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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                    FORM 10-Q

(MARK ONE)
|X|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended March 31, 2005
                                       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                       (I.R.S. Employer
   incorporation or organization)                     Identification Number)

   300 CRESCENT COURT, SUITE 1110, DALLAS, TEXAS          75201
    (Address of principal executive offices)            (Zip code)

                                 (214) 661-7488
              (Registrant's telephone number, including area code)

            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. |X| Yes |_| No

            Indicate by check mark  whether  the  registrant  is an  accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). |_| Yes |X| No

            Indicated  below  is  the  number  of  shares   outstanding  of  the
registrant's only class of common stock at May 13, 2005:

                                                    NUMBER OF SHARES
                   TITLE OF CLASS                      OUTSTANDING
                   --------------                      -----------
            Common Stock, $0.01 par value              34,653,104

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               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES

                                      INDEX

                                                                                PAGE
                                                                                ----

PART I FINANCIAL INFORMATION

Item 1.  Interim Condensed Consolidated Financial Statements

         Condensed Consolidated Balance Sheets - March 31, 2005 (Unaudited)
             and December 31, 2004.............................................   3

         Unaudited Condensed Consolidated Statements of Operations -
            For the Three Months ended March 31, 2005 and 2004.................   4

         Unaudited Condensed Consolidated Statements of Comprehensive Loss -
            For the Three Months ended March 31, 2005 and 2004.................   5

         Unaudited Condensed Consolidated Statements of Cash Flows -
            For the Three Months ended March 31, 2005 and 2004.................   6

         Notes to Unaudited Interim Condensed Consolidated Financial
            Statements.........................................................   7

Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations..........................................  14

Item 3.  Quantitative and Qualitative Disclosures about Market Risk............  15

Item 4.  Controls and Procedures...............................................  16

PART II OTHER INFORMATION

Item 1.  Legal Proceedings.....................................................  16

Item 6.  Exhibits..............................................................  17

SIGNATURE......................................................................  18

                                       2





                         PART I FINANCIAL INFORMATION

           ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                                                                             MARCH 31,     DECEMBER 31,
                                                                               2005            2004
                                                                            ------------   ------------
                                                                            (UNAUDITED)

                                     ASSETS

Current assets:
  Cash and cash equivalents ..........................................      $  1,487       $  1,716
  Prepaid and other current assets ...................................            97            145
  Short-term investments:
    Government securities ............................................        12,969         12,895
    Common stock .....................................................           371             --
                                                                            --------       --------
   Total short-term investments ......................................        13,340         12,895
                                                                            --------       --------
   Total current assets ..............................................        14,924         14,756

Property and equipment, net ..........................................             5              7

Other non-current assets .............................................             6              6
Investments ..........................................................            --            326
                                                                            --------       --------
  Total assets .......................................................      $ 14,935       $ 15,095
                                                                            ========       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ...................................................      $     45       $     45
  Accrued liabilities ................................................           402            283
                                                                            --------       --------
Total current liabilities ............................................           447            328

Other non-current liabilities ........................................             2              2
                                                                            --------       --------
   Total liabilities .................................................           449            330

Commitments and contingencies
Stockholders' equity:
  Preferred stock, $0.01 par value, 10,000,000 shares authorized;
   4,807,692 shares designated as Series A convertible preferred stock
   issued and outstanding ............................................            48             48
  Common stock, $0.01 par value, 75,000,000 shares authorized;
   34,653,104 shares issued and outstanding ..........................           347            347
  Additional paid-in capital .........................................        75,428         75,428
  Accumulated deficit ................................................       (61,431)       (61,107)
  Accumulated other comprehensive income .............................            94             49
                                                                            --------       --------
   Total stockholders' equity ........................................        14,486         14,765
                                                                            --------       --------
     Total liabilities and stockholders' equity ......................      $ 14,935       $ 15,095
                                                                            ========       ========

The  accompanying  notes  are  an  integral  part  of  these  interim  condensed
consolidated financial statements.

                                       3



               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                          THREE MONTHS ENDED
                                                               MARCH 31,
                                                         2005          2004
                                                      --------      ----------

Operating revenues ............................      $     -        $     --

Operating expenses:
   Selling, general and administrative expenses           353            645
   Depreciation and amortization expense ......             2             16
                                                     --------       --------
Operating loss ................................          (355)          (661)

Other income (expense):
   Interest income ............................            81             10
   Equity in net loss of affiliate ............            --         (1,200)
   Other (expense) income, net ................            --             (1)
                                                     --------       --------
Total other income (expense), net .............            81         (1,191)
                                                     --------       --------
Net loss ......................................      $   (274)      $ (1,852)

Preferred stock dividend ......................           (50)            --
                                                     --------       --------
Net loss applicable to common stockholders ....      $   (324)      $ (1,852)
                                                     ========       ========

Basic and diluted net loss per common share:
   Net loss ...................................      $  (0.01)      $  (0.05)

Weighted average common shares outstanding ....        34,653         34,653
                                                     ========       ========


The  accompanying  notes  are  an  integral  part  of  these  interim  condensed
consolidated financial statements.

                                       4





               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                                 (IN THOUSANDS)

                                                 THREE MONTHS ENDED
                                                       MARCH 31,
                                                  2005          2004
                                               ---------     ---------

Net loss ................................      $  (274)      $(1,852)

Other comprehensive income:

  Unrealized holding gains, net of $0 tax           45          --
                                               -------       -------

Comprehensive loss ......................      $  (229)      $(1,852)
                                               =======       =======




The  accompanying  notes  are  an  integral  part  of  these  interim  condensed
consolidated financial statements.

                                       5





               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

                                                         THREE MONTHS ENDED
                                                              MARCH 31,
                                                       ----------------------
                                                          2005         2004
                                                       --------      --------
Cash flows from operating activities:
Net loss ........................................      $  (274)      $(1,852)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization expenses ........            2            16
  Equity in net loss of affiliate ...............           --         1,200
  Loss on disposition of property and equipment .           --            30
  Accretion of discount on securities ...........          (74)           --
  Changes in operating assets and liabilities:
   Decrease in accounts receivable ..............           --             2
   Decrease in prepaid and other assets .........           48            87
   Increase in accounts payable .................           --             1
   Increase (decrease) in accrued liabilities ...           69          (421)
                                                       -------       -------
Net cash used in operating activities ...........         (229)         (937)

Cash flows from investing activities:
  Proceeds from sale of property and equipment ..           --             5
                                                       -------       --------
Net cash provided by investing activities .......           --             5

Cash flows from financing activities ............           --            --
                                                       -------       --------

Net decrease in cash and cash equivalents .......         (229)         (932)
Cash and cash equivalents, beginning of period ..        1,716         5,330
                                                       -------       --------

Cash and cash equivalents, end of period ........      $ 1,487       $ 4,398
                                                       =======       ========

Supplemental disclosure of financial information:
  Cash paid for interest ........................      $    --       $    --
  Cash paid for income taxes ....................      $    --       $    --

Supplemental disclosure of non-cash transactions:
  Increase in fair market value of investments ..      $    45       $    --
  Preferred stock dividend ......................      $    50       $    --


The  accompanying  notes  are  an  integral  part  of  these  interim  condensed
consolidated financial statements.

                                       6





               NEW CENTURY 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. and  subsidiaries
(collectively,  the  "Company"),  without  audit,  pursuant  to  the  rules  and
regulations  of  the  Securities  and  Exchange  Commission   ("SEC").   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 such rules
and regulations.  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, 2004.  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. HISTORICAL OVERVIEW AND RECENT DEVELOPMENTS

            New Century Equity  Holdings  Corp. is a company in transition.  The
Company is currently seeking to redeploy its assets to enhance stockholder value
and is  seeking,  analyzing  and  evaluating  potential  acquisition  and merger
candidates. The Company was formerly known as Billing Concepts Corp. ("BCC") and
was  incorporated  in the  state of  Delaware  in  1996.  BCC was  previously  a
wholly-owned  subsidiary of U.S. Long Distance Corp. ("USLD"). Upon its spin-off
from USLD, BCC became an independent,  publicly-held company. 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 also made  investments  in
other high growth  companies.  As of March 31, 2005,  the Company held an equity
interest in publicly traded Sharps Compliance Corp.  ("Sharps"),  which provides
cost-effective  medical-related  disposal solutions for the healthcare,  retail,
residential  and  hospitality  industries.  During the period from April 1, 2005
through  May 5,  2005,  the  Company  sold its  equity  interest  in Sharps  for
approximately $334,000.

NOTE 3. STOCK BASED COMPENSATION

            The Company  adopted  Statement  of Financial  Accounting  Standards
("SFAS") No. 123,  "Accounting  for  Stock-Based  Compensation,"  but elected to
apply Accounting  Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees,"  and related  interpretations  in accounting for its stock
option plans.  Accordingly,  the Company has not recognized compensation expense
for stock options  granted where the exercise  price is equal to or greater than
the market price of the underlying stock at the date of grant.

            The following table  illustrates the effect on net loss and net loss
per common share had compensation  expense for the Company's stock option grants
been determined  based on the fair value at the grant dates  consistent with the
methodology  of SFAS No.  123 and  SFAS No.  148,  "Accounting  for  Stock-Based
Compensation  -  Transition  and  Disclosure".  For  purposes  of the pro  forma
disclosures,  the  estimated  fair value of options  is  amortized  to pro forma
compensation expense over the options' vesting periods.

                                       7



                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                      ----------------------
(in thousands, except per share data)                                                    2005          2004
                                                                                      --------      --------
Net loss, as reported ..........................................................      $  (274)      $(1,852)
Less: Total stock based employee compensation expense determined
   under fair value based method for all awards, net of related tax effects ....           (8)           (1)
                                                                                      -------       -------

Net loss, pro forma ............................................................      $  (282)      $(1,853)
                                                                                      =======       =======

Basic and diluted net loss per common share:
   Net loss, as reported .......................................................      $ (0.01)      $ (0.05)
   Net loss, pro forma .........................................................      $ (0.01)      $ (0.05)

            The  fair  value  for  these  stock  options  was  estimated  at the
respective  grant date  using the  Black-Scholes  option-pricing  model with the
following  weighted  average  assumptions  for the three  months ended March 31,
2004:  expected  volatility of 96.3%,  no dividend  yield,  expected life of 2.5
years and  risk-free  interest rate of 1.8%. No stock options were issued during
the three months ended March 31, 2005.

NOTE 4. INVESTMENTS

            Investments consist of the following:
                                                           March 31,        December 31,
            (in thousands)                                   2005               2004
                                                          ---------         -------------
            Investment in Sharps:
              Cash investments ........................      970                 970
              Settlement ..............................     (389)               (389)
              Impairment of investment ................     (306)               (306)
              Unrealized holding gain .................       94                  49
              Other ...................................        2                   2
                                                           -----               -----
                 Net investment in Sharps                    371                 326
                                                           -----               -----
              Total investments .......................    $ 371               $ 326
                                                           =====               =====

            In January  2004,  the Company  entered into an  agreement  with the
former majority  stockholders of Operator  Service Company ("OSC") to settle all
claims related to the April 2000  acquisition  of OSC by the Company.  Under the
terms of the  agreement,  the  Company  transferred  to the former OSC  majority
stockholders  525,000 shares of the common stock of Sharps owned by the Company,
valued  at  approximately  $389,000.   Additionally,  the  former  OSC  majority
stockholders  agreed to a voting  rights  agreement  which allows the Company to
direct  the  vote of the  Company's  shares  owned by  them.  Subsequent  to the
transfer of the Sharps common stock shares, the Company's interest in Sharps was
3.6% of the outstanding  shares.  The Company  recorded a non-cash charge to net
loss from disposal of discontinued operations in 2003 of $389,000 in conjunction
with the settlement agreement.  During the period from April 1, 2005 through May
5, 2005,  the  Company  sold its  equity  interest  in Sharps for  approximately
$334,000,  resulting in a $57,000 gain for financial reporting purposes,  net of
$94,000 reclassified from other comprenhsive income.

NOTE 5. COMMITMENTS AND CONTINGENCIES

            In  October  2000,  the  Company   completed  the  sale  of  several
wholly-owned   subsidiaries  that  principally   provided   third-party  billing
clearinghouse  and  information  management  services to the  telecommunications
industry  (the  "Transaction  Processing  and  Software  Business")  to Platinum

                                       8





Holdings  ("Platinum"),  for  consideration  of  approximately  $49,700,000 (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 expires in 2006.  Under the original  terms of the first lease,  the
remaining minimum undiscounted rent payments totalling approximately  $2,886,000
at March 31,  2005.  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 totalling  approximately
$6,737,000  at March 31, 2005.  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 these lease  guarantees  and,
therefore, no liability has been accrued in the Company's financial statements.

            On August 11, 2004,  Craig  Davis,  allegedly a  stockholder  of the
Company, filed a complaint in the Chancery Court of New Castle County,  Delaware
(the  "Complaint").  The Complaint  asserts direct claims,  and also  derivative
claims on the Company's behalf,  against five former and three current directors
of the Company.  The  individual  defendants  are Parris H. Holmes,  Jr., C. Lee
Cooke,  Jr., Justin L. Ferrero,  Gary D. Becker,  J. Stephen Barley,  Stephen M.
Wagner,  Mark E.  Schwarz,  and  Steven  J.  Pully;  the  Company  is a  nominal
defendant.  In his Complaint,  Mr. Davis seeks the appointment of a receiver for
the Company under Section  226(a) of the Delaware  General  Corporation  Law and
other remedies.  Mr. Davis alleges that different director  defendants  breached
their  fiduciary  duties to the Company.  The allegations  involve,  among other
things,  transactions with, and payments to, Mr. Holmes, and whether the Company
operated as an unregistered investment company. The Company is currently funding
legal expenses of the defendants  pursuant to indemnification  arrangements that
were in place during the respective terms of each of the defendants.

            The Company and certain of the defendants responded to the Complaint
by filing a motion to  dismiss or stay the  action on  October  18,  2004 and on
November 3, 2004 filed a  memorandum  of law in support of such  positions.  The
motion to dismiss filed by the Company and various  defendants  was heard by the
Chancery  Court of New Castle  County,  Delaware on January 18, 2005.  The court
denied the motion to dismiss. On February 23, 2005, Mr. Davis filed a motion for
the  appointment  of a receiver.  On May 6, 2005, the Company and certain of the
defendants  filed a response in opposition to  plaintiff's  motion for receiver.
Mediation  among  parties  named in the  Complaint  took  place  in  Wilmington,
Delaware on May 13, 2005.

            On October 27, 2004 the board of directors appointed Messrs.  Pully,
Risher and Schwarz to a special  litigation  committee to investigate the claims
of the  plaintiff.  Prior  to the  filing  of the  Complaint,  the  Company  had
commenced an investigation of various transactions  involving former management,
including,  among other  things,  the payment of  approximately  $600,000 to Mr.
Holmes in  connection  with a restricted  stock  agreement  (see Note 7) and the
reimbursement of various expenses involving meals and entertainment,  travel and
other reimbursed  expenses.  As part of the investigative  work commenced by the
Company prior to the filing of the Complaint,  the Company sought  reimbursement
from Mr. Holmes for various amounts paid to him. The Company and Mr. Holmes were
unable to agree on the amount that Mr. Holmes should reimburse the Company.

            The Company has been notified by counsel to both Messrs.  Holmes and
Tusa that each of Messrs. Holmes and Tusa believe that approximately $60,000 and
$34,000,  respectively,  are  owed  to  each  of  them  under  their  respective
consulting  agreements.  In addition to notifying  both Messrs.  Holmes and Tusa
that  their  consulting  services  were  not  required  and  that no  obligation
therefore  existed  under  their  respective  agreements,  both  have  also been
notified  that the Company is  investigating  various  transactions,  including,

                                       9





among other  things,  the  payment of  approximately  $600,000 to Mr.  Holmes in
connection with a restricted stock agreement (see Note 7) and the  reimbursement
of  various  expenses  involving  meals  and  entertainment,  travel  and  other
reimbursed  expenses.  The Company disputes that any additional amounts are owed
under the  consulting  agreements  and,  therefore,  has not  provided  for such
amounts in the accompanying  financial statements for the period ended March 31,
2005.

            Pursuant  to the sale of  approximately  4.8  million  newly  issued
shares of the Company's  Series A 4% Convertible  Preferred Stock (the "Series A
Preferred  Stock") to Newcastle  Partners,  L.P.  ("Newcastle") on June 18, 2004
(the "Newcastle Transacation"),  the Company agreed to indemnify  Newcastle from
any  liability,  loss or damage,  together  with all costs and expenses  related
thereto  that the Company may suffer which arises out of affairs of the Company,
its board of  directors  or  employees  prior to the  closing  of the  Newcastle
Transaction.  The  Company's  obligation  to  indemnify  may be satisfied at the
option of the purchaser by issuing  additional  Series A Preferred  Stock to the
purchaser,  modifying the  conversion  price of the Series A Preferred  Stock, a
payment of cash or a redemption of Series A Preferred  Stock or a combination of
the foregoing.  The Company and the purchaser  have not yet  determined  whether
events that have arisen since the closing will trigger the indemnity provisions.

NOTE 6. INVESTMENT IN UNCONSOLIDATED AFFILIATE

            Prior to the selling of its interest in Princeton in June 2004,  the
Company  accounted for its  investment  in Princeton  under the equity method of
accounting  and recorded  the equity in net loss of  Princeton on a  three-month
lag. As of March 31, 2004, the Company's  ownership  percentage of the preferred
stock, the outstanding stock and the fully diluted stock of Princeton was 26.5%,
28.7% and 22.9%, respectively.

            Princeton's summarized balance sheet as of December 31, 2003, is as follows:
                                                  December 31,
            (in thousands)                            2003
                                                  ------------
            Current assets ...................      $42,043
            Non-current assets ...............       11,332
            Current liabilities ..............       39,476
            Non-current liabilities ..........          888
            Mandatorily redeemable convertible
               preferred stock ...............       39,553

            Princeton's  statements  of  operations  for the three  months ended
December 31, 2003 has been used to calculate  the equity in net loss recorded in
the Company's statement of operations for the three months ended March 31, 2004.
Princeton's summarized statement of operations is as follows:

                                                 Three Months Ended
                                                    December 31,
            (in thousands)                             2003
                                                 ------------------
            Total revenues...................      $   5,889
            Gross profit.....................          1,940
            Loss from operations.............         (3,768)
            Net loss.........................         (3,527)

                                       10





NOTE 7. RELATED PARTY TRANSACTIONS

            Parris  H.  Holmes,  Jr.  (former  Chairman  of the  Board and Chief
Executive  Officer  of the  Company)  served  on the  Board  of  Princeton  from
September  1998 until March 2004.  Mr. Holmes served as Chairman of the Board of
Princeton  from January 2002 until  December  2002.  David P. Tusa (former Chief
Financial  Officer of the Company)  served as a member of the Board of Princeton
from August 2001 until June 2002.

            Mr.  Holmes  has been a member of the board of  directors  of Sharps
since July 1998.  According to public filings by Sharps, Mr. Holmes continues to
be a director of Sharps,  although he is not serving in such  capacity on behalf
of the Company.  Mr. Tusa was  appointed  Chief  Financial  Officer of Sharps in
February 2003. In March 2003,  Sharps began  reimbursing the Company for certain
expenses  incurred by Mr. Tusa.  As of March 31, 2005,  no amount was due to the
Company by Sharps for these expenses. A current member of the Company's board of
directors, Lee Cooke, served on the board of directors of Sharps from March 1992
until November 2004.

            In August  2003,  the Company  issued  435,484  shares of its common
stock to Mr.  Holmes in exchange  for a salary  reduction  of  $135,000  for the
employment  period of October 1, 2003 to September  30, 2004.  These shares were
issued under the New Century Equity Holdings Corp.  1996 Employee  Comprehensive
Stock  Plan,  which  allows  for this  type of  issuance  without  any  material
amendments.

            In November 2001,  the Company  entered into an Amended and Restated
Employment  Agreement  ("Employment  Agreement") with Mr. Holmes. As part of the
Employment  Agreement,  the Company  entered into a Split-Dollar  Life Insurance
Agreement ("Insurance  Agreement") with a trust beneficially owned by Mr. Holmes
pursuant to which the Company paid the annual insurance premium of approximately
$172,000.  The underlying  life insurance  policy had a face value of $4,500,000
and required  remaining  annual premium  payments  through March 2012,  totaling
$1,500,000.  In December  2003,  Mr. Holmes and the Company  agreed to amend the
Employment  Agreement and terminate the provisions of the  Employment  Agreement
related to the  Insurance  Agreement in exchange for payments by the Company to,
and  on  behalf  of,  Mr.  Holmes  totaling   approximately  $700,000  in  cash.
Accordingly,  the Company  assigned to Mr. Holmes,  and Mr. Holmes assumed,  all
future obligations and benefits related to the Insurance  Agreement.  Mr. Holmes
released and  discharged  the Company from any further  obligation to provide or
fund any life insurance for the benefit of Mr.  Holmes,  including the Insurance
Agreement.  The entire  $700,000  was  included  in general  and  administrative
expenses during the year ended December 31, 2003. In December 2003,  $200,000 of
the total $700,000 was paid. The remaining  $500,000 was accrued at December 31,
2003 and paid in January 2004. In conjunction with the Insurance Agreement,  the
Company  relinquished  its rights under two other  split-dollar  life  insurance
policies  previously  entered into with Mr.  Holmes.  All premiums had been paid
under the two policies prior to 2004. The Company paid  approximately  $3,800 on
behalf of Mr. Holmes in connection with the transfer of rights to Mr. Holmes.

            Prior to the  Newcastle  Transaction,  during the quarter ended June
30,  2004,  the  Company  sold  certain  office  furniture  to  Mr.  Holmes  for
approximately  $7,000 and provided Mr. Holmes with title to the automobile  that
had been  furnished to him by the Company at no cost.  The Company had purchased
the office  furniture for  approximately  $28,000 during the period October 1994
through April 2003 and the furniture had a book value of $4,000. Pursuant to the
terms of his employment  agreement,  Mr. Holmes was provided with an automobile.
The  automobile  was acquired by the Company for $75,000 in 2000. At the time of
transfer,  the net book  value of the  automobile  was zero and the fair  market
value  was  $20,000.  In  accordance  with the terms of Mr.  Holmes'  employment
agreement,  the income taxes  incurred by Mr. Holmes as a result of the transfer
of title to him were borne by the Company.

                                       11





            The Company paid Mr. Holmes approximately  $600,000 on June 2, 2004,
purportedly as a result of a restricted stock grant as described below. In April
2000, the board of directors of the Company approved a restricted stock grant to
Mr. Holmes.  The restricted stock grant consisted of 400,000 shares of Princeton
common stock and was modified in June 2001 to provide for certain  anti-dilution
and ratchet  protections.  The restricted  stock grant vested on April 30, 2003.
The Company  expensed the fair market value of the  restricted  stock grant over
the  three-year  period  ended April 30,  2003.  The Company  has  commenced  an
investigation of various  transactions  involving former management,  including,
among other things, the $600,000 payment.

            In June 2004, in  connection  with the  Newcastle  Transaction,  Mr.
Schwarz,  Chief Executive Officer and Chairman of Newcastle Capital  Management,
Mr. Pully,  President of Newcastle  Capital  Management,  and Mr. Murray,  Chief
Financial Officer of Newcastle Capital Management, assumed positions as Chairman
of the Board, Chief Executive Officer and Chief Financial Officer, respectively,
of the  Company.  Mr.  Pully  receives  an annual  salary of  $150,000  as Chief
Executive Officer of the Company.  Newcastle  Capital  Management is the general
partner of Newcastle,  which owns 4,807,692  shares of Series A Preferred  Stock
and 150,000 shares of Common Stock of the Company.

            The Company's  corporate  headquarters are currently  located at 300
Crescent Court, Suite 1110,  Dallas,  Texas 75201, which are also the offices of
Newcastle.  Pursuant to an oral  agreement,  the Company  subleases a portion of
Newcastle's space on a month-to-month basis at no charge.

            The Company also receives  accounting  and  administrative  services
from employees of Newcastle Capital Management at no charge.

NOTE 8.  SHARE CAPITAL

            On July 10, 1996, the Company,  upon  authorization  of the board of
directors,  adopted a  Shareholder  Rights Plan  ("Rights  Plan") and declared a
dividend of one preferred  share purchase right on each share of its outstanding
Common Stock.  The rights will become  exercisable if a person or group acquires
15% or more of the  Company's  Common  Stock or  announces a tender  offer,  the
consummation  of which would  result in ownership by a person or group of 15% or
more of the Company's Common Stock. These rights, which expire on July 10, 2006,
entitle  stockholders  to buy one  ten-thousandth  of a share of a new series of
participating   preferred   shares  at  a   purchase   price  of  $130  per  one
ten-thousandth of a preferred share. The Rights Plan was designed to ensure that
stockholders  receive  fair and equal  treatment  in the  event of any  proposed
takeover of the Company.

            On June 10, 2004, the Company amended its July 10, 1996  Shareholder
Rights Agreement by reducing the Common Stock ownership threshold for triggering
the  distribution  of rights under such agreement  from fifteen  percent to five
percent.  Newcastle  and its  successors  and assigns are exempted from the five
percent ownership  limitation.  The purpose of such amendment was to help ensure
the   preservation  of  the  Company's  net  operating  loss  and  capital  loss
carryforwards.

            The Company has never  declared  or paid any cash  dividends  on its
Common  Stock.  The Company may not pay dividends on its Common Stock unless all
declared and unpaid  Preferred  Dividends have been paid. In addition,  whenever
the Company shall declare or pay any dividends on its Common Stock,  the holders
of Series A Preferred  Stock are entitled to receive such Common Stock dividends
on a ratably as-converted basis.

            The  Series A  Preferred  Stock is  convertible  into  approximately
thirty-five  percent of the  Company's  Common  Stock,  par value $.01 per share
("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

                                       12





are entitled to a four percent annual cash dividend (the "Preferred Dividends").
The Preferred  Dividends  shall accrue and shall be cumulative  from the date of
initial issuance of the shares of the Series A Preferred  Stock,  whether or not
declared by the Company's  board of directors.  In lieu of cash  dividends,  the
holders of Series A Preferred  Stock may elect to receive  such number of shares
of Series A  Preferred  Stock  that is equal to the  aggregate  dividend  amount
divided by $1.04.

            So long  as any  shares  of the  Series  A  Preferred  Stock  remain
outstanding, (1) the Company's board of directors shall not exceed four members,
(2) the Company  may not  increase  its  authorized  capitalization  and (3) the
Company may not create rights, rankings or preferences that adversely affect the
rights,  rankings and preferences of the Series A Preferred  Stock,  without the
written  consent of the holders of at least a majority of the shares of Series A
Preferred  Stock then  outstanding,  voting as a separate  class. So long as any
shares of the Series A Preferred Stock remain outstanding, the holders of shares
of Series A Preferred Stock shall be entitled (1) to vote as a separate class to
elect two  directors to the  Company's  board of directors  and to pass upon any
matters that affect the rights, value or ranking of the Series A Preferred Stock
and (2) to vote on all other  matters on which  holders of Common Stock shall be
entitled  to vote,  casting  such  number of votes in respect of such  shares of
Series A Preferred  Stock as shall equal the largest  whole  number of shares of
Common  Stock  into  which  such  shares  of Series A  Preferred  Stock are then
convertible.   The  other  powers,  preferences,   rights,   qualifications  and
restrictions  of the  Series A  Preferred  Stock are more fully set forth in the
Certificate of Designations  of Series A Convertible  Preferred Stock filed with
the Secretary of State of the State of Delaware  simultaneously with the closing
of the Newcastle Transaction.

NOTE 9. INVESTMENT IN SECURITIES AVAILABLE-FOR-SALE

            In October 2004, the Company  purchased a 26 week U.S. Treasury bill
for approximately $12,859,000. The fair value was $12,969,000 at March 31, 2005.
Short-term investments also consist of 375,000 shares of common stock of Sharps.

                                       13





ITEM 2.

            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, COMPETITIVE FACTORS, GENERAL ECONOMIC CONDITIONS,
CUSTOMER RELATIONS,  RELATIONSHIPS WITH VENDORS,  THE INTEREST RATE ENVIRONMENT,
GOVERNMENTAL  REGULATION AND SUPERVISION,  SEASONALITY,  DISTRIBUTION  NETWORKS,
PRODUCTS INTRODUCTIONS AND ACCEPTANCE, TECHNOLOGICAL CHANGE, 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.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
GENERAL

            The following is a discussion of the interim condensed  consolidated
financial  condition and results of operations for New Century  Equity  Holdings
Corp. and subsidiaries (collectively, the "Company"), for the three months ended
March 31, 2005.  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, 2004.

RESULTS OF OPERATIONS

Continuing Operations

            Selling,  general and administrative ("SG&A") expenses are comprised
of all selling, marketing and administrative costs incurred in direct support of
the business operations of the Company.  SG&A expenses decreased by $292,000, or
45%, to $353,000,  during the three months ended March 31, 2005,  as compared to
the three  months  ended  March 31,  2004.  The  decrease  in SG&A is due to the
reduction of salaried  employees  from five to one, the decrease in rent expense
as a result of the  sublease  entered  into on October  8,  2004,  to sublet the
office space  located at 10101  Reunion  Place,  Suite 970, San Antonio,  Texas,
offset by approximately  $229,000 for legal and professional fees related to the
lawsuit filed by Craig Davis.

Interest Income

            Interest income  increased by $71,000,  or 710%, to $81,000,  during
the three  months  ended March 31,  2005,  as compared to the three months ended
March 31, 2004. This increase was attributable to higher cash balances available
for  short-term  investment as our cash resources were increased by the proceeds
from the Newcastle  Transaction  and the sale of our Princeton  interest in June
2004.

                                       14





Equity In Net Loss Of Affiliate

            Equity in net loss of  affiliate  totaled  $1.2  million  during the
three  months  ended March 31,  2004.  In June 2004,  the  Company  sold all its
interest in Princeton for $10 million.

LIQUIDITY AND CAPITAL RESOURCES

            The  Company's  cash balance  decreased to $1.5 million at March 31,
2005,  from $1.7  million at December 31,  2004.  The  decrease  relates to SG&A
expenses  incurred  during  the three  months  ended  March 31,  2005,  of which
approximately  $229,000  represents legal and  professional  fees related to the
lawsuit  filed by Craig  Davis.  There were no capital  expenditures  during the
three months ended March 31, 2005.

            The Company's short-term  investments  increased to $13.4 million at
March 31, 2005, from $12.9 million at December 31, 2004. The increase relates to
accretion of discount on government  securities  and the  classification  of the
Sharps  investment as a short-term  investment in accordance  with the Company's
plan to  dispose  of the Sharps  common  stock.  As of May 5, 2005 all shares of
Sharps  common  stock  held by the  Company  had  been  sold  for  approximately
$334,000,  resulting in a $57,000 gain for financial reporting purposes,  net of
$94,000 reclassified from other comprenhsive income.

            During 2005, the Company's  operating cash requirements are expected
to consist principally of funding corporate expenses,  the costs associated with
maintaining a public  company,  expenses  incurred in pursuing and operating new
business  activities  and  litigation  expenses.  The  Company  expects to incur
additional  operating  losses through fiscal 2005, which will continue to have a
negative impact on liquidity and capital resources.

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
expires in 2006.  Under the  original  terms of the first lease,  the  remaining
minimum  undiscounted  rent payments  total $2.9 million at March 31, 2005.  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 $6.7 million at March 31, 2005. 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 these
lease guarantees and, therefore,  no liability has been accrued in the Company's
financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

            The Company is exposed to interest rate risk  primarily  through its
portfolio of cash equivalents and short-term marketable securities.  The Company
does not believe that it has  significant  exposure to market  risks  associated
with  changing  interest  rates as of March  31,  2005,  because  the  Company's
intention is to maintain a liquid portfolio. The Company does not use derivative
financial instruments in its operations.

                                       15





ITEM 4. 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 chief executive officer and chief financial officer as appropriate
to allow timely decisions regarding required disclosures.

            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 chief executive  officer and
chief 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 chief executive officer
and chief 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

ITEM 1. LEGAL PROCEEDINGS

            On August 11, 2004,  Craig  Davis,  allegedly a  stockholder  of the
Company, filed a complaint in the Chancery Court of New Castle County,  Delaware
(the  "Complaint").  The Complaint  asserts direct claims,  and also  derivative
claims on the Company's behalf,  against five former and three current directors
of the Company.  The  individual  defendants  are Parris H. Holmes,  Jr., C. Lee
Cooke,  Jr., Justin L. Ferrero,  Gary D. Becker,  J. Stephen Barley,  Stephen M.
Wagner,  Mark E.  Schwarz,  and  Steven  J.  Pully;  the  Company  is a  nominal
defendant.  In his Complaint,  Mr. Davis seeks the appointment of a receiver for
the Company under Section  226(a) of the Delaware  General  Corporation  Law and
other remedies.  Mr. Davis alleges that different director  defendants  breached
their  fiduciary  duties to the Company.  The allegations  involve,  among other
things,  transactions with, and payments to, Mr. Holmes, and whether the Company
operated as an unregistered investment company. The Company is currently funding
legal expenses of the defendants  pursuant to indemnification  arrangements that
were in place during the respective terms of each of the defendants.

            The Company and certain of the defendants responded to the Complaint
by filing a motion to  dismiss or stay the  action on  October  18,  2004 and on
November 3, 2004 filed a  memorandum  of law in support of such  positions.  The
motion to dismiss filed by the Company and various  defendants  was heard by the
Chancery  Court of New Castle  County,  Delaware on January 18, 2005.  The court
denied the motion to dismiss. On February 23, 2005, Mr. Davis filed a motion for
the  appointment  of a receiver.  On May 6, 2005, the Company and certain of the
defendants  filed a response in opposition to  plaintiff's  motion for receiver.
Mediation  among parties named in the Complaint has been scheduled to take place
in Wilmington, Delaware on May 13, 2005.

                                       16





            On October 27, 2004 the board of directors appointed Messrs.  Pully,
Risher and Schwarz to a special  litigation  committee to investigate the claims
of the  plaintiff.  Prior  to the  filing  of the  Complaint,  the  Company  had
commenced an investigation of various transactions  involving former management,
including,  among other  things,  the payment of  approximately  $600,000 to Mr.
Holmes  in  connection  with a  restricted  stock  agreement  (see Note 7 to the
Condensed  Consolidated  Financial  Statements) and the reimbursement of various
expenses  involving  meals  and  entertainment,   travel  and  other  reimbursed
expenses.  As part of the  investigative  work commenced by the Company prior to
the filing of the Complaint,  the Company sought  reimbursement  from Mr. Holmes
for various amounts paid to him. The Company and Mr. Holmes were unable to agree
on the amount that Mr. Holmes should reimburse the Company.

            The Company has been notified by counsel to both Messrs.  Holmes and
Tusa that each of Messrs. Holmes and Tusa believe that approximately $60,000 and
$34,000,  respectively,  are  owed  to  each  of  them  under  their  respective
consulting  agreements.  In addition to notifying  both Messrs.  Holmes and Tusa
that  their  consulting  services  were  not  required  and  that no  obligation
therefore  existed  under  their  respective  agreements,  both  have  also been
notified  that the Company is  investigating  various  transactions,  including,
among other  things,  the  payment of  approximately  $600,000 to Mr.  Holmes in
connection  with a  restricted  stock  agreement  (see  Note 7 to the  Condensed
Consolidated  Financial  Statements) and the  reimbursement  of various expenses
involving meals and  entertainment,  travel and other reimbursed  expenses.  The
Company  disputes  that any  additional  amounts  are owed under the  consulting
agreements and, therefore, has not provided for such amounts in the accompanying
financial statements for the period ended March 31, 2005.

            Pursuant  to  the  Newcastle  Transaction,  the  Company  agreed  to
indemnify Newcastle,  as the purchaser of the Series A Preferred Stock, from any
liability,  loss or damage, together with all costs and expenses related thereto
that the  Company may suffer  which  arises out of affairs of the  Company,  its
board  of  directors  or  employees  prior  to  the  closing  of  the  Newcastle
Transaction.  The  Company's  obligation  to  indemnify  may be satisfied at the
option of the purchaser by issuing  additional  Series A Preferred  Stock to the
purchaser,  modifying the  conversion  price of the Series A Preferred  Stock, a
payment of cash or a redemption of Series A Preferred  Stock or a combination of
the foregoing.  The Company and the purchaser  have not yet  determined  whether
events that have arisen since the closing will trigger the indemnity provisions.

ITEM 6. EXHIBITS

        Exhibits:

        31.1        Certification of Chief Executive  Officer in Accordance with
                    Section 302 of the Sarbanes-Oxley Act (filed herewith)
        31.2        Certification of Chief Financial  Officer in Accordance with
                    Section 302 of the Sarbanes-Oxley Act (filed herewith)
        32.1        Certification of Chief Executive  Officer in Accordance with
                    Section 906 of the Sarbanes-Oxley Act (filed herewith)
        32.2        Certification of Chief Financial  Officer in Accordance with
                    Section 906 of the Sarbanes-Oxley Act (filed herewith)


                                       17





                                    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: May 16, 2005              By:             /s/ John P. Murray
                                     ------------------------------------------
                                                 John P. Murray
                                            CHIEF FINANCIAL OFFICER
                               (Duly authorized and principal financial officer)

                                       18`