SOURCE: Velocity Asset Management

November 10, 2008 17:38 ET

Velocity Reports Operating Results for Three and Nine Month Periods Ended September 30, 2008

WALL, NJ--(Marketwire - November 10, 2008) - Velocity Asset Management, Inc. (AMEX: JVI) ("Velocity"), which collects delinquent consumer receivables using an outsourced litigation model, today announced operating results for the three- and nine-month periods ended September 30, 2008.

Velocity reported Q3 '08 operating income increased 23.4% to $1.84 million and income from continuing operations rose 91.4% to $1,005,000, versus Q3 2007. Velocity reported net income of $724,000 compared to net income of $384,600 in Q3 2007, an 88.3% increase. After payment of $345,000 in preferred dividends, Velocity reported Q3 net income attributable to common shareholders of $379,000, or $0.02 per diluted share, compared to net income of $39,600, or $0.01 per diluted share, in the prior year period. Velocity's Q3 2008 revenue decreased by 3.1% percent due to a decrease in acquisitions of consumer portfolios, which was offset by a 22.2% decrease in operating expenses and a 40.6% decrease in interest expense. Velocity reported a $280,700 loss in discontinued operations as a result of an additional impairment charge on a Florida investment property.

"In the face of challenging capital markets and concern about the consumer economy, we were extremely pleased with Velocity's performance during the 2008 third quarter," stated Velocity President and CEO Jack Kleinert. "We believe that the current market conditions have created a very attractive environment for acquiring charged-off consumer receivables for companies with a disciplined pricing methodology and a long-term legal approach to collections."

As of September 30, 2008, the Company's Velocity Investments subsidiary had $9.8 million outstanding, and $12.7 million in availability on its $22.5 million senior credit facility with Wells Fargo Foothill, Inc. Velocity continues to wind-down the discontinued operations of its J. Holder and VOM subsidiaries and expects to complete this process in the next 12 months. These divestitures will allow management to focus exclusively on its core, consumer receivables business, Velocity Investments.

About Velocity Asset Management, Inc.

Velocity Asset Management, Inc., through its wholly owned subsidiary, Velocity Investments, LLC, is focused on the purchase and collection of distressed consumer receivables, principally through an outsourced litigation model. The Company purchases consumer receivable portfolios that are of "litigation quality." By focusing on the quality of the portfolio prior to purchase, Velocity aims to diminish its risk and improve its overall collection rate as a percentage of principal balance. For more information, visit www.velocitycollect.com.

This Press Release contains or may contain forward-looking statements and information that are based upon beliefs of and information currently available to the Company's management as well as estimates and assumptions made by the Company's management. When used herein the words ''anticipate," "believe," "estimate," "expect," "future," "intend," "plan" and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties and assumptions relating to the Company's operations and results of operations and any businesses that may be acquired by the Company, including future collections, increased revenue, increased operating income and consumer receivables under management at the Company's Velocity Investments subsidiary. 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, intended or planned.

              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
    Email Contact