SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


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

                   For the fiscal year ended December 31, 2005

            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: 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 is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act [ ]

         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]

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

         Yes [ ] No [X]

         State issuer's revenues for its most recent fiscal year: $ 8,101,744
<PAGE>

         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
March 15, 2006 ($1.75 per share) was $6,657,340.

         State the number of shares outstanding of each of the issuer's classes
of common equity: As of March 15, 2006: 15,972,321 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

<PAGE>

                                TABLE OF CONTENTS



PART I                                                                        1

   ITEM 1: DESCRIPTION OF BUSINESS                                            1

   ITEM 2: DESCRIPTION OF PROPERTIES                                         22

   ITEM 3: LEGAL PROCEEDINGS                                                 22

   ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               22

PART II                                                                      23

   ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
   MATTERS                                                                   23

   ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
   AND RESULTS OF OPERATIONS.                                                24

   ITEM 7: FINANCIAL STATEMENTS                                              30

   ITEM 8: CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING
   AND FINANCIAL DISCLOSURE                                                  30

   ITEM 8A: CONTROLS AND PROCEDURES                                          30

   ITEM 8B: OTHER INFORMATION                                                31

PART III                                                                     31

   ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
   PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF
   THE REGISTRANT                                                            31

   ITEM 10: EXECUTIVE COMPENSATION                                           34

   ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND AND
   MANAGEMENT                                                                34

   ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                   36

PART IV                                                                      37

   ITEM 13: EXHIBITS                                                         37

   ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES                           40

<PAGE>

   FORWARD LOOKING STATEMENTS

         This 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.

         We cannot give any guarantee that these plans, intentions or
expectations will be achieved. All forward-looking statements involve risks and
uncertainties, and actual results may differ materially from those discussed in
the forward-looking statements as a result of various factors, including those
factors described in the "Risk Factors" section beginning on page [17] of this
Annual Report. Listed below and discussed elsewhere in this Annual Report are
some important risks, uncertainties and contingencies that could cause our
actual results, performances or achievements to be materially different from the
forward-looking statements included in this Annual Report. These risks,
uncertainties and contingencies include, but are not limited to, the following:

         o        the availability for purchase of consumer receivable
                  portfolios, interests in distressed real property and tax lien
                  certificates that satisfy our criteria;

         o        competition in the industry;

         o        the availability of debt and equity financing;

         o        future acquisitions;

         o        the availability of qualified personnel;

         o        international, national, regional and local economic and
                  political changes;

         o        general economic and market conditions;

         o        changes in applicable laws;

         o        trends affecting our industry, our financial condition or
                  results of operations;

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

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

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

<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
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 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. The merger
agreement also provided that upon amendment of our certificate of incorporation
to authorize us to issue a series of preferred stock having certain terms and
conditions, John C. Kleinert would convert all of the debt owed by us to him,
including debt under a line of credit and other secured loans, into shares of
such preferred stock. Mr. Kleinert has since converted all of the debt owed by
us to him into 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. As a result of such amendment, we had sufficient
authorized shares of common stock to enable us to issue to the former
stockholders of STB the additional shares of common stock and warrants as
provided in the merger agreement, and we have effected such issuances. Except as
otherwise noted, all share and per share data set forth in this annual report
gives effect to the one-for-thirteen reverse split.

         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.


Overview

         STB was formed in New Jersey in 2003. Since February 3, 2004, when we
acquired STB, we have engaged in the acquiring, managing, collecting and
servicing of distressed assets consisting of consumer receivable portfolios,
interests in distressed real property and tax lien certificates, through three
wholly-owned subsidiaries:

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

                                       1
<PAGE>

         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. Our 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 strategy for
the allocation of capital among different types of distressed assets is
determined solely by our senior management.

         Historically, the majority of our revenues have been derived from the
realization of our distressed real property assets, which accounted for
approximately 85% of our revenues during fiscal 2003, as compared to 7.5% of our
revenues during such year for each of our consumer receivables and our tax lien
certificates. Revenues generated from the realization or sale of our consumer
receivables business increased to $1,726,356 in fiscal 2004, or approximately
39.6% of our total revenues for fiscal 2004, and to $3,633,945, or approximately
44.5% of our total revenues in fiscal 2005, while revenues from our distressed
real property assets were $2,369,564, or approximately 54.4% of our total
revenues in fiscal 2004 and $3,685,338, or 44.9% of our total revenues in fiscal
2005. The increased revenue from our distressed real property assets in fiscal
2005 is attributable to the sale of a single property during such period. We
anticipate increasing growth in our consumer receivables portfolios as a result
of the $12.5 million line of credit that our Velocity Investments subsidiary
entered into with Wells Fargo Foothill, Inc. in 2005, as amended in February
2006. Such line of credit can 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.
Historically, all of our consumer receivables have been from obligors in New
Jersey, but since December 2004, we have acquired obligors in other states and
intend to continue to expand our operations geographically.

                                       2
<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.

Recent Financing

         On October 27, 2005, we consummated a $1.8 million secured convertible
debt financing with DKR SoundShore Oasis Ltd., or DKR, in a private offering.
Net proceeds from the financing were used primarily for general working capital
purposes including, but not limited to, the purchase of distressed real property
interests and distressed consumer receivable portfolios. We agreed to register
the shares of common stock underlying the debenture (and 200,000 shares of
common stock issuable upon the exercise of a warrant issued to DKR in connection
with such financing) with the Securities and Exchange Commission, which
registration was declared effective on December 29, 2005.

Proposed Preferred Stock Offering

         On December 1, 2005, we filed an initial registration statement with
the SEC with respect to the sale of up to 1,000,000 shares of Series A
convertible preferred stock at a price of $10.00 per share. We will be offering
a minimum of 500,000 shares on a "best efforts, all-or-none" basis and an
additional 500,000 of such shares on a "best efforts" basis up to a maximum of
1,000,000 shares. We intend to use the estimated net proceeds from such offering
primarily for the purchase of portfolios of unsecured consumer receivables, the
purchase of distressed real property, repayment of outstanding convertible debt
and for general corporate purposes, including working capital. There can be no
assurance, however, that we will be successful in selling the minimum number of
shares of preferred stock in such offering or any shares in excess of such
minimum.

Corporate Information

         Our principal executive offices are located at 48 S. Franklin Turnpike,
3rd Floor, Ramsey, New Jersey 07446 and our telephone number is (201) 760-6306.
Our corporate website is www.velocitycollect.com. The information on our website
is not incorporated by reference in this annual report.

                                       3
<PAGE>

Industry Overview

         The purchase and liquidation of distressed assets consisting of
consumer receivable portfolio, 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 February 2006, consumer
debt was $2.2 trillion and increasing at an annual rate of 3.0% as of December
2005. 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.

                                       4
<PAGE>

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,
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 services 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 2006 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, Indiana, Ohio,
Tennessee, Michigan, Colorado, Oregon, Wisconsin, Illinois, Kentucky, Minnesota,
Rhode Island, Virginia, Hawaii, Wyoming, Florida, Pennsylvania, California and
Missouri.


Consumer Receivables Purchase Program

         We purchase consumer receivable portfolios that include charged-off
receivables and semi-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 $17 million at purchase
prices ranging from $0.043 to $0.25 of such face amounts.

                                       5
<PAGE>

The following table summarizes our cumulative historical portfolio purchase
price and cash collections as of December 31, 2003, 2004 and 2005. (All dollar
amounts in thousands.)

<TABLE>
<CAPTION>
                    Aggregate Initial      No. of                                       Gross Cash
                       Outstanding       Portfolios    Cumulative    Cumulative Gross   Collections
Reporting Period     Principal Amount    Purchased   Purchase Price    Collections      Per Period
----------------     ----------------    ---------   --------------    -----------      ----------
<S>                    <C>                   <C>        <C>             <C>              <C>
   12/31/2003          $  11,498              5         $  2,038        $    446         $    446
   12/31/2004          $  21,008             15         $  3,489        $  2,596         $  2,150
   12/31/2005          $ 154,112             37         $ 14,951        $  8,001         $  5,405
</TABLE>

         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.

                                        6
<PAGE>

         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. Consequently, before acquiring a portfolio, we
analyze the various assets contained in the portfolio to determine how to best
maximize collections in a cost efficient manner. If we acquire the portfolio, we
can then 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 and
establishing customized policies and procedures.

                                        7
<PAGE>

         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, historically only Ragan & Ragan, P.C., 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 might 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 & Ragan, P.C. to service those
receivables. We expect to continue to use Ragan & Ragan, P.C. with respect to
our receivables in New Jersey until such time either (i) our agreement with
Ragan & Ragan, P.C. terminates; or (ii) the consumer receivables portfolios in
New Jersey increase beyond the capacity of Ragan & Ragan, P.C. Our current
agreement with respect to consumer receivables portfolios 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., our Vice President and a Director, and W.
Peter Ragan Jr., President of our wholly-owned subsidiary, Velocity Investments
LLC.

         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
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.

                                        8
<PAGE>

         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.

         On June 2, 2005, J. Holder acquired a residential property in
Melbourne, Florida through a joint venture with Groveland Estates, LLC, an
unrelated party. The property was purchased for $3.25 million from Detroit-based
Comercia Bank, which had acquired the property through a foreclosure.
Acquisition financing of approximately $3.3 million was provided by a group of
investors, including J. Holder, which invested approximately $125,000.00, that
will be entitled to receive 10% per annum and 2.0% of the loaned amount along
with a pro rata share of 20% of the net profit, if any, realized by J. Holder
upon the sale of the property. Under the terms of the joint venture agreement
with Groveland Estates, LLC, the investor group, including J. Holder, will be
entitled to receive 100% return of all capital, including acquisition and
carrying costs, plus the cost of funds. In addition, J. Holder will be entitled
to receive 60% of the net profit, if any, of the proceeds of the sale of the
property, 20% of which will be shared pro rata with the investor group
(including J. Holder), and Groveland Estates, LLC will be entitled to receive
40% of the net profit, if any, from the sale of the property, plus 20% of the
actual cost, if any, of the property's renovation, as a project management fee.
In the opinion of management, the property is adequately covered by insurance.
On September 21, 2005, J. Holder entered into a $1,000,000 mortgage and security
agreement, the proceeds of which are being used to renovate the property.
Estimated renovations are expected to cost approximately $900,000. All principal
accrues interest at a fixed annual rate of 12.0% per annum and payments of
accrued interest are due and payable in arrears in equal monthly payments on the
outstanding principal balance of the promissory note. J. Holder is required to
make monthly interest only payments of $10,000.00 until October 21, 2007 at
which time all principal, accrued interest and other charges are due and
payable. Prior to April 1, 2006, there is a prepayment penalty equal to the
interest that would have been accrued and earned for six months from the date of
the agreement. Although the property was appraised in March 2005 at $8.5
million, there can be no assurance that the sale of the property will result in
a profit.


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.

                                        9
<PAGE>

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:

         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
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.

                                       10
<PAGE>

         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, 2005, we had a total of nine employees, of which
seven 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.

                                  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
execute our business strategy 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 ability to execute our business strategy must be
evaluated in light of the problems, expenses and difficulties frequently
encountered by new businesses in general and a collection service specifically.

We May Not Be Able To Purchase Consumer Receivable Portfolios, Interests In Real
Property or Tax Lien Certificates At Favorable Prices Or On Sufficiently
Favorable Terms Or At All.

         Our ability to execute our business strategy 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;

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

         o        fluctuation in interest rates.

                                       12
<PAGE>

         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.

         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;

         o        changes in laws and regulations governing lending and
                  bankruptcy; and

         o        fluctuation in interest rates.

         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 possible profit, if any,
we generate from such assets.

We May Not Be Able To Recover Sufficient Amounts From The Assets We Acquire To
Recover The Costs Associated With The Purchase And Servicing Of Those Assets And
To Fund Our Operations.

         We acquire and collect on consumer receivable portfolios that contain
charged-off and semi-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. Our inability to
realize value from our receivable portfolios in excess of our expenses may
compromise our ability to remain as a going concern. 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 actual 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.

                                       13
<PAGE>

         We acquire and seek to liquidate interests in distressed real property
that include real property being sold at sheriff's foreclosure and judgment
execution sales and defaulted mortgages. In order to operate profitably over the
long term, we must continually purchase and sell a sufficient volume of
distressed real property interests to generate revenue that exceeds our costs.
Our ability to produce sufficient returns can be negatively impacted by the
quality of the distressed real estate assets that we purchase. No assurance can
be given that we will be successful in purchasing a sufficient number of
suitable interests in distressed real property at acceptable prices or that,
even if a sufficient number of such real property interests are purchased, our
investment objectives will be achieved. If cash flows from operations are less
than anticipated as a result of our inability to collect sufficient amounts on
distressed real property assets, our ability to satisfy our debt obligations,
purchase new interests in distressed real property and our future growth and
profitability may be materially adversely affected.

We Are Subject To Intense Competition For The Purchase Of Distressed Assets That
May Effect Our Ability To Purchase Distressed Assets 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 portfolios of these assets. 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 our ability to
cover operating expenses may be negatively impacted and our 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 possibly our profitability. In addition, our
revenues and profitability could be materially adversely affected if we are not
able to secure replacement servicers. Until December 2004, 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
president of our wholly-owned subsidiary, Velocity Investments, LLC,
respectively.

It May Be A Conflict Of Interest For W. Peter Ragan, Sr. To Serve As A Director
And Officer Of Our Company and For W. Peter Ragan, Jr. To Serve As An Officer Of
Our Company, While Also Being The Principals Of Ragan & Ragan, P.C., Our Primary
Third Party Servicer.

         As officers and, in the case of W. Peter Ragan, Sr., also as a
director, of our company, Messrs. Ragan and Ragan have a fiduciary duty to our
stockholders. However, their position as the principals of the law firm Ragan &
Ragan, P.C., the primary third party servicer of our consumer receivable
portfolios, interests in distressed real property and tax lien certificates, may
compromise their ability to make decisions in the best interests of our
stockholders.

                                       14
<PAGE>

         Each of Messrs. Ragan and Ragan devotes approximately 50% of his
business time to our affairs in accordance with the terms of his respective
employment agreement and the balance of his business time to his law practice
which includes the representation of companies that may be deemed our
competitors. Accordingly, there are potential conflicts of interest inherent in
such relationship. The current agreement by and between our wholly-owned
subsidiary, Velocity Investments, LLC, and 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., our vice president and a director, and W. Peter Ragan Jr., president
of our wholly-owned subsidiary, Velocity Investments, LLC. During fiscal 2004
and fiscal 2005, we paid Ragan & Ragan, P.C an aggregate of $633,084 and
$1,140,783, respectively, for services rendered in accordance with the terms of
the agreements between our subsidiaries and Ragan & Ragan, P.C. Pursuant to an
employment agreement dated January 1, 2004, by and between W. Peter Ragan, Sr.
and us, Mr. Ragan, Sr. is entitled to an annual salary of $75,000 in
consideration for his position as our Vice President and president of our
wholly-owned subsidiaries' J. Holder, Inc. and VOM, LLC. In addition, pursuant
to an employment agreement dated January 1, 2004, by and between W. Peter Ragan,
Jr. and us, Mr. Ragan, Jr. is entitled to an annual salary of $60,000 per year
in consideration for his position as president of our wholly owned subsidiary,
Velocity Investments, LLC.

         Our subsidiary, J. Holder, Inc., has entered into a one-year 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.

         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 any real property acquired by VOM upon foreclosure of a tax lien
certificate.

         Ragan & Ragan, P.C. is currently our third party servicer for
collections in the State of New Jersey. Our third party servicing agreements
with Ragan & Ragan, P.C. have terms no more favorable than our third party
servicing agreements with other third party servicers in other states.

         Each of W. Peter Ragan, Sr. and W. Peter Ragan, Jr. owns approximately
14.4% of our total outstanding shares of common stock as of the date of this
Annual Report.


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., president of our
wholly-owned subsidiary Velocity Investments, LLC, and Mr. James J. Mastriani,
our chief financial officer, chief legal officer, treasurer and secretary, 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. Although we have entered into employment
agreements with each of such individuals, the loss of any of their services
could disrupt our operations and adversely affect our ability to successfully
acquire consumer receivable portfolios, interests in distressed real property
and tax lien certificates. In addition, we have not obtained "key man" life
insurance on the lives of Mr. Kleinert, Mr. Ragan, Sr., Mr. Ragan, Jr. and Mr.
Mastriani.

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 at acceptable rates.
The failure to obtain financing and capital on acceptable financing terms as

                                       15
<PAGE>

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 Downturns.

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

         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, interests in
                  distressed real property and tax lien certificates, 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 senior credit facility or
                  other indebtedness or if our lenders demanded payment of a
                  portion or all of our indebtedness, we may not have sufficient
                  funds to make such payments.

If An Event Of Default Occurs Under Our Secured Financing, It Could Seriously
Harm Our Operations.

         On January 27, 2005, Velocity Investments entered into a Loan and
Security Agreement with Wells Fargo Foothill, Inc. (the "Lender"), in which the
Lender agreed to provide Velocity Investments with a two year $12,500,000 senior
credit facility (the "Credit Facility") to finance up to 60% of the purchase
price of the acquisition of individual pools of unsecured consumer receivables
that are approved by the Lender under specific eligibility criteria set forth in
the Loan and Security Agreement. On February 27, 2006, Velocity Investments
entered into a First Amendment to the Loan and Security Agreement with Wells
Fargo Foothill, Inc. (the "Amended and Restated Loan Agreement"). Pursuant to
the Amended and Restated Loan Agreement, the Lender extended the Credit Facility
until January 27, 2009 (formerly January 27, 2008) and agreed to increase the
advance rate under the credit facility to 67.5% (up from 60%) of the purchase
price of individual pools of unsecured consumer receivables that are approved by
the Lender. The Lender also agreed to reduce the interest rate on the loan from
3.50% above the prime rate of Wells Fargo Bank, N.A. to 2.50% above such prime
rate. In addition, the amortization schedule for each portfolio has been
extended from twenty-four to thirty months. The Lender also agreed to reduce the
personal guarantees from $1,000,000 to $500,000.

         Any indebtedness that we incur under such line of credit is secured by
a first lien upon 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.

         On October 27, 2005, we and our wholly owned subsidiary, J Holder,
Inc., entered into a Securities Purchase Agreement with DKR SoundShore Oasis
Ltd. relating to a sale of a 10% Secured Convertible Debenture, due April 27,
2007, in the aggregate principal amount of $1.8 million, and an associated
common stock purchase warrant to purchase 200,000 shares of our common stock at
an exercise price of $3.10 per share.

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

         DKR was granted (i) a security interest in: our assets and the assets
of our subsidiaries, JHolder, TLOP Acquisition Company, LLC, VOM, LLC and SH
Sales, Inc., and (ii) a pledge of our direct and indirect ownership of our
subsidiaries, each of which are subject to the liens of holders of existing
indebtedness, permitted liens and permitted indebtedness. Additionally, the
subsidiaries have agreed to guarantee our obligations under the debenture and
the other transaction documents. If we default under the indebtedness secured by
our assets, those assets would be available to DKR 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.

                                       16
<PAGE>

The Restrictions Contained In The Secured Financings Could Negatively Impact Our
Ability To Obtain Financing From Other Sources And To Operate Our Business.

         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
Investments' 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.

         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.

         As a result of our line of credit with Wells Fargo, we anticipate that
we 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.

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 realization on
those assets may decline and 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.

We May Not Be Able To Acquire 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 able to complete 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.

If We Fail To Manage Our Growth Effectively, We May Not Be Able To Execute Our
Business Strategy.

         We have experienced rapid growth over the past several years and intend
to maintain our growth. 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.

                                       17
<PAGE>

Our Operations Could Suffer From Telecommunications Or Technology Downtime,
Disruption Or Increased Costs.

         Our ability to execute our business strategy 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 and
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
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;

         o        the Fair Credit Reporting Act; and

         o        the Fair Foreclosure Act.

         We may be precluded from collecting consumer receivables we purchase
where the creditors or other previous owners or servicers 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.

                                       18
<PAGE>

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.


      Risk Factors Relating to Our Securities

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 Stockholders Own A Large Percentage Of Our Voting Stock, Other
Stockholders' Voting Power May Be Limited.

         As of March 15, 2006, 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 81.1%
(including shares issuable upon exercise of warrants owned by such stockholders)
of our shares. If those stockholders act together, they will have the ability to
control matters submitted to our stockholders 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
stockholders may have little or no influence over matters submitted for
stockholder approval. In addition, the ownership of such three stockholders
could preclude any unsolicited acquisition of us, and consequently, materially
adversely affect the price of our common stock. These stockholders 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.

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

Penny Stock Regulations May Impose Certain Restrictions On Marketability Of Our
Common Stock.

         The Securities and Exchange 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 (and after this offering, the preferred 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 Securities and Exchange 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

                                       19
<PAGE>

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 Securities and
Exchange 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 or preferred stock.

The Issuance Of Authorized Shares Of Preferred Stock And Additional Common Stock
May Result In Dilution To Existing Stockholders, Adversely Affect The Rights Of
Existing Stockholders 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. Our board of
directors has the authority, without stockholder 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 stockholders, 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 March 15, 2006, there were
15,972,321 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 4,326,660 of shares
of common stock. As of March 15, 2006, we have reserved up to 4,326,660 shares
of our common stock for issuance upon exercise of outstanding stock options and
warrants. In addition, the total number of shares of common stock issued and
outstanding does not include such number of shares of common stock that may be
issuable to DKR upon the conversion of the convertible debenture issued to DKR
in October 2005. A total of 1,000,000 shares of common stock have been reserved
under our 2004 Equity Incentive Program. As of the date of this Annual Report,
none of these shares have been issued.

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

         Exercise of the outstanding options and warrants (and conversion of the
preferred stock and if the convertible debenture holder converts such debenture
into shares of our common stock) will reduce the percentage of common stock held
by the public stockholders. Further, the terms on which we could obtain
additional capital during the life of the options and warrants may be adversely
affected, and it should be expected that the holders of the options and 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 options and
warrants. As a result, any issuance of additional shares of common stock may
cause our current stockholders 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 15,972,321 shares of common stock held by our present
stockholders, approximately 14,247,720 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. 3,100,063 shares
and 1,364,005 shares may be sold pursuant to current registration statements,

                                       20
<PAGE>

respectively. 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 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 common stock 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 securities 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 securities.

We Have Never Paid Dividends On Our Common Stock And 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 who convert their shares of preferred stock into shares of
common stock 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 Fluctuations 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, stockholders 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.

                                       21
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES

         Prior to the merger with STB, we did not lease any premises for our
executive or corporate offices. Following the merger, 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
(expiring on December 31, 2006) 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 an unrelated third party which expires on June 1, 2007 and has an
annual lease payment of $18,000.


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.

         As of the date of this filing, 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, except as
follows.

             (1)  Although no suit had been filed as of December 31, 2005, at
such time a dispute had arisen between J. Holder, Inc., a wholly owned
subsidiary of the Company, and W.A.C. International, Inc., a Florida corporation
("WAC"), with respect to the assignment of an undivided ten percent (10%)
interest in a contract to purchase a large parcel of land located in Lake
County, Florida. The approximate amount in controversy is $300,000.

             (2)  Although no suit had been filed as of December 31, 2005, at
such time a dispute had arisen between J. Holder, Inc. and Groveland Estates,
LLC, a Florida Limited Liability company ("Groveland"), regarding an estate home
located at 700 Jordan Blass Road in Melbourne, Florida. Groveland and WAC are
related entities. The approximate amount in controversy is $500,000.



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

         No matters were submitted to security holders during the fourth quarter
of the fiscal year ended December 31, 2005.

                                       22
<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 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
      Second Quarter                                   $     3.03   $     2.10
      Third Quarter                                    $     2.65   $     1.65
      Fourth Quarter                                   $     2.75   $     1.70

(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 March 15, 2006, the closing bid price of our common stock as reported on the
OTC Bulletin Board was $1.75 per share.

                                       23
<PAGE>

HOLDERS OF RECORD

         As of March 15, 2006, there were approximately 262 holders of record of
the our common stock and approximately 368 beneficial owners.

DIVIDENDS

         We have not paid any cash dividends on our 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

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our financial
statements and notes thereto and the other financial information included
elsewhere in this Annual Report.

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 our 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.

         As a result of this prior year restatement, we have adjusted the
beginning balances for both additional paid in capital and retained earnings
(deficit). The effect of this adjustment was an increase in additional paid in
capital of $2,859,307 and a decrease to retained earnings (deficit) of
($2,859,307). The restatement had no impact on our net income, earnings per
share, cash position and revenue for the year ended December 31, 2005.

Overview

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

                                       24
<PAGE>

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

Critical Accounting Policies

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

Purchased Receivable Portfolios and Revenue Recognition

         We purchase pools of consumer receivable accounts at a substantial
discount from their face amounts which are usually discounted from 75% to 97%
and are recorded at our acquisition cost. The pools of consumer receivables
contain accounts that have experienced deterioration of credit quality between
origination and our acquisition of the consumer receivable portfolios. The
discounted amount paid for a pool of consumer receivable accounts reflects our
determination that it is probable we will be unable to collect all amounts due
according to the contractual terms of the accounts. At acquisition, we review
the consumer receivable accounts in the portfolio to determine whether there is
evidence of deterioration of credit quality since origination and if it is
probable that we will be unable to collect all amounts due according to the
contractual terms of the accounts. If both conditions exist, we determine
whether each such loan is to be accounted for individually or whether such
receivables will be assembled into static pools based on common risk
characteristics. We consider expected prepayments and estimate the amount and
timing of undiscounted expected principal, interest and other cash flows for
each acquired portfolio of consumer receivable accounts and subsequently
aggregated pools of consumer receivable accounts. We determine the excess of the
pool's scheduled contractual principal and contractual interest payments over
all cash flows expected at acquisition as an amount that should not be accreted
based on our proprietary acquisition models. The remaining amount, representing
the excess of the loan's cash flows expected to be collected over the amount
paid, is accreted into income recognized on finance receivables over the
remaining life of the loan or pool.

         Prior to January 1, 2005, we accounted for our investment in consumer
receivables using the interest method under the guidance of Practice Bulletin 6,
"Amortization of Discounts on Certain Acquired Loans." In accordance with
Practice Bulletin 6, revenue was recognized based on our anticipated cash
collections and the estimated rate of return over the useful life of the pool.
Effective January 1, 2005, we adopted and began to account for our investment in
finance receivables using the interest method under the guidance of American
Institute of Certified Public Accountants Statement of Position 03-03,
"Accounting for Loans or Certain Securities Acquired in a Transfer." For
portfolios of consumer receivables acquired in fiscal years beginning prior to
December 15, 2004, Practice Bulletin 6 is still effective; however, Practice
Bulletin 6 was amended by Statement of Position 03-03. For portfolios of
consumer receivables acquired in fiscal years beginning after December 15, 2004,
Statement of Position 03-03 is effective. In accordance with Statement of
Position 03-03 (and the amended Practice Bulletin 6), revenue is recognized
based on our anticipated gross cash collections and the estimated rate of return
over the useful life of the pool.

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

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

                                       25
<PAGE>

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

         Generally, 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
re-evaluated quarterly.

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

         We establish valuation allowances for all acquired consumer receivable
portfolios subject to Statement of Position 03-03 to reflect only those losses
incurred after acquisition (that is, the present value of cash flows initially
expected at acquisition that are no longer expected to be collected). Valuation
allowances are established only subsequent to acquisition of the loans. At
December 31, 2005, we had no valuation allowance on our finance receivables.
Prior to January 1, 2005, if estimated future cash collections would be
inadequate to amortize the carrying balance, an impairment charge would be taken
with a corresponding write-off of the receivable balance.

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

Stock Based Compensation

         We have adopted the disclosure requirements of SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure" effective
December 2002. SFAS 148 amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
compensation and also amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
methods of accounting for stock-based employee compensation and the effect of
the method used on reported results. Additionally, regarding the treatment of
non-employee stock based compensation, we have followed the guidance of EITF
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services".

Results of Operations

         Comparison of the Fiscal Year Ended December 31, 2005 to the Fiscal
Year Ended December 31, 2004.

         Revenues in the fiscal year ended December 31, 2005 were $8,101,744 as
compared to $4,356,189 in the fiscal year ended December 31, 2004, representing
an 86.0% 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 us represented approximately 44.5%, 44.9% and 9.6%,
respectively, during fiscal 2005 as compared to 54.4%, 39.6%, and 6.0% during
fiscal 2004. Although management believes that the mix of revenues on a
comparative basis will vary from reporting period to reporting period partly as
a result of factors beyond its control, such as maturity dates, court decisions
and other similar events that affect the timing of revenue recognition, it also
believes that the increase in consumer receivables revenues in fiscal 2005 is
reflective of the continued growth in its consumer receivables business. It is
anticipated that such growth will be accelerated over time as a result of
Velocity Investments $12.5 million credit facility obtained in January 2005 and
amended in February 2006 which can be used exclusively to purchase additional
consumer receivable portfolios.

                                       26
<PAGE>

         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 8.6% 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 us represented approximately 54.4%, 39.6% and 6.0%,
respectively, during fiscal 2004 as compared to 84.8%, 7.4%, and 7.8% during
fiscal 2003. Although management believes that the mix of revenues on a
comparative basis will vary from reporting period to reporting period partly as
a result of factors beyond its control, such as maturity dates, court decisions
and other similar events that affect the timing of revenue recognition, it also
believes that the increase in consumer receivables revenues in fiscal 2004 is
reflective of the continued growth in its consumer receivables business. It is
anticipated that such growth will be accelerated over time as a result of the
Velocity Investments $12.5 million credit facility which can be used exclusively
to purchase additional consumer receivable portfolios.

Operating Expenses

         Comparison of the Fiscal Year Ended December 31, 2005 to the Fiscal
Year Ended December 31, 2004.

         Total operating expenses for the fiscal year ended December 31, 2005
were $6,465,620 as compared to $6,914,517 during the fiscal year ended December
31, 2004. The decrease 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 2005 as a result of our increasing collection fees and lien searches
for Velocity Investments and the expansion of operations.

         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.

Other Income (Expense)

         Comparison of the Fiscal Year Ended December 31, 2005 to the Fiscal
Year Ended December 31, 2004.

         Interest expense in the fiscal year ended December 31, 2005 was
$760,674 as compared to $338,525 in the fiscal year ended December 2004,
representing a 124.7% increase. The increase in interest expense was primarily
attributable to increases in long term borrowings, specifically with respect to
the acquisition of a single property in Melbourne, Florida. During fiscal 2004
and fiscal 2005 we recognized no other income.

         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, we
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.

Net Income (Loss)

         Comparison of the Fiscal Year Ended December 31, 2005 to the Fiscal
Year Ended December 31, 2004.

         Net income for the fiscal year ended December 31, 2005 was $473,867 as
compared to net loss for the fiscal year ended December 31, 2004 of $2,705,155.
The net loss in fiscal year 2004 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. The increase in net income in fiscal year 2005 is primarily
attributable to the expansion of operations at the Velocity Investments
subsidiary.

         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 net loss 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.

                                       27
<PAGE>

Liquidity and Capital Resources

         At December 31, 2005, the Company had approximately $49,381 in cash and
cash equivalents and trade accounts payable in the amount of $376,729.
Management believes that the revenues expected to be generated from operations,
the Company's line of credit and the proceeds of a convertible debenture
financing discussed below, will be sufficient to finance operations for the
foreseeable future.

         In order to expand operations by, among other things, purchasing
additional portfolios of distressed receivables, we have been seeking to raise
additional capital by way of the sale of equity securities, debt instruments and
obtaining a bank line of credit. From October 2004 through January 3, 2005, we
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, Velocity Investments 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 and all
our membership interests in Velocity Investments and VOM; and a Subordination
Agreement, in which all sums owing to us by Velocity Investments as an
intercompany payable for advances or loans made or property transferred to
Velocity Investments 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.

         On February 27, 2006, Velocity entered into a First Amendment to the
Loan and Security Agreement pursuant to which, Wells Fargo Foothill extended the
credit facility until January 27, 2009 and agreed to increase the advance rate
under the senior credit facility to 67.5% (up from 60%) of the purchase price of
individual pools of unsecured consumer receivables that are approved by the
lender. Under the First Amendment to the Loan and Security Agreement, Wells
Fargo Foothill also agreed to reduce the interest rate on the loan from 3.50%
above the prime rate of Wells Fargo Bank, N.A. to 2.50% above such prime rate.
In addition, the amortization schedule for each portfolio has been extended from
twenty-four to thirty months. Wells Fargo Foothill also agreed to reduce the
personal limited guarantees from $1,000,000 to $500,000.

         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
us 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.

         On April 15, 2005, we sold three promissory notes in the principal
amount of $100,000, $150,000 and $100,000 each to three accredited investors in
a private placement. Each of the notes bears interest at the rate of 7% per
annum and interest is payable in quarterly installments commencing June 30,
2005. The entire principal of each note is payable on April 15, 2006 unless the
holder thereof gives written notice to us 90 days prior to April 15, 2006 that
it elects to extend his, her or its note, in which event the entire principal
thereof is payable on April 15, 2007.

         On October 5, 2005, we sold two promissory notes in the principal
amount of $60,000 and $70,000, each to a related party entity. Each of the notes
bears interest at the rate of 7% per annum and principal and accrued interest is
payable on October 5, 2006.

         On October 27, 2005, we and our wholly owned subsidiary, J. Holder,
Inc., entered into a Securities Purchase Agreement with an institutional
investor relating to a sale of 10% Secured Convertible Debenture, due April 27,
2007, in the aggregate principal amount of $1.8 million, and an associated
common stock purchase warrant to purchase 200,000 shares of our common stock at
an exercise price of $3.10 per share. Proceeds from the financing ($1,780,000)
have been used primarily for working capital purposes including, but not limited
to, the purchase of distressed real property interests and distressed consumer
receivable portfolios.

                                       28
<PAGE>

Trends

         As a result of our line of credit and convertible debenture financing,
we anticipate that we 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. We are not presently aware of any other known
trends that may have a material impact on its revenues. We do 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
our business.

                  [remainder of page intentionally left blank]

                                       29
<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, 2004 and December 31, 2003 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, , referred to in this context as our certifying officers, we
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange
Act of 1934). Based upon that evaluation, our Chief Executive Officer and our
Chief Financial Officer concluded that as of the end of such period, our
disclosure controls and procedures were effective as of the 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.

         The certifying officers also have indicated that there were no
significant changes in our internal controls or other factors that could
significantly affect such controls subsequent to the date of their evaluation,
and there were no corrective actions with regard to significant deficiencies and
material weaknesses.

                                       30
<PAGE>

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, 2007.

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 AND DIRECTORS

Our executive officers and directors are identified in the table below.

<TABLE>
<CAPTION>
                                       YEAR BECAME AN
                                    EXECUTIVE OFFICER OR
          NAME                AGE        DIRECTOR                      POSITIONS
          ----                ---        --------                      ---------
<S>                           <C>          <C>        <C>
   John C. Kleinert           47           2004       President, Chief Executive Officer and Director (1)
----------------------------------------------------------------------------------------------------------
                                                      Chief Financial Officer, Chief Legal Officer,
   James J. Mastriani         36           2004       Treasurer and Secretary
----------------------------------------------------------------------------------------------------------

   W. Peter Ragan, Sr.        58           2004       Vice President and Director (1)
----------------------------------------------------------------------------------------------------------
                                                      President of Velocity Investments, LLC, our wholly-
   W. Peter Ragan, Jr.        35           2004       owned subsidiary
----------------------------------------------------------------------------------------------------------

   Steven Marcus.             46           2005       Independent Director (2)
----------------------------------------------------------------------------------------------------------

   Dr. Michael Kelly          53           2005       Independent Director (2)
----------------------------------------------------------------------------------------------------------

   David Granatell            48           2005       Independent Director (2)
----------------------------------------------------------------------------------------------------------
</TABLE>
(1)   Such person is also a member of our board of directors.

(2)   Member of Audit Committee and Nominating Committee

                                       31
<PAGE>

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

         The following brief biographies contain information about our directors
and our executive officers. 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.

         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.

         STEVEN MARCUS joined our board of directors in September 2005. Mr.
Marcus is the founder and President of Rainbow Capital, LLC, a private equity
firm that sponsors private equity transactions of mature middle market
companies. He founded the firm in 2001. From 1999 through 2001, Mr. Marcus was a
private equity investor, sourcing and evaluating investment opportunities in
primarily internet start-ups. For the previous 14 years, Mr. Marcus worked in
the high yield bond market for Donaldson, Lufkin & Jenrette, Smith Barney, Inc.
and PaineWebber, Inc. Mr. Marcus has an M.B.A. in finance from the University of
Duke and a B.S. in accounting from Syracuse University. Mr. Marcus is the
Chairman of our Audit Committee.

         DR. MICHAEL KELLY joined our board of directors in September 2005. Mr.
Kelly has been a Director of the Insal, Scott Kelly Institute of Orthopedic and
Sports Medicine in New York, New York since 1991. In 2004 Dr. Kelly was named
Chairman of the Department of Orthopedic Surgery at Hackensack University
Medical Center. He is also Vice President of the U.S. Knee Society, an attending
orthopedic surgeon at Lenox Hill Hospital in New York, New York and has served
as team physician for the New Jersey Nets franchise of the National Basketball
Association for the last 5 years. Mr. Kelly is a member of our Audit Committee.

         DAVID GRANATELL joined our board of directors in September 2005. Mr.
Granatell is an Executive Director of the privately-owned Elmwood Park, NJ based
Grant Industries, Inc., a specialty manufacturer of textile chemicals and
personal care raw materials, with locations in Mexico, Romania, England, China
and Korea. Mr. Granatell has worked for Grant Industries since graduating from
Rutgers University in 1979 and became a Partner in 1982. Mr. Granatell is a
member of our Audit Committee.

                                       32
<PAGE>

Director Independence

         We believe that Steven Marcus, Dr. Michael Kelly and David Granatell
qualify as independent directors as that term is defined in Section 301 of the
Sarbanes-Oxley Act of 2002 and Rule 10A(3)(b)(1) of the Securities Exchange Act,
as amended. Accordingly, our board of directors is comprised of a majority of
independent directors.

Board Committees

         The Board of Directors has established two standing committees --
Audit, and Nominating. The Audit and Nominating Committees each operate under a
charter that has been approved by the Board each of which are attached to this
Annual Report on Form 10-KSB.

         Audit Committee

         Our board of directors established an Audit Committee in December 2005,
comprised of Steven Marcus, Dr. Michael Kelly and David Granatell, all of whom
are independent directors as defined in Section 301 of the Sarbanes-Oxley Act of
2002 and Rule 10A(3)(b)(1) of the Securities Exchange Act, as amended. Mr.
Marcus will serve as chairman of the committee. The board of directors has
determined that Mr. Marcus is an "audit committee financial expert" as defined
in Item 401(e) of Regulation S-B.

         The Audit Committee was formed in September 2005 and did not formally
meet during 2005. The Audit Committee oversees our corporate accounting,
financial reporting practices and the audits of financial statements. For this
purpose, the Audit Committee performs several functions. The Audit Committee
evaluates the independence and performance of, and assesses the qualifications
of, our independent auditors, and engages such independent auditors. The Audit
Committee approves the plan and fees for the annual audit, review of quarterly
reports, tax and other audit-related services, and approves in advance any
non-audit service to be provided by the independent auditors. The Audit
Committee monitors the rotation of partners of the independent auditors on our
engagement team as required by law. The Audit Committee reviews the financial
statements to be included in our Annual Report on Form 10-KSB and reviews with
management and the independent auditors the results of the annual audit and our
quarterly financial statements. In addition, the Audit Committee oversees all
aspects our systems of internal accounting control and corporate governance
functions on behalf of the board. The Audit Committee provides oversight
assistance in connection with legal and ethical compliance programs established
by management and the board, including Sarbanes-Oxley implementation, and makes
recommendations to the Board of Directors regarding corporate governance issues
and policy decisions.

         Nominating Committee

         The Board of Directors has a Nominating Committee, comprised of Steven
Marcus, Dr. Michael Kelly and David Granatell. Mr. Marcus serves as the chairman
of the committee. The Nominating Committee is charged with the responsibility of
reviewing the Company's corporate governance policies and with proposing
potential director nominees to the Board of Directors for consideration. The
Nominating Committee was formed in September 2005 and did not formally meet
during 2005. The Nominating Committee has a charter. All members of the
Nominating Committee are independent directors as defined by the rules of the
AMEX. The Nominating Committee will consider director nominees recommended by
security holders. To recommend a nominee please write to the Nominating
Committee c/o the Company Attn: James J. Mastriani. There are no minimum
qualifications for consideration for nomination to be a director of the Company.
The nominating committee will assess all director nominees using the same
criteria. All of the current nominees to serve as directors on the Board of
Directors of the Company have previously served in such capacity. During 2005,
we did not pay any fees to any third parties to assist in the identification of
nominees. During 2005, we did not receive any director nominee suggestions from
stockholders.

         There are no other Board of Directors committees at this time.

Code of Ethics

         On January 20, 2006 our Board of Directors adopted a code of ethics
that applies to our principal executive and financial officers. A copy of the
Code of Ethics is attached hereto as Exhibit 20.1. We intend to file amendments,
changes or waivers to the code of ethics as required by SEC rules.


The Company's Audit Committee Charter and Nominating Committee Charter are
attached hereto as exhibits and will be available through the Company's Web
site, www.velocitycollect.com. This information is available in print to any
shareholder who requests it.


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.

                                       33
<PAGE>

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, 2005 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 2005, 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 one
year, renewing annually subject to the terms and conditions of the contract, at
an annual salary of $200,000. Mr. Kleinert devotes all of his business time to
our affairs in accordance with the terms of his employment contract.

         On January 1, 2004, we entered into an employment contract with W.
Peter Ragan, Sr. in which we agreed to employ Mr. Ragan, Sr. as our Vice
President and President of our wholly owned subsidiaries, J. Holder, Inc. and
VOM, LLC, for a period of one year, renewing annually subject to the terms and
conditions of the contract at an annual salary of $75,000. Mr. Ragan, Sr.
devotes approximately 50% of his business time to our affairs and the affairs of
J. Holder and VOM in accordance with the terms of his employment contract.

         On January 1, 2004, we entered into an employment contract with W.
Peter Ragan, Jr. in which we agreed to employ Mr. Ragan, Jr. as President of our
wholly owned subsidiary Velocity Investments, LLC, for a period of one year,
renewing annually subject to the terms and conditions of the contract, at an
annual salary of $60,000. 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 and three independent directors. We are not currently providing any
compensation to such members for serving in such capacity.

Compensation Pursuant to Plans

         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.

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                                       34
<PAGE>

         The following table sets forth information available to us, as of March
15, 2006 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                    52.3%
James J. Mastriani(5)                                         0                       0%
W. Peter Ragan, Sr.(4)(5)                             2,343,652                    14.4%
W. Peter Ragan, Jr.(4)(5)                             2,343,652                    14.4%
Steven Marcus (3)                                             0                      --
Dr. Michael Kelly (3)                                   344,412                     2.2%
David Granatell (3)(7)                                1,125,000                     6.6%
All officers and directors as a group
(seven persons)                                      14,287,039                    89.9%
</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.

(7)      Includes 562,500 shares of common stock issuable upon the exercise of
         warrants at $1.04 per share which expire on February 3, 2009.

                                       35
<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.    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 Velocity's indebtedness, including our Chief Executive Officer, John C.
Kleinert, in exchange for the cancellation thereof on the basis of one share per
$.90 of indebtedness.

         2.    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 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
years 2004 and 2005, our subsidiary Velocity Investments, paid Ragan & Ragan,
P.C. an aggregate of $738,900 and $1,062,196, respectively, our subsidiary J.
Holder, paid Ragan & Ragan, P.C. an aggregate of $61,830 and $65,574,
respectively, and our subsidiary, VOM, paid Ragan & Ragan, P.C. an aggregate of
$14,372 and $15,013, respectively.

         3.    In connection with our independent consulting agreement with The
Del Mar Consulting Group Inc., two of our executive officers, W. Peter Ragan,
Sr. and W. Peter Ragan, Jr., granted an option to RB & AJ Associated Holdings,
Inc., a company majority owned by the president of the consultant, to purchase
for $13,600 warrants owned by the executive officers to purchase an aggregate of
85,000 (42,500 from each) shares of our common stock at $1.04 per share. In
addition, the executive officers granted an employee of the consultant an option
to purchase for $2,400 warrants owned by the executive officers to purchase an
aggregate of 1,500 (750 from each) shares of our common stock at $1.04 per
share. Both options were exercised on March 15, 2004.

         4.    On October 5, 2005, we sold an unsecured promissory note in the
principal amount of $60,000 to Ragan & Ragan, PC, a related entity, in a private
placement. The note bears interest at the rate of 7% per annum. The entire
principal and accrued interest of the note is payable in one lump sum payment
on October 5, 2006 unless the holder thereof gives written notice to us 30 days
prior to October 5, 2006 that it elects to extend its note, in which event the
entire principal thereof is payable on October 5, 2007.

         5.    On October 5, 2005, our J. Holder subsidiary sold an unsecured
promissory note in the principal amount of $70,000 to YouBit, Inc. a related
entity owned by Ragan & Ragan, PC in a private placement. The note bears
interest at the rate of 7% per annum. The entire principal and accrued interest
of the note is payable in one lump sum payment on October 5, 2006 unless the
holder thereof gives written notice to us 30 days prior to October 5, 2006 that
it elects to extend its note, in which event the entire principal thereof is
payable on October 5, 2007.

         It is our policy, with respect to insider transactions, that all
transactions between us, our officers, directors and principal stockholders and
our affiliates be on terms no less favorable to us 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. We believe 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.

                                       36
<PAGE>

                                     PART IV
                                     -------

ITEM 13.    EXHIBITS

                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    A*
         Tele-Optics, Inc., TLOP Acquisition Company, L.L.C., STB,Inc., John C.
         Kleinert, W. Peter Ragan, Sr. and W. Peter Ragan, Jr.
 3.1(2)  Certificate of Incorporation                                               B*
 3.1(3)  Amendment to Certificate of Incorporation                                  C*
 3.2(2)  By-laws                                                                    B*
   3.3   Amended and Restated By-laws                                               O*
   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          F*
         between Velocity Investments, LLC and Wells Fargo Foothill, Inc.
   4.4   General Continuing Guaranty, dated January 27, 2005, executed by           F*
         Registrant in favor of Wells Fargo Foothill, Inc.
   4.5   Security and Pledge Agreement, dated as of January 27, 2005, by and        F*
         between Registrant and Wells Fargo Foothill, Inc.
   4.6   Subordination Agreement, dated as of January 27, 2005, by and between      F*
         Registrant and Wells Fargo Foothill, Inc.
  4.7    Form of promissory note issued on April 15, 2005                           L*
  4.8    10% Convertible Debenture due April 27, 2005                               O*
  4.9    Common Stock Purchase Warrant                                              O*
  10.1   Business Advisory Agreement, dated as of February 5, 2004, by and          G*
         between Lomond International, Inc. and Registrant
  10.2   Employment Contract, dated as of September 8, 2004, by and between         H*
         Registrant and James J. Mastriani
  10.3   Independent Consulting Agreement, dated December 16, 2004, between         I*
         Registrant and The Del Mar Consulting Group, Inc.
  10.4   Non-qualified Stock Option Agreement, dated December 16, 2004, Between     I*
         Registrant and The Del Mar Consulting Group, Inc.
  10.5   Employment Agreement, dated as of January 1, 2004, between John C.         J*
         Kleinert and STB, Inc. (n/k/a Velocity Asset Management, Inc.)
  10.6   Addendum, dated September 1, 2004, to Employment Agreement, dated as of    J*
         January 1, 2004, between John C. Kleinert and Registrant
  10.7   Employment Agreement, dated as of January 1, 2004, between John C.         J*
         Kleinert and J. Holder, Inc.
  10.8   Addendum, dated September 1, 2004, to Employment Agreement, dated As of    J*
         January 1, 2004, between John C. Kleinert and J. Holder, Inc.
  10.9   Employment Agreement, dated as of January 1, 2004, between Velocity        J*
         Investments, LLC and W. Peter Ragan, Jr.
  10.10  Addendum, dated September 1, 2004, to Employment Agreement, dated As of    J*
         January 1, 2004, between W. Peter Ragan, Jr. and Velocity Investments,
         LLC
  10.11  Employment Agreement, dated as of January 1, 2004, between VOM, LLC and    J*
         W. Peter Ragan, Sr.
  10.12  Addendum, dated September 1, 2004, to Employment Agreement, dated As of    J*
         January 1, 2004, between W. Peter Ragan, Sr. and VOM, LLC
  10.13  Retainer Agreement, dated as of January 1, 2005, between Ragan & Ragan,    J*
         P.C. and Velocity Investments, LLC
  10.14  Retainer Agreement, dated as of January 1, 2005, between Ragan & Ragan,    J*
         P.C. and VOM, LLC
  10.15  Retainer Agreement, dated as of January 1, 2005, between Ragan & Ragan,    J*
         P.C. and J. Holder, Inc.
  10.16  Addendum, dated January 1, 2006, to Employment Agreement, dated as of
         January 1, 2004, between John C. Kleinert and Registrant
  10.17  Addendum, dated January 1, 2006, to Employment Agreement, dated As of
         January 1, 2004, between John C. Kleinert and J. Holder, Inc.
  10.18  Addendum, dated January 1, 2006, to Employment Agreement, dated As of
         January 1, 2004, between W. Peter Ragan, Jr. and Velocity Investments,
         LLC
  10.19  Addendum, dated January 1, 2006, to Employment Agreement, dated As of
         January 1, 2004, between W. Peter Ragan, Sr. and VOM, LLC
</TABLE>

                                       37
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number   Title                                                                   Reference
------   -----                                                                   ---------
<S>      <C>                                                                         <C>
10.20    Form of Legal Collection Agreement                                          J*
10.21    Real Estate Joint Venture Agreement dated June 2, 2005                      M*
10.22    Business Advisory Agreement dated September 1, 2005                         N*
10.23    Securities Purchase Agreement dated October 27, 2005                        O*
10.24    Registration Rights Agreement dated October 27, 2005                        O*
10.25    Security Agreement dated October 27, 2005                                   O*
10.26    Subsidiary Guarantee dated October 27, 2005                                 O*
10.27    Amendment No. 1 to Business Advisory Agreement dated as of November 11,     Q*
         2005
10.28    Director Indemnification Agreement                                          Q*
10.29    First Amendment to Loan and Security Agreement by and between Wells         R*
         Fargo Foothill, Inc. and Velocity  Investments, L.L.C. dated as of
         February 27, 2006
10.30    Addendum, dated January 1, 2006, to Employment Agreement, dated as of     Attached
         January 1, 2004, between John C. Kleinert and Registrant
10.31    Addendum, dated January 1, 2006, to Employment Agreement, dated As of     Attached
         January 1, 2004, between W. Peter Ragan, Jr. and Velocity Investments,
         LLC
10.32    Addendum, dated January 1, 2006, to Employment Agreement, dated As of     Attached
         January 1, 2004, between W. Peter Ragan, Sr. and VOM, LLC
14.1     Code of Ethics                                                            Attached
16.1     Letter of Robert C. Seiwell, Jr. CPA                                        K*
21.1     Subsidiaries of the Registrant                                              P*
23.1     Consent of Cowan, Gunteski & Co. P.A.                                     Attached
31.1     Certification of the Chief Executive Officer pursuant to Section 302 of   Attached
         the Sarbanes-Oxley Act of 2002
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.        Attached
         Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002
32.2     Certification of the Chief Financial Officer pursuant to 18 U.S.C.        Attached
         Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002
99.1     Audit Committee Charter                                                   Attached
99.2     Nominating Committee Charter                                              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

                                       38
<PAGE>

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.

L     Incorporated by reference to Registrant's Current Report on Form 8-K filed
      with the Securities and Exchange Commission on April 19, 2005.

M     Incorporated by reference to Registrant's Current Report on Form 8-K filed
      with the Securities and Exchange Commission on June 22, 2005.

N     Incorporated by reference to Registrant's Current Report on Form 8-K filed
      with the Securities and Exchange Commission on September 7, 2005.

O     Incorporated by reference to Registrant's Current Report on Form 8-K filed
      with the Securities and Exchange Commission on October 31, 2005.

P     Filed as part of Amendment No. 1 to the Registration Statement on Form
      SB-2, File No. 333-130234, filed with the Securities Exchange Commission
      on December 29, 2005.

Q     Incorporated by reference to Registrant's Quarterly Report on Form
      10-QSB/A for the quarter ended September 30, 2005 filed with the
      Securities and Exchange Commission on December 2, 2005

R     Incorporated by reference to Registrant's Current Report on Form 8-K filed
      with the Securities and Exchange Commission on February 28, 2006.



*     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.

                                       39
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         (a) Audit Fees

         The aggregate fees billed for each of fiscal 2005 and fiscal 2004 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 $100,092.00 and $51,308.39, respectively.

         (b) Audit-Related Fees

         The aggregate fees billed in each of fiscal 2005 and fiscal 2004 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 was $23,586 and $0, respectively.

         (c) Tax Fees

         The aggregate fees billed in fiscal 2005 or fiscal 2004 for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning was $43,981.00 and $16,383.61, respectively.

         (d) All Other Fees

         No fees were billed in each of fiscal 2005 and fiscal 2004 for products
and services provided by the principal accountant.

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

                                       40
<PAGE>



                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003

<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003



                                    CONTENTS
                                                                         Page
                                                                         ----

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT                    F-1

FINANCIAL STATEMENTS

Consolidated Balance Sheets                                            F-2 - F-3

Consolidated Statements of Income (Loss)                                  F-4

Consolidated Statements of Changes in Equity                              F-5

Consolidated Statements of Cash Flows                                     F-6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                        F-7 - F-27

<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, 2005 and 2004 and the
related consolidated statements of income (loss), consolidated statements of
changes in equity and the consolidated statements of cash flows for Velocity
Asset Management, Inc. and Subsidiaries for the years ended December 31, 2005,
2004 and 2003. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audits 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated 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, 2005 and 2004, and the
results of its operations and its cash flows for the years ended December 31,
2005, 2004 and 2003, 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.


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


Toms River, New Jersey
March 17, 2006

                                       F-1
<PAGE>

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

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2005 and 2004


                 ASSETS                                              (Restated)
                                                         2005           2004
                                                     ------------   ------------
CURRENT ASSETS
  Cash and Cash Equivalents                          $     90,624   $  1,423,123
  Accounts Receivable                                      30,000        815,251
  Investments in Real Property                          6,439,240      2,150,860
  Deposits on Properties                                  241,000        120,000
  Investments in Municipal Tax Liens                      538,926        702,117
  Consumer Finance Receivables                         17,758,661      3,237,852
  Other Current Assets                                     14,924             --
                                                     ------------   ------------

      Total Current Assets                             25,113,375      8,449,203
                                                     ------------   ------------

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation                                             87,222         47,198
                                                     ------------   ------------

OTHER ASSETS
  Deferred Income Tax Asset - Non-Current                 178,000        221,500
  Security Deposit                                         87,500             --
  Other Asset                                             108,333         75,000
                                                     ------------   ------------

      Total Other Assets                                  373,833        296,500
                                                     ------------   ------------

      Total Assets                                   $ 25,574,430   $  8,792,901
                                                     ============   ============

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

                                       F-2
<PAGE>

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

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2005 and 2004


<TABLE>
<CAPTION>
        LIABILITIES AND STOCKHOLDERS' EQUITY                                       (Restated)
                                                                      2005            2004
                                                                  ------------    ------------
<S>                                                               <C>             <C>
CURRENT LIABILITIES
  Accounts Payable and Accrued Expenses                           $    447,971    $      1,937
  Estimated Court and Media Fees                                     3,799,646              --
  Short-Term Borrowings Under Line of Credit                         6,164,462              --
  Current Portion of Long-Term Debt                                    410,000         250,000
  Income Taxes Payable                                                 133,132          13,550
  Deferred Income Tax Liability - Current                               30,200          11,800
  Current Portion of Obligation Under Capital Lease                         --         709,157
                                                                  ------------    ------------

      Total Current Liabilities                                     10,985,411         986,444
                                                                  ------------    ------------

LONG-TERM LIABILITIES
  Secured Debenture                                                  1,800,000              --
  Long-Term Debt, less current portion                               4,350,000              --
                                                                  ------------    ------------

      Total Long-Term Liabilities                                    6,150,000              --
                                                                  ------------    ------------

      Total Liabilities                                             17,135,411         986,444
                                                                  ------------    ------------

STOCKHOLDERS' EQUITY
  Common Stock, $0.001 par value, 40,000,000 shares Authorized,
    15,972,321 and 15,794,348 shares Issued and Outstanding,
    respectively                                                        15,972          15,795
  Additional Paid In Capital                                        10,838,651      10,680,133
  Accumulated Deficit                                               (2,415,604)     (2,889,471)
                                                                  ------------    ------------

  Total Stockholders' Equity                                         8,439,019       7,806,457
                                                                  ------------    ------------

      Total Liabilities and Stockholders' Equity                  $ 25,574,430    $  8,792,901
                                                                  ============    ============
</TABLE>
            See Accompanying Notes and Independent Registered Public
                            Accounting Firm's Report

                                       F-3
<PAGE>

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

                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
             For the Years Ended December 31, 2005, 2004, and 2003


<TABLE>
<CAPTION>
                                                               (Restated)
                                                   2005            2004            2003*
                                               ------------    ------------    ------------
<S>                                            <C>             <C>             <C>
REVENUES
  Sale of Real Property                        $  3,685,338    $  2,369,564    $  3,399,164
  Collections on Consumer Receivables             3,633,945       1,726,356         297,360
  Interest Income - Tax Certificates                782,461         260,269         310,350
                                               ------------    ------------    ------------

Total Revenues                                    8,101,744       4,356,189       4,006,874
                                               ------------    ------------    ------------

OPERATING EXPENSES
  Cost of Real Property                           3,326,021       2,278,592       3,100,290
  Consulting Fees                                    25,513         416,287         117,992
  Professional Fees                               1,992,362       1,006,337         341,320
  Loss on Extinguishment of Debt                         --       2,859,307              --
  General and Administrative Expenses             1,121,724         353,994         151,747
                                               ------------    ------------    ------------

      Total Operating Expenses                    6,465,620       6,914,517       3,711,349
                                               ------------    ------------    ------------

      Income (Loss) from Operations               1,636,124      (2,558,328)        295,525
                                               ------------    ------------    ------------

OTHER INCOME (EXPENSE)
  Interest Expense                                 (760,674)       (338,525)       (329,740)
  Other Income                                           --              --          67,450
                                               ------------    ------------    ------------

     Total Other Income (Expense)                  (760,674)       (338,525)       (262,290)
                                               ------------    ------------    ------------

Income (Loss) Before Tax Provision                  875,450      (2,896,853)         33,235

Provision for (Benefit of) Income Taxes             401,583        (191,698)          2,567
                                               ------------    ------------    ------------

Net Income (Loss)                              $    473,867    $ (2,705,155)   $     30,668
                                               ============    ============    ============


Weighted Average Common Shares - Basic           15,947,618      27,047,005      13,005,000
                                               ============    ============    ============

Net Income (Loss) per Common Share - Basic     $       0.03    $      (0.10)   $       0.00
                                               ============    ============    ============

Weighted Average Common Shares - Diluted         19,915,704      36,451,226      13,005,000
                                               ============    ============    ============

Net Income (Loss) per Common Share - Diluted   $       0.02    $      (0.07)   $       0.00
                                               ============    ============    ============
</TABLE>

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

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

                                       F-4
<PAGE>

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

                  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
              For the Years Ended December 31, 2005, 2004, and 2003

<TABLE>
<CAPTION>
                                                             Common Stock
                                                     ----------------------------    Additional       Retained          Total
                                                       Number of                       Paid in        Earnings      Stockholders'
                                                        Shares        Par Value        Capital        (Deficit)    Equity (Deficit)
                                                     ------------    ------------    ------------    ------------    ------------
<S>                                                    <C>           <C>             <C>             <C>             <C>
*BALANCES, January 1, 2003                             13,005,000    $     13,005    $         --    $   (134,753)   $   (121,748)

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

Net Income for the Year Ended December 31, 2003                --              --              --          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 11)                           79,682,500          79,683              --              --          79,683

   Net Income (Loss) 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 11)                              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 12)          (114,004,379)       (114,004)             --              --        (114,004)

August 12, 2004 - Debt Conversion for Stock
   (See Note 15)                                        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 $2.50 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
January 30, 2004 and an independent consulting
agreement dated December 16, 2004  (See Note 14)               --              --         254,176              --         254,176

Net Loss for the Year Ended December 31, 2004 -
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

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
withing the next five years:
  January 5, 2005 - Fourth Tranche Closing                133,350             133         199,891              --         200,024

Commissions Paid in Conjunction with Private
Offering                                                       --              --        (135,268)             --        (135,268)

July 14, 2005 - Issuance of Stock Pursuant to
Right to Receive Clause                                    44,623              44             (44)             --              --

September 1, 2005 - Issuance of warrants for
services rendered by an independent consultant                 --              --          21,088              --          21,088

October 27, 2005 - Issuance of warrants pursuant
to secured debenture                                           --              --          72,851              --          72,851

Net Income for the Year Ended December 31, 2005                --              --              --         473,867         473,867
                                                     ------------    ------------    ------------    ------------    ------------

BALANCES, December 31, 2005                            15,972,321    $     15,972    $ 10,838,651    $ (2,415,604)   $  8,439,019
                                                     ============    ============    ============    ============    ============
</TABLE>

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

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

                                       F-5
<PAGE>

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

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 2005, 2004, and 2003

<TABLE>
<CAPTION>
                                                                              (Restated)
                                                                 2005            2004            2003*
                                                             ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income (Loss)                                          $    473,867    $ (2,705,155)   $     30,668
  Adjustments to reconcile net income (loss) to net cash
  used by operating activities:
    Depreciation                                                   26,287           5,147              --
    Loss on Extinguishment of Debt                                     --       2,859,307              --
    Stock and Warrants Issued in Lieu of Services Rendered         93,941         404,176              --
    (Increase) Decrease in:
      Accounts Receivable                                         785,251        (607,280)       (207,970)
      Investments in Municipal Tax Liens                          163,191         306,956         924,961
      Other Current Assets                                        (14,924)             --              --
      Investments in Real Property                             (4,288,380)     (1,011,190)        441,482
      Finance Receivables                                     (14,520,809)     (1,470,686)     (1,767,166)
      Deposits on Properties                                     (121,000)          7,500        (102,500)
      Security Deposit                                            (87,500)             --              --
      Other Investments                                                --              --          20,000
      Deferred Income Tax Asset - Non-Current                      43,500        (221,500)             --
      Other Assets                                                (33,333)        (75,000)             --
    Increase (Decrease) in:
      Accrued Expenses                                            446,034        (189,685)        109,477
      Estimated Court and Media Costs                           3,799,646              --              --
      Deferred Income Tax Liability - Current                      18,400          11,800              --
      Income Taxes Payable                                        119,582          10,983           2,567
                                                             ------------    ------------    ------------
         Net Cash Used by Operating Activities                (13,096,247)     (2,674,627)       (548,481)
                                                             ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
      Acquisition of Property and Equipment                       (66,311)        (52,345)             --
      Cash Received from Reverse Acquisition                           --             452              --
                                                             ------------    ------------    ------------
         Net Cash Used by Investing Activities                    (66,311)        (51,893)             --
                                                             ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  New Borrowings:
      Short-Term                                                6,164,460         500,000              --
      Long-Term                                                 4,510,000              --       2,613,899
  Debt Reduction:
      Short-Term                                                 (709,157)        (84,281)     (1,770,706)
      Long-Term                                                        --        (470,008)       (135,714)
  Proceeds Received from Private Placement Stock Sales            200,024       3,663,505              --
  Commissions Paid in Conjunction with Private Offering          (135,268)             --              --
  Proceeds from Secured Debenture                               1,800,000              --              --
  Capital Withdrawals                                                  --              --          (1,000)
                                                             ------------    ------------    ------------
    Net Cash Provided from Financing Activities                11,830,059       3,609,216         706,479
                                                             ------------    ------------    ------------

Net Increase (Decrease) in Cash and Cash Equivalents           (1,332,499)        882,696         157,998

Cash and Cash Equivalents, Beginning of Year                    1,423,123         540,427         382,429
                                                             ------------    ------------    ------------

Cash and Cash Equivalents, End of Year                       $     90,624    $  1,423,123    $    540,427
                                                             ============    ============    ============
</TABLE>

* Issued as an audited consolidated statement of income of STB, Inc. 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, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES

Basis of Presentation
---------------------

The consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America and require
management to make certain estimates and assumptions. These may affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements. They also may
affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates upon subsequent
resolution of identified matters.

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

On February 3, 2004, Tele-Optics, Inc., 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 Tele-Optics, Inc. operates all of its current business activities
through its wholly-owned subsidiary TLOP.

Effective April 8, 2004, Tele-Optics changed its name 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 Delaware on December
31, 1986. In 1987, the Company issued shares of its common stock pursuant to a
public offering. The Company was engaged in the manufacture of optical products
until 1991 when all assets and operations were sold. The Company was inactive
from 1992 through 1998. Commencing in 1999, the Company devoted its activities
to raising capital, becoming current on all previously delinquent regulatory
reporting obligations, and sought to effect a merger or acquisition with a
company that management believed to have significant growth potential. On
February 3, 2004 (the "Effective Date"), the Company acquired STB, Inc., a New
Jersey corporation ("STB"). Accordingly, the Company was classified as a
Development Stage Enterprise, effective January 1, 1999 through February 3,
2004.

TLOP Acquisition Company, L.L.C. - TLOP Acquisition Company, L.L.C. 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.

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, L.L.C. ("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, L.L.C. ("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 seeks to liquidate these portfolios through
legal collection means.

                                       F-7
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

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

The consolidated financial statements include the accounts of Velocity Asset
Management, Inc. and companies in which Velocity Asset Management, Inc. has a
controlling interest. Intercompany transactions have been eliminated. The equity
method of accounting is used for investments in affiliates and other joint
ventures over which Velocity Assets Management, Inc. has significant influence
(ownership between twenty and fifty percent) but does not have effective
control. Investments in affiliates in which Velocity Asset Management, Inc.
cannot exercise significant influence (ownership interest less than twenty
percent) are accounted for on the cost method.

Velocity Asset Management, Inc. also evaluates consolidation of entities under
Financial Accounting Standards Board (FASB) Interpretation No. 46R,
"Consolidation of Variable Interest Entities" (FIN 46R). FIN 46R requires
management to evaluate whether an entity or interest is a variable interest
entity and whether Velocity Asset Management, Inc. is the primary beneficiary.
Consolidation is required if both of these criteria are met. Velocity Asset
Management, Inc. does not have any variable interest entities requiring
consolidation.

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

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

Investment and Revenue Recognition - Investments in 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 Receivables
----------------------------------------------------------

The Company purchases consumer receivable portfolios at a substantial discount
from their face amount due to a deterioration of credit quality between the
origination and the Company's acquisition of the portfolios. Income is
recognized using either the interest method or cost recovery method. Upon
acquisition, the Company reviews each consumer receivable portfolio to determine
whether each such portfolio is to be accounted for individually or whether such
portfolio will be assembled into static pools of consumer receivables portfolios
based on common risk characteristics. Once the static portfolio pools are
created, management estimates the future anticipated cash flows for each pool.
If management can reasonably estimate the expected timing and amount to future
cash flows the interest method is applied. However, if the expected future cash
flows cannot be reasonably estimated, the Company uses the cost recovery method.

                                       F-8
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

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

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

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

Under the cost recovery method, no revenue is recognized until the Company has
fully collected the cost of the portfolio, or until such time that the Company
considers the collections to be probable and estimable and begins to recognize
income based on the interest method as described above. At December 31, 2005,
the Company had no consumer receivable portfolios accounted for under the cost
recovery method.

The Company establishes valuation allowances for all acquired loans subject to
SOP 03-03 to reflect only those losses incurred after acquisition (that is, the
present value of cash flows initially expected at acquisition that are no longer
expected to be collected). Valuation allowances are established only subsequent
to acquisition of the receivables. At December 31, 2005, the Company had no
valuation allowance on its receivables. Prior to January 1, 2005, in the event
that estimated future cash collections would be inadequate to amortize the
carrying balance, an impairment charge would be taken with a corresponding
write-off of the receivable balance.

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.

                                       F-9
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

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, 2005,
2004 and 2003 was $26,287, $5,147, 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
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".

                                      F-10
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

Recently Adopted Accounting Standards
-------------------------------------

In December 2003, the Accounting Standards Executive Committee issued Statement
of Position 03-03, "Accounting for Certain Loans of Debt Securities Acquired in
a Transfer". SOP 03-03 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 while decreases in expected cash flows
should be recognized as impairment.

Prior to January 1, 2005, the Company accounted for its investment in consumer
receivable portfolios using the interest method under the guidance of Practice
Bulletin 6, "Amortization of Discounts on Certain Acquired Loans." Effective
January 1, 2005, the Company adopted and began to account for its investment in
consumer receivable portfolios using the interest rate method under the guidance
of American Institute of Certified Public Accountants ("AICPA") Statement of
Position ("SOP") 03-03, "Accounting for Loans or Certain Securities Acquired in
a Transfer."

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

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


Recent Issued Accounting Standards
----------------------------------

SFAS No. 154, "Accounting Changes for Error Corrections, a replacement of APB
Opinion No. 20 and FASB Statement No. 3," was issued in June 2005. SFAS No. 154
is effective January 1, 2006. This statement requires retrospective application
to financial statements of prior periods for changes in accounting principle
that are not adopted prospectively. This standard has no impact on the Company's
2005 financial statements.

SFAS No. 153, "Exchanges of Nonmonetary Assets--an amendment of APB Opinion No.
29," was issued in December 2004. SFAS No. 153 is effective January 1, 2006.
This statement eliminates the exception for nonmonetary exchanges of similar
productive assets to be measured based on the fair value of the assets exchanged
and replaces it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. This standard has no impact on the
Company's financial statements.

                                      F-11
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Standards (Continued)
------------------------------------------------

SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity," was issued in May 2003. SFAS No. 150 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.

SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities," was issued in April 2003. SFAS No. 149 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.

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

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

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 condensed consolidated statements 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 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 for the year ended December 31, 2004.

                                      F-12
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (Continued)

Reclassification
----------------

Certain amounts in previously issued financial statements were reclassified to
conform to 2005 presentations. These reclassifications had no effect on retained
earnings.


NOTE 2 - INVESTMENTS

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

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

Investments in real property consist of the following:

<TABLE>
<CAPTION>
                                               2005           2004           2003
                                           ------------   ------------   ------------
<S>                                        <C>            <C>            <C>
   Total Property Inventory                $  6,024,038   $  1,524,810   $  1,139,670
   Assignments and Judgments                    415,202        626,050             --
                                           ------------   ------------   ------------

      Total Investments in Real Property   $  6,439,240   $  2,150,860   $  1,139,670
                                           ============   ============   ============
</TABLE>

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

Investments in municipal tax liens consist of the following:

                                       2005           2004           2003
                                   ------------   ------------   ------------
   Tax Lien Certificates           $    302,228   $    432,232   $    674,603
   Accrued Interest                     236,698        269,885        334,470
                                   ------------   ------------   ------------

      Total Tax Certficates        $    538,926   $    702,117   $  1,009,073
                                   ============   ============   ============

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


NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS

Consumer finance receivables consist of the following:

<TABLE>
<CAPTION>
                                                            2005            2004
                                                        ------------    ------------
<S>                                                     <C>             <C>
   Balance at beginning of period                       $  3,237,852    $  1,767,166
   Acquisitions and Capitalized Costs, net of Returns     16,291,794       1,689,316

   Cash Collections                                       (5,404,930)     (1,944,986)
   Income Recognized on Consumer Receivables               3,633,945       1,726,356
                                                        ------------    ------------
      Cash Collections Applied to Principal               (1,770,985)       (218,630)
                                                        ------------    ------------

      Total Consumer Receivable Portfolios              $ 17,758,661    $  3,237,852
                                                        ============    ============
</TABLE>

                                      F-13
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 3 - CONSUMER RECEIVABLE PORTFOLIOS (Continued)

As of December 31, 2005, the Company had $17,758,661 in consumer receivables.
Based upon management's current estimation of future cash collections, principal
reductions will be as follows:

   December 31, 2006                                      $ 2,575,723
   December 31, 2007                                        3,464,621
   December 31, 2008                                        4,502,514
   December 31, 2009                                        4,972,845
   December 31, 2010                                        2,242,958
                                                          -----------

      Total                                               $17,758,661
                                                          ===========

The accretable yield represents the amount of income the Company can expect to
generate over the remaining life of its existing portfolios based on estimated
cash flows as of December 31, 2005. Changes in the accretable yield are as
follows:

                                                              2005
                                                          ------------

   Balance at Beginning of Year                           $  2,879,823
   Income Recognized on Consumer Receivable Portfolios      (3,633,945)
   Additions                                                16,372,763
                                                          ------------

      Balance at End of Year                              $ 15,618,641
                                                          ============

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                         2005           2004           2003
                                     ------------   ------------   ------------

   Office Equipment                  $     92,820   $     41,775   $         --
   Furniture and Fixtures                   9,740          4,990             --
   Leasehold Improvements                  16,095          5,580             --
                                     ------------   ------------   ------------

   Total Property and Equipment           118,655         52,345             --

   Less:  Accumulated Depreciation        (31,433)        (5,147)            --
                                     ------------   ------------   ------------

   Net Property and Equipment        $     87,222   $     47,198   $         --
                                     ============   ============   ============

                                      F-14
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 5 - SHORT TERM BORROWINGS UNDER LINE OF CREDIT

The Company had a $2,000,000 line of credit with an officer and 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, 2005,
2004 and 2003, there was $-0-, $-0- and $1,294,523, respectively, available
under this line of credit. 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 of 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, in the year
2004 the Company has recorded a non-cash loss on early extinguishment of debt of
$794,349.

On January 27, 2005 (the "Closing Date"), 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 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. On the Closing Date, the following agreements were also
entered into with the Lender: a Continuing Guaranty, under which the Company
provided a secure guaranty of Velocity's obligations under the Loan Agreement; a
Security and Pledge Agreement, by and among the Registrant and the Lender, under
which the Company pledged all of the Company's assets to secure the credit
facility; and a Subordination Agreement, by and among the Company, the Lender
and Velocity, under which the Company agreed to subordinate certain sums of the
intercompany payable due and owing from Velocity to the payments owed under the
credit facility. The interest rate on the loan is 3.50% above the prime rate of
Wells Fargo Bank, N.A, which was 10.75% at December 31, 2005. As of December 31,
2005, the Company had $6,164,462 outstanding on the line. The Loan Agreement was
amended in February 2006, see Note 18, "SUBSEQUENT EVENTS".

                                      F-15
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 6 - NOTES PAYABLE
<TABLE>
<CAPTION>

Notes payable consist of the following:

                                                                                       2005            2004            2003
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Note payable to an officer and a related trust, interest at 10% per annum,
secured by tax lien certificates and all other assets of the Company. Principal
and interest payable quarterly or, if not quarterly, at such time as the
Company's cash flow allows, was due July 17, 2004. On August 12, 2004, the
Company entered into an agreement under which the above note was exchanged for
shares of the Company's common stock, par value $.001 per share at a rate of one
share per $.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 3, 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 No. 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, in the year 2004, the Company has recorded a non-cash loss on early
extinguishment of debt of $1,256,470.                                              $         --    $         --    $  1,506,036
                                                                                   ------------    ------------    ------------

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
$.90 of the obligation. The total debt exchanged including accrued interest of
$5,015, totaled $155,015. The effective date 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 since the last interest payment date of
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 No. 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, in the year 2004, the Company has recorded a non-cash loss on early
extinguishment of debt of $120,567.                                                          --              --         500,000
                                                                                   ------------    ------------    ------------

Subtotal                                                                                     --              --       2,006,036
                                                                                   ------------    ------------    ------------
</TABLE>

                                      F-16
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 6 - NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>

                                                                                       2005            2004            2003
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Subtotal brought forward                                                           $         --    $         --    $  2,006,036

Note payable to Michael Kelly, 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 $300,000 note payable was exchanged for shares of the Company's common stock,
par value $.001 per share at a rate of one share per $.90 of the obligation. The
total debt exchanged including accrued interest of $11,902 totaled $311,902. The
effective date 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 since the last interest payment date of 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 No. 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, in the year 2004, the Company has recorded a non-cash loss on early
extinguishment of debt of $241,089.                                                          --              --         300,000

Notes payable to an officer and shareholder, interest at 8% per annum,
unsecured. All notes originated during the period January-May of 2003 and were
each due in five years. Principal and interest were due on the anniversary of
each note except that 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 $.90 of the obligation. The total debt exchanged including accrued
interest of $51,798 totaled $550,818. The effective date of this 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 of June 30, 2004. On August 12, 2004, the Company's stock
as traded on OTCBB had a market vale of $1.60. In connection with this debt
exchange, in the year 2004, the Company has recorded a non-cash loss on early
extinguishment of debt of $446,832.                                                                                     499,020
                                                                                   ------------    ------------    ------------

Subtotal                                                                                     --              --       2,805,056
                                                                                   ------------    ------------    ------------
</TABLE>

                                      F-17
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 6 - NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>

                                                                                       2005            2004            2003
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Subtotal Carryover                                                                 $         --    $         --    $  2,805,056

On June 2, 2005, J. Holder, a wholly owned subsidiary of the Company, acquired a
residential property in Melbourne, Florida through a joint venture with
Groveland Estates, LLC, an unrelated party. The property was purchased for $3.25
million from Detroit-based Comerica Bank, which had acquired the property
through a foreclosure. Acquisition financing of $3,350,000 was provided by a
group of investors, including J. Holder (the "Investor Group") which invested
approximately $125,000, that will receive 10% per annum and 2.0% of the loaned
amount along with a pro rata share of 20% of the net profit realized by J.
Holder upon the sale of the property.

Under the terms of its joint venture agreement with Groveland Estates, LLC, the
Investor Group will receive 100% return of all capital including acquisition and
carrying costs, plus the above cost of funds. In addition, J. Holder will
receive 60% of the net profit of the proceeds upon the sale of the property, 20%
of which will be shared pro rata among the Investor Group, and Groveland
Estates, LLC will receive 40% of the net profit, plus 20% of the actual cost, if
any, of the property's renovation, as a project management fee. Although the
property was appraised in March 2005 at $8.5 million, there can be no assurance
that the sale of the property will result in a profit.                                3,350,000              --              --

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

Subtotal                                                                              4,350,000              --       2,805,056
                                                                                   ------------    ------------    ------------
</TABLE>

                                      F-18
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 6 - NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>

                                                                                       2005            2004            2003
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Subtotal brought forward                                                           $  4,350,000    $         --    $  2,805,056

On April 15, 2005, the Company sold three promissory notes in the principal
amount of $100,000, $150,000 and $100,000 each to three accredited investors in
a private placement. Each of the notes bears interest at the rate of 7% per
annum and interest is payable in quarterly installments commencing June 30,
2005. The entire principal of each note is payable on April 15, 2006 unless the
holder thereof gives written notice to the Company 90 days prior to April 15,
2006 that it elects to extend his, her or its note, in which event the entire
principal thereof is payable on April 15, 2007.                                         350,000

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 is payable upon
demand and is unsecured.                                                                     --         250,000              --

On October 5, 2005, the Company sold a promissory note in the principal amount
of $60,000 to a related entity in a private placement. The note bears interest
at the rate of 7% per annum. The entire principal and accrued interest of each
note is payable in one lump sum payment on October 5, 2006 unless the holder
thereof gives written notice to the Company 30 days prior to October 5, 2006
that it elects to extend his, her or its note, in which event the entire
principal thereof is payable on October 5, 2007.                                         60,000
                                                                                   ------------    ------------    ------------

Total notes payable                                                                   4,760,000         250,000       2,805,056
Less: Current Portion                                                                   410,000         250,000       2,306,036
                                                                                   ------------    ------------    ------------

                                                                                   $  4,350,000    $         --    $    499,020
                                                                                   ============    ============    ============

Maturities of notes payable are as follows:
                                                                      2006         $    410,000
                                                                      2007            4,350,000
                                                                                   ------------

                                                                                   $  4,760,000
                                                                                   ============
</TABLE>

                                      F-19
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 7 - OBLIGATION UNDER CAPITAL LEASE

The capital lease obligation consists of the following:
<TABLE>
<CAPTION>

                                                                                       2005            2004            2003
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Capital lease payable to Unifund Portfolio E, LLC in monthly installments of
$44,834, including interest at 5.75% with a ballon payment due November 2005,
secured by corresponding consumer receivables portfolios. On November 7, 2005,
the Company exercised its option to buy out the lease for a balloon payment of
$315,180.                                                                          $         --    $    709,157    $  1,179,165
                                                                                   ============    ============    ============
</TABLE>


NOTE 8 - RELATED PARTY TRANSACTIONS

Interest payments on the line of credit, Note 5, were made to a director and
shareholder of the Company in the amounts of, $-0- , $124,859 and $66,237 for
the years ended December 31, 2005, 2004 and 2003, respectively. In addition, the
Company paid the director and shareholder consulting fees of $-0-, $8,312, and
$103,389 for the years ended December 31, 2005, 2004 and 2003, respectively.

At December 31, 2005, 2004 and 2003, the Company had a related party receivable
from a related party in the amount of $-0-, $-0- and $16,872, 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 consulting
group, 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.

Until June 1, 2005, the Company's business office at 3100 Route 138 West, Wall,
NJ 07719 had been leased for a two year period from a company owned by Messrs.
Ragan & Ragan and total lease payments of $3,750, $9,000 and $-0- for years
ended December 31, 2005, 2004 and 2003.

The Company engages Ragan & Ragan, PC an entity owned by Messrs. Ragan & Ragan,
to pursue legal collection of its receivable portfolios with respect to obligors
and properties located in the State of New Jersey. The fee arrangements between
the Company's subsidiaries Velocity, J. Holder and VOM and Ragan & Ragan, P.C.,
each dated as of January 1, 2005, have been reviewed and approved by all 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.

Legal fees paid to Ragan & Ragan, P.C. by the individual subsidiaries were as
follows:

                                            2005         2004         2003
                                         ----------   ----------   ----------
Velocity Investments, L.L.C              $1,062,196      554,770   $  111,485
VOM, L.L.C                                   15,013        6,225       95,000
J. Holder, Inc.                              63,574       71,689       51,671
                                         ----------   ----------   ----------

                                         $1,140,783   $  632,684   $  258,156
                                         ==========   ==========   ==========

                                      F-20
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 8 - RELATED PARTY TRANSACTIONS (Continued)

On October 5, 2005, the Company sold a promissory note in the principal amount
of $60,000 to Ragan & Ragan, PC, a related entity, in a private placement. The
note bears interest at the rate of 7% per annum. The entire principal and
accrued interest of the note is payable in one lump sum payment on October 5,
2006 unless the holder thereof gives written notice to the Company 30 days prior
to October 5, 2006 that it elects to extend its note, in which event the entire
principal thereof is payable on October 5, 2007. On October 5, 2005, the
Company's J. Holder subsidiary sold a promissory note in the principal amount of
$70,000 to YouBit, Inc. a related entity owned by Ragan & Ragan, PC in a private
placement. The note bears interest at the rate of 7% per annum. The entire
principal and accrued interest of each note is payable in one lump sum payment
on October 5, 2006 unless the holder thereof gives written notice to the Company
30 days prior to October 5, 2006 that it elects to extend its note, in which
event the entire principal thereof is payable on October 5, 2007.


NOTE 9 - INCOME TAXES

The provision for corporate income taxes for the years ended December 31, 2005,
2004 and 2003 consist of the following:

<TABLE>
<CAPTION>
                                                       2005           2004            2003
                                                   ------------   ------------    ------------
<S>                                                <C>            <C>             <C>
Current:
  Federal                                          $    274,666   $         --    $         --
  State                                                  65,017         18,002           2,567
                                                   ------------   ------------    ------------

Total                                              $    339,683   $     18,002    $      2,567
                                                   ------------   ------------    ------------


Deferred Tax (Benefit) Expense:
  Federal                                          $     49,820       (221,500)   $         --
  State                                                  12,080         11,800              --
                                                   ------------   ------------    ------------

Total Deferred Tax (Benefit) Expense               $     61,900   $   (209,700)   $         --
                                                   ------------   ------------    ------------

Total Current and Deferred Tax (Benefit) Expense   $    401,583   $   (191,698)   $      2,567
                                                   ============   ============    ============
</TABLE>

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, 2005, 2004 and 2003 are as follows:

                                         2005           2004           2003
                                     ------------   ------------   ------------
Deferred Tax Asset
  Net Operating Loss Carryforwards   $    506,600   $    620,400   $    625,900
                                     ============   ============   ============

Deferred Tax Liability
  Depreciation and Amortization      $    (30,200)  $    (11,800)  $         --
                                     ============   ============   ============

Net Deferred Income Taxes            $    476,400        608,600   $    625,900

Valuation Allowance                      (328,600)      (398,900)      (625,900)
                                     ------------   ------------   ------------

Total                                $    147,800   $    209,700   $         --
                                     ============   ============   ============

                                      F-21
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 9 - INCOME TAXES (Continued)

Velocity Asset Management, Inc. (formerly Tele-Optics, Inc.) generated net
operating losses prior to its acquisition of STB. 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 carry forwards. These pre-reverse acquisition net operating loss
carry forwards will be limited and reduced based upon the applicable Federal and
New Jersey rules. Any net operating loss carry forwards 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 carry forwards were offset by a 100% valuation allowance due to
the uncertainty of profitable operations in the future.

At December 31, 2005, the Company had unused net operating loss carry forwards
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 $506,600, 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 carry forwards, a
valuation reserve has been established for an amount equal to the expected
expired amount.


NOTE 10 - RECAPITALIZATION

The merger of STB into Velocity Asset Management, Inc.'s wholly-owned subsidiary
TLOP Acquisition Company, L.L.C. was treated as a reverse acquisition resulting
in a recapitalization. The details of the recapitalization are as follows:

<TABLE>
<CAPTION>
                                                            February 3, 2004
                                       -------------------------------------------------------------
              Equity Account               Balance           Adjustments                Balance
                                           Prior to          Pursuant to                 After
                                       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.

                                      F-22
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 11 - COMMON STOCK TRANSACTIONS

Concurrent with and pursuant to the reverse merger, which occurred on February
3, 2004, between Velocity Asset Management, Inc. (formerly Tele-Optics, Inc.)
and STB, Inc. (See Note 1 - Organization and Accounting Policies), the Company
issued the following shares of common stock to the executive officers of the
Company:

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

        John 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
                                            ----------------      ---------

                                                   6,129,424      $   6,129
                                            ================      =========

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

              Name of Shareholder           Number of Shares      Par 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
12.


NOTE 12 - 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, 2005, the total common stock issued
and outstanding was 15,972,321 with a par value of $15,972 and there was no
preferred stock issued or outstanding. All references to share numbers or
earnings or loss per share contained in the consolidated financial statements to
which these notes relate give effect to the Reverse Split.

NOTE 13 - SECURED DEBENTURE

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

                                      F-23
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 13 - SECURED DEBENTURE (Continued)

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

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

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

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

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

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

The Company filed a registration statement with the Securities and Exchange
Commission in order to register the resale of the shares issuable upon
conversion of the Debenture and the shares issuable upon exercise of the
Warrant. Such registration was declared effective on December 29, 2005.

Pursuant to the Securities Purchase Agreement, the investor has certain rights
to participate in future financings of the Company. In addition, subject to
certain exceptions, for a period of 90 days (through March 29, 2006) after the
effective date of the registration statement (described above), the Company may
not issue shares of common stock or common stock equivalents.

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

                                      F-24
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 13 - SECURED DEBENTURE (Continued)

The offering, sale and issuance of the Debenture and the Warrant was effected
pursuant to the exemption from registration provided by Rule 506 promulgated
under the Securities Act of 1933, as amended.


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) 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 granted pursuant to private offerings and/or in lieu
of services rendered and expire after a period of five years.

At December 31, 2005, the Company had issued outstanding warrants to purchase
3,965,839 shares of its common stock at prices ranging from $1.04 to $2.50 per
share. The first warrants (3,199,500 shares of common stock, as adjusted for the
13:1 reverse stock split) were granted pursuant to the Merger Agreement
effective February 3, 2004 and expire after a period of five years. The second
warrants (716,339 shares of common stock) were granted pursuant to private
offerings and/or in lieu of services rendered and expire after a period of five
years. The remaining warrants (50,000 shares of common stock) were granted as
compensation to an independent consultant in lieu of services rendered and have
an expiration date of March 31, 2009.

NOTE 15 - STOCK BASED COMPENSATION

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

On January 30, 2004, the Company entered into a Business Advisory Agreement with
Lomond International, Inc., ("Lomond") an unrelated corporation, pursuant to
which we issued a warrant 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 warrant was 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.

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

                                      F-25
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 15 - STOCK BASED COMPENSATION (Continued)

valued as of the inception of the contract. Using the Black-Scholes model the
total compensation charge for the non-qualified stock option issued under the
service contract with Del Mar was $249,041 and the fair value of each share
subject to the option at the December 16, 2004 measurement date is $1.00. The
expense recorded for this contract is $399,041 and is included in consulting fee
expense.

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

On September 1, 2005, the Company entered into an Independent Consulting
Agreement (the "Agreement") with Lomond International, Inc., an unrelated
corporation (the "Consultant"), pursuant to which the Consultant agreed to
provide certain specified business advisory services for a period of one year.
As compensation for such services, we agreed to sell to the Consultant, as a
commencement bonus, a warrant to purchase 50,000 shares of the Company's common
stock with an exercise price of $2.50 per share, and an expiration date of March
31, 2009, for an aggregate purchase price of $2,500. The warrant will
participate in all forward and reverse stock splits and stock dividends and will
have a one-time piggy-back registration right on the warrant and the shares of
common stock underlying the warrant. On November 11, 2005, the Business Advisory
Agreement, dated September 1, 2005, between the Company and Lomond
International, Inc. was amended, retroactive to the date of the agreement, to
eliminate any compensation payable by the Company to Lomond International Inc.
in connection with any debt or equity investment of any kind. As consideration
for such amendment, Lomond was paid a fee of $25,000.

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 $730,674, $338,525, and $329,740
for the years ended December 31, 2005, 2004 and 2003, respectively. Cash was
expended for income taxes in the amount of $510,141, $7,568, and $2,892 for the
years ended December 31, 2005, 2004 and 2003, respectively.

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

                                      F-26
<PAGE>

                VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES
                          (Formerly Tele-Optics, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2005, 2004 and 2003


NOTE 16 - SUPPLEMENTAL CASH FLOW INFORMATION (Continued)

or gains and identified as a separate item. In connection with this debt
exchange, the Company has recorded a non-cash loss on early extinguishment of
debt of $2,859,307. The non-cash transaction was as follows:

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

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

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

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


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 ("FDIC") up to $100,000 per entity. At various
times during the year, the Company and its subsidiaries maintain balances in
excess of the balance insured by the FDIC.

NOTE 18 - SUBSEQUENT EVENTS

On February 27, 2006, the Company's Velocity subsidiary entered into a First
Amendment to the Loan and Security Agreement (the "Amended and Restated Loan
Agreement") with Wells Fargo Foothill, Inc., a California corporation (the
"Lender"), pursuant to which the Lender agreed to amend the Loan and Security
Agreement dated January 27, 2005 (the "Original Loan Agreement"). The Original
Loan Agreement provided for a two year $12,500,000 senior credit facility (the
"Credit Facility") 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. Pursuant to the Amended and Restated Loan
Agreement, the Lender extended the Credit Facility until January 27, 2009 and
agreed to increase the advance rate under the credit facility to 67.5% (up from
60%) of the purchase price of individual pools of unsecured consumer receivables
that are approved by the Lender. The Lender also agreed to reduce the interest
rate on the loan from 3.50% above the prime rate of Wells Fargo Bank, N.A. to
2.50% above such prime rate. In addition, the amortization schedule for each
portfolio has been extended from twenty-four to thirty months. The Lender also
agreed to reduce the limited personal guarantees of John Kleinert, W. Peter
Ragan Sr. and W. Peter Ragan Jr. from $1,000,000 to $500,000.

                                      F-27
<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:   March 31, 2006

                                       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           March 31, 2006
--------------------------      Officer and Director
John C. Kleinert


/s/ W. PETER RAGAN SR.       Vice President and Director          March 31, 2006
--------------------------
W. Peter Ragan, Sr.


/s/ JAMES J. MASTRIANI       Chief Financial Officer              March 31, 2006
--------------------------   and Chief Legal Officer,
James J. Mastriani           Treasurer and Secretary


/s/ STEVEN MARCUS                   Director                      March 31, 2006
--------------------------
Steven Marcus


/s/ DR. MICHAEL KELLY               Director                      March 31, 2006
--------------------------
Dr. Michael Kelly


/s/ DAVID GRANATELL                 Director                      March 31, 2006
--------------------------
David Granatell

                                       41