June 7, 2005
Mail Stop 0408
By U.S. Mail and Facsimile (212) 367-9579
John C. Kleinert
President and Chief Executive Officer
Velocity Asset Management, Inc.
48 S. Franklin Turnpike, 3rd Floor
Ramsey, New Jersey 07446
Re: Velocity Asset Management, Inc.
Amendment No. 3 to Form SB-2, filed May 24, 2005
File No. 333-122062
Dear Mr. Kleinert:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We welcome any questions
you
may have about our comments or on any other aspect of our review.
Feel free to call us at the telephone numbers listed at the end of
this letter.
General
1. Please include an updated consent of the independent
accountants
in your next amendment.
Certain Relationships and Related Transactions - page 32
2. Please include the disclosure found in Note 5 of your most
recent
10-Q, concerning the option granted to RB & AJ Associated
Holdings,
Inc.
Notes 6 & 7 - pages F-15 to F-17
3. We have considered your response to our prior comment no. 4 and
related previous comments referred to in prior staff letters.
Specifically, we remain unclear how you can characterize the
exchange
of debt for common shares involving a principal shareholder and
officer of the company as a "forgiveness" of debt. We have the
following additional comments related to the apparent exchange of
shares to exhaust almost $1.0 million in debt and accrued
interest:
* We remain unclear why you used an apparent February 2, 2004
private
placement share price of approximately $.90 per share to effect
the
exchange approximately five months later which appeared to be at
the
directive of an underwriter although this value was not
substantiated
in the marketplace due to the planned best efforts private
placement
offering with this underwriter being aborted;
* Why you believed the $.90 per share value was more
representative
than current marketplace data even though marketplace data would
inherently reflect your concerns of market volatility and actual
trades, and would more accurately reflect events and circumstances
since February 2, 2004;
Since you have stated that the effective date of this exchange was
July 1, 2004, we are unable to concur with your conclusion that
$.90
per share was the appropriate price per share at that date. We
remain unclear why you did not use the market price at July 1,
2004.
Please revise your financial statements and related disclosures or
provide additional persuasive evidence not previously provided
supporting your current accounting.
Note 12 - page F-21
4. We note that the number of shares contained in this note
reflect
actual issuances for the reverse merger and private placement
issuance to David Grantatell. Please include the actual number of
shares giving effect to the 13:1 reverse stock split. We suggest
you
have columns and related number of shares labeled pre and post
reverse stock split. Please also review all disclosures throughout
your document to ensure that all share references for shares
outstanding, warrants and options give effect to the reverse stock
split. You may opt to present both pre and post share information
or
clearly indicate that the shares reflect the reverse stock split.
As a related matter, please address the following questions
related
to the private placement with David Grantatell which was
concurrent
with the reverse merger:
* Discuss the business purpose of selling shares at approximately
$.07 per share (pre-split) on the date of the merger and discuss
what
was the fair value at that time, whether or not any compensation
expense was recognized and how these values were determined;
* Discuss Mr. Grantatell`s relationship to directors and officers
of
the current and predecessor organizations;
* Discuss whether you had an existing or planned services
agreements
for services previously performed or services to be performed at a
future date;
* Reconcile the number of shares being registered in the selling
shareholder portion of this document (1,125,000 post split shares)
and provide the number of shares acquired, price per share and
date(s) acquired by Mr. Grantatell which comprise the total amount
being registered. We note that half of the total shares
registered
to sell appear to represent the total number of shares acquired by
Mr. Grantatell from this particular private placement.
* * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
You may contact Amit Pande, Senior Accountant, at (202) 551-
3423, or John Nolan, Accounting Branch Chief, at (202) 551-3492 if
you have questions regarding comments on the financial statements
and
related matters. Please contact Gregory Dundas at (202) 551-3436
or
me at (202) 551- 3418 with any other questions.
Sincerely,
William Friar
Senior Financial Analyst
cc: Steve A. Saide, Esq.
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Velocity Asset Management, Inc.
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