VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2008 2007 ------------ ------------ (Unaudited) ASSETS Cash and cash equivalents $ 33,992 $ 162,180 Consumer receivables, net 46,152,417 46,971,014 Property and equipment, net of accumulated depreciation 47,347 64,420 Deferred income tax asset, net 83,600 98,600 Security deposits 30,224 30,224 Other assets (including $0 and $115,146 employee loan to a related party at September 30, 2008 and December 31, 2007, respectively) 351,035 487,071 Assets of discontinued operations 5,730,328 6,793,319 ------------ ------------ Total assets $ 52,428,943 $ 54,606,828 ============ ============ LIABILITIES AND STOCKHOLDERS EQUITY LIABILITIES Accounts payable and accrued expenses $ 477,590 $ 552,269 Estimated court and media costs 5,742,939 7,374,212 Line of credit 9,792,567 14,429,138 Notes payable 400,000 Notes payable to related parties 740,000 200,000 Convertible subordinated notes 2,350,000 2,350,000 Income taxes payable 1,605,919 820,222 Liabilities from discontinued operations (including notes payable to related parties of $2,300,000) 5,490,675 4,374,441 ------------ ------------ Total liabilities 26,599,690 30,100,282 ------------ ------------ STOCKHOLDERS EQUITY Series A 10% convertible preferred stock, $0.001 par value, 10,000,000 shares authorized, 1,380,000 shares issued and outstanding (liquidation preference of $13,800,000) 1,380 1,380 Common stock, $0.001 par value, 40,000,000 shares authorized, 17,875,987 and 17,066,821 shares issued and outstanding, respectively 17,875 17,066 Additional paid-in-capital 25,921,639 25,243,944 Accumulated deficit (111,641) (755,844) ------------ ------------ Total stockholders equity 25,829,253 24,506,546 ------------ ------------ Total liabilities and stockholders equity $ 52,428,943 $ 54,606,828 ============ ============ VELOCITY ASSET MANAGEMENT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the Three For the Nine Months Ended Months Ended September 30, September 30, ------------------------ ------------------------ 2008 2007 2008 2007 ----------- ----------- ----------- ----------- REVENUES Income on consumer receivables $ 3,447,831 $ 3,554,441 $10,942,757 $ 9,901,507 Other income 138 3,153 3,334 27,176 ----------- ----------- ----------- ----------- Total revenues 3,447,969 3,557,594 10,946,091 9,928,683 ----------- ----------- ----------- ----------- OPERATING EXPENSES Professional fees (including fees paid to related parties of $197,436 and $257,311 and $634,081 and $868,761 for the three and nine month periods ended September 30, 2008 and 2007, respectively) 1,246,701 1,313,876 3,817,408 3,438,740 General and administrative expenses 358,969 751,108 1,557,351 2,156,741 ----------- ----------- ----------- ----------- Total operating expenses 1,605,670 2,064,984 5,374,759 5,595,481 ----------- ----------- ----------- ----------- Income from operations 1,842,299 1,492,610 5,571,332 4,333,202 Interest expense (including interest incurred to related parties of $21,435 and $3,500 and $28,435 and $10,500 for the three and nine month periods ended September 30, 2008 and 2007, respectively) (271,286) (456,678) (880,064) (1,196,045) ----------- ----------- ----------- ----------- Income from continuing operations before provision for income taxes 1,571,013 1,035,932 4,691,268 3,137,157 Provision for income taxes 566,210 510,945 1,888,038 1,307,720 ----------- ----------- ----------- ----------- Income from continuing operations 1,004,803 524,987 2,803,230 1,829,437 Loss from discontinued operations (including fees paid and interest incurred to related parties of $-0- and $4,531 and $-0- and $4,723 and $58,778 and $58,956 and $175,056 and $164,559 for the three and nine months ended September 30, 2008 and 2007, respectively and net of tax benefit of $146,876 and $101,166 and $442,430 and $195,330 for the three and nine months ended September 30, 2008 and 2007 (280,730) (140,378) (1,124,027) (269,288) ----------- ----------- ----------- ----------- Net income 724,073 384,609 1,679,203 1,560,149 Preferred dividends (345,000) (345,000) (1,035,000) (1,035,000) ----------- ----------- ----------- ----------- Net income attributable to common stockholders $ 379,073 $ 39,609 $ 644,203 $ 525,149 =========== =========== =========== =========== Earnings (loss) per common share: Income from continuing operations: Basic $ 0.04 $ 0.01 $ 0.10 $ 0.05 Diluted $ 0.04 $ 0.01 $ 0.10 $ 0.04 Discontinued operations: Basic $ (0.02) $ (0.01) $ (0.06) $ (0.02) Diluted $ (0.02) $ (0.01) $ (0.06) $ (0.02) Net income: Basic $ 0.02 $ $ 0.04 $ 0.03 Diluted $ 0.02 $ $ 0.04 $ 0.03 Average common shares - basic 17,875,987 16,225,517 17,472,117 16,176,207 Average common shares - diluted 17,875,987 18,001,859 17,530,210 17,869,236
Contact Information: CONTACT: Jim Mastriani CFO Velocity Asset Management, Inc. 732/556-9090