SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  FORM 10-KSB/A
                                (Amendment No. 4)




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

                   For the fiscal year ended December 31, 2004

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

                        Commission File Number 000-161570

                         VELOCITY ASSET MANAGEMENT, INC.
             (Exact name of registrant as specified in its charter)

        DELAWARE                                        65-0008442
        (State or other jurisdiction of                 (IRS Employer
        incorporation or organization)                  Identification No.)

              48 S. Franklin Turnpike, 3rd Floor, Ramsey, NJ 07446
                    (Address of principal executive offices)

                                 (201) 760-6306
              (Registrant's telephone number, including area code)


          Securities registered pursuant to Section 12 (b) of the Act:


       Title of Each Class        Name of Each Exchange on Which Registered
       -------------------        -----------------------------------------
             None                                  None


          Securities registered pursuant to Section 12 (g) of the Act:
                     Common Stock, par value $.001 per share
                                (Title of Class)


         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d ) of the Exchange Act during the past 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 [ ]

         Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in the form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form 10-KSB.
[X]

         State issuer's revenues for its most recent fiscal year: $4,356,188
<PAGE>

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days: $11,054,587.50 as of
April 11, 2005.

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
                                 Not applicable

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         State the number of shares outstanding of each of the issuer's classes
of common equity: As of April 11, 2005: 15,927,462 shares of common stock, par
value $.001 per share, were outstanding.

Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]


                       DOCUMENTS INCORPORATED BY REFERENCE

         None

                                EXPLANATORY NOTE


We are filing this amendment to our Annual Report on Form 10-KSB, originally
filed with the Securities and Exchange Commission on April 15, 2005 and as
amended on May 24, 2005, May 25, 2005 and July 22, 2005, for the purpose of
amending Items 6, 8A and 8(B) and the certifications attached as exhibits
thereto. On July 22, 2005 and as amended on July 29,2005, we filed a Current
Report on Form 8-K with respect to the revision of our accounting for certain
exchanges of debt for equity (please see Note 1 to the financial statements).
The filing of this Form 10-KSB/A Amendment No. 4 is to indicate that the
financial statements for the quarter ended September 30, 2004 have been
restated, to explain such restatement in management's discussion and analysis
and to clarify that the restatement of our accounting for these exchanges
indicated a significant deficiency and a material weakness in our internal
control over financial reporting relating to such exchanges. Except as indicated
above, no other information included in this Annual Report on Form 10-KSB is
amended by this Form 10-KSB/A Amendment No. 4.

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

<PAGE>

                                TABLE OF CONTENTS


PART I.........................................................................1

   DESCRIPTION OF BUSINESS.....................................................1

   DESCRIPTION OF PROPERTIES..................................................12

   LEGAL PROCEEDINGS..........................................................12

   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................12

PART II.......................................................................24

   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......24

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
   OF OPERATIONS..............................................................25

   FINANCIAL STATEMENTS.......................................................33

   CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
   DISCLOSURE.................................................................33

   CONTROLS AND PROCEDURES....................................................33

   OTHER INFORMATION..........................................................34

PART III......................................................................34

   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
   WITH SECTION 16(A) OF THE EXCHANGE ACT OF THE REGISTRANT...................34

   EXECUTIVE COMPENSATION.....................................................36

   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND AND MANAGEMENT.........38

   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................39

PART IV.......................................................................40

   EXHIBITS, LIST AND REPORTS ON FORM 8-K.....................................40
<PAGE>

   FORWARD LOOKING STATEMENTS


         This amended Form 10-KSB and other reports we file from time to time
with the Securities and Exchange Commission (collectively the "Filings") contain
or may contain forward looking statements and information that are based upon
beliefs of, and information currently available to, our management as well as
estimates and assumptions made by our management. When used in the Filings the
words "anticipate", "believe", "estimate", "expect", "future", "intend", "plan"
or the negative of these terms and similar expressions as they relate to us or
our management identify forward looking statements. Such statements reflect our
current view with respect to future events and are subject to risks,
uncertainties, assumptions and other factors (including the risks contained in
the section of this report entitled "Risk Factors") relating to our industry and
our operations and results of operations. Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned.

         Although we believe that the expectations reflected in the forward
looking statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this report.

<PAGE>

                                     PART I
                                     ------

ITEM 1.  DESCRIPTION OF BUSINESS

BACKGROUND

         We were incorporated in Delaware under the name Tele-Optics, Inc. in
December 1986 for the purpose of acquiring all of the common stock of Lenzar
Optics, Inc. That company was then engaged in the development, manufacture and
marketing of a variety of optical, electronic and electro-optical products for
use in the medical and defense industries. In September 1991, we sold all of our
assets related to Lenzar's operations to a third party. Since that sale and
until February 3, 2004, when we acquired STB, Inc., a New Jersey corporation
("STB"), we have had virtually no active business operations. On November 21,
1997, new investors, including our management immediately prior to the Effective
Date, purchased approximately sixty-two (62%) percent of our then issued and
outstanding common stock. Between November 21, 1997 and February 3, 2004, those
investors and others provided additional funds in the form of equity investment
and loans that ensured our viability and permitted us to continue our limited
operations and pursue business opportunities.

         On February 3, 2004, we entered into and consummated an Agreement and
Plan of Merger by and among our wholly-owned subsidiary, TLOP Acquisition
Company, L.L.C., a New Jersey limited liability company, STB and the
stockholders of STB, John C. Kleinert, W. Peter Ragan, Sr. and W. Peter Ragan,
Jr. In accordance with the terms of the merger agreement, on that date, STB was

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merged with and into TLOP Acquisition, and we issued to the stockholders of STB,
in exchange for all of the common stock of STB issued and outstanding, (a) an
aggregate of 6,129,424 shares of our common stock, (b) the right to receive an
aggregate of 1,808,077 additional shares of our common stock upon amendment of
our certificate of incorporation to increase the total number of shares of
capital stock that we are authorized to issue, and (c) warrants to purchase
during a period of five years an aggregate of 2,437,000 shares of Common Stock
at an exercise price of $1.04 per share. The details of the merger with STB are
set forth in our Current Report on Form 8-K filed with the Securities and
Exchange Commission (the "SEC") on February 18, 2004. The 6,129,424 shares of
our common stock issued to the former stockholders of STB represented
approximately 80% of the then total issued and outstanding shares of our common
stock. Except as may be otherwise noted, all share and per share data set forth
is this filing give effect to the 13 for one reverse split of our common stock
effected on April 8, 2004, as discussed below.

         In connection with the merger with STB, we completed a private
placement to an accredited investor of 562,500 shares of our common stock and a
warrant exercisable for a period of five years to purchase an aggregate of
562,500 shares of our common stock at an exercise price of $1.04 per share in
exchange for an aggregate cash consideration of $500,000.

         As a result of the merger, we now carry on business through our
wholly-owned subsidiary TLOP Acquisition, which maintains its executive offices
at 48 Franklin Turnpike, 3rd Floor, Ramsey, NJ 07746 and its business offices at
3100 Route 138 West, Wall, New Jersey 07719.

         Effective April 8, 2004 we changed our corporate name from Tele-Optics,
Inc. to Velocity Asset Management, Inc., effected a 13 for one reverse split of
our then issued and outstanding shares of common stock, and changed the total
authorized shares of our capital stock to 50,000,000 shares, of which 40,000,000
are classified as common stock, par value $.001 per share, and 10,000,000 are
classified as preferred stock, par value $.001 per share, issuable in series
with such powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as our board of directors may fix from time to time by
resolution or resolutions.

         Unless the context otherwise requires, the terms "we," "us" or "our" as
used hereinafter refer to Velocity Asset Management and our subsidiaries,
including TLOP Acquisition and its subsidiaries J. Holder, Inc., VOM, LLC and
Velocity Investments, LLC for periods after February 3, 2004 and Tele-Optics,
Inc. for periods before February 3, 2004.

DESCRIPTION OF THE BUSINESS FORMERLY OPERATED BY STB AND CURRENTLY OPERATED BY
US

Overview

         STB, Inc. was formed in New Jersey in 2003. Its primary purpose was to
act as a holding company for three subsidiaries, J Holder, Inc., VOM, LLC and
Velocity Investments, LLC. These companies acquire, manage, collect and service
distressed assets consisting of consumer receivable portfolios, interests in
distressed real property and tax lien certificates.

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         Velocity Investments, LLC, which was formed in 2002, invests in
         unsecured consumer receivable portfolios purchased on the secondary
         market at a discount from face value and then liquidates these
         portfolios through legal collection means.

         J. Holder, Inc., which was formed in 1998, invests in interests in
         distressed real property, namely, real property being sold at sheriff's
         foreclosure and judgment execution sales, defaulted mortgages, partial
         interests in real property and the acquisition of real property with
         clouded title with the goal of re-selling the property or perfecting
         the partial interest and/or clouded title for resale. These investments
         are made following an extensive due diligence analysis of the legal
         status of the property and a market analysis of the property's value.
         The average holding period for J. Holder's properties is six months.

         VOM, LLC, which was formed in 2002, invests in New Jersey municipal tax
         lien certificates. VOM purchases tax lien certificates on the secondary
         market which allows VOM to perform its due diligence on a static pool
         of assets to determine what discount to par VOM is willing to offer as
         a purchase price. The average purchase price paid for a tax lien
         certificate on the secondary market is a 95% discount to the assessed
         value of the individual property. VOM creates returns by liquidating
         the portfolio while capitalizing upon opportunities presented by the
         current tax lien environment to acquire the underlying real properties
         that are the subject of the tax liens.

         Our objective is to maximize our return on investment in distressed
assets. The Company's overall capital base is allocated among consumer
receivable portfolios, interests in distressed real property and tax lien
certificates based on the conditions of the particular market, the price/cost of
the specific asset within such market and our internal risk/return analysis. The
ultimate strategy for the allocation of capital is determined by senior
management. Our current focus and that for the foreseeable future is the
acquisition of additional consumer receivable portfolios.

         Historically, the majority of our revenues have come from our
distressed real property business which accounted for approximately 85% of our
revenues during fiscal 2003, as compared to 7.5% of our revenues for each of our
consumer receivables and our tax lien certificate businesses. However, revenues
from the consumer receivables business increased to $1,726,356 in fiscal 2004,
or approximately 40% of our total revenues for fiscal 2004, while revenues from
our distressed real property business were $2,369,564, or approximately 54% of
our total revenues. We anticipate increasing growth in our consumer receivable
revenues as we continue to expand our consumer receivables business as a result
of the $12.5 million line of credit that our Velocity Investments subsidiary
recently entered into with Wells Fargo Foothill, Inc. Such line of credit will
be used exclusively to purchase additional consumer receivable portfolios.

         We acquire consumer receivable portfolios at a significant discount to
the amount actually owed by the obligors. We acquire these portfolios after a
qualitative and quantitative analysis of the underlying receivables and
calculate the purchase price so that our estimated cash flow offers us an
adequate return on our acquisition costs and servicing expenses. After
purchasing a consumer receivable portfolio, we actively monitor its performance
and review and adjust our collection and servicing strategies accordingly.
Although we perform some collection activities, we outsource the legal
collection process to third parties to keep actual overhead at a minimum.

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<PAGE>

         We acquire interests in distressed real property following due
diligence analysis of the legal status of each property and a market analysis of
the value of such property.

         We acquire tax lien certificates in the secondary market at a discount
to par following due diligence analysis on the underlying properties.

         We purchase consumer receivables from creditors and others through
privately negotiated direct sales and auctions in which sellers of consumer
receivables seek bids from several pre-qualified debt purchasers. We pursue new
acquisitions of consumer receivable portfolios, interests in distressed real
property and tax lien certificates on an ongoing basis through our relationships
with industry participants, collection agencies, investors and our financing
sources, brokers who specialize in the sale of consumer receivable portfolios
and other sources.

         Our distressed assets are purchased through internally generated cash
flow, seller financed credit lines/leases and through traditional leverage
methods.

INDUSTRY OVERVIEW

         The purchase and liquidation of distressed assets consisting of
consumer receivable portfolios, interests in distressed real property and tax
lien certificates is a growing industry that is driven by many factors
including:

         o        increasing levels of debt;

         o        increasing defaults of the underlying receivables;

         o        increasing utilization of third-party providers to collect
                  such receivables;

         o        fluctuating employment environment exacerbated by overseas
                  outsourcing;

         o        challenged municipal governments raising property taxes to
                  bridge budgetary gaps;

         o        increasing values in a real estate market driven by high
                  refinancing activity as a means to maintain lifestyles; and

         o        mounting debt and pressure on banks and financial institutions
                 to remove nonperforming or unattractive assets from their
                 balance sheets.

         According to a US Federal Reserve release dated January 2005, consumer
debt was $2.1 trillion and increasing at an annual rate of 4.5% as of December
2004. We believe that as a result of the difficulty in collecting these
receivables and the desire of originating institutions to focus on their core
businesses and to generate revenue from these receivables, originating
institutions are increasingly electing to sell these portfolios.

Strategy

         Our primary objective is to utilize our management's experience and
expertise to effectively grow our business by identifying, evaluating, pricing
and acquiring distressed assets consisting of consumer receivable portfolios,

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interests in distressed real property and tax lien certificates, and maximizing
the return on such assets in a cost efficient manner. Our strategy includes:

         o        managing the legal collection and servicing of our receivable
                  portfolios;

         o        managing the acquisition and disposal of interest in
                  distressed real property and tax lien certificates;

         o        conducting extensive internal due diligence to ensure our
                  third party servicers are provided with the most complete
                  available information on a portfolio in order to maximize
                  collections;

         o        outsourcing the legal collection processes;

         o        expanding geographically while maintaining the same management
                  of the legal collection and servicing of receivable
                  portfolios;

         o        increasing and expanding financial flexibility and leverage
                  through increased capital lines of credit;

         o        capitalizing on our strategic relationships to identify and
                  acquire consumer receivable portfolios, interests in
                  distressed real property and tax lien certificates; and

         o        expanding our business through the purchase of consumer
                  receivables, interests in distressed real property and tax
                  lien certificates from new and existing sources.

         We believe that as a result of our management's experience and
expertise, and the fragmented yet growing market in which we operate, we are
well-positioned to successfully implement our strategy.

         Additionally, in 2005 we intend to continue to grow our business
generally while emphasizing the expansion of the business of Velocity
Investments by acquiring additional consumer debt receivable portfolios,
including multi-state consumer debt receivables. Until December 2004, when we
acquired our first multi-state portfolio, all receivables owned by Velocity
Investments were from obligors in New Jersey. Since December 2004, we have
purchased portfolios with receivables from obligors in New York, Massachusetts,
Delaware, Maryland, Georgia, Alabama, Arkansas, Connecticut and Indiana.

Consumer Receivables Purchase Program

         We purchase consumer receivable portfolios that include charged-off
receivables, semi-performing receivables and performing receivables. We identify
potential portfolio acquisitions on an ongoing basis through our relationships
with industry participants, collection agencies, investors and our financing
sources, brokers who specialize in the sale of receivable portfolios and other
sources.

         Historically, Velocity Investments has acquired receivable portfolios
with face amounts ranging from $225,000 to approximately $10 million at purchase
prices ranging from $0.043 to $0.25 of such face amounts. Although to date we
have only purchased claims on our own behalf we would and have considered
entering into joint ventures and seller participation arrangements.

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<PAGE>

         The following table summarizes our cumulative historical portfolio
purchase price and cash collections as of December 31, 2003 and 2004.

Reporting        No. of Portfolios      Purchase Price        Cash Collections
 Period             Purchased           (in Thousands)         (in Thousands)
---------       -----------------       --------------        ----------------

12/31/03                5                    $1,971                 $  446
12/31/04               15                    $3,489                 $2,596

         We utilize our relationships with brokers, servicers and sellers of
consumer receivable portfolios to locate consumer receivable portfolios for
purchase. Our senior management is responsible for:

         o        coordinating due diligence, including in some cases on-site
                  visits to the seller's office;

         o        stratifying and analyzing the portfolio characteristics;

         o        valuing the portfolio;

         o        preparing bid proposals;

         o        negotiating pricing and terms;

         o        closing the purchase; and

         o        coordinating the receipt of account documentation for the
                  acquired portfolios.

         The seller or broker typically supplies us with either a sample listing
or the actual portfolio being sold on a compact disk, a diskette or other form
of media. We analyze each receivable portfolio to determine if it meets our
purchasing criteria. We may then prepare a bid or negotiate a purchase price. If
a purchase is completed, senior management monitors the portfolio's performance
and uses this information in determining future buying criteria and pricing.

         We purchase consumer receivables at substantial discounts from the
balance actually owed by the obligors. We determine how much to bid on a
portfolio and a purchase price by evaluating many different variables, such as:

         o        the number of collection agencies previously attempting to
                  collect the receivables in the portfolio;

         o        the average balance of the receivables;

         o        the age of the receivables;

         o        number of days since charge-off;

         o        payments made since charge-off; and

         o        the locations of the obligors.

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         Once a consumer receivable portfolio has been identified for potential
purchase, we prepare quantitative analyses to analyze the potential
collectibility of the portfolio. We also analyze the portfolio by comparing it
to similar portfolios previously acquired by us. In addition, we perform
qualitative analyses of other matters affecting the value of portfolios,
including a review of the delinquency, charge off, placement and recovery
policies of the originator as well as the collection authority granted by the
originator to any third party collection agencies, and, if possible, by
reviewing their recovery efforts on the particular portfolio. After these
evaluations are completed, members of our senior management discuss the
findings, decide whether to make the purchase and finalize the price at which we
are willing to purchase the portfolio.

         We purchase most of our consumer receivable portfolios directly from
originators and other sellers including, from time to time, auction type sales
in which sellers of consumer receivables seek bids from several pre-qualified
debt purchasers. In order for us to consider a potential seller as a source of
receivables, a variety of factors are considered. Sellers must demonstrate that
they have:

         o        adequate internal controls to detect fraud;

         o        the ability to provide post sale support; and

         o        the capacity to honor buy-back and return warranty requests.

         Generally, our portfolio purchase agreements provide that we can return
certain accounts to the seller. In some transactions, however, we may acquire a
portfolio with few, if any, rights to return accounts to the seller. After
acquiring a portfolio, we conduct a detailed analysis to determine which
accounts in the portfolio should be returned to the seller. Although the terms
of each portfolio purchase agreement differ, examples of accounts that may be
returned to the seller include:

         o        debts paid prior to the cutoff date;

         o        debts in which the obligor filed bankruptcy prior to the
                  cutoff date; and

         o       debts in which the obligor was deceased prior to cutoff date.

         We generally use third-parties to determine bankrupt and deceased
obligors, which allows us to focus our resources on portfolio collections. Under
a typical portfolio purchase agreement, the seller refunds the portion of the
purchase price attributable to the returned accounts or delivers replacement
receivables to us. Occasionally, we will acquire a well seasoned portfolio at a
reduced price from a seller that is unable to meet all of our purchasing
criteria. When we acquire such portfolios, the purchase price is discounted
beyond the typical discounts we receive on the portfolios we purchase that meet
our purchasing criteria.

Consumer Receivables Servicing

         Our objective is to maximize our return on investment on acquired
consumer receivable portfolios. As a result, before acquiring a portfolio, we
analyze the portfolio to determine how to best maximize collections in a cost

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efficient manner. Therefore, if we are successful in acquiring the portfolio, we
can promptly process the receivables that were purchased and commence the
collection process. Unlike collection agencies that typically have only a
specified period of time to recover a receivable, as the portfolio owners we
have significantly more flexibility in establishing payment programs.

         Once a portfolio has been acquired, we download all receivable
information provided by the seller into our account management system and
reconcile certain information with the information provided by the seller in the
purchase contract. We then conduct additional due diligence on the portfolio to
augment the information provided by the seller and download such information
into our account management system. We send notification letters to obligors of
each acquired account explaining, among other matters, our new ownership and
asking that the obligor contact us or our servicers to make payment
arrangements.

         We outsource all of the legal collection process of our receivables to
third party law firms based on specific guidelines established by senior
management and set forth in a third-party servicing contract. Each third-party
law firm to whom we outsource receivable servicing is selected from an industry
law list with an accredited bond, has compatible information technology systems
and meets certain other specific criteria. Our standard form of servicing
contract provides for the payment to the law firm of a contingency fee equal to
25% of all amounts collected and paid by the debtors. Once a group of
receivables is sent to a third-party servicer, our management actively monitors
and reviews the servicer's performance on an ongoing basis. Our management
receives detailed analyses, including collection activity and portfolio
performance, from our internal servicing department to assist it in evaluating
the results of the efforts of the third-party law firm. Based on portfolio
performance guidelines, our management may move certain receivables from one
third-party servicer to another if it anticipates that this will result in an
increase in collections. Until December 2004, all of our receivables were from
obligors in New Jersey and we have employed the law firm of Ragan and Ragan,
P.C. to service those receivables. Our current agreement with Ragan & Ragan,
P.C. is for a one year period commencing January 1, 2005, and automatically
extends for additional periods of one year each unless terminated by us. The
agreement provides for the payment to such firm of a contingency fee equal to
25% of all amounts collected and paid by the obligors. The shareholders of Ragan
& Ragan, P.C. are W. Peter Ragan, Sr. and W. Peter Ragan Jr., our Vice
President, and Treasurer and Secretary, respectively.

         From time to time we may resell certain accounts in our pool of
consumer receivables that we have deemed uncollectible in order to generate
revenue.

Distressed Real Property Program

         We acquire interests in distressed real property, namely, real property
being sold at sheriff's foreclosure and judgment execution sales, defaulted
mortgages, partial interests in real property and real property with clouded
title. Properties and property interests are purchased mainly at publicly
advertised judicial and non-judicial auction sales. Purchases of real property
are mainly in New Jersey. However, we have also purchased six properties in
Indiana through a Bankruptcy Court auction sale conducted in Atlanta, Georgia.
It is anticipated that as we expand, we will acquire properties in other
geographic locations. Some property interests are purchased through referrals

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from independent contractor finders who are paid a varying commission of the net
profit, if any, at the time of the disposal of the asset to a third party
transferee (not upon acquisition). Our subsidiary, J. Holder, Inc., has entered
into a retainer agreement with the law firm of Ragan & Ragan P.C. and such firm
has agreed to provide legal services at varying hourly rates in connection with
the purchase and sale of J. Holder's interests in distressed real property with
a minimum fee of $1,500 per each purchase and sale. In addition, such firm is
entitled to receive a finder's fee equal to 15% of J. Holder's net profit, if
any, at the time of sale of any property interest referred to us by Ragan &
Ragan, P.C. The retainer agreement is for a one year period commencing January
1, 2005, and renews for successive periods of one year each unless terminated by
our subsidiary.

         Senior management conducts extensive due diligence on the status of any
property or property interest proposed to be acquired by us and a market
analysis of the property's value before making any investment decision.

         Our average holding period for an interest in distressed real property
prior to disposal has been six months which has allowed for the wind-up of any
litigation, possession and rehabilitation of the property to the degree
necessary for resale. To the extent possible, any rehabilitation has been
limited to clean up of the premises. Sales of properties are generally made
through local, but nationally affiliated, realtors using multiple listing
sources. From time to time, we sell interests in distressed real property to
generate revenue and to dispose of unwanted properties. Typically, at closing we
pay a commission of 5% of the sales price, although incentives may be offered
from time to time to expedite a particular sale.

Tax Lien Certificate Program

         We acquire tax lien certificates at a discount to par. We acquire these
in the secondary market which allows senior management to perform its due
diligence on the underlying property which is the subject of the tax lien before
the determination is made regarding what discount to par we are willing to offer
as a purchase price. Historically, all of the tax lien certificates we have
purchased have related to properties located in the State of New Jersey. As our
business expands, we contemplate purchasing tax lien certificates relating to
properties in other states. Our subsidiary, VOM, LLC has entered into a retainer
agreement with the law firm of Ragan & Ragan, P.C., in which such firm has
agreed to provide legal services at varying hourly rates in connection with the
foreclosure of tax lien certificates with a minimum fee of $1,500 per foreclosed
tax lien certificate and a commission equal to 15% of VOM's net profit, if any,
at the time of sale of and real properties acquired by VOM upon foreclosure of a
tax lien certificate.

         From time to time we sell properties acquired by foreclosure of a tax
lien certificate. Sales of such properties are through local, but nationally
affiliated, realtors using multiple listing services. Typically, at closing we
pay a commission of 5% of the sales price, although incentives may be offered
from time to time to expedite a particular sale.

Competition

         Our business of purchasing consumer receivables, interests in
distressed real property and tax lien certificates is highly competitive and
fragmented, and we expect that competition from new and existing companies will
increase. We compete with:

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<PAGE>

         o        other purchasers of consumer receivables, interests in
                  distressed real property and tax lien certificates, including
                  third-party collection companies; and

         o        other financial services companies who purchase consumer
                  receivables, interests in distressed real property and tax
                  lien certificates.

         Some of our competitors are larger and more established and may have
substantially greater financial, technological, personnel and other resources
than we have, including greater access to capital markets. We believe that no
individual competitor or group of competitors has a dominant presence in the
market.

         We compete with our competitors for consumer receivable portfolios,
interests in distressed real property and tax lien certificates based on many
factors, including:

         o        purchase price;

         o        representations, warranties and indemnities requested;

         o        speed in making purchase decisions; and

         o        our reputation.

         Our strategy is designed to capitalize on the market's lack of a
dominant industry player. We believe that our management's experience and
expertise in identifying, evaluating, pricing and acquiring receivable
portfolios, interests in distressed real property and tax lien certificates and
managing collections coupled with our strategic alliances with third-party
servicers and our sources of financing give us a competitive advantage. However,
we cannot assure that we will be able to compete successfully against current or
future competitors or that competition will not increase in the future.

Management Information Systems

         We believe that a high degree of automation is necessary to enable us
to grow and successfully compete with other financial services companies.
Accordingly, we continually upgrade our computer software and, when necessary,
our hardware to support the servicing and recovery of consumer receivables that
we acquire. Our telecommunications and computer systems allow us to quickly and
accurately process the large amount of data necessary to purchase and service
consumer receivable portfolios. Due to our desire to increase productivity
through automation, we periodically review our systems for possible upgrades and
enhancements.

Government Regulation

         The relationship of obligors and a creditor is extensively regulated by
Federal, state and municipal laws, rules, regulations and ordinances. These laws
include, but are not limited to, the following statutes and regulations: the
Fair Debt Collection Practices Act, the Federal Truth-In-Lending Act, the Fair
Credit Billing Act, the Equal Opportunity Act, the Fair Foreclosure Act and the
Fair Credit Reporting Act, as well as comparable statutes in states where
obligors reside and/or where creditors are located. Among other things, the laws

                                       10
<PAGE>

and regulations applicable to various creditors impose disclosure requirements
regarding the advertisement, application, establishment and operation of credit
accounts or other types of credit programs. Federal law requires a creditor to
disclose to an obligor, among other things, the interest rates, fees, grace
periods and balance calculations methods associated with their accounts. In
addition, obligors are entitled to have payments and credits applied to their
accounts promptly, to receive prescribed notices and to require billing errors
to be resolved promptly. In addition, some laws prohibit certain discriminatory
practices in connection with the extension of credit. Further, state laws may
limit the interest rate and the fees that a creditor may impose on obligors.
Failure by creditor to comply with applicable laws could create claims and
rights of offset that would reduce or eliminate an obligor's obligations, which
could have a material adverse effect on our operations. Pursuant to agreements
under which we purchase receivables, we are typically indemnified against losses
resulting from the failure of the creditor to have complied with applicable laws
relating to the receivables prior to our purchase of such receivables.

         Certain laws, including the laws described above, may limit our ability
to collect amounts owing with respect to the receivables regardless of any act
or omission on our part. For example, under the Federal Fair Credit Billing Act,
a credit card issuer may be subject to certain claims and defenses arising out
of certain transactions in which a credit card is used if the consumer has made
a good faith attempt to obtain satisfactory resolution of a problem relative to
the transaction and, except in cases where there is a specified relationship
between the person honoring the card and the credit card issuer, the amount of
the initial transaction exceeds $50 and the place where the initial transaction
occurred was in the same state as the consumer's billing address or within 100
miles of that address. Accordingly, as a purchaser of defaulted receivables, we
may purchase receivables subject to valid defenses on the part of the obligor.
Other laws provide that, in certain instances, obligors cannot be held liable
for, or their liability is limited to $50 with respect to, charges to the credit
card credit account that were a result of an unauthorized use of the credit card
account. No assurances can be given that certain of the receivables were not
established as a result of unauthorized use of a credit card account, and,
accordingly, the amount of such receivables may not be collectible by us.

         Several Federal, state and municipal laws, rules, regulations and
ordinances, including, but not limited to, the Federal Fair Debt Collection
Practices Act and the Federal Trade Commission Act and comparable state statutes
regulate debt collection activity. Although, for a variety of reasons, we may
not be specifically subject to the Federal Fair Debt Collection Practices Act
and certain state statutes specifically addressing third-party debt collectors,
it is our policy to comply with applicable laws in our collection activities. To
the extent that some or all of these laws apply to our collection activities,
failure to comply with such laws could have a materially adverse effect on us.

         Additional laws may be enacted that could impose additional
restrictions on the servicing and collection of consumer receivables. Such new
laws may adversely affect the ability to collect such receivables.

         Because the receivables were originated and serviced pursuant to a
variety of Federal laws by a variety of entities there can be no assurance that
all original servicing entities have at all times been in substantial compliance
with applicable law. Additionally, there can be no assurance that we or our
servicers have been or will continue to be at all times in substantial
compliance with applicable law. The failure to comply with applicable law could
materially adversely affect our ability to collect our receivables and could
subject us to increased costs, fines and penalties.

                                       11
<PAGE>

         We currently hold a number of licenses issued under applicable credit
laws. Certain of our current licenses and any licenses that we may be required
to obtain in the future may be subject to periodic renewal provisions and/or
other requirements. Our inability to renew licenses or to take any other
required action with respect to such licenses could have a material adverse
effect upon our results of operation and financial condition.

EMPLOYEES

         As of December 31, 2004, we had a total of five employees, of which
three are full time employees. Most of our collection activities are outsourced
and managed by corporate officers. None of our employees is covered by a
collective bargaining agreement. We consider our relationship with our employees
to be good. We anticipate the hiring of a bookkeeper, property assistant and
collection assistant in the near future.


ITEM 2.  DESCRIPTION OF PROPERTIES

         Both our executive/corporate offices at 48 Franklin Turnpike, 3rd
Floor, Ramsey, NJ 07746 and our business office at 3100 Route 138 West, Wall,
New Jersey 07719 are located in leased space. The executive/corporate office is
approximately 500 square feet and is subject to a one year lease from an
unrelated third party and has an annual lease payment of $12,000. The business
office is approximately 1000 square feet and is subject to a two year lease from
a company owned by Messrs. Ragan and Ragan and has an annual lease payment of
$9,000.

ITEM 3.  LEGAL PROCEEDINGS

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

         There are presently no material pending legal proceedings to which the
Company or any of its subsidiaries is a part or to which any of its property is
the subject and, to the best of its knowledge, no such actions against the
Company are contemplated or threatened.

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


         No matters were submitted to security holders during our 2004 fiscal
year.

         On March 12, 2004, shareholders owning in the aggregate 6,691,924
shares of Common Stock, or approximately 87% of our then issued and outstanding
common stock, consented in writing to approve (a) an amendment to our amended
Certificate of Incorporation effectuating (i) a change in the our name to
Velocity Asset Management, Inc., (ii) a 13 for one reverse split of our common
stock and (iii) a change in the total authorized capital stock to 50,000,000

                                       12
<PAGE>

shares, of which 40,000,000 are classified as common stock, par value $.001 per
share, and 10,000,000 are classified as preferred stock, par value $.001 per
share, issuable in series with such powers, designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as our board of directors may fix from time
to time by resolution or resolutions; and (b) the adoption of our 2004 Equity
Incentive Program.

                                  RISK FACTORS

         You should carefully consider the risks described below and the other
information in this report in evaluating the Company. If any of the following
risks or uncertainties actually occurs, our business, financial condition and
operating results would likely suffer. In that event, the market price of our
common stock could decline and you could lose all or part of your investment.

                     RISK FACTORS RELATING TO OUR OPERATIONS

WE HAVE A LIMITED OPERATING HISTORY AND OUR BUSINESS AND FUTURE PROSPECTS ARE
DIFFICULT TO EVALUATE

         Prior to our acquisition of STB, Inc. (the former parent of our current
subsidiaries) on February 3, 2004, our company had been inactive since 1991. STB
was organized in 2003 and none of its subsidiaries has conducted business for
more than five years. Due to our limited operating history, our ability to
operate successfully is materially uncertain and our operations and prospects
are subject to all risks inherent in a developing business enterprise. Our
limited operating history also makes it difficult to evaluate our long term
commercial viability. Our potential for success must be evaluated in light of
the problems, expenses and difficulties frequently encountered by new businesses
in general and the collection services business specifically.

WE MAY NOT BE ABLE TO PURCHASE CONSUMER RECEIVABLE PORTFOLIOS, INTERESTS IN
DISTRESSED REAL PROPERTY OR TAX LIEN CERTIFICATES AT FAVORABLE PRICES OR ON
SUFFICIENTLY FAVORABLE TERMS OR AT ALL.

         Our success depends upon the continued availability of consumer
receivable portfolios, interests in distressed real property and tax lien
certificates that meet our purchasing criteria and our ability to identify and
finance the purchases of such assets. The availability of consumer receivable
portfolios, interests in distressed real property and tax lien certificates at
favorable prices and on terms acceptable to us depends on a number of factors
outside of our control, including:

         o        the continuation of the current growth trend in debt;

         o        the continued volume of consumer receivable portfolios,
                  interests in distressed real property and tax lien
                  certificates available for sale; and

         o        competitive factors affecting potential purchasers and sellers
                  of consumer receivable portfolios, interests in distressed
                  real property and tax lien certificates.

         The market for acquiring consumer receivable portfolios, interests in
distressed real property and tax lien certificates is becoming more competitive,
thereby possibly diminishing our ability to acquire such assets at attractive
prices in future periods.

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<PAGE>

         The growth in debt may also be affected by:

         o        a slowdown in the economy;

         o        reductions in consumer spending;

         o        changes in the underwriting criteria by originators; and

         o        changes in laws and regulations governing lending and
                  bankruptcy.

         Any slowing of the consumer debt growth trend could result in a
decrease in the availability for purchase of consumer receivable portfolios,
interests in distressed real property and tax lien certificates that could
affect the purchase prices of such assets. Any increase in the prices we are
required to pay for such assets in turn will reduce the profit, if any, we
generate from such assets.

WE MAY NOT BE ABLE TO RECOVER SUFFICIENT AMOUNTS ON OUR CONSUMER RECEIVABLE
PORTFOLIOS TO RECOVER THE COSTS ASSOCIATED WITH THE PURCHASE AND SERVICING OF
THOSE PORTFOLIOS AND TO FUND OUR OPERATIONS.

         We acquire and collect on consumer receivable portfolios that contain
charged-off, semi-performing and performing receivables. In order to operate
profitably over the long term, we must continually purchase and collect on a
sufficient volume of receivables to generate revenue that exceeds our costs. For
accounts that are charged-off or semi-performing, the originators or interim
owners of the receivables generally have:

         o        made numerous attempts to collect on these obligations, often
                  using both their in-house collection staff and third-party
                  collection agencies;

         o        subsequently deemed these obligations as uncollectible; and

         o        charged-off these obligations.

         These receivable portfolios are purchased at significant discounts to
the amount the obligors owe. These receivables are difficult to collect and
actual recoveries may vary and be less than the amount expected. In addition,
our collections may worsen in a weak economic cycle. We may not recover amounts
in excess of our acquisition and servicing costs.

         Our ability to recover on our receivable portfolios and produce
sufficient returns can be negatively impacted by the quality of the purchased
receivables. In the normal course of our portfolio acquisitions, some
receivables may be included in the portfolios that fail to conform to certain
terms of the purchase agreements and we may seek to return these receivables to
the seller for payment or replacement receivables. However, we cannot guarantee
that any of such sellers will be able to meet their payment obligations to us.
Accounts that we are unable to return to sellers may yield no return. If cash
flows from operations are less than anticipated as a result of our inability to
collect sufficient amounts on our receivables, our ability to satisfy our debt
obligations, purchase new portfolios and our future growth and profitability may
be materially adversely affected.

                                       14
<PAGE>

WE ARE SUBJECT TO INTENSE COMPETITION FOR THE PURCHASE OF DISTRESSED ASSETS THAT
MAY EFFECT OUR ABILITY TO PURCHASE DISTRESSED ASSTS AT ACCEPTABLE PRICES OR AT
ALL.

         We compete with other purchasers of consumer receivable portfolios,
interests in distressed real property and tax lien certificates, with
third-party collection agencies and with financial services companies that
manage their own consumer receivable portfolios. We compete on the basis of
reputation, industry experience and performance. Some of our competitors have
greater capital, personnel and other resources than we have. The possible entry
of new competitors, including competitors that historically have focused on the
acquisition of different asset types, and the expected increase in competition
from current market participants, may reduce our access to consumer receivable
portfolios, interests in distressed real property and tax lien certificates.
Aggressive pricing by our competitors could raise the price of such distressed
assets above levels that we are willing to pay, which could reduce the amount of
such assets suitable for us to purchase or, if purchased by us, reduce the
profits, if any, generated by such assets. If we are unable to purchase
distressed assets at favorable prices or at all, our revenues and earnings could
be materially reduced.

WE ARE DEPENDENT UPON THIRD PARTIES, IN PARTICULAR, THE LAW FIRM OF RAGAN &
RAGAN, P.C., TO SERVICE THE LEGAL COLLECTION PROCESS OF OUR CONSUMER RECEIVABLE
PORTFOLIOS.

         We are dependent upon the efforts of our third party servicers, in
particular, the law firm of Ragan & Ragan, P.C., to service and collect our
consumer receivables. Any failure by our third party servicers to adequately
perform collection services for us or remit such collections to us could
materially reduce our revenues and our profitability. In addition, our revenues
and profitability could be materially adversely affected if we are not able to
secure replacement servicers and redirect payments from the debtors to our new
servicers promptly if our agreements with our third-party servicers are
terminated, our third-party servicers fail to adequately perform their
obligations or if our relationships with such servicers adversely change. Until
recently our sole servicer has been the law firm of Ragan & Ragan, P.C., the
principals of which are W. Peter Ragan, Sr. and W. Peter Ragan, Jr. our Vice
President and a director, and our Treasurer and Secretary, respectively.

IF WE ARE UNABLE TO ACCESS EXTERNAL SOURCES OF FINANCING, WE MAY NOT BE ABLE TO
FUND AND GROW OUR OPERATIONS.

         We depend on loans from our credit facility and other external sources
to fund and expand our operations. Our ability to grow our business is dependent
on our access to additional financing and capital resources. The failure to
obtain financing and capital as needed would limit our ability to purchase
consumer receivable portfolios, interests in distressed real property and tax
lien certificates and achieve our growth plans.

WE MAY INCUR SUBSTANTIAL DEBT FROM TIME TO TIME IN CONNECTION WITH OUR PURCHASE
OF CONSUMER RECEIVABLE PORTFOLIOS WHICH COULD AFFECT OUR ABILITY TO OBTAIN
ADDITIONAL FUNDS AND MAY INCREASE OUR VULNERABILITY TO ECONOMIC OR BUSINESS
DOWNTURNS.

         We may incur substantial indebtedness from time to time in connection
with the purchase of consumer receivable portfolios and would be subject to the
risks associated with incurring such indebtedness, including:

                                       15
<PAGE>

         o        we would be required to dedicate a portion of our cash flows
                  from operations to pay debt service costs and, as a result, we
                  would have less funds available for operations, future
                  acquisitions of consumer receivable portfolios, and other
                  purposes;

        o         it may be more difficult and expensive to obtain additional
                  funding through financings, if available at all;

        o         we would be more vulnerable to economic downturns and
                  fluctuations in interest rates, less able to withstand
                  competitive pressures and less flexible in reacting to changes
                  in our industry and general economic conditions; and

        o         if we defaulted under our existing credit facility or if our
                  lender demanded payment of a portion or all of our
                  indebtedness, we may not have sufficient funds to make such
                  payments.

Our new loan and security agreement has a $12.5 million dollar credit line. Any
indebtedness that we incur under such line of credit is secured by a pledge of
all of our assets, including all of our portfolios of consumer receivables
acquired for liquidation. If we default under the indebtedness secured by our
assets, those assets would be available to the secured creditor to satisfy our
obligations to the secured creditor. Any of these consequences could adversely
affect our ability to acquire consumer receivable portfolios, interests in
distressed real property and tax lien certificates, and operate our business.

In addition, our loan and security agreement contains certain restrictive
covenants that may restrict our ability to operate our business. Furthermore,
the failure to satisfy any of these covenants could:

         o        cause our indebtedness to become immediately payable;

         o        preclude us from further borrowings from these existing
                  sources; and

         o        prevent us from securing alternative sources of financing
                  necessary to purchase consumer receivable portfolios,
                  interests in distressed real property and tax lien
                  certificates and to operate our business.

OUR COLLECTIONS ON UNSECURED CONSUMER RECEIVABLES MAY DECREASE IF BANKRUPTCY
FILINGS INCREASE.

         During times of economic recession, the amount of defaulted receivables
generally increases, which contributes to an increase in the amount of personal
bankruptcy filings. Under certain bankruptcy filings an obligor's assets are
sold to repay credit originators, but since certain of the receivables we
purchase are unsecured we often would not be able to collect on those
receivables. We cannot assure you that our collection experience would not
decline with an increase in bankruptcy filings. If our actual collection
experience with respect to our unsecured receivable portfolios is significantly
lower than we projected when we purchased the portfolios, our earnings could be
negatively affected. We use estimates for recognizing revenue on a majority of
our receivable portfolio investments and our earnings would be reduced if actual
results are less than estimated.

                                       16
<PAGE>

WE MAY NOT BE SUCCESSFUL AT ACQUIRING RECEIVABLES OF NEW ASSET TYPES OR
IMPLEMENTING A NEW PRICING STRUCTURE.

We may pursue the acquisition of receivable portfolios of asset types in which
we have little current experience. We may not be successful in completing any
acquisitions of receivables of these asset types and our limited experience in
these asset types may impair our ability to collect on these receivables. This
may cause us to pay too much for these receivables, and consequently, we may not
generate a profit from these receivable portfolio acquisitions.

THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS MAY ADVERSELY AFFECT OUR OPERATIONS
AND OUR ABILITY TO SUCCESSFULLY ACQUIRE DISTRESSED ASSETS.

         Mr. John C. Kleinert, our President and Chief Executive Officer, Mr. W.
Peter Ragan, Sr., our Vice President, Mr. W. Peter Ragan, Jr., our Treasurer and
Secretary, and Mr. James J. Mastriani, our Chief Financial and Chief Legal
Officer, are responsible for making substantially all management decisions,
including determining which distressed assets to purchase, the purchase price
and other material terms of such acquisitions. These decisions are instrumental
to the success of our business. The loss of the services of Mr. Kleinert, Mr.
Ragan, Sr., Mr. Ragan, Jr. or Mr. Mastriani could disrupt our operations and
adversely affect our ability to successfully acquire consumer receivable
portfolios, interests in distressed real property and tax lien certificates.

IF WE FAIL TO MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS MAY NOT SUCCEED.

                                       17
<PAGE>

         We have experienced rapid growth over the past several years and intend
to maintain our growth focus. However, our growth will place demands on our
resources and we cannot be sure that we will be able to manage our growth
effectively. Future internal growth will depend on a number of factors,
including:

         o        the effective and timely initiation and development of
                  relationships with sellers of distressed assets and strategic
                  partners;

         o        our ability to efficiently collect consumer receivables; and

         o        the recruitment, motivation and retention of qualified
                  personnel.

         Sustaining growth will also require the implementation of enhancements
to our operational and financial systems and will require additional management,
operational and financial resources. There can be no assurance that we will be
able to manage our expanding operations effectively or that we will be able to
maintain or accelerate our growth and any failure to do so could adversely
affect our ability to generate revenues and control our expenses.

OUR OPERATIONS COULD SUFFER FROM TELECOMMUNICATIONS OR TECHNOLOGY DOWNTIME,
DISRUPTIONS OR INCREASED COSTS.

         Our success depends in part on sophisticated telecommunications and
computer systems. The temporary loss of our computer and telecommunications
systems, through casualty, operating malfunction or service provider failure,
could disrupt our operations. In addition, we must record and process
significant amounts of data quickly and accurately to properly bid on
prospective acquisitions of consumer receivable portfolios and to access,
maintain and expand the databases we use for our collection or monitoring
activities. Any failure of our information systems and their backup systems
would interrupt our operations. We may not have adequate backup arrangements for
all of our operations and we may incur significant losses if an outage occurs.
Any interruption in our operations could have an adverse effect on our results
of operations and financial condition.

UNTIL RECENTLY ALL OF OUR CONSUMER RECEIVABLES HAVE BEEN FROM OBLIGORS IN ONE
STATE AND WE FACE THE UNCERTAINTIES INHERENT IN ACQUIRING RECEIVABLES FROM
OBLIGORS IN OTHER STATES.

         Historically, all of our consumer receivables have been from obligors
in New Jersey. Accordingly, we have been dependent on the economic conditions in
such state. Since December 2004, we have acquired consumer receivables from
obligors in other states and we intend to continue to expand our operations
geographically. Therefore, we face the uncertainties inherent in operating in
states other than New Jersey, including lack of familiarity with local laws,
identifying new servicers and obtaining and maintaining licenses in such states.

OUR INABILITY TO OBTAIN OR RENEW REQUIRED LICENSES COULD HAVE A MATERIAL ADVERSE
EFFECT UPON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         We currently hold a number of licenses issued under applicable consumer
credit laws. Certain of our current licenses and any licenses that we may be

                                       18
<PAGE>

required to obtain in the future may be subject to periodic renewal provisions
and/or other requirements. Our inability to renew such licenses or take any
other required action with respect to such licenses could limit our ability to
collect on some of our receivables and otherwise have a material adverse effect
upon our results of operations and financial condition.

                      RISK FACTORS RELATING TO OUR INDUSTRY

GOVERNMENT REGULATIONS MAY LIMIT OUR ABILITY TO RECOVER AND ENFORCE THE
COLLECTION OF OUR CONSUMER RECEIVABLES.

         Federal, state and municipal laws, rules, regulations and ordinances
may limit our ability to recover and enforce our rights with respect to the
consumer receivables acquired by us. These laws include, but are not limited to,
the following Federal statutes and related regulations and comparable statutes
in states where obligors reside and/or where creditors are located:

         o        the Fair Debt Collection Practices Act;

         o        the Federal Trade Commission Act;

         o        the Truth-In-Lending Act;

         o        the Fair Credit Billing Act;

         o        the Equal Credit Opportunity Act; and

         o        the Fair Credit Reporting Act.

         o        the Fair Foreclosure Act.

         We may be precluded from collecting consumer receivables we purchase
where the creditor or other previous owner or servicer failed to comply with
applicable law in originating or servicing such acquired receivables. Laws
relating to the collection of consumer debt also directly apply to our business.
Our failure to comply with any laws applicable to us, including state licensing
laws, could limit our ability to recover on our receivables and could subject us
to fines and penalties, which could reduce our earnings and result in a default
under our loan arrangements.

         Additional laws may be enacted that could impose additional
restrictions on the servicing and collection of consumer receivables. Such new
laws may adversely affect the ability to collect on our receivables which could
also adversely affect our revenues and earnings.

CLASS ACTION SUITS AND OTHER LITIGATION IN OUR INDUSTRY COULD DIVERT OUR
MANAGEMENT'S ATTENTION FROM OPERATING OUR BUSINESS AND INCREASE OUR EXPENSES.

         Certain originators and servicers in the consumer credit industry have
been subject to class actions and other litigation. Claims have included failure
to comply with applicable laws and regulations and improper or deceptive
origination and servicing practices. If we become a party to any such class
action suit or other litigation, our results of operations and financial
condition could be materially adversely affected.

                                       19
<PAGE>

                    RISK FACTORS RELATING TO OUR COMMON STOCK

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE AND CAUSE OUR STOCK PRICE TO
DECLINE.

         Because of the nature of our business, our quarterly operating results
may fluctuate, which may adversely affect the market price of our common stock.
Our results may fluctuate as a result of any of the following:

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

         o        our inability to identify and acquire additional consumer
                  receivable portfolios;

         o        a decline in the estimated value of our consumer receivable
                  portfolio recoveries;

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

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

         o        general and economic market conditions.

BECAUSE THREE SHAREHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK, OTHER
SHAREHOLDERS' VOTING POWER MAY BE LIMITED.

         As of April 11, 2005, John C. Kleinert, W. Peter Ragan, Sr. and W.
Peter Ragan, Jr., three of our executive officers and the former holders of all
of the capital stock of STB, beneficially own or control approximately 86.9%
(including shares issuable upon exercise of warrants owned by such shareholders)
of our shares. If those shareholders act together, they will have the ability to
control matters submitted to our shareholders for approval, including the
election and removal of directors and the approval of any merger, consolidation
or sale of all or substantially all of our assets. As a result, our other
shareholders may have little or no influence over matters submitted for
shareholder approval. In addition, the ownership of such three shareholders
could preclude any unsolicited acquisition of us and consequently materially
adversely affect the price of our common stock. These shareholders may make
decisions that are adverse to your interests.

OUR ORGANIZATIONAL DOCUMENTS AND DELAWARE LAW MAKE IT HARDER FOR US TO BE
ACQUIRED WITHOUT THE CONSENT AND COOPERATION OF OUR BOARD OF DIRECTORS AND
MANAGEMENT.

         Several provisions of our organizational documents and Delaware law may
deter or prevent a takeover attempt, including a takeover attempt in which the
potential purchaser offers to pay a per share price greater than the current
market price of our common stock. Under the terms of our certificate of
incorporation, our board of directors has the authority, without further action
by the shareholders, to issue shares of preferred stock in one or more series
and to fix the rights, preferences, privileges and restrictions of such shares.
The ability to issue shares of preferred stock could tend to discourage takeover
or acquisition proposals not supported by our current board of directors. In

                                       20
<PAGE>

addition, we are subject to Section 203 of the Delaware General Corporation Law,
which restricts business combinations with some shareholders once the
shareholder acquires 15% or more of our common stock.

PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF OUR
COMMON STOCK.

         The Commission has adopted regulations which generally define a "penny
stock" to be any equity security that has a market price (as defined) of less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exceptions. As a result, our common stock is subject to rules that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the Commission relating to the penny stock market. The broker-dealer must also
disclose the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell our
securities and may affect the ability of investors to sell our securities in the
secondary market and the price at which such purchasers can sell any such
securities.

         Investors should be aware that, according to the Commission, the market
for penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include:

         o        control of the market for the security by one or a few
                  broker-dealers that are often related to the promoter or
                  issuer;

         o        manipulation of prices through prearranged matching of
                  purchases and sales and false and misleading press releases;

         o        "boiler room" practices involving high pressure sales tactics
                  and unrealistic price projections by inexperienced sales
                  persons;

         o        excessive and undisclosed bid-ask differentials and markups by
                  selling broker-dealers; and

         o        the wholesale dumping of the same securities by promoters and
                  broker-dealers after prices have been manipulated to a desired
                  level, along with the inevitable collapse of those prices with
                  consequent investor losses.

         Our management is aware of the abuses that have occurred historically
in the penny stock market. Although we do not expect to be in a position to
dictate the behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to our common
stock.

                                       21
<PAGE>

THE ISSUANCE OF AUTHORIZED SHARES OF PREFERRED STOCK AND ADDITIONAL COMMON STOCK
MAY RESULT IN DILUTION TO EXISTING SHAREHOLDERS, ADVERSELY AFFECT THE RIGHTS OF
EXISTING SHAREHOLDERS AND DEPRESS THE PRICE OF OUR COMMON STOCK.

         We have 10,000,000 shares of authorized "blank check" preferred stock,
the terms of which may be fixed by our board of directors. Although none of this
preferred stock is issued and outstanding and we have no present plans to issue
any preferred stock, our board of directors has the authority, without
shareholder approval, to create and issue one or more series of such preferred
stock and to determine the voting, dividend and other rights of the holders of
such preferred stock. Depending on the rights, preferences and privileges
granted when the preferred stock is issued, it may have the effect of delaying,
deferring or preventing a change in control without further action by the
shareholders, may discourage bids for our common stock at a premium over the
market price of the common stock and may adversely affect the market price of
and voting and other rights of the holders of our common stock.

         In addition to the preferred stock, we are authorized to issue
40,000,000 shares of our common stock. As of the date of this report, there were
15,927,462 shares of our common stock issued and outstanding. However, the total
number of shares of common stock issued and outstanding does not include
outstanding unexercised options or warrants exercisable for 4,074,260 of shares
of common stock. As of the date of this report, we have reserved up to 4,074,260
shares of our common stock for issuance upon exercise of outstanding stock
options and warrants. A total of 1,000,000 shares of common stock have been
reserved under the Company's 2004 Equity Incentive Program. None of these shares
have been issued.

         Under most circumstances, our board of directors has the right, without
shareholder approval, to issue the authorized but unissued and nonreserved
shares of our common stock. If all of these shares were issued, it would dilute
the existing shareholders and may depress the price of our common stock.

         Exercise of the outstanding options and warrants will reduce the
percentage of common stock held by the public shareholders. Further, the terms
on which we could obtain additional capital during the life of the warrants may
be adversely affected, and it should be expected that the holders of the
warrants would exercise them at a time when we would be able to obtain equity
capital on terms more favorable than those provided for by such warrants. As a
result, any issuance of additional shares of common stock may cause our current
shareholders to suffer significant dilution and depress the price of our common
stock.

COMMON STOCK ELIGIBLE FOR FUTURE SALE MAY DEPRESS THE PRICE OF OUR COMMON STOCK
IN THE MARKET.

         Of the 15,927,462 shares of common stock held by our present
shareholders, 9,095,090 shares may be available for public sale by means of
ordinary brokerage transactions in the open market pursuant to Rule 144
promulgated under the Act, subject to certain limitations. In general, under
Rule 144, a person (or persons whose shares are aggregated) who has satisfied a
one-year holding period may, under certain circumstances, sell within any
three-month period a number of securities which does not exceed 1% of the then
outstanding shares of common stock. Rule 144 also permits, under certain

                                       22
<PAGE>

circumstances, the sale of securities, without any limitation, by a person who
is not our affiliate and who has satisfied a two-year holding period. The sale
of such a large number of shares may cause the price of our common stock to
decline.

THE LIMITED TRADING ACTIVITY IN OUR COMMON STOCK MAY CAUSE POSSIBLE VOLATILITY
IN OUR STOCK PRICE.

         There has only been a limited public market for our securities and
there can be no assurance that an active trading market in our securities will
develop, and, if developed, maintained. The OTC Bulletin Board is an
unorganized, inter-dealer, over-the-counter market which provides significantly
less liquidity than The Nasdaq Stock Market, and quotes for stocks included on
the OTC Bulletin Board are not listed in the financial sections of newspapers as
are those for The Nasdaq Stock Market. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many smaller companies. The trading
price of our common stock is expected to be subject to significant fluctuations
in response to variations in quarterly operating results, changes in analysts'
earnings estimates, announcements of innovations by us or our competitors,
general conditions in the industry in which we operate and other factors. These
fluctuations, as well as general economic and market conditions, may have a
material or adverse effect on the market price of our common stock.

WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK, AND WE DO NOT ANTICIPATE
PAYING DIVIDENDS FOR THE FORESEEABLE FUTURE; THEREFORE, RETURNS ON YOUR
INVESTMENT MAY ONLY BE REALIZED BY THE APPRECIATION IN VALUE OF OUR SECURITIES.

         We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future. We plan to retain any future earnings to finance growth. Because of
this, investors may only realize a return on their investment if the value of
our common stock appreciates.

         If we determine that we will pay dividends to the holders of our common
stock, there is no assurance or guarantee that such dividends will be paid on a
timely basis.

THE PRICE OF OUR COMMON STOCK HAS BEEN SUBJECT TO SIGNIFICANT FLUCTUATION AND
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE WHICH MAY RESULT IN LITIGATION
THAT COULD BE COSTLY AND DIVERT OUR RESOURCES.

         The trading price of our common stock in the past has been, and in the
future may be, highly volatile. The trading price could be subject to wide
fluctuations in response to quarter-to-quarter variations in our operating
results, announcements of technological innovations or new acquisitions by us or
our competitors, changes in financial estimates by securities analysts or other
events or factors. When the market price of a company's stock drops
significantly, shareholders often institute securities class action lawsuits
against that company. A lawsuit against us could cause us to incur substantial
costs and could divert the time and attention of our management and other
resources.

                                       23
<PAGE>

                                     PART II
                                     -------

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         Our common stock has traded on the Over-the-Counter Bulletin Board
(OTC: BB) under the symbol "TLOP" since May 9, 2002 and since April 12, 2004
under the symbol "VCYA". The following table sets forth the reported high and
low bid quotations of our common stock for the periods indicated. Such
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.

        Period Ended                       High Bid   Low Bid
        ------------                       --------   -------


Fiscal Year Ended December 31, 2003

         First Quarter(1)(2)                 0.13      0.12
         Second Quarter(1)(2)                0.12      0.11
         Third Quarter(1)(2)                 0.11      0.06
         Fourth Quarter(1)(2)                0.06      0.06

Fiscal Year Ending December 31, 2004

         First Quarter(1)(2)                 0.32      0.06
         Second Quarter(1)                  $4.00     $1.56
         Third Quarter                      $3.15     $1.60
         Fourth Quarter                     $3.55     $1.50

Fiscal Year Ending December 31, 2005

         First Quarter                      $4.45     $2.10

                                       24
<PAGE>

(1) Prices adjusted retroactively to reflect 13 for 1 reverse split effected on
April 8, 2004. These adjusted prices are not necessarily indicative of what the
price might have been if such reverse split had occurred prior to April 12,
2004.

(2) On February 3, 2004, we acquired STB, Inc. in a merger. Prior to that date,
we had virtually no active business operations.

         On April 11, 2005, the closing bid price of our common stock as
reported on the OTC Bulletin Board was $2.50 per share.

HOLDERS OF RECORD

         As of April 11, 2005, there were approximately 248 holders of record of
the our common stock and approximately 198 beneficial owners.

DIVIDENDS

         We have not paid any cash dividends on its common stock to date, and do
not anticipate declaring or paying any dividends in the foreseeable future. We
anticipate that for the foreseeable future we will follow a policy of retaining
earnings, if any, in order to finance the expansion and development of our
business. Payment of dividends is within the discretion of our board of
directors and will depend upon our earnings, capital requirements and operating
and financial condition, among other factors.

RECENT SALES OF UNREGISTERED SECURITIES

         During the period covered by this Report, we did not issue any
securities that were not registered under the Securities Act of 1933, as
amended, except as previously included in a quarterly report on Form 10-QSB or a
current report on Form 8-K.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS


Restatement

         We have restated the consolidated financial statements for the year
ended December 31, 2004. This restatement consisted of an adjustment to include
a loss on debt extinguishment recorded in the third quarter of 2004 to comply
with APB 26, "Early Extinguishment of Debt." The restatement had no impact on
net cash used in operating activities in the statement of cash flows for the
year ended December 31, 2004.

         The addition of the loss on debt extinguishment resulted from the need
to apply the accounting principles in paragraph 20 of APB 26 in determining the
difference between the reacquisition price and the net carrying amount of the
extinguished debt related to the August 12, 2004 exchange in which $3,676,252 in
outstanding debt was exchanged for 4,084,724 shares of the Company's Common
Stock at $0.90 per share. After further evaluation, we determined that APB 26
requires that a loss be computed using the August 12, 2004 OTCBB market price of
$1.60 for VCYA.ob common stock, resulting in a non-cash loss of $2,859,307 due
to the difference between the $1.60 OTCBB market price and the $0.90 per share
used in the negotiated exchange. This loss generates a permanent timing
difference between book and tax reporting.


Overview

         The Company, previously known as Tele-Optics, Inc., was organized in
the State of Delaware in December 1986. The Company was inactive until February
3, 2004, when the Company acquired STB, Inc., a New Jersey corporation. Since
that acquisition, the Company has engaged in the business of acquiring, managing
and servicing distressed assets consisting of consumer receivable portfolios,
interests in distressed real estate and tax lien certificates. The business is
carried on by the Company's three wholly owned subsidiaries: Velocity
Investments, LLC, which invests in consumer debt purchased on the secondary
market at a discount from face value and then liquidates these debt portfolios
through legal collection means; J. Holder, Inc., which invests in distressed
real property interests, namely, real property being sold at sheriff's
foreclosure and judgment execution sales, defaulted mortgages, partial interests

                                       25
<PAGE>

in real property and the acquisition of real property with clouded title; and
VOM, LLC, which invests in New Jersey municipal tax liens with the focus on
profit through legal collection and owned real estate opportunities presented by
the current tax environment.

         Our consumer receivable portfolios are purchased at a discount from
face or fair market value. Our interests in distressed real property are
purchased following an extensive due diligence process concerning the legal
status of each property and a market analysis of the value of the property or
underlying property. Our tax lien certificates are purchase at a discount from
par following a due diligence analysis similar to that performed in connection
with the purchase of interests in distressed real property. Our profitability
depends upon our ability to purchase and collect on a sufficient volume of our
consumer receivables, the sale of our interests in distressed real property and
the collection of taxes and accrued interest on our tax lien certificates to
generate revenue that exceeds our cost.

Critical Accounting Policies

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

    Purchased Receivable Portfolios and Revenue Recognition

         We purchase pools of consumer receivable portfolios at a substantial
discount from their face amounts which are usually discounted from 75% to 99%
and are recorded at our acquisition cost. In accordance with Practice Bulletin
6, revenue is recognized based on our anticipated cash collections and its
estimated rate of return over the useful life of the pool. Revenue is recognized
to the extent that collections exceed the estimated rate of return taken on the
portfolio as a whole. Each pool's estimated useful life is different, but each
pool is generally amortized over a period of between 48 and 60 months. As of
December 30, 2004 and 2003, the Company had 15 and 5 pools, respectively, under
the interest method of revenue recognition.

        We believe that the amounts and timing of cash collections for our
purchased receivables can be reasonably estimated and, therefore, we utilize the
interest method of accounting for our purchased receivables prescribed by
Practice Bulletin 6. This belief is predicated on our historical results and our
knowledge of the industry. Each static pool of receivables is statistically
modeled to determine its projected cash flows based on historical cash
collections for pools with similar characteristics. Practice Bulletin 6 requires

                                       26
<PAGE>

that the accrual basis of accounting be used at the time the amount and timing
of cash flows from an acquired portfolio can be reasonably estimated and
collection is probable.

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

         Management does not believe that the fair value of consumer receivables
differs materially from their book value. Therefore, no allowance has been
applied to the consumer receivable portfolio balances at December 31, 2004 and
2003.

         An internal rate of return is established for each static pool of
receivables based on the projected cash flows and applied to the balance of the
static pool. The resulting revenue recognized is based on the internal rate of
return applied to the remaining balance of each static pool of accounts. Each
static pool is analyzed monthly to assess the actual performance compared to the
expected performance. To the extent there are differences in actual performance
versus expected performance, the internal rate of return is adjusted
prospectively to reflect the revised estimate of cash flows over the remaining
life of the static pool. Generally, these portfolios are expected to amortize
over a five year period based on our estimated future cash flows. Historically,
a majority of the cash we ultimately collect on a portfolio is received during
the first 36 months after acquiring the portfolio, although additional amounts
are collected over the remaining period. The estimated future cash flows of the
portfolios are reevaluated quarterly.

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

         In December 2003, the Accounting Standards Executive Committee issued
Statement of Position 03-3, "Accounting for Certain Loans of Debt Securities
Acquired in a Transfer". Statement of Position 03-3 addresses accounting for
differences between contractual cash flows and cash flows expected to be
collected from an investor's initial investment in loans or debt if those
differences are attributable, at least in part, to credit quality. Increases in
expected cash flows should be recognized prospectively through adjustment of
internal rate of return while decreases in expected cash flows should be
recognized as impairment. This treatment differs form our current guidance,
Practice Bulletin 6.

                                       27
<PAGE>

         Under both the guidance of Practice Bulletin 6 and Statement of
Position 03-3, when expected cash flows are higher than prior projections, the
increase in expected cash flows results in an increase in the internal rate of
return and therefore, the effect of the cash flow increase is recognized as
increased revenue prospectively over the remaining life of the affected pool.
However, when expected cash flows are lower than prior projections, Statement of
Position 03-3 requires that the expected decrease be recognized as an impairment
by decreasing the carrying value of the affected pool (rather than lower the
internal rate of return) so that the pool will amortize over its expected life
using the original internal rate of return. Under our current guidance (Practice
Bulletin 6), a decrease in expected cash flows results in a reduction of the
internal rate of return and therefore, the effect of the cash flow reduction is
recognized as lower revenue prospectively over the remaining life of the
affected pool.

         In January 2005, we adopted Statement of Policy 03-3. In accordance
with such Statement of Policy, when expected cash flows are lower than
originally projected, an immediate impairment will be recognized. However, under
Statement of Policy 03-3 the internal rate of return is not lowered and
therefore, more revenue will be recognized over the remaining life of the pool
than would be recognized under Practice Bulletin 6. The amount of revenue
recognized over the approximate 60 month life of each pool is identical under
both Practice Bulletin 6 and Statement of Policy 03-3.

         Statement of Policy 03-3 is effective for loans acquired in fiscal
years beginning after December 15, 2004 and should be applied prospectively to
loans acquired on or before December 15, 2004 as it applies to decreases in
expected cash flows. We do not anticipate any material changes in results of
operations, expected cash flows or financial position under Statement of
Position 03-3.

                                       28
<PAGE>

Stock Based Compensation

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


Results of Operations

         Comparison of the Fiscal Year Ended December 31, 2004 to the Fiscal
Year Ended December 31, 2003.

         Revenues in the fiscal year ended December 31, 2004 were $4,356,189 as
compared to $4,006,874 in the fiscal year ended December 31, 2003, representing
an 8.7% increase. The increase in revenues was primarily attributable to an
increase in collections on consumer receivables at our Velocity Investments
subsidiary. Revenues from the sale of real property, the collection of consumer
receivables and the collection of taxes and interest derived from tax lien
certificates owned by the Company represented approximately 54%, 40% and 6%,
respectively, during fiscal 2004 as compared to 85%, 7.5%, and 7.5% during
fiscal 2003. The change in the mix of revenues on a comparative basis is
indicative of an increase in operations at our Velocity Investments subsidiary
and related increase in revenues from collection on unsecured consumer
receivables.

         Comparison of the Fiscal Year Ended December 31, 2003 to the Fiscal
Year Ended December 31, 2002.

         Revenues in the fiscal year ended December 31, 2003 were $4,006,874 as
compared to $4,040,768 in the fiscal year ended December 31, 2002. The decrease
in revenues is not viewed as material. Revenues from the sale of real property,
the collection of consumer receivables and the collection of taxes and interest
derived from tax lien certificates owned by the Company represented
approximately 85%, 7.5% and 7.5%, respectively, during fiscal 2003 as compared
to 96%, 0%, and 4% during fiscal 2002. Management does not believe that the mix
of revenues on a comparative basis is necessarily indicative of any trend but,
among other things, related to factors beyond the Company's control, such as
maturity dates, court decisions and other similar events that affect the timing
of revenue recognition.

                                       29
<PAGE>

Operating Expenses

        Comparison of the Fiscal Year Ended December 31, 2004 to the Fiscal Year
Ended December 31, 2003.


         Total operating expenses for the fiscal year ended December 31, 2004
were $6,914,517 as compared to $3,711,349 during the fiscal year ended December
31, 2003. The increase in total operating expenses was primarily attributable to
a non-cash loss on early extinguishment of debt of $2,859,307 in the three month
period ended September 30, 2004. General and administrative expenses increased
in fiscal 2004 as a result of our increasing collection fees and lien searches
for Velocity Investments and the commencement of payroll.


         Comparison of the Fiscal Year Ended December 31, 2003 to the Fiscal
Year Ended December 31, 2002.

         Total operating expenses for the fiscal year ended December 31, 2003
were $3,711,349 as compared to $3,838,087 during the fiscal year ended December
31, 2002, representing a 3.3% decrease. The decrease in total operating expenses
was primarily attributable to a decrease in sales commissions that was offset by
an increase in general and administrative expenses and professional fees.
General and administrative expenses increased in fiscal 2003 as a result of our
increasing collection fees and lien searches for Velocity Investments.

Other Income (Expense)

         Comparison of the fiscal Year Ended December 31, 2004 to the Fiscal
Year Ended December 31, 2003.

         Interest expense in the fiscal year ended December 31, 2004 was
$338,525 as compared to $329,740 in the fiscal year ended December 2003,
representing a 2.7% increase. The increase in interest expense was primarily
attributable to increases in long term borrowings. During fiscal 2004, the
Company recognized no other income as compared to other income of $67,450 in
fiscal 2003, all of which was derived from other J. Holder operations.

         Comparison of the Fiscal Year Ended December 31, 2003 to the Fiscal
Year Ended December 31, 2002.

         Interest expense in the fiscal year ended December 31, 2003 was
$329,740 as compared to $265,025 in the fiscal year ended December 2002,
representing a 24.4% increase. The increase in interest expense was primarily
attributable to increases in long term borrowings, including the execution of a
capital lease by Velocity Investments. During fiscal 2003, the Company
recognized other income of $67,450 as compared to no other income in fiscal
2002, all of which was derived from other J. Holder operations.

                                       30
<PAGE>

Net Income (Loss)

         Comparison of the Fiscal Year Ended December 31, 2004 to the Fiscal
Year Ended December 31, 2003.


         Net loss for the fiscal year ended December 31, 2004 was $2,705,155 as
compared to net income for the fiscal year ended December 31, 2003 of $30,668.
The increase in net loss is primarily attributable to a non-cash loss on early
extinguishment of debt of $2,859,307 in the three month period ended September
30, 2004.


         Comparison of the Fiscal Year Ended December 31, 2003 to the Fiscal
Year Ended December 31, 2002.

         Net income for the fiscal year ended December 31, 2003 was $30,668 as
compared to a net loss for the fiscal year ended December 31, 2002 of $62,344.
The increase in net income is primarily attributable to new operations at
Velocity Investments which were not present in fiscal 2002.

Liquidity and Capital Resources

         At December 31, 2004, the Company had $1,423,123 in cash and cash
equivalents and trade accounts payable in the amount of $1,937. Management
believes that such funds, together with the revenues expected to be generated
from operations and its recent line of credit will be sufficient to finance
operations for the foreseeable future.

         In order to expand operations by, among other things, purchasing
additional portfolios of receivables, the Company has been seeking to raise
additional capital by way of the sale of equity securities and obtaining a bank
line of credit. From October 2004 through January 3, 2005, the Company raised an
aggregate of $3,363,529.50 (approximately $3,100,000 after deducting expenses
and commissions associated with the sale) of additional equity capital by the
sale of 2,242,353 units of its securities in private placement. Each unit is
comprised of one share of our common stock and a warrant to purchase one-fifth
of a share of our common stock for $2.50 per share exercisable for a period of
five years.

         On January 27, 2005, our wholly owned subsidiary, Velocity Investments,
LLC, entered into a Loan and Security Agreement with Wells Fargo Foothill, Inc.,
a California corporation, in which Wells Fargo Foothill agreed to provide
Velocity Investments with a two year $12,500,000 senior credit facility to
finance the acquisition of individual pools of unsecured consumer receivables
that are approved by Wells Fargo Foothill under specific eligibility criteria
set forth in the Loan and Security Agreement.

         Simultaneous with the Loan and Security Agreement, the following
agreements were also entered into with Wells Fargo Foothill: a Continuing
Guaranty, in which we unconditionally and irrevocably guaranteed Velocity's
obligations under the Loan and Security Agreement; a Security and Pledge
Agreement, in which we pledged all of our assets to secure the credit facility,
including, but not limited to, all of our stock ownership of J. Holder, Inc. and
all our membership interests in Velocity Investments and VOM, LLC; and a
Subordination Agreement, in which all sums owing to the Company by Velocity as
an intercompany payable for advances or loans made or property transferred to
Velocity will be subordinated to the credit facility to the extend that such
sums, when added to Velocity Investment's membership interest in the parent does
not exceed $3,250,000. In addition, three of our executive officers, John C.
Kleinert, W. Peter Ragan, Sr. and W. Peter Ragan, Jr., provided joint and
several limited guarantees of Velocity Investment's obligations under the Loan
and Security Agreement.

                                       31
<PAGE>

         In the Loan and Security Agreement, Wells Fargo Foothill has agreed to
advance to Velocity Investments up to $12,500,000 to be used to finance up to
60% of the purchase price of individual pools of unsecured consumer receivables
that are approved by Wells Fargo Foothill under specific eligibility criteria
set forth in the Loan and Security Agreement. The interest rate on the loan is
3.50% above the prime rate of Wells Fargo Bank, N.A. The maturity date of the
facility is January 27, 2008.

         Use of the senior credit facility is subject to Velocity Investments
complying with certain restrictive covenants under the Loan and Security
Agreement, including but not limited to: a restriction on incurring additional
indebtedness or liens; a change of control of Velocity Investments; a
restriction on entering into transactions with affiliates outside the course of
Velocity Investment's ordinary business; and a restriction on making payments to
the Company in compliance with the Subordination Agreement. In addition,
Velocity Investments has agreed to maintain certain ratios with respect to
outstanding advances on the credit facility against the estimated remaining
return value on Wells Fargo Foothill financed portfolios, and, until Velocity
Investment's member's equity equals or exceeds $3,250,000, Velocity Investments
has agreed to maintain at least $3,250,000 in member's equity and subordinated
debt. We have also agreed to maintain at least $6,000,000 in stockholder's
equity and subordinated debt for the duration of the facility.

Trends

         As a result of the Company's recent line of credit, the Company
anticipates it will incur significant increases in interest expense offset, over
time, by expected increased revenues from consumer receivable portfolios
purchased utilizing funds under such line of credit. No assurance can be given
that the expected revenues from such purchased portfolios will exceed the
additional interest expense. The Company is not presently aware of any other
known trends that may have a material impact on its revenues. The Company does
not believe that the recent increases in interest rates, and the anticipated
continuing gradual increases in interest rates, has had or will have a material
adverse affect upon the Company's business.

                                       32
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements listed on the Index to the Financial
Statements are included beginning at F-1 following Item 14 of this Report.

ITEM 8.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         On July 21, 2003, the Company's principal accountant, Grassano
Accounting, P.A. resigned and the Company appointed Robert C. Seiwell, Jr. CPA,
as its principal accountant. The report of Grassano Accounting, P.A. on the
Company's financial statements for the fiscal year ended December 31, 2002, did
not contain an adverse opinion or disclaimer of opinion, and was not qualified
or modified as to uncertainty, audit scope, or accounting principles, except for
a going concern uncertainty.

         In connection with the audit of the Company's financial statements for
the fiscal year ended December 31, 2002, and in the subsequent interim period,
there were no disagreements, disputes, or differences of opinion with Grassano
Accounting, P.A. on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures, which, if not resolved
to the satisfaction of Grassano Accounting, P.A. would have caused Grassano
Accounting, P.A. to make reference to the matter in its report.

         Effective December 14, 2003, Robert C. Seiwell, Jr. CPA, resigned.
Prior to his resignation, Mr. Seiwell did not issue any audit of or report on
the Company's financial statements. There were no disagreements, disputes, or
differences of opinion with Robert C. Seiwell, Jr. CPA on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures, which, if not resolved to the satisfaction of Robert C.
Seiwell, Jr. CPA would have caused Robert C. Seiwell, Jr. CPA to make reference
to the matter in any report to be issued by Mr. Seiwell.

         On February 10, 2004, we engaged Cowan, Gunteski & Co., P.A., an
independent public accounting firm, to act as our independent auditors. During
the fiscal years ended December 31, 2003 and December 31, 2002 and through the
date hereof, neither the Registrant nor anyone on its behalf consulted with
Cowan, Gunteski & Co., P.A. with respect to any matters or event, including any
matters or events set forth and described in Items 304(a)(2)(i) and (ii) of
Regulation S-K.


ITEM 8A. CONTROLS AND PROCEDURES

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

As a result of an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by our Annual Report on
Form 10-KSB for the year ended December 31, 2004, with the participation of our
Chief Executive Officer and Chief Financial Officer, we identified a material
weakness in our internal controls over financial reporting relating to the
process of accounting for the August 12, 2004 debt exchange in which $3,676,252
in outstanding debt was exchanged for 4,084,724 shares of the Company's Common
Stock at $0.90 per share in compliance with APB 26, "Early Extinguishment of
Debt." After further evaluation, we determined that APB 26 requires that a loss
be computed using the August 12, 2004 $1.60 OTCBB market price of VCYA.ob common
stock, resulting in a non-cash loss of $2,859,307 due to the difference between
the $1.60 OTCBB market price and the $0.90 per share used in the negotiated
exchange. As a result, and as set forth in Note 1 to the Consolidated Financial
Statements and the "Restatement" section included in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, we
have restated our audited consolidated financial statements for the fiscal year
ended December 31, 2004 included in this report. We have also undertaken
remedial action to address and correct the weakness in our internal controls
over this process.


                                       33
<PAGE>


A material weakness is a control deficiency, or a combination of control
deficiencies, that results in a more than remote likelihood that a material
misstatement of the Company's annual or interim financial statements will not be
prevented or detected. Management has concluded that material weaknesses existed
in the following areas as of December 31, 2004:

     o    The policies and procedures supporting the accounting for, and
          reporting and monitoring of, certain debt conversion transactions.

The following remedial actions will be undertaken immediately.

     o    The Company will review all existing accounting policies, and develop
          appropriate supporting documentation to ensure that generally accepted
          accounting principles are applied appropriately. The Company
          anticipates completing its accounting policies review by the end of
          the first quarter of 2006.

Velocity Asset Management, Inc. continues the process to complete a thorough
review of its internal controls as part of its preparation for compliance with
the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Section 404
requires our management to report on, and our external auditors to attest to,
the effectiveness of our internal control structure and procedures for financial
reporting. As a non-accelerated filer under Rule 12b-2 of the Exchange Act, our
first report under Section 404 will be contained in our Form 10-KSB for the
period ended December 31, 2006.

ITEM 8B. OTHER INFORMATION

None


                                    PART III
                                    --------

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF THE REGISTRANT

INFORMATION CONCERNING EXECUTIVE OFFICERS AND DIRECTORS

EXECUTIVE OFFICERS

Our executive officers are identified in the table below.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                     YEAR BECAME AN
           NAME             AGE     EXECUTIVE OFFICER                    POSITIONS
           ----             ---     -----------------                    ---------
------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>           <C>
     John C. Kleinert        46           2004          President, Chief Executive Officer(1)
------------------------------------------------------------------------------------------------------------
    James J. Mastriani       34           2004          Chief Financial Officer
------------------------------------------------------------------------------------------------------------
    W. Peter Ragan, Sr.      58           2004          Vice President(1)
------------------------------------------------------------------------------------------------------------
    W. Peter Ragan, Jr.      34           2004          Treasurer, Secretary and Chief Financial Officer
------------------------------------------------------------------------------------------------------------

(1)  Such person is also a member of our board of directors.

</TABLE>

        (a)    There are no material proceedings known to us to which any of our
directors, officers or affiliates, or any owner of record or beneficially of
more than 5% of any class of our voting securities, or any affiliate of such
persons is a party adverse to us or has a material interest adverse to our
interests.

        (b)    The following brief biographies contain information about our
directors and our executive officer. The information includes each person's
principal occupation and business experience for at least the past five years.
This information has been furnished to us by the individuals named. Except for
the relationship of Mr. Ragan, Sr. and Mr. Ragan, Jr., who are father and son,
there are no family relationships known to us between the directors and
executive officers. We do not know of any legal proceedings that are material to
the evaluation of the ability or integrity of any of the directors or executive
officers.

                                       34
<PAGE>

         JOHN C. KLEINERT earned a Bachelor of Science degree in Chemical
Engineering from Princeton University in 1981. In 1982 Mr. Kleinert was hired by
Goldman Sachs in New York and from 1982-1990 he traded various municipal
products and was appointed head of the Municipal Trading Desk in 1991. In 1994
Mr. Kleinert was elected a general partner of the firm and served in that
capacity until the end of 1997 when he retired and became a limited partner.
Since retiring from Goldman Sachs and prior to his full time employment by us as
president and chief executive officer, Mr. Kleinert pursued several business
ventures, including managing a trading operation, JCK Investments, which invests
in equities, bonds, commodities and options. He is also a co-founder or our
company.

         JAMES J. MASTRIANI earned a Bachelor of Arts degree in 1992 from
Georgetown University and earned his juris doctorate from the Seton Hall
University School of Law in 1997. After graduating from law school, Mr.
Mastriani was in-house counsel for SBC Warburg Dillon Read Inc., providing legal
advice and transactional support to the broker-dealer subsidiary of Swiss Bank
Corporation. From 1998 to 2004, Mr. Mastriani practiced at the New York office
of international law firm Skadden, Arps, Slate, Meagher and Flom LLP, where he
was responsible for providing legal and regulatory advice to clients in the
financial services and consumer finance industries.

         W. PETER RAGAN, SR. received a Bachelor of Science in Marketing from
LaSalle University in 1968 and earned his law degree from the Seton Hall
University School of Law in 1974. Since his graduation he has practiced
primarily in the area of creditor's rights. Mr. Ragan practiced with the firm of
Schaefer and Crawford in Ocean Township, New Jersey, from 1974 to 1979 where he
specialized in municipal law and creditor's rights. From 1979 through May of
1998, Mr. Ragan was a principal of Blankenhorn & Ragan, P.C., and its
predecessor partnership. In May of 1998, the firm of Ragan & Ragan, P.C. was
created where Mr. Ragan is presently senior partner and continues with his focus
upon creditor's rights. Mr. Ragan has been a member of the New Jersey State Bar
since 1974 and is also admitted to practice before the United States District
Court for the District of New Jersey, United States Third Circuit Court of
Appeals and the United States Supreme Court. Mr. Ragan is also a co-founder of
our company.

         W. PETER RAGAN, JR. earned a Bachelor of Science in Management and
Marketing from Manhattan College 1992 and graduated, cum laude, from the Seton
Hall University School of Law in May of 1996. In 2001, Mr. Ragan received a
Masters Degree in Business Administration from Monmouth University. After Mr.
Ragan's graduation from Seton Hall he was employed by Blankenhorn & Ragan, PC as
a litigation associate. He has handled cases involving creditor's rights,
collection and bankruptcy litigation practice. In May of 1998, Mr. Ragan became
a partner in the firm Ragan & Ragan, P.C. and now manages Ragan & Ragan, P.C.'s
volume collection practice. Mr. Ragan is a member of the New York and New Jersey
State Bars and is also admitted to practice before the United States District of
New Jersey, the United States District Court for the Southern District of New
York, and the United States Third Circuit Court of Appeals. Mr. Ragan is also a
co-founder of our company.

BOARD OF DIRECTORS

Our board of directors are identified in the table below.

--------------------------------------------------------------------------
                                       YEAR BECAME A
          NAME               AGE         DIRECTOR           BACKGROUND
          ----               ---         --------           ----------
--------------------------------------------------------------------------
   John C. Kleinert           46           2004             Co-Founder
--------------------------------------------------------------------------
   W. Peter Ragan, Sr.        58           2004             Co-Founder
--------------------------------------------------------------------------

                                       35
<PAGE>

        (a)    There are no material proceedings known to us to which any of our
directors, officers or affiliates, or any owner of record or beneficially of
more than 5% of any class of our voting securities, or any affiliate of such
persons is a party adverse to us or has a material interest adverse to our
interests.

        (b)    None of our directors received any additional compensation for
his services as a director.

        (c)    We expect to expand our board of directors in 2005 by adding up
to three independent directors.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively the "Reporting Persons") to file reports and changes in ownership
of such securities with the Securities and Exchange Commission and the Company.
Based solely upon a review of (i) Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e), promulgated under the Exchange Act,
during the Company's fiscal year ended December 31, 2003 and (ii) Forms 5 and
any amendments thereto and/or written representations furnished to the Company
by any Reporting Persons stating that such person was not required to file a
Form 5 during the Company's fiscal year ended December 2003, it has been
determined that no Reporting Persons were delinquent with respect to such
person's reporting obligations set forth in Section 16(a) of the Exchange Act.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION

         On January 1, 2004, we entered into an employment contract with John C.
Kleinert. We agreed to employ Mr. Kleinert as our President for a period of two
years at an annual salary of $100,000. On the same date, our wholly owned
subsidiary, J. Holder, Inc., entered into an employment contract with Mr.
Kleinert in which it agreed to employ Mr. Kleinert as its President for a period
of two years at an annual salary of $50,000. No salary was paid or accrued under
either employment contract until September 1, 2004, when each contract was
amended to provide for the commencement of payment. Mr. Kleinert devotes all of
his business time to our affairs and those of J. Holder as provided under his
employment contracts.

         On January 1, 2004, our wholly owned subsidiary, VOM, LLC, entered into
an employment contract with W. Peter Ragan, Sr. in which it agreed to employ Mr.
Ragan, Sr. as its President for a period of two years at an annual salary of
$50,000. No salary was paid or accrued under such employment contract until
September 1, 2004, when such contract was amended to provide for the
commencement of payment. Mr. Ragan, Sr. devotes approximately 50% of his
business time to the affairs of VOM in accordance with the terms of his
employment contract.

         On January 1, 2004, our wholly owned subsidiary, Velocity Investments,
LLC, entered into an employment contract with W. Peter Ragan, Jr. in which it
agreed to employ Mr. Ragan, Jr. as its President for a period of two years at an
annual salary of $50,000. No salary was paid or accrued under such employment

                                       36
<PAGE>


contract until September 1, 2004, when such contract was amended to provide for
the commencement of payment. Mr. Ragan, Jr. devotes approximately 50% of his
business time to the affairs of Velocity Investments in accordance with the
terms of his employment contract

         On September 8, 2004, we entered into an employment contract with James
J. Mastriani in which we agreed to employ Mr. Mastriani as our Chief Financial
Officer and our Chief Legal Officer for a period of three years ending September
1, 2007 at an annual base salary of not less than $150,000, with annual
increases and annual bonuses determined at the discretion of our board of
directors and calculated in same manner as other executives. Additionally, we
agreed to grant Mr. Mastriani equity securities pursuant to our 2004 Equity
Incentive Program. The amount, type and terms of the equity securities to be
granted to Mr. Mastriani will be determined by our board of directors and Mr.
Mastriani. Mr. Mastriani devotes all of his business time to our affairs as
provided under his employment contract.

         Our board of directors presently consists of two of our executive
officers. We are not currently providing any compensation to such members for
serving in such capacity. During 2005, we anticipate adding independent
directors at which time we will consider compensating the independent members.

Compensation Pursuant to Plans

         As of December 31, 2003, we had not adopted an equity compensation
plan. In March 2004, we approved the 2004 Equity Incentive Program. Such Program
provides for the grant of incentive stock options, nonqualified stock options,
restricted stock grants, including, but not limited to, unrestricted stock
grants, as approved by the Board or a committee of the board. Incentive stock
options granted under the Program are intended to qualify as "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended. Nonqualified stock options granted under the Program are intended
not to qualify as incentive stock options under the Internal Revenue Code.

         The total number of shares of the Company's common stock that may be
issued under the Program upon the exercise of all option granted under the
Program or the satisfaction by all recipients of all conditions necessary for
the receipt of restricted stock awards and/or unrestricted stock awards may not
exceed 13,000,000, of which 6,500,000 shares shall be available for issuance
under incentive stock options and 6,500,000 shares hall be available for
issuance under nonqualified stock options, restricted stock awards and/or
unrestricted stock awards. No awards have been made under the Program as of the
date of this prospectus.

                                       37
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information available to us, as of April
11, 2005 with respect to the beneficial ownership of the outstanding shares of
common stock by (i) any holder of more than five percent (5%) of the outstanding
shares; (ii) our officers and directors; and (iii) our officers and directors as
a group:

<TABLE>
<CAPTION>
                                                       SHARES OF COMMON STOCK         PERCENTAGE (%) OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER(1)                      OWNED                          STOCK(2)
---------------------------------------                      -----                          --------
<S>                                                       <C>                                    <C>
John C. Kleinert(3)(6)                                     9,255,323                            58.1
James J. Mastriani(5)                                              0                              --
W. Peter Ragan, Sr.(4)(5)                                  2,343,652                            14.4
W. Peter Ragan, Jr.(4)(5)                                  2,343,652                            14.4
All officers and directors as a group (four               13,842,627                            86.9
persons)
</TABLE>

(1)     Beneficial ownership as reported in the table above has been determined
        in accordance with Instruction (1) to Item 403 (b) of Regulation S-B of
        the Securities Exchange Act of 1934.
(2)     Percentages are approximate and exclude shares issuable upon outstanding
        warrants and options.
(3)     The business address of Mr. Kleinert is 48 Franklin Turnpike, 3rd Fl,
        Ramsey, NJ.
(4)     Includes 309,250 shares of common stock issuable upon the exercise of
        warrants issued to each of Mr. Ragan Sr. and Mr. Ragan Jr. in connection
        with the merger with STB.
(5)     The business address of the stockholder, director or officer, as the
        case may be, noted above is 3100 Rt. 138, Wall, NJ.
(6)     Includes 1,718,500 shares of common stock issuable upon the exercise of
        warrants issued to Mr. Kleinert in connection with the merger with STB.

                                       38
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Except as set forth below, no transactions have occurred since the
beginning of the Company's last fiscal year or are proposed with respect to
which a director, executive officer, security holder owning of record or
beneficially more than 5% of any class of the Company's securities or any member
of the immediate families of the foregoing persons had or will have a direct or
indirect material interest:

         1.       As a result of the merger with STB, the Company's business
office at 3100 Route 138 West, Wall, New Jersey 07719 is leased for a two year
period from a company owned by Messrs. Ragan and has an annual lease payment of
$9,000.

         2.       In August 2004, effective as of June 30, 2004, we issued an
aggregate of 4,084,724 shares of our common stock to three holders of $3,676,252
of the Company's indebtedness, including the Company's Chief Executive Officer,
John C. Kleinert, in exchange for the cancellation thereof on the basis of one
share per $.90 of indebtedness.

         3.       We engage Ragan & Ragan, P.C. to pursue legal collection of
our receivable portfolios, interests in distressed real property and tax lien
certificates. Both Messrs. Ragan, Sr. and Ragan, Jr. are partners of Ragan &
Ragan, P.C. The fee arrangements and retainer agreements between our
subsidiaries and Ragan & Ragan, P.C. have been reviewed and approved by all of
the members of a committee appointed by our board of directors other than Mr.
Ragan, Sr. who abstained. John C. Kleinert and James J. Mastriani comprised the
committee. During fiscal year 2004, our subsidiary, Velocity Investments, paid
Ragan & Ragan, P.C. an aggregate of $554,770, our subsidiary, J.Holder, paid
Ragan & Ragan, P.C. an aggregate of $71,689 and our subsidiary, VOM, paid Ragan
& Ragan, P.C. an aggregate of $6,625.

         It is the Company's policy, with respect to insider transactions, that
all transactions between the Company, its officers, directors and principal
stockholders and their affiliates be on terms no less favorable to the Company
than could be obtained from an unrelated third parties in arms-length
transactions, and that all such transactions shall be approved by a majority of
the disinterested members of the board of directors. The Company believes that
the transactions described above comply with such policy.

         Except for the relationship of W. Peter Ragan, Sr. and W. Peter Ragan,
Jr. who are father and son none of our officers and directors are related.

                                       39
<PAGE>

                                     PART IV
                                     -------

ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K

         (a)      Exhibits


<TABLE>
<CAPTION>
Exhibit
Number   Title                                                                    Reference
<S>     <C>                                                                          <C>
2.1     Agreement and Plan of Merger dated as of February 3, 2004, by and
        among Tele-Optics, Inc., TLOP Acquisition Company, L.L.C., STB,Inc.,
        John C. Kleinert, W. Peter Ragan, Sr. and W. Peter Ragan, Jr.                A*
3.1(2)  Certificate of Incorporation                                                 B*
3.1(3)  Amendment to Certificate of Incorporation                                    C*
3.2(2)  By-laws, as currently in effect                                              B*
4.1     Specimen Common Stock Certificate                                            D*
4.2     Form of Subscription Agreement                                               E*
4.3     Loan and Security Agreement, dated as of January 27, 2005, by and
        between Velocity Investments, LLC and Wells Fargo Foothill, Inc.             F*
4.4     General Continuing Guaranty, dated January 27, 2005, executed by
        Registrant in favor of Wells Fargo Foothill, Inc.                            F*
4.5     Security and Pledge Agreement, dated as of January 27, 2005, by and
        between Registrant and Wells Fargo Foothill, Inc.                            F*
4.6     Subordination Agreement, dated as of January 27, 2005, by and
        between Registrant and Wells Fargo Foothill, Inc.                            F*
10.1    Business Advisory Agreement, dated as of February 5, 2004, by and
        between Lomond International, Inc. and Registrant                            G*
10.2    Employment Contract, dated as of September 8, 2004, by and between
        Registrant and James J. Mastriani                                            H*
10.3    Independent Consulting Agreement, dated December 16, 2004, between
        Registrant and The Del Mar Consulting Group, Inc.                            I*
10.4    Non-qualified Stock Option Agreement, dated December 16, 2004,
        Between Registrant and The Del Mar Consulting Group, Inc.                    I*
10.5    Employment Agreement, dated as of January 1, 2004, between John C.
        Kleinert and STB, Inc. (n/k/a Velocity Asset Management, Inc.)               J*
10.6    Addendum, dated September 1, 2004, to Employment Agreement, dated
        as of January 1, 2004, between John C. Kleinert and Registrant               J*
10.7    Employment Agreement, dated as of January 1, 2004, between John C.
        Kleinert and J. Holder, Inc.                                                 J*
10.8    Addendum, dated September 1, 2004, to Employment Agreement, dated
        As of January 1, 2004, between John C. Kleinert and J. Holder, Inc.          J*
10.9    Employment Agreement, dated as of January 1, 2004, between Velocity
        Investments, LLC and W. Peter Ragan, Jr.                                     J*
10.10   Addendum, dated September 1, 2004, to Employment Agreement, dated
        As of January 1, 2004, between W. Peter Ragan, Jr. and Velocity
        Investments, LLC                                                             J*
10.11   Employment Agreement, dated as of January 1, 2004, between VOM, LLC
        and W. Peter Ragan, Sr.                                                      J*
10.12   Addendum, dated September 1, 2004, to Employment Agreement, dated
        As of January 1, 2004, between W. Peter Ragan, Sr. and VOM, LLC              J*
10.13   Retainer Agreement, dated as of January 1, 2005, between Ragan &
        Ragan, P.C. and Velocity Investments, LLC                                    J*
10.14   Retainer Agreement, dated as of January 1, 2005, between Ragan &
        Ragan, P.C. and VOM, LLC                                                     J*
10.15   Retainer Agreement, dated as of January 1, 2005, between Ragan &
        Ragan, P.C. and J. Holder, Inc.                                              J*
</TABLE>

                                       40
<PAGE>
<TABLE>
<CAPTION>
<S>     <C>                                                                          <C>
10.16   Form of Legal Collection Agreement                                           J*
16.1    Letter of Robert C. Seiwell, Jr. CPA                                         K*
23.1    Consent of Cowan, Gunteski & Co. P.A.                                    Attached
31.1    Certification of the Chief Executive Officer pursuant to
        Section 302 of the Sarbanes-Oxley Act of 2002                            Attached
31.2    Certification of the Chief Financial Officer pursuant to
        Section 302 of the Sarbanes-Oxley Act of 2002                            Attached
32.1    Certification of the Chief Executive Officer pursuant to
        18 U.S.C. Section 1350, as adopted pursuant to Section 906
        of the Sarbanes-Oxley Act of 2002                                        Attached
32.2    Certification of the Chief Financial Officer pursuant to
        18 U.S.C. Section 1350, as adopted pursuant to Section 906
        of the Sarbanes-Oxley Act of 2002                                        Attached
</TABLE>


------------------------------


A       Incorporated by reference to Registrant's Current Report on Form 8-K
        filed with the Securities and Exchange Commission on February 18, 2004.
B       Incorporated by reference to Registrant's Registration Statement on Form
        S-18 (File No. 33.13609A) filed with the Securities and Exchange
        Commission.
C       Incorporated by reference to Registrant's Definitive Information
        Statement filed with the Securities and Exchange Commission on March 19,
        2004.
D.      Previously filed with Registrant's Annual Report on Form 10-KSB for the
        year ended December 31, 2004.
E       Incorporated by reference to Registrant's Current Report on Form 8-K
        filed with the Securities and Exchange Commission on October 7, 2004.
F       Incorporated by reference to Registrant's Current Report on Form 8-K
        filed with the Securities and Exchange Commission on February 2, 2005.
G       Incorporated by reference to Schedule 13D filed by Lomond International,
        Inc. with the Securities and Exchange
H       Incorporated by reference to Registrant's Current Report on Form 8-K
        filed with the Securities and Exchange Commission on September 14, 2004.
I       Incorporated by reference to Registrant's Current Report on Form 8-K
        filed with the Securities and Exchange Commission on January 5, 2005.
J       Filed as part of Amendment No. 1 to the Registration Statement on Form
        SB-2, File No. 333-122062, filed with the Securities Exchange Commission
        on March 16, 2005.
K       Incorporated by reference to Registrant's Current Report on Form 8-K
        filed with the Securities and Exchange Commission on January 16, 2004.


*       In accordance with Rule 12b-32 under the Securities Exchange Act of
        1934, as amended, reference is made to the documents previously filed
        with the Securities and Exchange Commission, which documents are hereby
        incorporated by reference.


         b)       Reports on Form 8-K

                  (1)  On October 7, 2004, Registrant filed a Current Report on
                       Form 8-K reporting the entry into material definitive
                       agreements and the unregistered sales of equity
                       securities in connection with a private placement
                       effected by the Registrant.
                  (2)  On January 5, 2005, Registrant filed a Current Report on
                       Form 8-K reporting the entry into material definitive
                       agreements and the unregistered sales of equity
                       securities in connection with a private placement and a
                       consulting agreement.
                  (3)  On February 2, 2005, Registrant filed a Current Report on
                       Form 8-K reporting the entry into material definitive
                       agreements in connection with a line of credit.

                                       41
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         (a) Audit Fees

         The aggregate fees billed for each of fiscal 2004 and fiscal 2003 for
professional services rendered by the principal accountant for the audit of the
Company's annual financial statements and review of financial statements
included in the Company's Form 10-QSB or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years was $67,691.50 and $11,000, respectively.

         (b) Audit-Related Fees

         No fees were billed in each of fiscal 2004 and fiscal 2003 for
assurance and related services by the principal accountant that were reasonably
related to the performance of the audit or review of the Company's financial
statements.

         (c) Tax Fees

         No fees were billed in fiscal 2004 or fiscal 2003 for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning.

         (d) All Other Fees

         No fees were billed in each of fiscal 2004 and fiscal 2003 for products
and services provided by the principal accountant.

         (e) The Company did not have an audit committee during fiscal 2004 or
fiscal 2003.

                                       42
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.



Dated:    August 10, 2005

                                   VELOCITY ASSET MANAGEMENT, INC.


                                   By: /s/ JOHN C. KLEINERT
                                       -----------------------------------------
                                       Name:   John C. Kleinert
                                       Title:  President and Chief
                                               Executive Officer



         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

--------------------------------------------------------------------------------
SIGNATURE                         TITLE                         DATE
--------------------------------------------------------------------------------


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

/s/ W. PETER RAGAN SR.             Vice President and Director  August 10, 2005
--------------------------------
    W. Peter Ragan, Sr.

/s/ W. PETER RAGAN, JR.            Treasurer and Secretary      August 10, 2005
--------------------------------
    W. Peter Ragan, Jr.

/s/ JAMES J. MASTRIANI             Chief Financial Officer      August 10, 2005
--------------------------------    and Chief Legal Officer
    James J. Mastriani


                                       43
<PAGE>

                         VELOCITY ASSET MANAGEMENT, INC.
                          (formerly Tele-Optics, Inc.)


                        CONSOLIDATED FINANCIAL STATEMENTS
                 For the Years Ended December 31, 2004 and 2003


                                    CONTENTS

                                                                          Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                   F-1

FINANCIAL STATEMENTS


   Consolidated Balance Sheets                                            F-2

   Consolidated Statements of Income (Loss)                               F-4

   Consolidated Statements of Retained Earnings (Deficit)                 F-5

   Consolidated Statements of Cash Flows                                  F-6


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                        F-7 - F-25

<PAGE>

             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------

To the Board of Directors and Stockholders of
Velocity Asset Management, Inc. and Subsidiaries
Ramsey, New Jersey

We have audited the accompanying consolidated balance sheets of Velocity Asset
Management, Inc. and subsidiaries, as of December 31, 2004 and 2003 and the
related consolidated statements of income (loss), consolidated statement of
retained earnings (deficit) and consolidated statements of cash flows for
Velocity Asset Management, Inc. and subsidiaries for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements of Velocity Asset Management,
Inc. and subsidiaries for the year ended December 31, 2002, were audited by
other auditors whose report dated July 11, 2003, expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provide a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Velocity Asset Management, Inc.
and subsidiaries as of December 31, 2004 and 2003, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.


As discussed in Note 1 to the consolidated financial statements, certain errors
and disclosures in connection with the early extinguishment of debt were omitted
from the previously issued consolidated financial statements of the Company.
Accordingly, the 2004 consolidated financial statements have been restated to
correct the error and provide additional disclosure.

Cowan, Gunteski & Co., P.A.

/s/ Cowan Gunteski & Co., P.A.

Toms River, New Jersey
July 15, 2005


                                      F-1
<PAGE>
<TABLE>
<CAPTION>

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


                           CONSOLIDATED BALANCE SHEETS



                     ASSETS                                                    December 31,   December 31,
                                                                                   2004          2003 *
                                                                                (Restated)
                                                                               ------------   ------------
<S>                                                                            <C>            <C>

CURRENT ASSETS
 Cash and Cash Equivalents                                                     $  1,423,123   $    540,427
 Accounts Receivable                                                                815,251        207,971
 Property Inventory Owned                                                         2,150,860      1,139,670
 Deposits on Properties                                                             120,000        127,500
 Tax Certificates Held and Accrued Interest Receivable, net of discounts            702,117      1,009,073
 Finance Receivables                                                              3,237,852      1,767,166
                                                                               ------------   ------------

   Total Current Assets                                                           8,449,203      4,791,807
                                                                               ------------   ------------

PROPERTY AND EQUIPMENT, net of accumulated
 depreciation                                                                        47,198             --
                                                                               ------------   ------------
OTHER ASSETS
 Deferred Income Tax Asset - Non-Current                                            221,500             --
 Other Asset                                                                         75,000             --
                                                                               ------------   ------------

   Total Other Assets                                                               296,500             --
                                                                               ------------   ------------

   Total Assets                                                                $  8,792,901   $  4,791,807
                                                                               ============   ============
</TABLE>

*  Issued as an audited consolidated balance sheet of STB, Inc. prior to the
   reverse acquisition of Tele-Optics, Inc.

See Accompanying Notes and Independent Registered Public Accounting Firm's
Report.

                                      F-2
<PAGE>
<TABLE>
<CAPTION>

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


                           CONSOLIDATED BALANCE SHEETS

       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                               December 31,   December 31,
                                                                                  2004          2003 *
                                                                               (Restated)
                                                                               ------------   ------------

<S>                                                                            <C>            <C>
CURRENT LIABILITIES
 Accrued Expenses                                                              $      1,937   $    191,622
 Short-Term Borrowings Under Line of Credit                                              --        705,477
 Current Portion of Long-Term Debt                                                  250,000      2,306,036
 Income Taxes Payable                                                                13,550          2,567
 Deferred Income Tax Liability - Current                                             11,800             --
 Current Portion of Obligation Under Capital Lease                                  709,157        436,752
                                                                               ------------   ------------

   Total Current Liabilities                                                        986,444      3,642,454
                                                                               ------------   ------------

LONG-TERM LIABILITIES
 Obligation Under Capital Lease, less current portion                                    --        742,413
 Long-Term Debt, less current portion                                                    --        499,020
                                                                               ------------   ------------

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


   Total Liabilities                                                                986,444      4,883,887
                                                                               ------------   ------------
STOCKHOLDERS' EQUITY (DEFICIT)
 Common Stock, $0.001 par value, 40,000,000 shares Authorized,
  15,794,348 and 13,005,000 shares Issued and Outstanding,
  respectively                                                                       15,795         13,005
 Additional Paid In Capital                                                      10,680,133             --
 Retained Deficit                                                                (2,889,471)      (105,085)
                                                                               ------------   ------------


 Total Stockholders' Equity (Deficit)                                             7,806,457        (92,080)
                                                                               ------------   ------------

   Total Liabilities and Stockholders' Equity (Deficit)                        $  8,792,901   $  4,791,807
                                                                               ============   ============
</TABLE>

*  Issued as an audited consolidated balance sheet of STB, Inc. prior to the
   reverse acquisition of Tele-Optics, Inc.

See Accompanying Notes and Independent Registered Public Accounting Firm's
Report.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

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


                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)


                                                             For the Year Ended December 31,
                                                      --------------------------------------------
                                                          2004           2003*           2002**
                                                       (Restated)
                                                      ------------    ------------    ------------

<S>                                                   <C>             <C>             <C>
REVENUES
  Sale of Real Property                               $  2,369,564    $  3,399,164    $  3,862,993
  Collections on Credit Card Receivables                 1,726,356         297,360              --
  Interest Income - Tax Certificates Held and Other        260,269         310,350         177,775
                                                      ------------    ------------    ------------

   Total Revenues                                        4,356,189       4,006,874       4,040,768
                                                      ------------    ------------    ------------

OPERATING EXPENSES
  Cost of Real Property                                  2,278,592       3,100,290       3,403,534
  Consulting Fees                                          416,287         117,992         132,982
  Professional Fees                                      1,006,337         341,320         261,440

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

  General and Administrative Expenses                      353,994         151,747          40,131
                                                      ------------    ------------    ------------


   Total Operating Expenses                              6,914,517       3,711,349       3,838,087
                                                      ------------    ------------    ------------

   Income from Operations                               (2,558,328)        295,525         202,681
                                                      ------------    ------------    ------------


OTHER INCOME (EXPENSE)
 Interest Expense                                         (338,525)       (329,740)       (265,025)
 Other Income                                                   --          67,450              --
                                                      ------------    ------------    ------------

   Total Other Income (Expense)                           (338,525)       (262,290)       (265,025)
                                                      ------------    ------------    ------------


Income (Loss) Before Tax Provision                      (2,896,853)         33,235         (62,344)


Provision for Income Taxes                                (191,698)          2,567              --
                                                      ------------    ------------    ------------


Net Income (Loss)                                     $ (2,705,155)   $     30,668    $    (62,344)
                                                      ============    ============    ============


Weighted Average Common Shares - Basic                  27,047,005      13,005,000      13,005,000
                                                      ============    ============    ============

Net Income (Loss) per Common Share - Basic            $      (0.10)   $       0.00    $      (0.00)
                                                      ============    ============    ============


Weighted Average Common Shares - Diluted                36,451,226      13,005,000      13,005,000
                                                      ============    ============    ============

Net Income (Loss) per Common Share - Diluted          $      (0.07)   $       0.00    $      (0.00)
                                                      ============    ============    ============
</TABLE>


*  Issued as an audited consolidated statement of income of STB, Inc. prior to
   the reverse acquisition of Tele-Optics, Inc.
** Issued as an audited combined statement of income (loss) of J.Holder, Inc.
   and VOM, LLC prior to the reverse acquisition of Tele-Optics, Inc.

See Accompanying Notes and Independent Registered Public Accounting Firm's
Report.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (FORMERLY TELE-OPTICS, INC.)

            CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT) /
                            MEMBERS EQUITY (DEFICIT)
                        December 31, 2004, 2003 and 2002


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

<S>                                                             <C>    <C>             <C>             <C>             <C>
**BALANCES, January 1, 2002                                     100    $        100    $        900    $    (63,404)   $    (62,404)

Retroactive Restatement of Stockholders' Equity
 Prior to Merger for Recapitalization (See Note 11)      13,004,900          12,905            (900)        (12,005)             --
Member Contribution                                              --              --              --           3,000           3,000

Net Loss                                                         --              --              --         (62,344)        (62,344)
                                                       ------------    ------------    ------------    ------------    ------------

**BALANCES, December 31, 2002                            13,005,000          13,005              --        (134,753)       (121,748)

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

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

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

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

 Net Income of Subsidiary (i.e. Tele-Optics, Inc.)
  through February 3, 2004 (Date of Acquisition)
  and the prior years' accumulated deficit                       --              --          90,499         (79,231)         11,268

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

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

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



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


Private Offering of Up to 3,500,000 Units.
 Each Unit is comprised of one share of common stock
 and a warrant to purchase one-fifth of one share of
 common stock for $2.50 per share within the next
 five years:
  October 4, 2004 - First Tranche Closing                   620,333             620         929,880              --         930,500
  December 22, 2004 - Second Tranche Closing                928,503             929       1,391,826              --       1,392,755
  December 31, 2004 - Third Tranche Closing                 560,167             560         839,690              --         840,250

December 16, 2004 - Commencement Bonus - Issued to
 a Consultant with a non-qualified option to
 purchase 250,000 additional shares of common stock
 for per share within the next five years                   100,000             100         149,900              --         150,000

December 28, 2004 - Issuance of warrants for services
 rendered by two unrelated corporations pursuant to a
 business advisory agreement dated February 5, 2004
 and independent consulting agreement dated
 December 16, 2004  (See Note 15)                                --              --         254,176              --         254,176


Net Income - As Restated                                         --              --              --      (2,705,155)     (2,705,155)
                                                       ------------    ------------    ------------    ------------    ------------


BALANCES, December 31, 2004                              15,794,348    $     15,795    $ 10,680,133    $ (2,889,471)   $  7,806,457
                                                       ============    ============    ============    ============    ============
</TABLE>


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

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

See Accompanying Notes and Independent Registered Public Accounting Firm's
Report.

                                      F-5
<PAGE>
<TABLE>
<CAPTION>

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


                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                     For the Year Ended December 31,
                                                                               -----------------------------------------
                                                                                  2004           2003*          2002**
                                                                               (Restated)
                                                                               -----------    -----------    -----------

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

 Net Income (Loss)                                                             $(2,705,155)   $    30,668    $   (62,344)

 Adjustments to reconcile net income (loss) to net cash
  used by operating activities
  Depreciation                                                                       5,147             --             --

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

   Stock and Warrants Issued in Lieu of Services Rendered                          404,176             --             --
   (Increase) Decrease in:
     Accounts Receivable                                                          (607,280)      (207,970)            --
     Tax Certificates Held and Accrued Interest Receivable, Net of Discounts       306,956        924,961     (1,934,035)
     Property Inventory Owned                                                   (1,011,190)       441,482         21,183
     Finance Receivables                                                        (1,470,686)    (1,767,166)            --
     Deposits on Properties                                                          7,500       (102,500)       172,500
     Other Investments                                                                  --         20,000             --
     Deferred Income Tax Asset - Non-Current                                      (221,500)            --             --
     Other Asset                                                                   (75,000)            --             --
   Increase (Decrease) in:
     Accrued Expenses                                                             (189,685)       109,477         16,306
     Deferred Income Tax Liability - Current                                        11,800             --             --
     Income Taxes Payable                                                           10,983          2,567             --
                                                                               -----------    -----------    -----------
      Net Cash Provided from (Used by) Operating Activities                     (2,674,627)      (548,481)    (1,786,390)
                                                                               -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of Property and Equipment                                           (52,345)            --             --
   Cash Received from Reverse Acquisition                                              452             --             --
                                                                               -----------    -----------    -----------
      Net Cash Used by Investing Activities                                        (51,893)            --             --
                                                                               -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
 New Borrowings:
   Short-Term                                                                      500,000             --      4,807,836
   Long-Term                                                                            --      2,613,899             --
 Debt Reduction:
   Short-Term                                                                      (84,281)    (1,770,706)    (2,695,837)
   Long-Term                                                                      (470,008)      (135,714)            --
Proceeds Received from Private Placement Stock Sales                             3,663,505             --             --
Capital Contributions (Withdrawals)                                                     --         (1,000)         3,000
                                                                               -----------    -----------    -----------
      Net Cash Provided from Financing Activities                                3,609,216        706,479      2,114,999
                                                                               -----------    -----------    -----------

Net Increase in Cash and Cash Equivalents                                          882,696        157,998        328,609

Cash and Cash Equivalents, Beginning of Year                                       540,427        382,429         53,820
                                                                               -----------    -----------    -----------

Cash and Cash Equivalents, End of Year                                         $ 1,423,123    $   540,427    $   382,429
                                                                               ===========    ===========    ===========
</TABLE>

*  Issued as an audited consolidated statement of income of STB, Inc. prior to
   the reverse acquisition of Tele-Optics, Inc.
** Issued as an audited combined statement of income (loss) of J.Holder, Inc.
   and VOM, LLC prior to the reverse acquisition of Tele-Optics, Inc.

See Accompanying Notes and Independent Registered Public Accounting Firm's
Report.

                                      F-6
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS


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

We have restated our consolidated financial statements for the year ended
December 31, 2004. The restatement consists of an adjustment to include a loss
on debt extinguishment recorded in the third quarter of 2004 to comply with APB
26, "Early Extinguishment of Debt." The restatement had no impact on net cash
used in operating activities in the statement of cash flows.

The addition of the loss on debt extinguishment resulted from the need to apply
the accounting principles in paragraph 20 of APB 26 in determining the
difference between the reacquisition price and the net carrying amount of the
extinguished debt related to the August 12, 2004 exchange in which $3,676,252 in
outstanding debt was exchanged for 4,084,724 shares of the Company's Common
Stock at $0.90 per share. After further evaluation, we determined that APB 26
requires that a loss be computed using the August 12, 2004 OTCBB market price of
$1.60 for VCYA.ob common stock, resulting in a non-cash loss of $2,859,307 due
to the difference between the $1.60 OTCBB market price and the $0.90 per share
used in the negotiated exchange. This loss generates a permanent timing
difference between book and tax reporting.

The effect of the adjustment for the year ended December 31, 2004 was a decrease
from a net income of $154,192 to a net loss of ($2,705,115) which resulted in a
decrease in basic earnings per share for the year ended December 31, 2004 from
$0.01 to ($0.10) or an $0.11 decrease and a decrease in diluted earnings per
share from $0.00 to ($0.07) or a $0.07 decrease.

The restatement had no impact on our cash position and revenue as previously
reported for the year ended December 31, 2004. See Note 6, 7 and 16 for
additional details regarding the loss on extinguishment of debt.


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

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

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

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

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

                                      F-7
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)

Nature of Operations (Continued)
--------------------------------

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

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

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

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

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

For accounting purposes, STB, Inc. is considered the acquirer in the reverse
acquisition. The consolidated statement of income for Velocity Asset Management,
Inc. for the year ended December 31, 2004, includes twelve months of revenues
and expenses of STB, Inc and its subsidiaries combined with the revenues and
expenses for Tele-Optics, Inc. and its subsidiary for the period from the date
of acquisition, February 3, 2004, through December 31, 2004.

                                      F-8
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

For the purposes of the accompanying consolidating financial statements, STB,
Inc. is considered the accounting "Parent" company and Tele-Optics, Inc. is
considered the subsidiary. Therefore, these consolidating financial statements
include the combined assets and liabilities of STB, Inc. and its subsidiaries as
of December 31, 2004. The consolidating statement of income (loss) includes the
revenues and expenses of STB, Inc. and its subsidiaries for the complete twelve
months ended December 31, 2004 and the revenues and expenses of Tele-Optics,
Inc. for the period from February 3, 2004 through December 31, 2004. All
material intercompany payables, receivables, revenues and expenses have been
eliminated for purposes of this consolidation.

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

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

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

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

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

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

Investment in Revenue Recognition - New Jersey Municipal Tax Liens
------------------------------------------------------------------

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

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

The Company purchases pools of consumer receivable portfolios at a substantial
discount from their face amounts (usually discounted 75% to 99%) and are
recorded at the Company's acquisition cost. In accordance with Practice Bulletin
6 ("PB6"), revenue is recognized based on the Company's anticipated cash
collections and its estimated rate of return over the useful life of the pool.
Revenue is recognized to the extent that collections exceed the estimated rate
of return taken on the portfolio as a whole. Each pool's estimated useful life
is different, but each pool is generally amortized between 48 and 60 months. As
of December 31, 2004, 2003 and 2002 the Company had 15, 5 and 0 pools
respectively, under the interest method of revenue recognition.

                                      F-9
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments and Revenue Recognition - Consumer Receivable Portfolios (Continued)
--------------------------------------------------------------------------------

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

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

In the event that cash collected would be inadequate to amortize the carrying
value, an impairment charge would be taken with a corresponding write-off to the
receivables balance. Accordingly, an allowance for impairment is not maintained
for purchased receivables.

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

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

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

Property and equipment are recorded at cost. Depreciation is computed under both
the straight-line and the double-declining balance methods for financial
reporting purposes. Depreciation expense for the years ended December 31, 2004,
2003 and 2002 was $5,147, $-0-, and $-0-, respectively.

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

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

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

The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS No. 128) which establishes standards for computing
and presenting earnings per share ("EPS") and requires the presentation of both
basic and diluted EPS. As a result, primary and fully diluted EPS have been

                                      F-10
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Share (Continued)
------------------------------

replaced by basic and diluted EPS. EPS is calculated by dividing net income by
the weighted-average number of outstanding shares of Common Stock for each year.

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

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

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

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

In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4,
44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This
statement (i) eliminates extraordinary accounting treatment for a gain or loss
reported on the extinguishment of debt, (ii) eliminates inconsistencies in the
accounting required for sale-leaseback transactions and certain lease
modifications with similar economic effects and (iii) amends other existing
authoritative pronouncements to make technical corrections, clarify meanings or
describe their applicability under changed conditions. The adoption of this
Statement did not have a material impact on the Company's consolidated results
of operations, cash flows or financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which is effective for exit or disposal activities
that are initiated after December 31, 2002. The Company's adoption of SFAS No.
146 did not have a material effect on the Company's consolidated results of
operations, cash flows or financial position.

On November 25, 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34. FIN
45 clarifies the requirements of FASB Statement No. 5, Accounting for
Contingencies, relating to the guarantor's accounting for and disclosure of the
issuance of certain types of guarantees. The disclosure requirements of FIN 45
are effective for financial statements of interim or annual periods that end
after December 15, 2002. The provisions for initial recognition and measurement
are effective on a prospective basis for guarantees that are issued or modified
after December 31, 2002, irrespective of the guarantor's year-end. FIN 45
requires that upon issuance of a guarantee, the entity must recognize a
liability for the fair value of the obligation it assumes under that guarantee.
The Company's adoption of FIN 45 did not have a material effect on the Company's
consolidated results of operations, cash flows or financial position.

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities" - an interpretation of ARB No. 51, and in December 2003, issued a
revised FIN 46(R), "Consolidation of Variable Interest Entities"

                                      F-11
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)
--------------------------------------------

- an interpretation of ARB No. 51, both of which address consolidation of
variable interest entities. FIN 46 expanded the criteria for consideration in
determining whether a variable interest entity should be consolidated by a
business entity, and requires existing unconsolidated variable interest entities
(which include, but are not limited to, Special Purpose Entities, or SPEs) to be
consolidated by their primary beneficiaries if the entities do not effectively
disperse risks among parties involved. This interpretation was immediately
applicable to variable interest entities created after January 31, 2003. FIN 46
is applicable in 2004 to variable interest entities in which an enterprise holds
a variable interest that were acquired before February 1, 2003. The Company's
adoption of FIN 46 did not have a material effect on the Company's results of
operations, cash flows or financial position.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, which is effective for contracts
entered into or modified after June 30, 2003. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. The Company's adoption of SFAS No. 149 in 2003 did not have
a material effect on the Company's results of operations, cash flows or
financial position.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity", which is
effective for financial instruments entered into or modified after May 31, 2003.
This Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. The Company's adoption of SFAS No. 150 in 2003 did not have a material
effect on the Company's results of operations, cash flows or financial position.

In December 2003, the Accounting Standards Executive Committee issued Statement
of Position 03-3, "Accounting for Certain Loans of Debt Securities Acquired in a
Transfer". This Statement of Position ("SOP") addresses accounting for
differences between contractual cash flows and cash flows expected to be
collected from an investor's initial investment in loans or debt if those
differences are attributable, at least in part, to credit quality. Increases in
expected cash flows should be recognized prospectively through adjustment of IRR
("Internal Rate of Return") while decreases in expected cash flows should be
recognized as impairment.

Under both the guidance of PB 6 and SOP 03-3, when expected cash flows are
higher than prior projections, the increase in expected cash flows results in an
increase in the IRR and therefore, the effect of the cash flow increase is
recognized as increased revenue prospectively over the remaining life of the
affected pool. However, when expected cash flows are lower than prior
projections, SOP 03-3 requires that the expected decrease be recognized as an
impairment by decreasing the carrying value of the affected pool (rather than
lower the IRR) so that the pool will amortize over its expected life using the
original IRR. Under our current guidance (PB 6), a decrease in expected cash
flows results in a reduction of the IRR and therefore, the effect of the cash
flow reduction is recognized as lower revenue prospectively over the remaining
life of the affected pool.

Beginning with the adoption of SOP 03-3 in January 2005, when expected cash
flows are lower than originally projected, an immediate impairment will be
recognized. However, under SOP 03-3 the IRR is not lowered and therefore, more
revenue will be recognized over the remaining life of the pool than would be

                                      F-12
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)
--------------------------------------------

recognized under PB 6. The amount of revenue recognized over the approximate 60
month life of each pool is identical under both PB 6 and SOP 03-3.

The SOP is effective for loans acquired in fiscal years beginning after December
15, 2004 and should be applied prospectively to loans acquired on or before
December 15, 2004 as it applies to decreases in expected cash flows.

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

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

NOTE 3 - INVESTMENTS

Investments in Real Property
----------------------------

As discussed in Note 1, investments in real property are made at a discount to
fair market value with the focus on acquiring the property for resale or to
perfect the partial interest and/or clouded title for resale.

Investments in real property consist of the following:

                                              2004         2003         2002
                                           ----------   ----------   ----------

Total Property Inventory                   $1,524,810   $1,139,670   $1,581,152
Assignment & Judgments                        626,050           --           --
                                           ----------   ----------   ----------

          Total Property Inventory Owned   $2,150,860   $1,139,670   $1,581,152
                                           ==========   ==========   ==========

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

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

                                              2004         2003         2002
                                           ----------   ----------   ----------
Tax lien certificates                      $  432,232   $  679,528  $1,830,667
Discount on purchase                               --       (4,925)    (29,790)
Accrued interest                              269,885      334,470     133,158
                                           ----------   ----------  ----------
          Total Tax Certificates,
           Net of Discounts                $  702,117   $1,009,073  $1,934,035
                                           ===========  ==========  ===========

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

                                      F-13
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 4 - FINANCE RECEIVABLES

Finance receivables consist of the following:

<TABLE>
<CAPTION>
                                                2004           2003             2002
                                            ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
Consumer receivable portfolios              $ 20,316,882    $ 10,171,860    $         --
Discount on portfolios                       (17,079,030)     (8,404,694)             --
                                            ------------    ------------    ------------


       Net Consumer Receivable Portfolios   $  3,237,852    $  1,767,166    $         --
                                            ============    ============    ============
</TABLE>

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment are summarized by major classifications as follows:

<TABLE>
<CAPTION>
                                                2004           2003             2002
                                            ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
Office Equipment                            $     52,345    $         --    $         --
Less: Accumulated Depreciation                    (5,147)             --              --
                                            ------------    ------------    ------------

                                            $     47,198    $         --    $         --
                                            ============    ============    ============
</TABLE>


NOTE 6 - SHORT TERM BORROWINGS UNDER LINE OF CREDIT


The Company had a $2,000,000 line of credit with a shareholder, which was due to
expire May 2005, for the purpose of financing the Company's investments in real
property. Interest at 10% per annum was due upon sale of the real property,
based on the number of days the funds were committed to the investment. Each
investment was presented on a case-by-case basis for funding approval and, if
approved, the asset purchased was assigned as collateral to the shareholder for
the funds advanced until the property was sold. Funds advanced were held and
disbursed from an attorney trust account. At December 31, 2004, 2003 and 2002,
there was $0, $1,294,523 and $17,781, respectively, available under this line of
credit. Interest expense for the years ended December 31, 2004, 2003 and 2002
was $124,859, $66,237 and $164,791, respectively. On August 12, 2004, the
Company entered into an agreement under which the line of credit was exchanged
for shares of the Company's common stock, par value $.001 per share, at a rate
of one share per $0.90 of the obligation. The total debt exchanged, including
accrued interest of $79,489, totaled $984,966. The effective date of this
exchange of debt for equity is retroactive to July 1, 2004, which reflects the
agreement of the parties that no interest would be accrued or paid on the debt
exchanged since the last interest payment date, June 30, 2004. On August 12,
2004, the Company's stock as traded on the OTCBB had a market value of $1.60.
Paragraph 20 of APB 26 requires that a difference between the reacquisition
price and the net carrying amount of the extinguished debt should be recognized
currently in income of the period of extinguishment as losses or gains and
identified as a separate item. In connection with the exchange of line of
credit, the Company has recorded a non-cash loss on early extinguishment of debt
of $794,349.


                                      F-14
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 7 - LONG-TERM DEBT

Notes payable consist of the following:

                                                                           2004           2003         2002
                                                                        ----------     ----------   ----------
<S>                                                                     <C>            <C>          <C>

Note payable to an officer and a related trust, interest in 10% per
annum, secured by tax lien certificates and all other assets of the
Company.  Principle and interest payable quarterly or, if not
quarterly, at such time as the Company's cash flow allows, was
due July 17, 2004.  On August 12, 2004, the Company entered into
an agreement under which the above note payable was exchanged
for shares of the Company's common stock, par value $.001 per
share at a rate of one share per $0.90 of the obligation.  The total
debt exchanged including accrued interest of $75,095, totaled
$1,581,131. The effective date of this exchange of debt for equity
is retroactive to July 1, 2004, which reflects the agreement of the
parties that no interest would be accrued or paid on the debt
exchanged since the last interest payment date, June 30, 2004
On August 12, 2004, the Company's stock as traded on the
OTCBB had a market value of $1.60.  Paragraph 20 of APB 26
requires that any difference between the reacquisition price and
the net carrying amount of the extinguished debt should be
recognized currently in income of the period of extinguishment
as losses or gains and identified as a separate item.  In connection
with this debt exchange, the Company has recorded a non-cash
loss on early extinguishment of debt of $1,256,470                      $       --     $1,506,036   $2,000,000
                                                                        ----------     ----------   ----------


Subtotal                                                                $       --     $1,506,036   $2,000,000
                                                                        ----------     ----------   ----------
</TABLE>

                                      F-15
<PAGE>
<TABLE>
<CAPTION>

                                                                           2004           2003         2002
                                                                        ----------     ----------   ----------
<S>                                                                     <C>            <C>          <C>
Balance brought forward                                                 $       --     $1,506,036   $2,000,000


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

Note payable to Michael Kelly, interest at 8% per annum payable
semi-annually, at the expiration of one year, upon 30 days notice
to the Company, the note could have been payable upon demand,
secured by first position upon all corporate assets.  On August 12,
2004, the Company entered into an agreement under which the
above note was exchanged for shares of the Company's common
stock, par value $.001 per share at a rate of one share per $0.90
of the obligation.  The total debt exchanged including accrued
interest of $11,902, totalled $311,902.  The effective date of this
exchange of debt for equity is July 1, 2004, which reflects the
agreement of the parties that no interest would be accrued or paid
on the debt exchanged since the last interest payment date, June
30, 2004.  On August 12, 2004, the Company's stock as traded
on the OTCBB had a market value of $1.60.  Paragraph 20 of
APB 26 requires that any difference between the reacquisition
price and the net carrying amount of the extinguished debt should
be recognized currently in income of the period of extinguishment
as losses or gains and identified as a separate item.  In connection
with this debt exchange, the Company has recorded a non-cash
loss on early extinguishment of debt of $241,089                                --        300,000           --
                                                                        ----------     ----------   ----------


Subtotal                                                                $       --     $2,306,036   $2,000,000
                                                                        ----------     ----------   ----------
</TABLE>

                                      F-16
<PAGE>
<TABLE>
<CAPTION>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 7 - LONG-TERM DEBT (CONTINUED)


                                                                          2004         2003         2002
                                                                       ----------   ----------   ----------
<S>                                                                    <C>          <C>          <C>
Balance brought forward                                                $       --   $2,306,036   $2,000,000
                                                                       ----------   ----------   ----------

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


Note payable to Richard Cavanaugh, interest at 6% per annum,
payable quarterly, due April 15, 2005, upon 30 days notice to the
Company, the note may be payable upon demand and is unsecured             250,000           --           --
                                                                       ----------   ----------   ----------

                                                                          250,000    2,805,056    2,000,000
Less: Current Portion                                                     250,000    2,306,036    2,000,000
                                                                       ----------   ----------   ----------
                                                                       $       --   $  499,020   $       --
                                                                       ==========   ==========   ==========
</TABLE>
Maturities of notes payable are as follows:


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

                                      F-17
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 8 - OBLIGATION UNDER CAPITAL LEASE

The capital lease obligation consists of the following:

<TABLE>
<CAPTION>
                                                    2004         2003         2002
                                                 ----------   ----------   ----------
<S>                                              <C>          <C>          <C>
Capital lease payable to Unifund Portfolio E,
LLC in monthly payments of $44,834, including
interest at 5.75% with a balloon payment due
November 2005, secured by corresponding
corresponding investment portfolios              $  709,157   $1,179,165   $       --
                                                 ==========   ==========   ==========
</TABLE>


Minimum lease payments due under the capital lease as of December 31, 2004, are
as follows:

Period Ending December 31,
2005                                                          $  763,525
                                                              ----------
Total net minimum capital lease payments                         763,525
Less amount representing interest                                 54,368
                                                              ----------
Present value of future minimum capital lease payments           709,157
Less Current Portion of Obligation Under Capital Lease           709,157
                                                              ----------
Obligation Under Capital Lease, less current portion          $       --
                                                              ==========

NOTE 9 -RELATED PARTY TRANSACTIONS

Interest payments on the line of credit, Note 6, were made to a director and
shareholder of the Company in the amounts of $124,859, $66,237, and $164,791 for
the years ended December 31, 2004, 2003 and 2002, respectively. In addition, the
Company paid the director and shareholder consulting fees of $8,312, $103,389,
and $114,910 for the years ended December 31, 2004, 2003 and 2002, respectively.

At December 31, 2004, 2003 and 2002, the Company had a receivable from a related
party in the amount of $-0-, $16,872 and $-0-, respectively.

In connection with the Company's independent consulting agreement with The Del
Mar Consulting Group Inc. agreement, two of the Company's executive officers, W.
Peter Ragan, Sr. and W. Peter Ragan, Jr. granted an option to RB & AJ Associated
Holdings, Inc., a corporation majority owned by the President of the Consultant,
to purchase $13,600 warrants owned by the executive officers to purchase an
aggregate of 85,000 (42,500 from each) shares of common stock at $1.04 per
share. In addition, the executive officers granted an employee of the Consultant
an option to purchase $2,400 warrants owned by the executive officers to
purchase an aggregate of 15,000 (7,500 from each) share of common stock at $1.04
per share. Both of these options were exercised on March 15, 2005.

The Company's Business office at 3100 Route 138 West, Wall, NJ 07719 is leased
for a two year period from a company owned by Messrs. Ragan & Ragan and has an
annual lease payment of $9,000.

The Company engages Ragan & Ragan, PC an entity owned by Messrs. Ragan & Ragan,
to pursue legal collection of our receivable portfolios with respect to obligors
and properties located in the State of New Jersey. The fee arrangements between
our subsidiaries Velocity, J. Holder and VOM and Ragan & Ragan,

                                      F-18
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 9 - RELATED PARTY TRANSACTIONS (Continued)

P.C., each dated as of January 1, 2005, have been reviewed and approved by all
the members of a committee appointed by the Board of Directors other than Mr.
Ragan, Sr. who abstained. John C. Kleinert and James J. Mastriani comprised the
committee.

Under the Retainer Agreement for Legal Services by and between Velocity
Investments, LLC and Ragan & Ragan, P.C., the Company paid legal contingency
fees to Ragan & Ragan, P.C. representing 25% of gross legal collections on
consumer receivable portfolios, as follows

<TABLE>
<CAPTION>

                                                              2004           2003           2002
                                                           ----------     ----------     ----------
<S>                                                        <C>            <C>            <C>
Legal Services Paid to Ragan & Ragan, P.C
 Velocity Investments, LLC                                 $  554,770     $  111,485     $       --
                                                           ==========     ==========     ==========
<CAPTION>

Under the Retainer Agreement for Legal Services by and between J. Holder and
Ragan & Ragan, P.C., the Company paid legal contingency fees to Ragan & Ragan,
P.C. as follows:
                                                              2004           2003           2002
                                                           ----------     ----------     ----------
<S>                                                        <C>            <C>            <C>
Legal Services Paid to Ragan & Ragan, P.C
 by J.Holder, Inc.                                         $   71,689     $   51,671     $       --
                                                           ==========     ==========     ==========
<CAPTION>

Under the Retainer Agreement for Legal Services by and between VOM and Ragan &
Ragan, P.C., the Company paid legal fees to Ragan & Ragan, P.C. as follows:

                                                              2004           2003           2002
                                                           ----------     ----------     ----------
<S>                                                        <C>            <C>            <C>
Legal Services Paid to Ragan & Ragan, P.C
 by VOM, LLC                                               $    6,225     $   95,000     $       --
                                                           ==========     ==========     ==========
<CAPTION>

NOTE 10 - INCOME TAXES

The provision for corporate income taxes for the years ended December 31, 2004,
2003 and 2002 consists of the following:

                                                 2004            2003           2002
                                               ----------     ----------     ----------
<S>                                            <C>            <C>            <C>
Current:
   Federal                                     $       --     $       --     $       --
   State                                           18,002          2,567             --
                                               ----------     ----------     ----------
     Total                                     $   18,002     $    2,567     $       --
                                               ==========     ==========     ==========

                                                 2004            2003           2002
                                               ----------     ----------     ----------
Deferred Tax (Benefit) Expense:
   Federal                                     $ (221,500)    $       --     $       --
   State                                           11,800          2,567             --
                                               ----------     ----------     ----------
     Total                                     $ (209,700)    $    2,567     $       --
                                               ==========     ==========     ==========
</TABLE>

                                      F-19
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 10 - INCOME TAXES (CONTINUED)

The tax effect of temporary differences that make up the significant components
of the deferred tax asset and liability for financial reporting purposes at
December 31, 2004, 2003 and 2002, are as follows:

<TABLE>
<CAPTION>
                                                 2004            2003           2002
                                               ----------     ----------     ----------
<S>                                            <C>            <C>            <C>
Deferred Tax Asset:
   Net Operating Loss
   Carryforwards                               $  620,400     $  625,900     $  643,200
                                               ==========     ==========     ==========
Deferred Tax Liability:
   Depreciation and
   Amortizable Assets                          $  (11,800)    $       --     $       --
                                               ==========     ==========     ==========


                                                  2004            2003           2002
                                               ----------     ----------     ----------

Net Deferred Income Taxes                      $  608,600     $  625,900     $  643,200


Valuation Allowance                              (398,900)      (625,900)      (643,200)
                                               ----------     ----------     ----------
Total                                          $  209,700     $       --     $       --
                                               ==========     ==========     ==========
</TABLE>
Velocity Asset Management, Inc. (formerly Tele-Optics, Inc.) generated net
operating losses prior to its acquisition of STB, Inc. As a result of the
reverse acquisition, the ownership change of Velocity Asset Management, Inc. as
of February 3, 2004 limits and reduces the future utilization of the Company's
net operating loss carryforwards. These pre-reverse acquisition net operating
loss carryforwards will be limited and reduced based upon the applicable Federal
and New Jersey rules. Any net operating loss carryforwards for future tax years
will be available to offset future taxable income of the consolidated group
subject to an annual limit per the Internal Revenue Code Section 382.

For the tax years ending December 31, 2003 and 2002 (pre-reverse acquisition),
the deferred income taxes relating to the tax benefit of the Company's net
operating loss carryforwards were offset by a 100% valuation allowance due to
the uncertainty of profitable operations in the future.

At December 31, 2004, the Company had unused net operating loss carryforwards of
approximately $1,638,200 for Federal purposes and $107,600 for New Jersey
purposes. These net operating losses may provide future income tax benefits of
approximately $620,400, which will expire between the years 2006 and 2014. The
ability to utilize such losses is dependent upon the Company's ability to
generate taxable future income as well as the annual limit per the Internal
Revenue Code Section 382 versus the expiration dates of the losses. Because some
of the losses are due to expire prior to fully utilizing the carryforwards, a
valuation reserve has been established for an amount equal to the expected
expired amount.

NOTE 11 - RECAPITALIZATION

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

                                      F-20
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 11 - RECAPITALIZATION (Continued)


<TABLE>
<CAPTION>

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


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

Retained Deficit                               (122,748)           (12,005)(A)           (134,753)
                                       ----------------   ----------------       ----------------
Totals                                 $       (121,748)  $             --       $       (121,748)
                                       ================   ================       ================
</TABLE>
(A) A recapitalization adjustment was required to convert the equity section of
STB, Inc. (the accounting acquirer in the reverse merger) immediately prior to
the reverse merger to the equity section of the newly acquired public shell
immediately following the reverse merger.

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

NOTE 12 - COMMON STOCK TRANSACTIONS

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


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

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

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

Additionally, concurrent with the reverse merger, the Company sold the following
shares of common stock

                                      F-21
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 12 - COMMON STOCK TRANSACTIONS (Continued)

pursuant to a private placement to the following shareholder for $500,000:

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


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

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


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


On April 8, 2004, the Company amended its certificate of incorporation to (a)
effect a 13-for-1 reverse split of the Company's then issued and outstanding
shares of common stock and (b) change the total authorized shares of capital
stock to 50,000,000 shares, of which 40,000,000 are classified as common stock,
par value $.001 per share and 10,000,000 are classified as preferred stock, par
value $.001 per share. As of December 31, 2004, the total common stock issued
and outstanding was 15,794,164 with a par value of $15,794 and there was no
preferred stock issued or outstanding. All references to share numbers or
earnings or loss per share contained in the financial statements to which these
notes relate give effect to the Reverse Split.


NOTE 14 - OUTSTANDING WARRANTS


At December 31, 2004, the Company had issued and outstanding warrants to
purchase 5,358,503 shares of its common stock at a prices ranging from $1.04 to
$2.50 per share. A portion of the warrants (2,999,500, as adjusted for the 13:1
reverse stock split - see Note 13) were granted pursuant to the Merger Agreement
effective February 3, 2004 and expire after a period of five years. The balance
of the warrants (2,359,003) were grant pursuant to private offerings and/or in
lieu of services rendered and expire after a period of five years.


NOTE 15 - STOCK BASED COMPENSATION

Stock Based Compensation to Non-Employees
-----------------------------------------

On January 30, 2004, we entered into a Business Advisory Agreement with Lomond
International, Inc., ("Lomond") an unrelated corporation, pursuant to which we
issued warrants exercisable for a five year period to purchase an aggregate of
200,000 shares of common stock at an exercise price of $1.04 per share in
exchange for business advisory services for a period of one year. The principal
service of which was our acquisition of Tele - Optics, Inc. on February 3, 2004.
As required by EITF 96-18, the warrants were valued as of the date in which
significant performance required by the contract was completed. The fair value
of the common stock at the date of issuance to Lomond was $0.08 per share, the
closing bid price of Tele-Optics, Inc.'s common stock as reported by the OTC
Bulletin Board on February 3, 2004. Using the Black-Scholes model the total
compensation charge for the service contract with Lomond was $5,134 and the fair
value of each equity instrument at the February 3, 2004 measurement date is
$0.03. The expense recorded for this contract is $5,134 and is included in
consulting fee expense.

                                      F-22
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 15 - STOCK BASED COMPENSATION (CONTINUED)

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

On December 16, 2004, the Company entered into an independent consulting
agreement with The Del Mar Consulting Group, Inc., an unrelated California
corporation ("Del Mar"). The Consultant agreed to provide specified public
relations services for a period of one year. As compensation for such services
the Company agreed to issue as a commencement bonus, 100,000 shares of common
stock and a non-qualified stock option exercisable for five years to purchase
250,000 shares of common stock at a price of $2.50 per share. The total
compensation charge for the common stock issued to Del Mar was $150,000 and the
fair value of the common stock at the December 16, 2004 measurement date was
$1.50 per share, the closing bid price of Velocity Asset Management, Inc.'s
common stock as reported by the OTC Bulletin Board on December 16, 2004. As
required by EITF 96-18, the non-qualified stock option was valued as of the
inception of the contract. Using the Black-Scholes model the total compensation
charge for the non-qualified stock option issued under the service contract with
Del Mar was $249,041 and the fair value of each share subject to the option at
the December 16, 2004 measurement date is $1.00. The expense recorded for this
contract is $399,041 and is included in consulting fee expense.

Neither contract contains a "substantial incentives for non-performance" as that
term is defined under EITF 96-18, "Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services", or provisions for the forfeiture of the warrants/options in
the event of non-performance.

The Company did not issue any warrants/options as stock based compensation for
the years ended December 31, 2003 and 2002.

Stock Based Compensation for Employees
--------------------------------------

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

NOTE 16 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash was expended for interest in the amount of $373,112, $262,217, and $253,382
for the years ended December 31, 2004, 2003 and 2002, respectively. Cash was
expended for income taxes in the amount of $7,568, $2,892, and $0 for the years
ended December 31, 2004, 2003 and 2002, respectively.


On August 12, 2004, the Company entered into agreements with an officer and
other creditors in satisfaction of their outstanding loans under which the
Company exchanged $3,676,252 of its existing indebtedness ("the Obligations")
for 4,084,724 shares of the Company's common stock, par value $.001 per share at
a rate of one share per $0.90 of the obligation. The effective date of this
conversion of debt to equity is retroactive to July 1, 2004, which reflects the
agreement of the parties that no interest would be accrued or paid on the debt
exchanged since the last interest payment date, June 30, 2004. On August 12,
2004, the Company's stock as traded on the OTCBB had a market price of $1.60.


                                      F-23
<PAGE>

           VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES (Formerly
                               Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 16 - SUPPLEMENTAL CASH FLOW INFORMATION (CONTINUED)


Paragraph 20 of APB 26 requires that any difference between the reacquisition
price and the net carrying amount of the extinguished debt should be recognized
currently in income of the period of extinguishment as losses or gains and
identified as a separate item. In connection with this debt exchange, the
Company has recorded a non-cash loss on early extinguishment of debt of
$2,859,307. The non-cash transaction was as follows:

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

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


Total Debt Extinguished
 Short-term borrowings under line of credit                        $    905,476
 Notes payable                                                        2,455,056
 Accrued interest payable                                               229,221
 Accrued interest expense                                                86,499
                                                                   ------------
 Total Debt Extinguished                                              3,676,252
 Loss on Extinguishment of Debt                                       2,859,307
                                                                   ------------
Total                                                              $  6,535,559
                                                                   ============

 *   The loss on extinguishment of debt represents the difference in value of
     the stock on August 12, 2004 between the application of APB 26, Paragraph
     20 for financial statement purposes and the agreement under which the
     transaction was executed. Thus, the difference is 4,084,724 shares times
     $0.70 ($1.60 less $0.90) resulting in a loss on extinguishment of debt of
     $2,859,306.


NOTE 17 - CONCENTRATIONS OF CREDIT RISK

The consolidated entities maintain cash balances at one institution located in
central New Jersey. The amounts at this institution are insured by the Federal
Deposit Insurance Corporation up to $100,000 per entity. The amount at risk at
December 31, 2004, 2003 and 2002 was $1,188,413, $335,948, and $-0-,
respectively. The Company considers the risk to be minimal.

NOTE 18 - SUBSEQUENT EVENTS

From October 2004 through January 3, 2005, the Company sold 2,242,353 units of
its securities for aggregate gross proceeds of $3,363,530 ($1.50 per unit) in a
private transaction. Each unit consists of one share of the Company's Common
Stock and a warrant to purchase one-fifth of a share of the Company's Common
Stock at $2.50 per share during a period of five years.

On January 27, 2005 (the "Closing Date"), the Company's wholly owned subsidiary,
Velocity Investments, LLC ("Velocity"), entered into a Loan and Security
Agreement (the "Loan Agreement") with Wells Fargo Foothill, Inc., a California
corporation (the "Lender"), pursuant to which the Lender agreed to provide
Velocity with a two year $12,500,000 credit facility to finance the acquisition
of individual pools of unsecured consumer receivables that are approved by the
Lender under specific eligibility criteria set forth in the Loan Agreement.

                                      F-24
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-optics, Inc.)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2004, 2003 and 2002

NOTE 18 - SUBSEQUENT EVENTS (CONTINUED)

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

Pursuant to the Loan Agreement, the Lender has agreed to advance to Velocity up
to $12,500,000 to be used to finance up to 60% of the purchase price of
individual pools of unsecured consumer receivables that are approved by the
Lender under specific eligibility criteria set forth in the Loan Agreement. The
interest rate on the loan is 3.50% above the prime rate of Wells Fargo Bank,
N.A. The maturity date of the facility is January 27, 2008.

                                      F-25