The Velvet Worms are found mostly in moist humid forest habitats in tropical, subtropical, and temperate regions...mostly in the Southern Hemisphere. They are all carnivorous, and subdue their prey (small invertebrates) with a sticky white resin which they release from appendages near the head, known as oral papillae. They are not true worms, in that they have legs, which end in small chitinous claws. Their skin is covered with small bumps that contain sub dermal chitinous scales which give them a velvety texture and water repellent qualities. They are mostly live bearing, and the female is inseminated when the male passes his sperm packet, the spermatophore, into the female's genital opening with either his legs or facial appendages.
Hmmm, that was dry, well whatever. Enjoy the pictures.
Here are some nice links: