UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549





FORM 10-Q





(Mark
One)





xQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended September 30,
2008




or





 ̈TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from 
to





Commission File Number:
0-28536





NEW
      CENTURY EQUITY HOLDINGS CORP.(Exact
      name of registrant as specified in its
charter)





Delaware
                74-2781950(State
      or other jurisdiction of incorporation or organization)
                (I.R.S.
      Employer Identification
No.)





200
      Crescent Court, Suite 1400, Dallas, Texas
            75201(Address
      of principal executive offices)
            (Zip
      Code)





(214)
      661-7488(Registrant’s
      telephone number, including area code)(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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
 ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
(Check one):




Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
              Smaller
      reporting company x
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).     Yes o    No
x
  As of
November 14, 2008, the registrant had 53,883,872 shares of Common Stock
outstanding.


Index




NEWCENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
  INDEX
  PAGEPART
      I FINANCIAL INFORMATIONItem
      1.
                Financial
      StatementsCondensed Consolidated Balance Sheets – September
      30, 2008 (Unaudited) and December 31, 2007
                1Unaudited Condensed Consolidated Statements
      of Operations – For the Three and Nine Months ended September 30, 2008 and
      2007
                2Unaudited Condensed Consolidated Statements of Cash
      Flows – For the Nine Months ended September 30, 2008 and
      2007
                3Notes to Unaudited Interim Condensed Consolidated Financial
      Statements
                4Item
      2.
                Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                10Item
      4.
                Controls and Procedures
                15PART
      II OTHER INFORMATIONItem
      1.
                Legal Proceedings
                15Item
      5.
                Other Information
                16Item
      6.
                Exhibits
                16SIGNATURE
                17
 
  i
 Index
   PART
I FINANCIAL INFORMATION
  Item
1.  Financial Statements
  NEWCENTURY EQUITY HOLDINGS CORP. AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (In
thousands, except share data)
  September
      30,
                    2008
                
                
                December
      31,
                    2007(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                12,088
                
                
                $
                12,679Prepaids
      and other assets
                
                
                815
                
                
                
                37Total
      current assets
                
                
                12,903
                
                
                
                12,716Revenue
      interest
                
                
                803
                
                
                
                803Total
      assets
                
                $
                13,706
                
                
                $
                13,519LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
                
                $
                106
                
                
                $
                -Accrued
      liabilities
                
                
                260
                
                
                
                131Current
      and total liabilities
                
                
                366
                
                
                
                131Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $0.01 par value, 10,000,000 shares authorized; none
      outstanding
                
                
                -
                
                
                
                -Common
      stock, $0.01 par value, 75,000,000 shares authorized; 53,883,872 shares
      issued and outstanding
                
                
                539
                
                
                
                539Additional
      paid-in capital
                
                
                75,357
                
                
                
                75,357Accumulated
      deficit
                
                
                (62,556
                )
                
                
                (62,508
                )Total
      stockholders’ equity
                
                
                13,340
                
                
                
                13,388Total
      liabilities and stockholders’ equity
                
                $
                13,706
                
                
                $
                13,519
 
 The
accompanying notes are an integral part of these interim condensed consolidated
financial statements.
  1
 Index
  NEWCENTURY EQUITY HOLDINGS CORP. AND
SUBSIDIARIES
 UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In
thousands, except per share data)
  Three
      Months Ended
                    June
      30,
                
                
                Nine
      Months Ended
                    September
      30,2008
                
                
                2007
                
                
                2008
                
                
                2007Operating
      revenues
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      expenses:General
      and administrative expenses
                
                
                81
                
                
                
                121
                
                
                
                271
                
                
                
                448Operating
      loss
                
                
                (81
                )
                
                
                (121
                )
                
                
                (271
                )
                
                
                (448
                )Other
      income (expense):Interest
      income
                
                
                60
                
                
                
                155
                
                
                
                223
                
                
                
                466Total
      other income
                
                
                60
                
                
                
                155
                
                
                
                223
                
                
                
                18Net
      income (loss) applicable to common stockholders
                
                $
                (21
                )
                
                $
                34
                
                
                $
                (48
                )
                
                $
                18Basic
      and diluted net income (loss) per common share:Net
      income (loss)
                
                $
                (0.00
                )
                
                $
                0.00
                
                
                $
                (0.00
                )
                
                $
                0.00Weighted
      average common shares outstanding
                
                
                53,884
                
                
                
                53,884
                
                
                
                53,884
                
                
                
                53,884
 
 The
accompanying notes are an integral part of these interim condensed consolidated
financial statements.
  2
 Index
  NEWCENTURY EQUITY HOLDINGS CORP. AND
SUBSIDIARIES
 UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In
thousands)
  Nine
      Months Ended
                    September
      30,2008
                
                
                2007Cash
      flows from operating activities:Net
      (loss) income
                
                $
                (48
                )
                
                $
                18Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Share
      based payment expense
                
                
                -
                
                
                
                17Changes
      in operating assets and liabilities:(Increase)
      decrease in prepaid and other assets
                
                
                (778
                )
                
                
                122Increase
      (decrease) in accounts payable
                
                
                106
                
                
                
                (13
                )Increase
      (decrease) in accrued liabilities
                
                
                129
                
                
                
                (59
                )Net
      cash (used in) provided by operating activities
                
                
                (591
                )
                
                
                85Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                -
                
                
                
                (2
                )Net
      cash used in investing activities
                
                
                -
                
                
                
                (2
                )Cash
      flows from financing activities
                
                
                -
                
                
                
                -Net
      (decrease) increase in cash and cash equivalents
                
                
                (591
                )
                
                
                83Cash
      and cash equivalents, beginning of period
                
                
                12,679
                
                
                
                12,319Cash
      and cash equivalents, end of period
                
                $
                12,088
                
                
                $
                12,402
 
 The
accompanying notes are an integral part of these interim condensed consolidated
financial statements.
  3
 Index
  NEWCENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
 NOTES
TO THE INTERIM CONDENSED CONSOLIDATED
 FINANCIAL
STATEMENTS
 (UNAUDITED)
  Note
1.  Basis of Presentation
  The
interim condensed consolidated financial statements included herein have been
prepared by New Century Equity Holdings Corp. (“NCEH” or the “Company”) and
subsidiaries without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (“SEC”).  Although certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to those rules
and regulations, all adjustments considered necessary in order to make the
financial statements not misleading, have been included.  In the
opinion of the Company’s management, the accompanying interim condensed
consolidated financial statements reflect all adjustments, of a normal recurring
nature, that are necessary for a fair presentation of the Company’s financial
position, results of operations and cash flows for such periods.  It
is recommended that these interim condensed consolidated financial statements be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007, as amended.  Results of operations for the interim
periods are not necessarily indicative of results that may be expected for any
other interim periods or the full fiscal year.
  Note
2.  Recent Developments
  Wilhelmina
Acquisition Agreement
  On August
25, 2008, NCEH and Wilhelmina Acquisition Corp., a New York corporation and
wholly owned subsidiary of NCEH (“Wilhelmina Acquisition”), entered into an
agreement (the “Acquisition Agreement”) with Dieter Esch (“Esch”), Lorex
Investments AG, a Swiss corporation (“Lorex”), Brad Krassner (“Krassner”),
Krassner Family Investments, L.P. (“Krassner L.P.” and together with Esch, Lorex
and Krassner, the “Control Sellers”), Wilhelmina International, Ltd., a New York
corporation (“Wilhelmina International”), Wilhelmina – Miami, Inc., a Florida
corporation (“Wilhelmina Miami”), Wilhelmina Artist Management LLC, a New York
limited liability company (“WAM”), Wilhelmina Licensing LLC, a Delaware limited
liability company (“Wilhelmina Licensing”), and Wilhelmina Film & TV
Productions LLC, a New York limited liability company (“Wilhelmina TV” and
together with Wilhelmina International, Wilhelmina Miami, WAM and Wilhelmina
Licensing, the “Wilhelmina Companies”), Sean Patterson, an executive with the
Wilhelmina Companies (“Patterson”), and the shareholders of Wilhelmina Miami
(the “Miami Holders” and together with the Control Sellers and Patterson, the
“Sellers”).  Pursuant to the Acquisition Agreement, NCEH will acquire
the Wilhelmina Companies subject to the terms and conditions thereof (the
“Acquisition”).  The Acquisition Agreement provides for (i) the merger
of Wilhelmina Acquisition with and into Wilhelmina International in a
stock-for-stock transaction, as a result of which Wilhelmina International will
become a wholly owned subsidiary of NCEH (the “Merger”) and (ii) NCEH’s purchase
of the outstanding equity interests of the other Wilhelmina Companies for
cash.
  At the
closing of the Acquisition Agreement (the “Closing”), NCEH will pay an aggregate
purchase price of $30,000,000 in connection with the Acquisition, of which
$24,000,000 will be paid for the outstanding equity interests of the Wilhelmina
Companies and $6,000,000 in cash will repay the outstanding balance of a note
held by a Control Seller.  The purchase price includes $15,000,000 of
Common Stock of NCEH (the “Common Stock”), valued at book value as of July 31,
2008 (which the parties agreed is $0.247 per share of Common Stock, subject to
adjustment) to be issued in connection with the merger of Wilhelmina Acquisition
with and into Wilhelmina International.  The remaining $9,000,000 of
cash will be paid to acquire the equity interests of the remaining Wilhelmina
Companies.
  4
 Index
  The
purchase price is subject to certain post-closing adjustments, which will be
effected against a total of $4,600,000 of Common Stock that will be held in
escrow pursuant to the Acquisition Agreement.  The $30,000,000 to be
paid at Closing, less $4,500,000 of Common Stock to be held in escrow in respect
of the “core business” purchase price adjustment, provides for a floor purchase
price of $25,500,000 (which amount may be further reduced in connection with
certain indemnification matters).  The shares of Common Stock held in
escrow may be repurchased by NCEH for a nominal amount, subject to certain
earnouts and offsets.
  The
shares of Common Stock held in escrow support earnout offsets and
indemnification obligations of the Sellers.  The Sellers will be
required to leave in escrow, through 2011, any stock “earned” following
resolution of “core” adjustment, up to a total value of
$1,000,000.  Losses at WAM and Wilhelmina Miami, respectively, can be
offset against any positive earnout with respect to the other Wilhelmina
Company.  Losses in excess of earnout amounts could also result in the
repurchase of the remaining shares of Common Stock held in escrow for a nominal
amount.   Working capital deficiencies may also reduce positive
earnout amounts.  The earnouts are payable in 2011.
  The
Acquisition Agreement and the transactions contemplated thereunder is subject to
shareholder approval.  On October 14, 2008, the Company filed a
preliminary proxy statement with the SEC in order to seek shareholder approval
of, among other things, the Acquisition Agreement and the transactions
contemplated thereunder.  When completed, the definitive proxy
statement will be mailed to the shareholders.
  Newcastle
Financing Agreement
  Concurrently
with the execution of the Acquisition Agreement, the Company entered into a
purchase agreement (the “Equity Financing Agreement”) with Newcastle Partners,
L.P., a Texas limited partnership (“Newcastle”), which currently owns 19,380,768
shares or approximately 36% of the Company’s outstanding Common Stock, for the
purpose of obtaining financing to complete the transactions contemplated by the
Acquisition Agreement.  Pursuant to the Equity Financing Agreement,
subject to and conditioned upon the Closing of the Acquisition Agreement, the
Company will sell to Newcastle $3,000,000 of shares of Common Stock at $.247 per
share, or approximately (but slightly higher than) the per share price
applicable to the Common Stock issuable under the Acquisition
Agreement.  In addition, under the Equity Financing Agreement,
Newcastle committed to purchase, at the Company’s election at any time or times
prior to six months following the Closing, up to an additional $2,000,000 of
Common Stock on the same terms.  The Equity Financing Agreement is
subject to certain other conditions, including the parties’ entry into a
registration rights agreement upon the Closing, pursuant to which Newcastle will
be granted certain demand and piggyback registration rights with respect to the
Common Stock it holds, including the Common Stock issuable under the Equity
Financing Agreement.
  Sean
Patterson Employment Agreement
  On
November 10, 2008, the Company, Wilhelmina International and Sean Patterson
entered into an Employment Agreement covering the terms of the employment of Mr.
Patterson by Wilhelmina International subject to, and effective upon, the
closing of the acquisition of the Wilhelmina Companies by the Company pursuant
to the Acquisition Agreement.  See “Wilhelmina Acquisition
Agreement” above.  Under the Employment Agreement, Mr.
Patterson will continue to serve as President of Wilhelmina
International.  Mr. Patterson will receive a base salary of $475,000
per year and an annual bonus based on the excess of the combined annual EBITDA
of Wilhelmina International, WAM and Wilhelmina Models, Inc., a Wilhelmina
International subsidiary, over $4,000,000.  The Employment Agreement
has a three year term.  Mr. Patterson is subject to certain
non-competition, non-solicitation and related obligations during and following
the term of the Employment Agreement.
 Note
3.  Historical Overview
  On
October 5, 2005, the Company entered into an agreement (the “Ascendant
Agreement”) with ACP Investments, L.P. (d/b/a Ascendant Capital Partners)
(“Ascendant”) to acquire an interest in the revenues generated by
Ascendant.  Ascendant is a Berwyn, Pennsylvania based alternative
asset management company whose funds have investments in long/short equity funds
and which distributes its registered funds primarily through various financial
intermediaries and related channels.  The Company’s interest in
Ascendant currently represents the Company’s sole operating
business.
  5
 Index
  The
Company, which was formerly known as Billing Concepts Corp. (“BCC”), was
incorporated in the state of Delaware in 1996.  BCC was previously a
wholly-owned subsidiary of U.S. Long Distance Corp. (“USLD”) and principally
provided third-party billing clearinghouse and information management services
to the telecommunications industry (the “Transaction Processing and Software
Business”).  Upon its spin-off from USLD, BCC became an independent,
publicly-held company.  In October 2000, the Company completed the
sale of several wholly-owned subsidiaries that comprised the Transaction
Processing and Software Business to Platinum Holdings (“Platinum”) for
consideration of $49,700,000 (the “Platinum Transaction”).  The
Company also received payments totaling $7,500,000 for consulting services
provided to Platinum over the twenty-four month period subsequent to the
Platinum Transaction.
  Beginning
in 1998, the Company made multiple investments in Princeton eCom Corporation
(“Princeton”) totaling approximately $77,300,000 before selling all of its
interest for $10,000,000 in June 2004.  The Company’s strategy,
beginning with its investment in Princeton, of making investments in high-growth
companies was also facilitated through several other investments.
  In early
2004, the Company announced that it would seek stockholder approval to liquidate
the Company.  In June of 2004, the board of directors of the Company
determined that it would be in the best interest of the Company to accept an
investment from Newcastle, an investment fund with a long track record of
investing in public and private companies.  On June 18, 2004, the
Company sold 4,807,692 newly issued shares of its Series A 4% Convertible
Preferred Stock (the “Series A Preferred Stock”) to Newcastle for $5,000,000
(the “Newcastle Transaction”).  The Series A Preferred Stock was
convertible into approximately thirty-five percent of the Company’s Common
Stock, at any time after the expiration of twelve months from the date of its
issuance at a conversion price of $0.26 per share of Common Stock, subject to
adjustment for dilution.  The holders of the Series A Preferred Stock
were entitled to a four percent annual cash dividend (the “Preferred
Dividends”).  Following the investment by Newcastle, the management
team resigned and new executives and board members were appointed.  On
July 3, 2006, Newcastle converted its Series A Preferred Stock into 19,230,768
shares of Common Stock.
  During
May 2005, the Company sold its equity interest in Sharps Compliance Corp.
(“Sharps”) for approximately $334,000.  Following the sale of its
interest in Sharps, the Company no longer holds any investments made by former
management and which reflected former management’s strategy of investing in
high-growth companies.
  Derivative
Lawsuit
  On August
11, 2004, Craig Davis, allegedly a stockholder of the Company, filed a lawsuit
in the Chancery Court of New Castle County, Delaware (the
“Lawsuit”).  The Lawsuit asserted direct claims, and also derivative
claims on the Company’s behalf, against five former and three current directors
of the Company.  On April 13, 2006, the Company announced that it
reached an agreement with all of the parties to the Lawsuit to settle all claims
relating thereto (the “Settlement”).  On June 23, 2006, the Chancery
Court approved the Settlement, and on July 25, 2006, the Settlement became final
and non-appealable.  As part of the Settlement, the Company set up a
fund (the “Settlement Fund”), which was distributed to stockholders of record as
of July 28, 2006, with a payment date of August 11, 2006.  The portion
of the Settlement Fund distributed to stockholders pursuant to the Settlement
was $2,270,017 or approximately $.04 per common share on a fully diluted basis,
provided that any Common Stock held by defendants in the Lawsuit who were
formerly directors of the Company would not be entitled to any distribution from
the Settlement Fund.  The total Settlement proceeds of $3,200,000 were
funded by the Company’s insurance carrier and by Parris H. Holmes, Jr., the
Company’s former Chief Executive Officer, who contributed
$150,000.  Also included in the total Settlement proceeds was $600,000
of reimbursement for legal and professional fees paid to the Company by its
insurance carrier and subsequently contributed by the Company to the Settlement
Fund.  Therefore, the Company recognized a loss of $600,000 related to
the Lawsuit for the year ended December 31, 2006.  As part of the
Settlement, the Company and the other defendants in the Lawsuit agreed not to
oppose the request for fees and expenses by counsel to the plaintiff of
$929,813.  Under the Settlement, the plaintiff, the Company and the
other defendants (including Mr. Holmes) also agreed to certain mutual
releases.
  6
 Index
  The
Settlement provided that, if the Company had not acquired a business that
generated revenues by March 1, 2007, the plaintiff maintained the right to
pursue a claim to liquidate the Company.  This custodian claim was one
of several claims asserted in the Lawsuit.  Even if such a claim is
elected to be pursued, there is no assurance that it will be
successful.  In addition, the Company believes that it has preserved
its right to assert that the Ascendant investment meets the foregoing
requirement to acquire a business.
  During
October 2007, in connection with the resolution of the Lawsuit, the Company and
the insurance carrier agreed to settle all claims for reimbursement of legal and
professional fees paid by the Company for $240,000.
  Note
4.  Stock Based Compensation
  During
the quarter ended March 31, 2006, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment”
(“SFAS 123R”) using the modified prospective application transition
method.  Under this method, previously reported amounts should not be
restated to reflect the provisions of SFAS 123R.  SFAS 123R requires
measurement of all employee stock-based compensation awards using a fair-value
method and recording of such expense in the consolidated financial statements
over the requisite service period.  Previously, the Company had
applied the provisions of Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees” and related interpretations and
elected to utilize the disclosure option of Statement of Financial Accounting
Standards No. 123, “Accounting for Stock-Based Compensation”.  For the
nine months ended September 30, 2008 and 2007, the Company recorded $0 and
$17,000, respectively, of stock-based compensation expense under the fair-value
provisions of SFAS 123R.  The Company utilizes stock-based awards as a
form of compensation for employees, officers and directors.
  Note
5.  Revenue Interest
  Pursuant
to the Ascendant Agreement, the Company is entitled to a 50% interest, subject
to certain adjustments, in the revenues of Ascendant, which interest declines if
the assets under management of Ascendant reach certain
levels.  Revenues generated by Ascendant include revenues from assets
under management or any other sources or investments, net of any agreed
commissions.  The Company also agreed to provide various marketing
services to Ascendant.  On November 5, 2007, John Murray, Chief
Financial Officer of the Company, was appointed to the Investment Advisory
Committee of Ascendant to replace the Company’s former CEO.  The total
potential purchase price under the terms of the Ascendant Agreement was
$1,550,000, payable in four equal installments of $387,500.  The first
installment was paid at the closing and the second installment was paid on
January 5, 2006.  Subject to the provisions of the Ascendant
Agreement, including Ascendant’s compliance with the terms thereof, the third
installment was payable on April 5, 2006 and the fourth installment was payable
on July 5, 2006.  On April 5, 2006, the Company elected not to make
the April installment payment and subsequently determined not to make the
installment payment due July 5, 2006.  The Company believed that it
was not required to make the payments because Ascendant did not satisfy all of
the conditions in the Ascendant Agreement.
  Subject
to the terms of the Ascendant Agreement, if the Company does not make an
installment payment and Ascendant is not in breach of the Ascendant Agreement,
Ascendant has the right to acquire the Company’s revenue interest at a price
which would yield a 10% annualized return to the Company.  The Company
has been notified by Ascendant that Ascendant is exercising this right as a
result of the Company’s election not to make its third and fourth installment
payments.  The Company believes that Ascendant has not satisfied the
requisite conditions to repurchase the Company’s revenue interest.
  7
 Index
  Ascendant
had assets under management of approximately $40,800,000 and $37,500,000 as of
September 30, 2008 and December 31, 2007, respectively.  Under the
Ascendant Agreement, revenues earned by the Company from the Ascendant revenue
interest (as determined in accordance with the terms of the Ascendant Agreement)
are payable in cash within 30 days after the end of each
quarter.  Under the terms of the Ascendant Agreement, Ascendant has 45
days following notice by the Company to cure any material breach by Ascendant of
the Ascendant Agreement, including with respect to payment
obligations.  Ascendant failed to make the required revenue sharing
payments for the calendar quarters including June 30, 2006 through June 30,
2008, in a timely manner and did not cure such failures within the required 45
day period.  In addition, Ascendant has not made the payment for the
quarter ended September 30, 2008.  Under the terms of the Ascendant
Agreement, upon notice of an uncured material breach, Ascendant is required to
fully refund all amounts paid by the Company, and the Company’s revenue interest
remains outstanding.
  The
Company has not recorded any revenue or received any revenue sharing payments
for the period from July 1, 2006 through September 30,
2008.  According to the Ascendant Agreement, if Ascendant acquires the
revenue interest from the Company, Ascendant must pay the Company a return on
the capital that it invested.  Pursuant to the Ascendant Agreement,
the required return on the Company’s invested capital will not be impacted by
any revenue sharing payments made or not made by Ascendant.
  In
connection with the Ascendant Agreement, the Company also entered into the
Principals Agreement with Ascendant and certain limited partners and key
employees of Ascendant (the “Principals Agreement”) pursuant to which, among
other things, the Company has the option to purchase limited partnership
interests of Ascendant under certain circumstances.  Effective March
14, 2006, in accordance with the terms of the Principals Agreement, the Company
acquired a 7% limited partnership interest from a limited partner of Ascendant
for nominal consideration.  The Principals Agreement contains certain
noncompete and nonsolicitation obligations of the partners of Ascendant that
apply during their employment and the twelve month period following the
termination thereof.
  Since the
Ascendant revenue interest meets the indefinite life criteria outlined in
Statement of Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets”, the Company does not amortize this intangible asset, but
instead reviews this asset quarterly for impairment.  Each reporting
period, the Company assesses whether events or circumstances have occurred which
indicate that the carrying amount of the intangible asset exceeds its fair
value.  If the carrying amount of the intangible asset exceeds its
fair value, an impairment loss will be recognized in an amount equal to that
excess.  After an impairment loss is recognized, the adjusted carrying
amount of the intangible asset shall be its new accounting
basis.  Subsequent reversal of a previously recognized impairment loss
is prohibited.
  The
Company assesses whether the entity in which the acquired revenue interest
exists meets the indefinite life criteria based on a number of factors
including: the historical and potential future operating  performance;
the historical and potential future rates of attrition among existing clients;
the stability and longevity of existing client relationships; the recent, as
well as long-term, investment performance; the characteristics of the entities’
products and investment styles; the stability and depth of the
management  team and the history and perceived franchise or brand
value.
  8
 Index
  Note
6.  Commitments and Contingencies
  In
October 2000, the Company completed the Platinum Transaction.  Under
the terms of the Platinum Transaction, all leases and corresponding obligations
associated with the Transaction Processing and Software Business were assumed by
Platinum.  Prior to the Platinum Transaction, the Company guaranteed
two operating leases for office space of the divested companies.  The
first lease is related to office space located in San Antonio, Texas, and
expired in 2006.  The second lease is related to office space located
in Austin, Texas, and expires in 2010.  Under the original terms of
the second lease, the remaining minimum undiscounted rent payments total
approximately $1,773,000 at September 30, 2008.  In conjunction with
the Platinum Transaction, Platinum agreed to indemnify the Company should the
underlying operating companies not perform under the terms of the office
leases.  The Company can provide no assurance as to Platinum’s
ability, or willingness, to perform its obligations under the
indemnification.  The Company does not believe it is probable that it
will be required to perform under the remaining lease guarantee and, therefore,
no liability has been accrued in the Company’s financial
statements.
  On
December 12, 2005, the Company received a letter from the SEC, based on a review
of the Company’s Form 10-K filed for the year ended December 31, 2004,
requesting that the Company provide a written explanation as to whether the
Company is an “investment company” (as such term is defined in the Investment
Company Act of 1940).  The Company provided a written response to the
SEC, dated January 12, 2006, stating the reasons why it believes it is not an
“investment company”.  The Company has provided certain confirmatory
information requested by the SEC.  In the event the SEC or a court
took the position that the Company is an investment company, the Company’s
failure to register as an investment company would not only raise the
possibility of an enforcement or other legal action by the SEC and potential
fines and penalties, but also could threaten the validity of corporate actions
and contracts entered into by the Company during the period it was deemed to be
an unregistered investment company, among other remedies.
  In a
letter to the Company dated October 16, 2007, a lawyer representing Steven J.
Pully (the former CEO) alleged that the Company filed false and misleading
disclosure with the Securities and Exchange Commission with respect to the
elimination of Mr. Pully’s compensation (see the Company’s Forms 8-K filed on
September 5, 2007 and October 17, 2007).  No specifics were provided
as to such allegations.  The Company believes such allegations are
unfounded and, if a claim is made, the Company intends to vigorously defend
itself.
  Note
7.  Related Party Transactions
  In June
2004, in connection with the Newcastle Transaction, Mark Schwarz, Chief
Executive Officer and Chairman of Newcastle Capital Management, L.P. (“NCM”),
Steven J. Pully, former President of NCM, and John Murray, Chief Financial
Officer of NCM, assumed positions as Chairman of the Board, Chief Executive
Officer and Chief Financial Officer, respectively, of the
Company.  Mr. Pully received an annual salary of $150,000 as Chief
Executive Officer of the Company.  Mr. Pully resigned as Chief
Executive Officer of the Company effective October 15, 2007.  Mr.
Schwarz is performing the functions of Chief Executive Officer.  NCM
is the general partner of Newcastle, which owns 19,380,768 shares of Common
Stock of the Company.
  The
Company’s corporate headquarters are currently located at 200 Crescent Court,
Suite 1400, Dallas, Texas 75201, which are also the offices of
NCM.  The Company occupies a portion of NCM space on a month-to-month
basis at $2,500 per month, pursuant to a services agreement entered into between
the parties.  The Company also receives accounting and administrative
services from employees of NCM pursuant to such agreement.  NCM is the
general partner of Newcastle.  The Company incurred expenses pursuant
to the services agreement totaling $115,500 and $22,500 for the nine months
ended September 30, 2008 and 2007, respectively.  The Company owed NCM
$69,000 and $0 as of September 30, 2008 and 2007, respectively.
  9
 Index
  On August
25, 2008, concurrently with the execution of the Acquisition Agreement, the
Company entered into the Equity Financing Agreement with Newcastle for the
purpose of obtaining financing to complete the transactions contemplated by the
Acquisition Agreement (See Note 2).
  Note
8.  Share Capital
  On July
10, 2006, the Company entered into a stockholders rights plan (the “Rights
Plan”) that replaced the Company’s stockholders rights plan dated July 10, 1996
(the “Old Rights Plan”) that expired according to its terms on July 10,
2006.  The Rights Plan provides for a dividend distribution of one
preferred share purchase right (a “Right”) for each outstanding share of Common
Stock.  The terms of the Rights and the Rights Plan are set forth in a
Rights Agreement, dated as of July 10, 2006, by and between New Century Equity
Holdings Corp. and The Bank of New York Trust Company, N.A., as Rights
Agent.
  The
Company’s Board of Directors adopted the Rights Plan to protect stockholder
value by protecting the Company’s ability to realize the benefits of its net
operating loss carryforwards (“NOLs”) and capital loss
carryforwards.  In general terms, the Rights Plan imposes a
significant penalty upon any person or group that acquires 5% or more of the
outstanding Common Stock without the prior approval of the Company’s Board of
Directors.  Stockholders that own 5% or more of the outstanding Common
Stock as of the close of business on the Record Date may acquire up to an
additional 1% of the outstanding Common Stock without penalty so long as they
maintain their ownership above the 5% level (such increase subject to downward
adjustment by the Company’s Board of Directors if it determines that such
increase will endanger the availability of the Company’s NOLs and/or its capital
loss carryforwards).  In addition, the Company’s Board of Directors
has exempted Newcastle, the Company’s largest stockholder, and may exempt any
person or group that owns 5% or more if the Board of Directors determines that
the person’s or group’s ownership will not endanger the availability of the
Company’s NOLs and/or its capital loss carryforwards.  A person or
group that acquires a percentage of Common Stock in excess of the applicable
threshold is called an “Acquiring Person”.  Any Rights held by an
Acquiring Person are void and may not be exercised.  The Company’s
Board of Directors authorized the issuance of one Right per each share of Common
Stock outstanding on the Record Date.  If the Rights become
exercisable, each Right would allow its holder to purchase from the Company one
one-hundredth of a share of the Company’s Series A Junior Participating
Preferred Stock, par value $0.01 (the “Preferred Stock”), for a purchase price
of $10.00.  Each fractional share of Preferred Stock would give the
stockholder approximately the same dividend, voting and liquidation rights as
does one share of Common Stock.  Prior to exercise, however, a Right
does not give its holder any dividend, voting or liquidation
rights.
  The
Company has never declared or paid any cash dividends on its Common Stock, other
than $2,270,017 distributed to the stockholders pursuant to the Settlement in
August 2006 (See Note 3).  On June 30, 2006, Newcastle elected to
receive Preferred Dividends in cash for the period from June 19, 2005 through
June 30, 2006.  On July 3, 2006, Newcastle elected to convert all of
its Series A Preferred Stock into 19,230,768 shares of Common
Stock.
  Item2.
  This
Quarterly Report on Form 10-Q contains certain “forward-looking” statements as
such term is defined in the Private Securities Litigation Reform Act of 1995 and
information relating to the Company and its subsidiaries that are based on the
beliefs of the Company’s management as well as assumptions made by and
information currently available to the Company’s management.  When
used in this report, the words “anticipate”, “believe”, “estimate”, “expect” and
“intend” and words or phrases of similar import, as they relate to the Company
or its subsidiaries or Company management, are intended to identify
forward-looking statements.  Such statements reflect the current
risks, uncertainties and assumptions related to certain factors including,
without limitation, the timing and successful completion of the acquisition of
Wilhelmina International, Ltd. and its affiliated companies (the “Wilhelmina
Companies”), the Company’s success in integrating the operations of the
Wilhelmina Companies in a timely manner, or at all, the Company’s ability to
realize the anticipated benefits of the transaction to the extent, or in the
timeframe, anticipated, competitive factors, general economic conditions, the
interest rate environment, governmental regulation and supervision, seasonality,
changes in industry practices, onetime events and other factors described herein
and in other filings made by the Company with the Securities and Exchange
Commission.  Based upon changing conditions, should any one or more of
these risks or uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from those described herein
as anticipated, believed, estimated, expected or intended.  The
Company does not intend to update these forward-looking statements.
  10
 Index
  MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION
AND RESULTS OF OPERATIONS
  General
  The
following is a discussion of the interim unaudited condensed consolidated
financial condition and results of operations for New Century Equity Holdings
Corp. (the “Company”) and subsidiaries for the three months and nine months
ended September 30, 2008.  It should be read in conjunction with the
Unaudited Interim Condensed Consolidated Financial Statements of the Company,
the notes thereto and other financial information included elsewhere in this
report, and the Company’s Annual Report on Form 10-K for the year ended December
31, 2007, as amended.
  On August
25, 2008, the Company executed a definitive agreement to acquire Wilhelmina
International, Ltd. and its affiliated companies.  At the closing of
the transaction, the Company is expected to change its name to “Wilhelmina
International, Inc.”  Wilhelmina International, Ltd. will become the
Company’s operating business.  The transaction is subject to the
approval of the Company’s shareholders, together with other customary
conditions.  In connection with the execution of the agreement,
Newcastle Partners, L.P., an affiliate of the Company’s Chairman and acting
Chief Executive Officer, Mark E. Schwarz, has agreed to provide to the Company
up to $5 million in additional equity financing on terms commensurate with the
valuation of shares to be issued in connection with the
transaction.  These funds will be used by the Company to complete the
transaction.  The financing arrangements have been approved separately
by an independent committee of the Company’s Board of Directors.  The
discussion of the business, financial conditions and results of operations of
the Company in this report does not include the anticipated effects of this
acquisition.  See the sections entitled “Wilhelmina Acquisition
Agreement” and “Newcastle Financing”
below.
  Results
of Operations
  Operating
Revenues
  Pursuant
to the Ascendant Agreement, the Company is entitled to a 50% interest, subject
to certain adjustments, in the revenues of Ascendant, which interest declines if
the assets under management of Ascendant reach certain
levels.  Revenues generated by Ascendant include revenues from assets
under management or any other sources or investments, net of any agreed
commissions.  The Company also agreed to provide various marketing
services to Ascendant.  On November 5, 2007, John Murray, Chief
Financial Officer of the Company, was appointed to the Investment Advisory
Committee of Ascendant to replace the Company’s former CEO.  The total
potential purchase price under the terms of the Ascendant Agreement was
$1,550,000, payable in four equal installments of $387,500.  The first
installment was paid at the closing and the second installment was paid on
January 5, 2006.  Subject to the provisions of the Ascendant
Agreement, including Ascendant’s compliance with the terms thereof, the third
installment was payable on April 5, 2006 and the fourth installment was payable
on July 5, 2006.  On April 5, 2006, the Company elected not to make
the April installment payment and subsequently determined not to make the
installment payment due July 5, 2006.  The Company believed that it
was not required to make the payments because Ascendant did not satisfy all of
the conditions in the Ascendant Agreement.
  11
 Index
  Subject
to the terms of the Ascendant Agreement, if the Company does not make an
installment payment and Ascendant is not in breach of the Ascendant Agreement,
Ascendant has the right to acquire the Company’s revenue interest at a price
which would yield a 10% annualized return to the Company.  The Company
has been notified by Ascendant that Ascendant is exercising this right as a
result of the Company’s election not to make its third and fourth installment
payments.  The Company believes that Ascendant has not satisfied the
requisite conditions to repurchase the Company’s revenue interest.
  Ascendant
had assets under management of approximately $40,800,000 and $37,500,000 as of
September 30, 2008 and December 31, 2007, respectively.  Under the
Ascendant Agreement, revenues earned by the Company from the Ascendant revenue
interest (as determined in accordance with the terms of the Ascendant Agreement)
are payable in cash within 30 days after the end of each
quarter.  Under the terms of the Ascendant Agreement, Ascendant has 45
days following notice by the Company to cure any material breach by Ascendant of
the Ascendant Agreement, including with respect to payment
obligations.  Ascendant failed to make the required revenue sharing
payments for all calendar quarters including June 30, 2006 through June 30,
2008, in a timely manner and did not cure such failures within the required 45
day period.  In addition, Ascendant has not made the payment for the
quarter ended September 30, 2008.  Under the terms of the Ascendant
Agreement, upon notice of an uncured material breach, Ascendant is required to
fully refund all amounts paid by the Company, and the Company’s revenue interest
remains outstanding.
  The
Company has not recorded any revenue or received any revenue sharing payments
for the period from July 1, 2006 through September 30,
2008.  According to the Ascendant Agreement, if Ascendant acquires the
revenue interest from the Company, Ascendant must pay the Company a return on
the capital that it invested.  Pursuant to the Ascendant Agreement,
the required return on the Company’s invested capital will not be impacted by
any revenue sharing payments made or not made by Ascendant.
  General
and Administrative Expenses
  General
and administrative (“G&A”) expenses are comprised of all costs incurred in
direct support of the business operations of the Company.  G&A
expenses decreased by $40,000, or 33%, and $177,000 or 40%, to $81,000 and
$271,000, respectively, during the three and nine months ended September 30,
2008, respectively, as compared to the corresponding periods of the prior fiscal
year.  This decrease is primarily attributable to the absence of legal
and professional fees associated with the Lawsuit, officers’ compensation and
stock based compensation during the three and nine months ended September 30,
2008.
  Interest
Income
  Interest
income decreased by $95,000, or 61%, and $243,000, or 52%, to $60,000 and
$223,000, respectively, during the three and nine months ended September 30,
2008, respectively, as compared to the corresponding periods of the prior fiscal
year.  This decrease is attributable to a decrease in yields on cash
balances available for short term investment.
  12
 Index
  Liquidity
and Capital Resources
  The
Company’s cash balance decreased to $12,088,000 at September 30, 2008, from
$12,679,000 at December 31, 2007.  The decrease resulted from cash
funding of general and administrative expenses and expenses associated with the
proposed acquisition of Wilhelmina International, Ltd. and its affiliated
companies offset by interest income of approximately $223,000 during the nine
months ended September 30, 2008.
  During
the next 12 months, the Company’s operating cash requirements are expected to
consist principally of funding corporate expenses, the costs associated with
maintaining a public company and expenses incurred in pursuing the Company’s
business plan.  The Company expects to incur operating losses through
fiscal 2008 which will continue to have a negative impact on liquidity and
capital resources.
  Assuming
the acquisition of Wilhelmina International, Ltd. and its affiliated companies
is approved by the stockholders of the Company, the Company will be obligated to
fund $15,000,000 at closing of the acquisition, subject to the conditions set
forth in the Acquisition Agreement (as defined herein).  The Company
expects to fund the cash closing obligations with cash on hand and funds from
the Equity Financing Agreement (as defined herein).  See the sections
entitled “Wilhelmina
Acquisition Agreement” and “Newcastle Financing
Agreement” below.
  Lease
Guarantees
  In
October 2000, the Company completed the Platinum Transaction.  Under
the terms of the Platinum Transaction, all leases and corresponding obligations
associated with the Transaction Processing and Software Business were assumed by
Platinum.  Prior to the Platinum Transaction, the Company guaranteed
two operating leases for office space of the divested companies.  The
first lease is related to office space located in San Antonio, Texas, and
expired in 2006.  The second lease is related to office space located
in Austin, Texas, and expires in 2010.  Under the original terms of
the second lease, the remaining minimum undiscounted rent payments total
approximately $1,773,000 at September 30, 2008.  In conjunction with
the Platinum Transaction, Platinum agreed to indemnify the Company should the
underlying operating companies not perform under the terms of the office
leases.  The Company can provide no assurance as to Platinum’s
ability, or willingness, to perform its obligations under the
indemnification.  The Company does not believe it is probable that it
will be required to perform under the remaining lease guarantee and, therefore,
no liability has been accrued in the Company’s financial
statements.
  Off-Balance
Sheet Arrangements
  The
Company guaranteed two operating leases for office space for certain of its
wholly-owned subsidiaries prior to the Platinum Transaction.  One such
lease expired in 2006.  See the section entitled “Lease Guarantees”
above.
  13
 Index
  Wilhelmina
Acquisition Agreement
  On August
25, 2008, the Company and Wilhelmina Acquisition Corp., a New York corporation
and wholly owned subsidiary of the Company (“Wilhelmina Acquisition”), entered
into an agreement (the “Acquisition Agreement”) with Dieter Esch (“Esch”), Lorex
Investments AG, a Swiss corporation (“Lorex”), Brad Krassner (“Krassner”),
Krassner Family Investments, L.P. (“Krassner L.P.” and together with Esch, Lorex
and Krassner, the “Control Sellers”), Wilhelmina International, Ltd., a New York
corporation (“Wilhelmina International”), Wilhelmina – Miami, Inc., a Florida
corporation (“Wilhelmina Miami”), Wilhelmina Artist Management LLC, a New York
limited liability company (“WAM”), Wilhelmina Licensing LLC, a Delaware limited
liability company (“Wilhelmina Licensing”), and Wilhelmina Film & TV
Productions LLC, a New York limited liability company (“Wilhelmina TV” and
together with Wilhelmina International, Wilhelmina Miami, WAM and Wilhelmina
Licensing, the “Wilhelmina Companies”), Sean Patterson, an executive with the
Wilhelmina Companies (“Patterson”), and the shareholders of Wilhelmina Miami
(the “Miami Holders” and together with the Control Sellers and Patterson, the
“Sellers”).  Pursuant to the Acquisition Agreement, the Company will
acquire the Wilhelmina Companies subject to the terms and conditions thereof
(the “Acquisition”).  The Acquisition Agreement provides for (i) the
merger of Wilhelmina Acquisition with and into Wilhelmina International in a
stock-for-stock transaction, as a result of which Wilhelmina International will
become a wholly owned subsidiary of the Company (the “Merger”) and (ii) the
Company’s purchase of the outstanding equity interests of the other Wilhelmina
Companies for cash.
  At the
closing of the Acquisition Agreement (the “Closing”), the Company will pay an
aggregate purchase price of $30,000,000 in connection with the Acquisition, of
which $24,000,000 will be paid for the outstanding equity interests of the
Wilhelmina Companies and $6,000,000 in cash will repay the outstanding balance
of a note held by a Control Seller.  The purchase price includes
$15,000,000 of Common Stock of the Company (the “Common Stock”), valued at book
value as of July 31, 2008 (which the parties agreed is $0.247 per share of
Common Stock, subject to adjustment) to be issued in connection with the merger
of Wilhelmina Acquisition with and into Wilhelmina International.  The
remaining $9,000,000 of cash will be paid to acquire the equity interests of the
remaining Wilhelmina Companies.
  The
purchase price is subject to certain post-closing adjustments, which will be
effected against a total of $4,600,000 of Common Stock that will be held in
escrow pursuant to the Acquisition Agreement (the “Seller Restricted
Shares”).  The $30,000,000 to be paid at Closing, less $4,500,000 of
Common Stock to be held in escrow in respect of the “core business” purchase
price adjustment, provides for a floor purchase price of $25,500,000 (which
amount may be further reduced in connection with certain indemnification
matters).  The shares of Common Stock held in escrow may be
repurchased by the Company for a nominal amount, subject to certain earnouts and
offsets.
  The
shares of Common Stock held in escrow support earnout offsets and
indemnification obligations of the Sellers.  The Sellers will be
required to leave in escrow, through 2011, any stock “earned” following
resolution of “core” adjustment, up to a total value of
$1,000,000.  Losses at WAM and Wilhelmina Miami, respectively, can be
offset against any positive earnout with respect to the other Wilhelmina
Company.  Losses in excess of earnout amounts could also result in the
repurchase of the remaining shares of Common Stock held in escrow for a nominal
amount.   Working capital deficiencies may also reduce positive
earnout amounts.  The earnouts are payable in 2011.
  The
Acquisition Agreement and the transactions contemplated thereunder is subject to
shareholder approval.  On October 14, 2008, the Company filed a
preliminary proxy statement with the SEC in order to seek shareholder approval
of, among other things, the Acquisition Agreement and the transactions
contemplated thereunder.  When completed, the definitive proxy
statement will be mailed to the shareholders.
  14
 Index
  Newcastle
Financing Agreement
  Concurrently
with the execution of the Acquisition Agreement, the Company entered into a
purchase agreement (the “Equity Financing Agreement”) with Newcastle, which
currently owns 19,380,768 shares or approximately 36% of the Company’s
outstanding Common Stock, for the purpose of obtaining financing to complete the
transactions contemplated by the Acquisition Agreement.  Pursuant to
the Equity Financing Agreement, subject to and conditioned upon the Closing of
the Acquisition Agreement, the Company will sell to Newcastle $3,000,000 of
shares of Common Stock at $.247 per share, or approximately (but slightly higher
than) the per share price applicable to the Common Stock issuable under the
Acquisition Agreement.  In addition, under the Equity Financing
Agreement, Newcastle committed to purchase, at the Company’s election at any
time or times prior to six months following the Closing, up to an additional
$2,000,000 of Common Stock on the same terms.  The Equity Financing
Agreement is subject to certain other conditions, including the parties’ entry
into a registration rights agreement upon the Closing, pursuant to which
Newcastle will be granted certain demand and piggyback registration rights with
respect to the Common Stock it holds, including the Common Stock issuable under
the Equity Financing Agreement.
  Item4.  Controls and Procedures
  Disclosure
controls are procedures that are designed with the objective of ensuring that
information required to be disclosed in the Company’s reports under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as this
Form 10-Q, is reported in accordance with the rules of the
SEC.  Disclosure controls are also designed with the objective of
ensuring that such information is accumulated appropriately and communicated to
management, including the principal executive officer and principal financial
officer as appropriate to allow timely decisions regarding required
disclosures.  John Murray, the Company’s CFO, is the Company’s
principal financial officer.  Up until his resignation as CEO in
October 2007, Steven J. Pully was the Company’s principal executive
officer.  Since Mr. Pully’s resignation, Mark E. Schwarz, the Chairman
of the Board of the Company, has served the function of the CEO and is currently
the principal executive officer of the Company.
  As of the
end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Company’s management,
including the Company’s principal executive officer and principal financial
officer, of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and
15d-15(e).  Based upon that evaluation, the principal executive
officer and principal financial officer concluded that the Company’s disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries)
required to be included in the Company’s periodic SEC filings.  No
change in the Company’s internal control over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) occurred during the period covered by this
report that materially affected or is reasonably likely to materially affect the
Company’s internal control over financial reporting.
  A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are
met.  Because of inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been
detected.
  PART
II OTHER INFORMATION
  Item1.  Legal Proceedings
  On
December 12, 2005, the Company received a letter from the SEC, based on a review
of the Company’s Form 10-K filed for the year ended December 31, 2004,
requesting that the Company provide a written explanation as to whether the
Company is an “investment company” (as such term is defined in the Investment
Company Act of 1940).  The Company provided a written response to the
SEC, dated January 12, 2006, stating the reasons why it believes it is not an
“investment company”.  The Company has provided certain confirmatory
information requested by the SEC.  In the event the SEC or a court
took the position that the Company is an investment company, the Company’s
failure to register as an investment company would not only raise the
possibility of an enforcement or other legal action by the SEC and potential
fines and penalties, but also could threaten the validity of corporate actions
and contracts entered into by the Company during the period it was deemed to be
an unregistered investment company, among other remedies.
  15
 Index
  In a
letter to the Company dated October 16, 2007, a lawyer representing Steven J.
Pully (the former CEO) alleged that the Company filed false and misleading
disclosure with the Securities and Exchange Commission with respect to the
elimination of Mr. Pully’s compensation (see the Company’s Forms 8-K filed on
September 5, 2007 and October 17, 2007).  No specifics were provided
as to such allegations.  The Company believes such allegations are
unfounded and, if a claim is made, the Company intends to vigorously defend
itself.
  Item5.  Other Information
  On
November 10, 2008, the Company, Wilhelmina International and Sean Patterson
entered into an Employment Agreement covering the terms of the employment of Mr.
Patterson by Wilhelmina International subject to, and effective upon, the
closing of the acquisition of the Wilhelmina Companies by the Company pursuant
to the Acquisition Agreement.  See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations - Wilhelmina
Acquisition Agreement” above.  Under the Employment Agreement,
Mr. Patterson will continue to serve as President of Wilhelmina
International.  Mr. Patterson will receive a base salary of $475,000
per year and an annual bonus based on the excess of the combined annual EBITDA
of Wilhelmina International, WAM and Wilhelmina Models, Inc., a Wilhelmina
International subsidiary, over $4,000,000.  The Employment Agreement
has a three year term.  Mr. Patterson is subject to certain
non-competition, non-solicitation and related obligations during and following
the term of the Employment Agreement.
  The
foregoing description of the Employment Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Employment Agreement, which is attached as Exhibit 10.1 hereto.
  Item6.  Exhibits
  Exhibits:10.1
                Employment
      Agreement By and Among New Century Equity Holdings Corp., Wilhelmina
      International, Ltd. and Sean Patterson, dated November 10, 2008 (filed
      herewith).31.1
                Certification
      of Principal Executive Officer in Accordance with Section 302 of the
      Sarbanes-Oxley Act (filed herewith).31.2
                Certification
      of Principal Financial Officer in Accordance with Section 302 of the
      Sarbanes-Oxley Act (filed herewith).32.1
                Certification
      of Principal Executive Officer in Accordance with Section 906 of the
      Sarbanes-Oxley Act (filed herewith).32.2
                Certification
      of Principal Financial Officer in Accordance with Section 906 of the
      Sarbanes-Oxley Act (filed
herewith).
  
 16
 Index
  SIGNATURE
  Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
  NEW
      CENTURY EQUITY HOLDINGS CORP.(Registrant)Date:  November
      14, 2008
              By:
              /s/
      John P. MurrayJohn
      P. MurrayChief
      Financial Officer(Duly
      authorized and principal financial
officer)
 
 
 17