Stock"),
which was filed with the Secretary of State of Nevada on June 10,
2009.





The
Series A Preferred Stock has a par value of $0.001 per share. The Series A
Preferred Stock consists of one thousand (1,000) shares, each having no dividend
rights, no liquidation preference, and no conversion or redemption rights.
However, the one thousand (1,000) shares of Series A Preferred Stock have the
right, voting in aggregate, to vote on all shareholder matters equal to
fifty-one percent (51%) of the total vote. For example, if there are 10,000,000
shares of the Company's common stock issued and outstanding at the time of a
shareholder vote, the holders of Series A Preferred Stock, voting separately as
a class, will have the right to vote an aggregate of 10,408,163 shares, out of a
total number of 20,408,163 shares.





Additionally,
the Company shall not adopt any amendments to the Company's Bylaws, Articles of
Incorporation, as amended, make any changes to the Certificate of Designations,
or effect any reclassification of the Series A Preferred Stock, without the
affirmative vote of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock. However, the Company may, by any means authorized by law and
without any vote of the holders of shares of Series A Preferred Stock, make
technical, corrective, administrative or similar changes to the Certificate of
Designations that do not, individually or in the aggregate, adversely affect the
rights or preferences of the holders of shares of Series A Preferred
Stock.


-4-


Series B Preferred
Stock




On May 5,
2009, the Company’s Board of Directors unanimously agreed by a written consent
to action without a meeting, to adopt a Certificate of Designations for the
creation of a Series B preferred stock (“Series B Preferred Stock”), which was
filed with the Secretary of State of Nevada on June 11, 2009.




The
Series B Preferred Stock has a par value of $0.001 per share. The Series B
Preferred Stock consists of two million (2,000,000) shares, each having no
dividend rights, no liquidation preference, no voting rights and no redemption
rights.




The
Series B Preferred Stock has a price of $2.50 per share and convert into the
Company’s common stock on the basis of one for thirty. The Series B Preferred
Stock was mistakenly filed such that the $2.50 price was subject to
recapitalizations; however the Company is currently taking steps to amend
the designation such that the Series B Preferred will not be subject to
recapitalizations and to increase the number of designated shares of Series B
Preferred Stock to four million (4,000,000) shares.





Additionally,
the Company shall not adopt any amendments to the Company's Bylaws, Articles of
Incorporation, as amended, which adversely affect the rights of the Series B
Preferred Stock, make any changes to the Certificate of Designations, or effect
any reclassification of the Series B Preferred Stock, without the affirmative
vote of at least 66-2/3% of the outstanding shares of Series B Preferred Stock.
However, the Company may, by any means authorized by law and without any vote of
the holders of shares of Series B Preferred Stock, make technical, corrective,
administrative or similar changes to the Certificate of Designations that do
not, individually or in the aggregate, adversely affect the rights or
preferences of the holders of shares of Series B Preferred
Stock.





No shares
of the Company’s Series B Preferred Stock have been issued to date.





SUBSEQUENT
EVENTS:





On or
around November 10, 2009, Travel Engine Solutions, LLC (“Travel Engine”)
subscribed for 1,000 shares of our Series A Preferred Stock (the “Series A
Shares”) for aggregate consideration of $175,000.  A total of $50,000
of the funds for the Series A Shares was received immediately and pursuant to
the terms of the Subscription Agreement, we agreed to issue Travel Engine one
share of Series A Preferred Stock in connection with such payment, which share
(the “Series A Preferred Share”) is to be held in trust until such time as
Travel Engine has paid the remaining $125,000 due pursuant to the terms of the
Subscription Agreement (the “Additional Consideration”).  In the event
the Additional Consideration is not paid, other than because the Company failed
to meet the Requirements (defined below), the Series A Preferred Share is to be
redeemed for $100 and the Company is to retain the $50,000 initial payment in
liquidated damages.  While held in trust, Travel Engine has the right
to vote the Series A Preferred Share (which has the right to vote 51% of the
Company’s outstanding voting securities).





Additional
“Requirements” which must be met prior to Travel Engine paying the Additional
Consideration include that the Company shall have no liabilities, shall not be
party to any litigation (threatened or pending), shall not have any convertible
securities outstanding (other than a convertible note currently held by Capersia
Pte. Ltd.), the Company shall have filed this Form 10-Q (the “Form 10-Q”), the
Company shall not have indicated that it is a “shell company” in the Form-Q, the
Company shall have obtained the resignation of its current officers and
Directors (along with representations from such officers and Directors that no
fees or other compensation are due to such officers and Directors), and Frank
Jacobs, the Company’s current Director shall have entered into a lock-up
agreement, approved by Travel Engine, pursuant to which Mr. Jacobs will agree
not to sell any Company securities for a period of one (1)
year.


-5-


PLAN
OF OPERATIONS





Moving
forward, the Company is planning to focus its attention on geothermal energy,
producing liquefied petroleum gas (“LPG”) and possibly other downstream
energy/engineering projects in Indonesia, funding permitting, of which there can
be no assurance.





We intend
to seek out quality geothermal energy projects and acquire the expertise in this
field of power generation through the alliance with other companies. We
currently have a tentative list of potential acquisitions.  We will
need to raise substantial additional capital either though the sale of debt or
equity securities or by entering into joint ventures with established companies
and/or institutional investors in the field of geothermal energy to obtain the
necessary funds we will require to move forward with our business
plan.





RESULTS
FROM OPERATIONS





FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2008





We did
not generate any oil and gas revenues for the three months ended September 30,
2009, or for the three months ended September 30, 2008, and do not anticipate
generating any oil and gas revenues until we have a successful exploration
program or until we acquire producing oil and gas production properties, of
which there can be no assurance.





We had
general and administrative expenses of $40,476 for the three months ended
September 30, 2009, compared to general and administrative expenses of $14,553
for the three months ended September 30, 2008, an increase of $25,923 or 178%
from the prior period.  The increase in general and administrative
expenses was mainly due to an increase in legal fees, accounting fees and
wages.





We had no
impairment of oil and gas properties for the three months ended September 30,
2009, compared to $20,200 of impairment of oil and gas properties for the three
months ended September 30, 2008, which was due to the relinquishment of SMI 138,
as described in greater detail above.





We had
$382 in depreciation expense for the three months ended September 30, 2009
compared with depreciation expense of $372 for the three months ended September
30, 2008.





We had
total operating expenses and a total operating loss of $40,858 for the three
months ended September 30, 2009, compared to total operating expenses and a
total operating loss of $34,945 for the three months ended September 30, 2008,
an increase in total operating expenses and total operating loss of $5,913 or
17% from the prior period.





We had
interest expense of $2,759 for the three months ended September 30, 2009,
compared to interest expense of $399 for the three months ended September 30,
2008, an increase in interest expense of $2,360, which increase in interest
expense was in connection with interest on the loan received from Capersia Pte.
Ltd., a shareholder of the Company (“Capersia”), as evidenced by the Note
described below.





We had a
net loss of $43,617 for the three months ended September 30, 2009, compared to a
net loss of $35,344 for the three months ended September 30, 2008, an increase
in net loss of $8,273 or 23% from the prior period, which was due to the $5,913
or 17% increase in total operating expenses and the $2,360 increase in interest
expense.  We anticipate incurring net losses until and unless we are
able to obtain oil and gas interests, and unless such interests produce
sufficient revenues to support our operations, of which there can be no
assurance.


-6-


FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2008





We did
not generate any oil and gas revenues for the nine months ended September 30,
2009, or for the nine months ended September 30, 2008, and do not anticipate
generating any oil and gas revenues until we have a successful exploration
program or until we acquire producing oil and gas production properties, of
which there can be no assurance.





We had
general and administrative expenses of $116,969 for the nine months ended
September 30, 2009, compared to general and administrative expenses of $84,370
for the nine months ended September 30, 2008, an increase of $32,599 or 39% from
the prior period.  The increase in general and administrative expenses
was mainly due to increased legal and accounting fees for the nine months ended
September 30, 2009, compared to the nine months ended September 30, 2008, due to
the Company filing its registration statement and obtaining quotation on the
Over-The-Counter Bulletin Board.





We had
$12,500 of impairment of oil and gas properties for the nine months ended
September 30, 2009, compared to $20,020 of impairment of oil and gas properties
for the nine months ended September 30, 2008, which was due to the
relinquishment of SMI 138, as described in greater detail above.





We had
$1,144 in depreciation expense for the nine months ended September 30, 2009
compared with depreciation expense of $921 for the nine months ended September
30, 2008.





We had
total operating expenses and a total operating loss of $130,613 for the nine
months ended September 30, 2009, compared to total operating expenses and a
total operating loss of $105,311 for the nine months ended September 30, 2008,
an increase in total operating expenses and total operating loss of $25,302 or
24% from the prior period.





We had
interest expense of $3,591 for the nine months ended September 30, 2009,
compared to interest expense of $888 for the nine months ended September 30,
2008, an increase in interest expense of $2,703, which increase in expense was
in connection with interest on the loan received from Capersia, a shareholder of
the Company, as evidenced by the Note described below.





We had a
total net loss of $134,204 for the nine months ended September 30, 2009,
compared to a total net loss of $106,199 for the nine months ended September 30,
2008, an increase in net loss of $28,005 or 26% from the prior period, which was
due to the $25,302 or 24% increase in total operating expenses and the $2,703
increase in interest expense.  We anticipate incurring net losses
until and unless we are able to obtain oil and gas interests, and unless such
interests produce sufficient revenues to support our operations, of which there
can be no assurance.





LIQUIDITY
AND CAPITAL RESOURCES





We had
total assets of $4,623 as of September 30, 2009 consisting of property and
equipment, net of accumulated depreciation of $3,726 and total current assets
consisting solely of cash of $897.





We had
total liabilities as of September 30, 2009 of $240,578, consisting of total
current liabilities of $137,325; which included $18,141 of accounts payable,
$117,977 of accrued liabilities and $1,207 of accounts payable related party,
which amount was owed to Frank Jacobs in connection with management services
rendered to the Company by Mr. Jacobs; and non-current liabilities consisting of
$101,932 of long-term advances, related party, in connection with advances to
the Company by its officer and Director, Frank Jacobs and entities controlled by
Mr. Jacobs, which funding does not bear interest and is payable on demand with
at least one (1) year and one (1) day prior notice and/or is payable in shares
of the Company’s common stock at the option of the Company on the date such
payment is demanded (based on the then trading price of the Company’s common
stock, assuming such common stock is publicly-traded); and $1,321 of note
payable to Capersia, net of $10,443 of unamortized discount.


-7-


We had
negative working capital of $136,428 and a total deficit accumulated during the
exploration stage of $421,188 as of September 30, 2009.





On June
1, 2007, we issued Capersia an $8,000 Promissory Note to evidence an $8,000 loan
we received from Capersia, which Promissory Note was amended in December 2007
(the “Note”).  The Note had an effective date of June 13, 2007, and
bears interest at the rate of 6% per annum until paid in full.  The
Note is payable on demand; however, Capersia has agreed to provide the Company
at least one (1) year and one (1) day notice prior to the due date of such Note,
and any amounts not paid when due accrue interest at the rate of 15% per
annum.  Capersia had the right at any time prior to the date such Note
is repaid to convert any or all of the outstanding principal amount of the Note
into shares of the Company’s common stock at a conversion price of $0.10 per
share.





On or
around November 7, 2008, the Promissory Note was amended to reflect an increased
amount owed to the Company of $12,764.





On or
around August 20, 2009, we entered into an amendment to the Note, pursuant to
which we agreed to amend the conversion price of the Note to $0.001 per share,
and to allow Capersia to convert $1,000 of the amount owed under the Note into
1,000,000 shares of our common stock.  If the remaining approximately
$11,764 of principal was converted into shares of the Company’s common stock,
such Promissory Note would convert into 11,764,000 shares of common stock,
representing approximately 48% of the Company’s then outstanding common
stock.





The
modified note contains a beneficial conversion feature. We calculated the
intrinsic value of the conversion feature of the modified note and recorded a
discount on the debt of $12,764. The discount is being amortized over the life
of the loan using the effective interest rate method. During the nine months
ended September 30, 2009, an aggregate of $2,321 of amortization was recorded on
the debt discount.





On or
around November 10, 2009, Capersia sold its entire interest in the Note (as
described below), which had an aggregate balance, not including any accrued and
unpaid interest of $11,764 as of September 30, 2009, and as of the date of the
note sale, each to Cascata Equity Management, Inc. (50%) (“Cascata”) and
Seven Palm Investments, LLC. (“Seven Palm”) (50%).





As of the
filing of this report, neither Cascata nor Seven Palm has provided us notice of
their intention to demand repayment of the Note or otherwise convert such Note
into shares of our common stock.





We had
$51,465 of net cash used in operating activities for the nine months ended
September 30, 2009, which included a net loss of $134,204 offset by a decrease
in accrued liabilities of $65,571 and an impairment of oil and gas properties of
$12,500.





We had
$46,646 of net cash provided by financing activities for the nine months ended
September 30, 2009, which was due to $46,646 of advances from related parties in
connection with long term loans advanced to the Company by the Company’s officer
and Director, Frank Jacobs and Jacobs Oil & Gas, Ltd., an entity controlled
by Mr. Jacobs, which loans are described in greater detail above.





On or
around November 10, 2009, Travel Engine Solutions, LLC (“Travel Engine”)
subscribed for 1,000 shares of our Series A Preferred Stock (the “Series A
Shares”) for aggregate consideration of $175,000.  A total of $50,000
of the funds for the Series A Shares was received immediately and pursuant to
the terms of the Subscription Agreement, we agreed to issue Travel Engine one
share of Series A Preferred Stock in connection with such payment, which share
(the “Series A Preferred Share”) is to be held in trust until such time as
Travel Engine has paid the remaining $125,000 due pursuant to the terms of the
Subscription Agreement (the “Additional Consideration”), as described in greater
detail above.


-8-


Our
business operations to date have been minimal, and until such time as we are
able to develop the geothermal opportunities available to the Company, we
anticipate such business operations remaining that way.





We
currently rely on funds provided by Frank Jacobs, our officer and
Director.  Mr. Jacobs previously committed to provide us funding,
pursuant to his letter dated January 20, 2008, until the effectiveness of our
Registration Statement and to provide us funds for costs and fees associated
with our quotation on the Over-The-Counter Bulletin Board.  As both of
these events have occurred, Mr. Jacobs no longer has any obligations to provide
us funding.  Moving forward, we anticipate Mr. Jacobs, will continue
to provide us funding in the future; however, there are no assurances that he
will.





We do not
currently have any formal commitments or identified sources of additional
capital from third parties or from our officers, directors or majority
shareholders. We can provide no assurance that additional financing will be
available on favorable terms, if at all. If we are not able to raise the capital
necessary to continue our business operations, we may be forced to abandon or
curtail our business plan and/or suspend our exploration
activities.




In the
future, we may be required to seek additional capital by selling additional debt
or equity securities, selling assets, if any, or otherwise be required to bring
cash flows in balance when we approach a condition of cash insufficiency. The
sale of additional equity or debt securities, if accomplished, may result in
dilution to our then shareholders. We provide no assurance that financing will
be available in amounts or on terms acceptable to us, or at all.





Critical
Accounting Policies





Our
discussion and analysis of our financial condition and results of operations is
based upon our unaudited financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of any contingent assets and liabilities. On an
on-going basis, we evaluate our estimates, including those related to
uncollectible receivable, investment values, income taxes, the recapitalization
and contingencies. We base our estimates on various assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis
for making judgments about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.





Recently issued accounting
pronouncements. The Company does not expect the adoption of any recently
issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flows.





In July
2009, the Financial Accounting Standards Board (“FASB”) issued new guidance
relating to the “FASB Accounting Standards Codification” at FASB ASC 105, as the
single source of authoritative nongovernmental U.S. generally accepted
accounting principles (GAAP). The codification is effective for interim periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in FASB ASC 105. All other accounting literature not
included in the Codification is nonauthoritative. The adoption of FASB ASC 105
did not impact Velocity’s results of operations, financial position or cash
flows.





Effective
this quarter, Velocity implemented FASB ASC 855, Subsequent Events. This
standard establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued. The adoption of FASB ASC 855 did not impact Velocity’s financial
position or results of operations. Velocity evaluated all events or transactions
that occurred after September 30, 2009 until November 20, 2009. During this
period, Velocity did not have any material recognizable subsequent
events.


-9-


ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to
provide the information required by this Item as it is a “smaller reporting
company,” as defined by Rule 229.10(f)(1).





ITEM 4. CONTROLS AND
PROCEDURES





(a)
Evaluation of disclosure controls and procedures. Our Principal Executive
Officer and Principal Financial Officer, after evaluating the effectiveness of
our "disclosure controls and procedures" (as defined in the Securities Exchange
Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
by this Quarterly Report on Form 10-Q (the "Evaluation Date"), has concluded
that as of the Evaluation Date, our disclosure controls and procedures were
effective to provide reasonable assurance that information we are required to
disclose in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Principal
Executive Officer and Principal Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.





(b)
Changes in internal control over financial reporting. There were no changes in
our internal control over financial reporting during the covered by this
Quarterly Report on Form 10-Q, that materially affected, or were reasonably
likely to materially affect, our internal control over financial
reporting.


-10-


PART II - OTHER
INFORMATION





ITEM 1. LEGAL
PROCEEDINGS





From time
to time, we may become party to litigation or other legal proceedings that we
consider to be a part of the ordinary course of our business. We are not
currently involved in legal proceedings that could reasonably be expected to
have a material adverse effect on our business, prospects, financial condition
or results of operations. We may become involved in material legal proceedings
in the future.





ITEM 1A. RISK
FACTORS





The
Company’s securities are highly speculative and should only be purchased by
persons who can afford to lose their entire investment in us. You should
carefully consider the following risk factors and other information in this
report before deciding to become a holder of our common stock. If any of the
following risks actually occur, our business and financial results could be
negatively affected to a significant extent.





The
Company's business is subject to the following Risk Factors (references to
"our," "we," "Velocity" and words of similar meaning in these Risk Factors refer
to the Company):





Risks Relating To Our
Planned Business Operations





WE
WILL NEED ADDITIONAL FINANCING TO CONTINUE OUR BUSINESS PLAN, WHICH FINANCING,
IF WE ARE UNABLE TO RAISE MAY FORCE US TO SCALE BACK OR ABANDON OUR BUSINESS
PLAN.





We
anticipate the need for approximately of $50,000 of additional funding moving
forward to support our operations and continue our business
plan.  Moving forward, we anticipate Frank Jacobs, our officer and
Director and the Company’s largest shareholder, will continue funding us,
although he has made no such commitments.  We also hope to raise
additional funds through the sale of debt and/or equity to enable us to
implement our corporate plan.





We do not
currently have any commitments or identified sources of additional capital from
third parties or from our officers, directors or majority
shareholders.   If we are not able to raise the capital necessary to
continue our business operations and/or we may be forced to abandon or curtail
our business plan and/or suspend our business activities.





SHAREHOLDERS
WHO HOLD UNREGISTERED SHARES OF COMMON STOCK COULD BE SUBJECT TO RESALE
RESTRICTIONS PURSUANT TO RULE 144, DUE TO FINRA OR THE SEC STILL CONSIDERING THE
COMPANY TO BE A “SHELL COMPANY”.





While the
Company has taken the position that it is not a “shell company”, as outlined in
a Form 8-K filing made by the Company in January 2009, FINRA or the SEC could
put restrictions on the resale of unregistered shares of our common
stock.





WE
CURRENTLY HAVE NEGATIVE WORKING CAPITAL.





As stated
above, we currently anticipate that we will be funded by our officer and
Director, Frank Jacobs, moving forward, other than in connection with
exploration investment, although he is not obligated to do
such.  Additionally, we will need to raise substantial additional
capital to continue our business operations.  Moving forward, we may
be forced to raise such funds on unfavorable terms, if at all.  Our
failure to raise additional capital could diminish the value of our securities
and/or cause them to become worthless.


-11-


WE
HAVE BEEN CONTACTED IN CONNECTION WITH VARIOUS MERGER AND ACQUISITION
OPPORTUNITIES AND MAY CHOOSE TO ENTER INTO A MERGER AND/OR ACQUISITION
TRANSACTION IN THE FUTURE.





We have
been contacted by parties seeking to merge and/or acquire us. While we have no
immediate plans to merge with or acquire any entity, in the event that we do
enter into a merger and/or acquisition with a separate company in the future,
our majority shareholders will likely change and new shares of common or
preferred stock could be issued resulting in substantial dilution to our then
current shareholders. As a result, our new majority shareholders will likely
change the composition of our Board of Directors and replace our current
management. The new management will likely change our business focus and we can
make no assurances that our new management will be able to properly manage our
direction or that this change in our business focus will be successful. If we do
enter into a merger or acquisition, and our new management fails to properly
manage and direct our operations, we may be forced to scale back or abandon our
operations, which will cause the value of our common stock to decline or become
worthless. We have not entered into any merger or acquisition agreements as of
the date of this filing.





WE
RELY HEAVILY ON FRANK A. JACOBS AND EDWARGO SETJADININGRAT, OUR
OFFICERS AND DIRECTORS AND IF THEY WERE TO LEAVE, WE COULD FACE SUBSTANTIAL
COSTS IN SECURING SIMILARLY QUALIFIED OFFICERS AND DIRECTORS.




Our
success depends upon the personal efforts and abilities of Edwargo
Setjadiningrat, our Chief Executive Officer, President and Director and Frank A.
Jacobs, our Secretary and Director. Our ability to operate and implement our
exploration activities is heavily dependent on the continued service of Mr.
Setjadiningrat and Mr. Jacobs and will depend on our ability to attract
qualified contractors and consultants on an as-needed
basis.  Additionally, we currently rely on Mr. Jacobs, to provide us
funding for working capital and expenses, although he is not obligated to
provide such funding.





We
anticipate facing continued competition for such contractors and consultants,
and may face competition for the services of Mr. Setjadiningrat and Mr. Jacobs
in the future. We do not have an employment contract with Mr. Setjadiningrat and
Mr. Jacobs, nor do we currently have any key man insurance on Mr. Setjadiningrat
and Mr. Jacobs.  Mr. Setjadiningrat and Mr. Jacobs are our driving
force and are responsible for maintaining our relationships and operations. In
addition to Mr. Setjadiningrat’s and Mr. Jacobs’s positions with the Company,
they currently have additional employment outside of the Company, and as such,
the amount of time they are able to spend on Company matters may be
limited.





We cannot
be certain that we will be able to retain Mr. Setjadiningrat and Mr. Jacobs
and/or attract and retain contractors and consultants in the future. The loss of
Mr. Setjadiningrat or Mr. Jacobs and/or our inability to attract and retain
qualified contractors and consultants on an as-needed basis could have a
material adverse effect on our business and operations.





BECAUSE
OF THE SPECULATIVE NATURE OF OIL AND GAS EXPLORATION, THERE IS SUBSTANTIAL RISK
THAT WE WILL NOT FIND ANY COMMERCIALLY EXPLOITABLE OIL OR GAS AND THAT OUR
BUSINESS WILL FAIL.




The
search for commercial quantities of oil as a business is extremely risky. We
cannot provide investors with any assurance that we will be able to obtain
properties in the future and/or that any properties we obtain will contain
commercially exploitable quantities of oil and/or gas.  Future
exploration expenditures made by us, if any, may not result in the discovery of
commercial quantities of oil and/or gas in any future properties we may acquire
the rights to, and problems such as unusual or unexpected formations and other
conditions involved in oil and gas exploration often result in unsuccessful
exploration efforts. If we are unable to find commercially exploitable
quantities of oil and gas, in any properties we may acquire in the future,
and/or we are unable to commercially extract such quantities we may find in any
properties we may acquire in the future, we may be forced to abandon or curtail
our business plan, and as a result, any investment in us may become
worthless.


-12-


BECAUSE
OF THE INHERENT DANGERS INVOLVED IN OIL AND GAS EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS OPERATIONS,
WHICH COULD FORCE US TO EXPEND A SUBSTANTIAL AMOUNT OF MONEY IN CONNECTION WITH
LITIGATION AND/OR A SETTLEMENT.





The oil
and natural gas business involves a variety of operating hazards and risks such
as well blowouts, pipe failures, casing collapse, explosions, uncontrollable
flows of oil, natural gas or well fluids, fires, spills, pollution, releases of
toxic gas and other environmental hazards and risks. These hazards and risks
could result in substantial losses to us from, among other things, injury or
loss of life, severe damage to or destruction of property, natural resources and
equipment, pollution or other environmental damage, cleanup responsibilities,
regulatory investigation and penalties and suspension of operations. In
addition, we may be liable for environmental damages caused by previous owners
of property purchased and leased by us in the future. As a result, substantial
liabilities to third parties or governmental entities may be incurred, the
payment of which could reduce or eliminate the funds available for the purchase
of properties and/or property interests, exploration, development or
acquisitions or result in the loss of our properties and/or force us to expend
substantial monies in connection with litigation or settlements. As such, there
can be no assurance that any insurance obtained by us in the future will be
adequate to cover any losses or liabilities. We cannot predict the availability
of insurance or the availability of insurance at premium levels that justify our
purchase. The occurrence of a significant event not fully insured or indemnified
against could materially and adversely affect our financial condition and
operations. We may elect to self-insure if management believes that the cost of
insurance, although available, is excessive relative to the risks presented. In
addition, pollution and environmental risks generally are not fully insurable.
The occurrence of an event not fully covered by insurance could have a material
adverse effect on our financial condition and results of operations, which could
lead to any investment in us becoming worthless.





WE
REQUIRE SUBSTANTIAL ADDITIONAL FINANCING TO PURCHASE PROPERTIES AND BEGIN OUR
EXPLORATION AND DRILLING ACTIVITIES, WHICH FINANCING IS OFTEN HEAVILY DEPENDENT
ON THE CURRENT MARKET PRICE FOR OIL AND GAS, WHICH WE ARE UNABLE TO
PREDICT.





Our
growth and continued operations could be impaired by limitations on our access
to capital markets. If the market for oil and/or gas were to weaken for an
extended period of time, our ability to raise capital would be substantially
reduced. There can be no assurance that capital from outside sources will be
available, or that if such financing is available, that it will not involve
issuing securities senior to the common stock or equity financings which will be
dilutive to holders of common stock. Such issuances, if made, would likely cause
a decrease in the value of our common stock.





THE
MARKET FOR OIL AND GAS IS INTENSELY COMPETITIVE, AND AS SUCH, COMPETITIVE
PRESSURES COULD FORCE US TO ABANDON OR CURTAIL OUR BUSINESS PLAN.





The
market for oil and gas exploration services is highly competitive, and we only
expect competition to intensify in the future. Numerous well-established
companies are focusing significant resources on exploration and are currently
competing with us for oil and gas opportunities. Additionally, there are
numerous companies focusing their resources on creating fuels and/or materials
which serve the same purpose as oil and gas, but are manufactured from renewable
resources. As a result, there can be no assurance that we will be able to
compete successfully or that competitive pressures will not adversely affect our
business, results of operations and financial condition. If we are not able to
successfully compete in the marketplace, we could be forced to curtail or even
abandon our current business plan, which could cause any investment in us to
become worthless.


-13-


WE
MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH, WHICH COULD LEAD TO OUR
INABILITY TO IMPLEMENT OUR BUSINESS PLAN.





Our
future growth is expected to place a significant strain on our managerial,
operational and financial resources, especially considering that we currently
only have two Directors and executive officers. Further, as we enter into
contracts, we will be required to manage multiple relationships with various
consultants, businesses and other third parties. These requirements will be
exacerbated in the event of our further growth. There can be no assurance that
our systems, procedures and/or controls will be adequate to support our
operations or that our management will be able to achieve the rapid execution
necessary to successfully implement our business plan. If we are unable to
manage our growth effectively, our business, results of operations and financial
condition will be adversely affected, which could lead to us being forced to
abandon or curtail our business plan and operations.





THE
PRICE OF OIL AND NATURAL GAS HAS HISTORICALLY BEEN VOLATILE AND IF IT WERE TO
DECREASE SUBSTANTIALLY, OUR PROJECTIONS, BUDGETS, AND REVENUES, IF ANY, WOULD BE
ADVERSELY EFFECTED, AND WE WOULD LIKELY BE FORCED TO MAKE MAJOR CHANGES IN OUR
BUSINESS PLAN.





Our
future financial condition, results of operations, if any, and the carrying
value of our future oil and natural gas properties, if any, depend primarily
upon the prices we will receive for our oil and natural gas production, if any
in the future. Oil and natural gas prices historically have been volatile and
likely will continue to be volatile in the future, especially given current
world geopolitical conditions. Our cash flows from operations will be highly
dependent on the prices that we receive for any oil and natural gas we may
produce in the future.





This
price volatility also affects the amount of our cash flows available for capital
expenditures and our ability to borrow money or raise additional capital. The
prices for oil and natural gas are subject to a variety of additional factors
that are beyond our control. These factors include:





·
            the
      level of consumer demand for oil and natural gas;·
            the
      domestic and foreign supply of oil and natural gas;·
            the
      ability of the members of the Organization of Petroleum Exporting
      Countries ("OPEC") to agree  to and maintain oil price and
      production controls;·
            the
      price of foreign oil and natural gas;·
            domestic
      governmental regulations and taxes;·
            the
      price and availability of alternative fuel sources;·
            weather
      conditions;·
            market
      uncertainty due to political conditions in oil and natural gas producing
      regions, including the Middle East; and·
            worldwide
      economic conditions.





These
factors as well as the volatility of the energy markets generally make it
extremely difficult to predict future oil and natural gas price movements with
any certainty. Declines in oil and natural gas prices would not only reduce our
revenue due to the sale of oil and gas, if any, but could reduce the amount of
oil and natural gas that we can produce economically, if any, and, as a result,
could have a material adverse effect upon our financial condition, results of
operations, oil and natural gas reserves and the carrying values of our future
oil and natural gas properties, if any. If the oil and natural gas industry
experiences significant price declines, we may be unable to make planned
expenditures, among other things. If this were to happen, we may be forced to
abandon or curtail our business operations, which would cause the value of an
investment in us to decline in value, or become worthless.


-14-


Risks Relating To The
Company's Securities





WE
CURRENTLY HAVE A SPORADIC, ILLIQUID, VOLATILE MARKET FOR OUR COMMON STOCK, AND
THE MARKET FOR OUR COMMON STOCK MAY REMAIN SPORADIC, ILLIQUID, AND VOLATILE IN
THE FUTURE.





On May
15, 2008, we obtained quotation for our common stock on the Over-The-Counter
Bulletin Board (“OTCBB”) under the symbol VOIG.OB.  Since this time,
there has been a limited market for our common stock on the OTCBB that has been
volatile, illiquid and sporadic and is subject to wide fluctuations in response
to several factors, including, but not limited to:





(1)
            actual
      or anticipated variations in our results of operations;(2)
            our
      ability or inability to generate new revenues;(3)
            increased
      competition;(4)
            conditions
      and trends in oil and gas industry; and(5)
            the
      market for oil and gas.





Furthermore,
our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price and liquidity of our common stock.





WE
HAVE AN OUTSTANDING CONVERTIBLE PROMISSORY NOTE, WHICH ALLOWS THE HOLDERS
THEREOF TO CONVERT THE AMOUNT OF SUCH NOTE INTO A SIGNIFICANT NUMBER OF THE
COMPANY’S OUTSTANDING SHARES OF COMMON STOCK.





On June
1, 2007, we issued Capersia Pte. Ltd. (“Capersia”) an $8,000 Promissory Note to
evidence an $8,000 loan we received from Capersia, which Promissory Note was
amended in December 2007 (the “Note”).  The Note had an effective date
of June 13, 2007, and bears interest at the rate of 6% per annum until paid in
full.  The Note is payable on demand; however, Capersia has agreed to
provide the Company at least one (1) year and one (1) day notice prior to the
due date of such Note, and any amounts not paid when due accrue interest at the
rate of 15% per annum.   On or around November 7, 2008, the Promissory
Note was amended to reflect an increased amount owed to the Company of $12,764.
On or around August 20, 2009, we entered into an amendment to the Note, pursuant
to which we agreed to amend the conversion price of the Note to $0.001 per
share, and to allow Capersia to convert $1,000 of the amount owed under the Note
into 1,000,000 shares of our common stock.  On or around November 10,
2009, Capersia sold its entire interest in the Note (as described below) to
Cascata Equity Management, Inc. (50%) (“Cascata”) and Seven Palm Investments,
LLC. (50%) (“Seven Palm”). As of the filing of this report, neither Cascata nor
Seven Palm has provided us notice of their intention to demand repayment of the
Note or otherwise convert such Note into shares of our common stock. If the
remaining approximately $11,764 of principal was converted into shares of the
Company’s common stock, such Promissory Note would convert into 11,764,000
shares of common stock, representing approximately 48% of the Company’s then
outstanding common stock, of which 1⁄2 of such converted Note or 5,882,000 shares
would each be held by Cascata and Seven Palm.


-15-


As such,
in the event that Cascata or Seven Palm converts their portion of the Promissory
Note and provides the Company one year and one day notice, or in the event the
Company waives such notice (which it has previously done in connection with the
conversion of $1,000 of the Promissory Note), Cascata or Seven Palm would own a
significant amount of our securities and along with its prior ownership in the
Company.





OUR
AUDITORS HAVE EXPRESSED A CONCERN ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.





Our
auditors, in our audited financial statements, expressed a concern about our
ability to continue as a going concern. We had a working capital deficit of
$136,428 and had an accumulated deficit of $421,188 as of September 30,
2009.  For the nine months ended September 30, 2009, we had a net loss
of $134,204, and we have not generated any revenues to date. These factors raise
substantial doubt as to whether we will be able to continue as a going concern.
The attached financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
we be unable to continue as a going concern.





NEVADA
LAW AND OUR ARTICLES OF INCORPORATION AUTHORIZE US TO ISSUE SHARES OF PREFERRED
STOCK, WHICH SHARES MAY HAVE RIGHTS AND PREFERENCES GREATER THAN OUR CURRENTLY
OUTSTANDING COMMON STOCK.





Pursuant
to our Articles of Incorporation, we have 100,000,000 shares of common stock and
10,000,000 shares of preferred stock authorized, including 1,000 shares of
Series A Preferred Stock designated and 2,000,000 shares of Series B Preferred
Stock designated. As of November 17, 2009, we had 12,620,500 shares of common
stock issued and outstanding and one share of Series A preferred stock issued
and outstanding (although we have a pending subscription to purchase an
aggregate of 1,000 shares of our Series A Preferred Stock, as described above).
As a result, our Board of Directors has the ability to issue a large number of
additional shares of common stock without shareholder approval, which if issued
would cause substantial dilution to our then shareholders. Additionally, shares
of preferred stock may be issued by our Board of Directors without shareholder
approval with voting powers, and such preferences and relative, participating,
optional or other special rights and powers as determined by our Board of
Directors. We currently have shares of Series A Preferred Stock designated,
which shares provide the holder thereof to vote on all shareholder matters equal
to fifty-one percent (51%) of the total vote on such matters. Because the Board
of Directors is able to designate the powers and preferences of the preferred
stock without the vote of a majority of the Company's shareholders, shareholders
of the Company will have no control over what designations and preferences the
Company's preferred stock will have. The holder of the shares of Series A
Preferred Stock, currently Travel Engine, as described below, will exercise
voting control over the Company. As a result of this, the Company's shareholders
will have no control over the designations and preferences of the preferred
stock and as a result the operations of the Company and the issuance of shares
of common stock and/or preferred stock may cause the value of our securities to
decrease and/or become worthless.





TRAVEL
ENGINE SOLUTIONS, LLC, BENEFICIALLY OWNS OUR OUTSTANDING SHARES OF SERIES A
PREFERRED STOCK AND THEREFORE EXERCISES MAJORITY CONTROL OVER CORPORATE
DECISIONS INCLUDING THE APPOINTMENT OF NEW DIRECTORS.





On or
around November 10, 2009, Travel Engine Solutions, LLC, which is beneficially
owned by Matt Krieg and Konstantin Derenstein (“Travel Engine”) subscribed for
1,000 shares of our Series A Preferred Stock (the “Series A Shares”) for
aggregate consideration of $175,000.  A total of $50,000 of the funds
for the Series A Shares was received immediately and pursuant to the terms of
the Subscription Agreement, we agreed to issue Travel Engine one share of Series
A Preferred Stock in connection with such payment, which share (the “Series A
Preferred Share”) is to be held in trust until such time as Travel Engine has
paid the remaining $125,000 due pursuant to the terms of the Subscription
Agreement (the “Additional Consideration”).  In the event the
Additional Consideration is not paid, other than because the Company failed to
meet the Requirements (defined below), the Series A Preferred Share is to be
redeemed for $100 and the Company is to retain the $50,000 initial payment as
liquidated damages.  While held in trust, Travel Engine has the right
to vote the Series A Preferred Share (which has the right to vote 51% of the
Company’s outstanding voting securities).


-16-


Accordingly,
Travel Engine will exercise control in determining the outcome of all corporate
transactions or other matters, including the election of directors, mergers,
consolidations, the sale of all or substantially all of our assets, and also the
power to prevent or cause a change in control. Any investors who purchase shares
will be minority shareholders and as such will have little to no say in the
direction of the Company and the election of Directors. Additionally, it will be
difficult if not impossible for investors to remove our current officers and
Directors, or any other Director that Travel Engine may appoint. As a potential
investor in the Company, you should keep in mind that even if you own shares of
the Company's common stock and wish to vote them at annual or special
shareholder meetings, your shares will likely have little effect on the outcome
of corporate decisions.





IF
WE ARE LATE IN FILING OUR QUARTERLY OR ANNUAL REPORTS WITH THE SEC, WE MAY BE
DE-LISTED FROM THE OVER-THE-COUNTER BULLETIN BOARD.





Pursuant
to Over-The-Counter Bulletin Board ("OTCBB") rules relating to the timely filing
of periodic reports with the SEC, any OTCBB issuer which fails to file a
periodic report (Form 10-Q's or 10-K's) by the due date of such report (not
withstanding any extension granted to the issuer by the filing of a Form
12b-25), three (3) times during any twenty-four (24) month period is
automatically de-listed from the OTCBB. Such removed issuer would not be
re-eligible to be listed on the OTCBB for a period of one-year, during which
time any subsequent late filing would reset the one-year period of de-listing.
If we are late in our filings three times in any twenty-four (24) month period
and are de-listed from the OTCBB, our securities may become worthless and we may
be forced to curtail or abandon our business plan.





INVESTORS
MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO
FEDERAL REGULATIONS OF PENNY STOCKS.





Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.





IN
THE FUTURE, WE WILL INCUR SIGNIFICANT INCREASED COSTS AS A RESULT OF OPERATING
AS A FULLY REPORTING COMPANY IN CONNECTION WITH SECTION 404 OF THE SARBANES
OXLEY ACT, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO NEW
COMPLIANCE INITIATIVES.





Moving
forward, we anticipate incurring significant legal, accounting and other
expenses in connection with our status as a fully reporting public company. The
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently
implemented by the SEC have imposed various new requirements on public
companies, including requiring changes in corporate governance practices. As
such, our management and other personnel will need to devote a substantial
amount of time to these new compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make
some activities more time-consuming and costly. The Sarbanes-Oxley Act requires,
among other things, that we maintain effective internal controls for financial
reporting and disclosure of controls and procedures. In particular, commencing
in calendar 2009 (one year after we began publicly reporting), we must perform
system and process evaluation and testing of our internal controls over
financial reporting to allow management to report on the effectiveness of our
internal controls over financial reporting, and in fiscal 2010, to allow our
independent registered public accounting firm to report on the effectiveness of
our internal controls over financial reporting, as required by Section 404 of
the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our
independent registered public accounting firm, may reveal deficiencies in our
internal controls over financial reporting that are deemed to be material
weaknesses. Our compliance with Section 404 will require that we incur
substantial accounting expense and expend significant management efforts. We
currently do not have an internal audit group, and we will need to hire
additional accounting and financial staff with appropriate public company
experience and technical accounting knowledge. Moreover, if we are not able to
comply with the requirements of Section 404 in a timely manner, or if we or our
independent registered public accounting firm identifies deficiencies in our
internal controls over financial reporting that are deemed to be material
weaknesses, the market price of our stock could decline, and we could be subject
to sanctions or investigations by the SEC or other regulatory authorities, which
would require additional financial and management resources.


-17-


STATE
SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN
WHICH AND CONDITIONS UNDER WHICH YOU CAN SELL SHARES.





Secondary
trading in our common stock will not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of the state or
there is confirmation that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of, the common stock in any particular state, the common stock could not
be offered or sold to, or purchased by, a resident of that state. In the event
that a significant number of states refuse to permit secondary trading in our
common stock, the liquidity for the common stock could be significantly
impacted.





ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS





In
October 2009, we agreed to issue 1,000,000 shares of common stock to Capersia
Pte Ltd. (“Capersia”), in connection with the conversion by Capersia of $1,000
of the amount outstanding under a Promissory Note held by Capersia. We claim an
exemption from registration offered by Section 4(2) of the Act since the
foregoing issuance will not involve a public offering, the recipient will take
the shares for investment and not resale and we will take appropriate measures
to restrict transfer.





In
November 2009, in connection with the Subscription Agreement (described below),
the Company agreed to issue one share of Series A Preferred Stock to Travel
Engine (as defined below) in consideration for partial payment of $50,000
received in connection with the subscription for 1,000 shares of our Series A
Preferred Stock for $175,0000.  We claim an exemption from
registration offered by Section 4(2) of the Act since the foregoing issuance
will not involve a public offering, the recipient will take the shares for
investment and not resale and we will take appropriate measures to restrict
transfer.





ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.





None.





ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS





None.





ITEM 5. OTHER
INFORMATION





On or
around November 10, 2009, Travel Engine Solutions, LLC (“Travel Engine”)
subscribed for 1,000 shares of our Series A Preferred Stock (the “Series A
Shares”) for aggregate consideration of $175,000.  A total of $50,000
of the funds for the Series A Shares was received immediately and pursuant to
the terms of the Subscription Agreement, we agreed to issue Travel Engine one
share of Series A Preferred Stock in connection with such payment, which share
(the “Series A Preferred Share”) is to be held in trust until such time as
Travel Engine has paid the remaining $125,000 due pursuant to the terms of the
Subscription Agreement (the “Additional Consideration”).  In the event
the Additional Consideration is not paid, other than because the Company failed
to meet the Requirements (defined below), the Series A Preferred Share is to be
redeemed for $100 and the Company is to retain the $50,000 initial payment as
liquidated damages.  While held in trust, Travel Engine has the right
to vote the Series A Preferred Share (which has the right to vote 51% of the
Company’s outstanding voting securities).


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Additional
“Requirements” which must be met prior to Travel Engine paying the Additional
Consideration include that the Company shall have no liabilities, shall not be
party to any litigation (threatened or pending), shall not have any convertible
securities outstanding (other that a convertible note currently held by Capersia
Pte. Ltd.), the Company shall have filed this Form 10-Q (the “Form 10-Q”), the
Company shall not have indicated that it is a “shell company” in the
Form-Q, the Company shall have obtained the resignation of its current officers
and Directors (along with representations from such officers and Directors that
no fees or other compensation are due to such officers and Directors), and Frank
Jacobs, the Company’s current Director shall have entered into a lock-up
agreement, approved by Travel Engine, pursuant to which Mr. Jacobs will agree
not to sell any Company securities for a period of one (1) year.





Additionally,
on or around November 10, 2009, Capersia Pte. Ltd. (“Capersia”) sold its entire
interest in the Note (as described below) to Cascata Equity Management, Inc.
(50%) and Seven Palm Investments, LLC. (50%).





Change
in Control:





Travel
Engine is beneficially owned by Matt Krieg and Konstantin Derenstein, and as a
result of the entry into the Subscription Agreement and the transactions
described above, Matt Krieg and Konstantin Derenstein obtained voting control
over the Company.




ITEM 6.
EXHIBITS





Exhibit Number
              Description of ExhibitExhibit
      3.1(1)
              Articles
      of IncorporationExhibit
      3.2(5)
              Certificate
      of Designations of Series A Preferred StockExhibit
      3.3(5)
              Certificate
      of Designations of Series B Preferred StockExhibit
      3.4(1)
              BylawsExhibit
      10.1(1)
              Acquisition
      & Participation Agreement with Polaris Holdings,
  Inc.Exhibit
      10.2(1)
              $8,000
      Promissory Note with Capersia Pte. Ltd.Exhibit
      10.3(1)
              Amendment
      to Acquisition & Participation AgreementExhibit
      10.4(2)
              Assignment
      of Membership InterestsExhibit
      10.5(2)
              Assignment
      of Production Payment


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Exhibit
      10.6(2)
            Purchase
      and Sale Agreement By and Between Entek USA Inc. and Velocity Oil &
      Gas, Inc.Exhibit
      10.7(+)(3)
            Amended
      and Restated  Participation Agreement between South Marsh,
      Ridgelake and GulfXExhibit
      10.8(2)
            Amendment
      to Amended and Restated Participation AgreementExhibit
      10.14(3)
            Amended
      Promissory Note with CapersiaExhibit
      10.15(3)
            Letter
      Agreement Regarding Terms of Jacobs Oil & Gas, Inc.
      AdvancesExhibit
      10.16(3)
            Letter
      Agreement Regarding Terms of Jacobs Oil & Gas, Inc.
      AdvancesExhibit
      10.17(4)
            Assignment
      agreement with Ridgelake Energy, Inc.Exhibit
      10.18(6)
            Second
      Amendment to Promissory Note with CapersiaExhibit
      10.19(6)
            Third
      Amendment to Promissory Note with CapersiaExhibit
      99.1(3)
            Letter
      From Frank JacobsExhibit
      31*
            Certificate
      of the Principal Executive Officer and Principal Financial Officer
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002Exhibit
      32*
            Certificate
      of the Principal Executive Officer and Principal Financial Officer
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002




*   Filed
as an exhibit to this report.





+  Includes
all material exhibits of the Amended and Restated Participation Agreement
between South Marsh, Ridgelake and GulfX.





(1) Filed
as an exhibit to our Form SB-2 Registration Statement filed with the Commission
on October 1, 2007, and incorporated herein by reference.





(2) Filed
as an exhibit to our Form SB-2 Registration Statement filed with the Commission
on December 21, 2007, and incorporated herein by reference.




(3) Filed
as an exhibit to our Form S-1 Registration Statement filed with the Commission
on March 21, 2008, and incorporated herein by reference.





(4) Filed
as an exhibit to our Form 8-K Report filed with the Commission on November 10,
2008, and incorporated herein by reference.





(5) Filed
as an exhibit to our Form 8-K filed with the Commission on June 19, 2009, and
incorporated herein by reference.





(6) Filed
as an exhibit to the Company’s Post Effective Form S-1 Registration Statement,
filed with the Commission on October 28, 2009, and incorporated herein by
reference.


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SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





VELOCITY OIL & GAS,
  INC.DATED:
      November 20, 2009
                By: /s/
      Edwargo SetjadiningratEdwargo
      SetjadiningratPresident
      (Principal Executive Officer)And
      Principal Financial
Officer


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