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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 September 30, 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

         Indicate by check mark whether the  registrant  is a shell  company (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 November 11, 2005:

                                                  Number of Shares
             Title of Class                         Outstanding
      -----------------------------        -----------------------------
      Common Stock, $0.01 par value                  34,653,104

               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES

                                      INDEX

                                                                                         PAGE

PART I FINANCIAL INFORMATION

Item 1. Interim Condensed Consolidated Financial Statements

        Condensed Consolidated Balance Sheets - September 30, 2005 (Unaudited)
           and December 31, 2004........................................................   3

        Unaudited Condensed Consolidated Statements of Operations - For the Three
           and Nine Months ended September 30, 2005 and 2004............................   4

        Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) -
           For the Three and Nine Months ended September 30, 2005 and 2004..............   5

        Unaudited Condensed Consolidated Statements of Cash Flows - For the
           Nine Months ended September 30, 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................................................................  15

Item 3. Quantitative and Qualitative Disclosures about Market Risk......................  17

Item 4. Controls and Procedures.........................................................  17

PART II OTHER INFORMATION

Item 1. Legal Proceedings...............................................................  18

Item 6. Exhibits........................................................................  19

SIGNATURE  .............................................................................  20

                                       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)

                                                                                September 30,       December 31,
                                                                                    2005                2004
                                                                             ------------------  ------------------
                                                                                 (Unaudited)

                                     ASSETS

Current assets:
  Cash and cash equivalents ............................................         $    13,076         $     1,716
  Insurance receivable and other current assets ........................               1,452                 145
  Short-term investments ...............................................                --                12,895
                                                                                 -----------         -----------
   Total current assets ................................................              14,528              14,756

Property and equipment, net ............................................                --                     7

Other non-current assets ...............................................                   6                   6
Investments ............................................................                --                   326
                                                                                 -----------         -----------
  Total assets .........................................................         $    14,534         $    15,095
                                                                                 ===========         ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable .....................................................         $        51         $        45
  Accrued liabilities ..................................................                 471                 283
                                                                                 -----------         -----------
Total current liabilities ..............................................                 522                 328

Other non-current liabilities ..........................................                   2                   2
                                                                                 -----------         -----------
   Total liabilities ...................................................                 524                 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 ....................................................             (61,813)            (61,107)
Accumulated other comprehensive income (loss) ..........................                --                    49
                                                                                 -----------         -----------
 Total stockholders' equity ............................................              14,010              14,765
                                                                                 -----------         -----------
  Total liabilities and stockholders' equity ...........................         $    14,534         $    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         Nine Months Ended
                                                                        September 30,               September 30,
                                                                   ------------------------   ------------------------
                                                                      2005         2004          2005          2004
                                                                   -----------  ----------    -----------  -----------

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

Operating expenses:
   Selling, general and administrative expenses ..............          284           288           881         4,546
   Depreciation and amortization expense .....................            3             4             7            26
                                                                   --------      --------      --------      --------

Operating loss ...............................................         (287)         (292)         (888)       (4,572)

Other income (expense):
   Interest income, net ......................................          108            31           289            57
   Equity in net loss of affiliate ...........................         --            --            --          (2,985)
   Gain on sale of equity affiliate ..........................         --            --            --           5,817
   Other (expense) income, net ...............................          (14)           (1)           43            (4)
                                                                   --------      --------      --------      --------

Total other income, net ......................................           94            30           332         2,885
                                                                   --------      --------      --------      --------

Net income (loss) ............................................         (193)         (262)         (556)       (1,687)

Preferred stock dividend .....................................          (50)          (50)         (150)          (57)
                                                                   --------      --------      --------      --------
Net income (loss) applicable to
   common stockholders .......................................     $   (243)     $   (312)     $   (706)     $ (1,744)
                                                                   ========      ========      ========      ========

Basic and diluted net income (loss) per common share:
   Net income (loss) .........................................     $  (0.01)     $  (0.01)     $  (0.02)     $  (0.05)
                                                                   ========      ========      ========      ========

Weighted average common shares outstanding ...................       34,653        34,653        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 INCOME / (LOSS)
                                                    (IN THOUSANDS)

                                                                Three Months Ended              Nine Months Ended
                                                                  September 30,                   September 30,
                                                            --------------------------      --------------------------
                                                               2005            2004            2005            2004
                                                            -----------     ----------      -----------  -------------

Net income (loss) .....................................      $  (193)        $  (262)        $  (556)        $(1,687)

Other comprehensive income:
  Reclassification of unrealized loss (gain) on .......            5            --               (94)           --
   investment
  Unrealized holding gains (losses), net of $0 tax ....         --                (8)             45               7
                                                             -------         -------         -------         -------

Comprehensive income (loss) ...........................      $  (188)        $ (270)         $  (605)        $(1,680)
                                                             =======         =======         =======         =======

       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)

                                                                                                Nine Months Ended
                                                                                                  September 30,
                                                                                               2005           2004
                                                                                           -------------  -------------
Cash flows from operating activities:
Net loss ..............................................................................      $   (556)      $ (1,687)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization expenses ..............................................             7             25
  Equity in net loss of affiliate .....................................................          --            2,985
  Gain on sale of equity affiliate ....................................................          --           (5,817)
  Loss on disposition of property and equipment .......................................          --               28
  Loss on sale of treasury bill .......................................................            14           --
  Gain on sale of Sharps Compliance Corp. common stock ................................           (57)          --
  Accretion of discount on securities .................................................          (185)          --
  Changes in operating assets and liabilities:
   Decrease in accounts receivable ....................................................          --               28
   (Increase) decrease in insurance receivable and other assets .......................        (1,307)           301
   Increase in accounts payable .......................................................             6            103
   Increase (decrease) in accrued liabilities .........................................           238           (628)
                                                                                             --------       --------
Net cash used in operating activities .................................................        (1,840)        (4,662)

Cash flows from investing activities:
  Proceeds from sale of short-term investments ........................................        27,186           --
  Purchase of short-term investments ..................................................       (13,786)          --
  Purchases of property and equipment .................................................          --               (3)
  Proceeds from sale of property and equipment ........................................          --               12
  Proceeds from sale of equity affiliate (all holdings in Princeton) ..................          --           10,000
  Proceeds from sale of equity affiliate (all holdings in Princeton) allocated
  to former chief executive officer ...................................................          --             (600)
  Other investing .....................................................................          --               40
                                                                                             --------       --------

Net cash provided by investing activities .............................................        13,400          9,449

Cash flows from financing activities:
  Cash dividends paid on preferred stock ..............................................          (200)          --
  Proceeds from sale of preferred stock ...............................................          --            5,000
                                                                                             --------       --------

Net cash provided by (used in) financing activities ...................................          (200)         5,000

Net increase (decrease) in cash and cash equivalents ..................................        11,360          9,787
Cash and cash equivalents, beginning of period ........................................         1,716          5,330
                                                                                             --------       --------

Cash and cash equivalents, end of period ..............................................      $ 13,076       $ 15,117
                                                                                             ========       ========

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 ........................................      $   --         $      7
  Preferred stock dividend ............................................................      $    150       $     57

      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 following (a) condensed  consolidated  balance sheet as of December
31, 2004, which has been derived from audited financial statements,  and (b) the
unaudited interim condensed consolidated financial statements have been prepared
by New  Century  Equity  Holdings  Corp.  and  subsidiaries  (collectively,  the
"Company"), 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,  although  the
Company  believes that the disclosures made are adequate to make the information
not misleading.  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

         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.  During the period  from April 1, 2005
through May 5, 2005, the Company sold its equity  interest in Sharps  Compliance
Corp. ("Sharps") for approximately $334,000.

         The Company is pursuing a business  plan of acquiring  and investing in
alternative asset management  companies,  including management companies of fund
of funds that invest in hedge  funds.  On October 5, 2005,  the Company  entered
into an agreement with ACP  Investments LP (d/b/a  Ascendant  Capital  Partners)
("Ascendant"),  pursuant to which the Company acquired an interest in Ascendant,
a  Berwyn,   Pennsylvania  based  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.
See Note 10 for further discussion.

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.

                                       7

         The following table illustrates the effect on net income (loss) and net
income (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.

                                                                 Three Months Ended         Nine Months Ended
                                                                    September 30,             September 30,
                                                              ------------------------  ------------------------
(in thousands, except per share data)                             2005        2004         2005         2004
                                                              -----------  -----------  -----------  -----------
Net income (loss), as reported..............................  $      (193) $      (262) $      (556) $    (1,687)
Less: Total stock based employee compensation
   expense determined under fair value based method
   for all awards, net of related tax effects...............           (4)          (5)         (32)         (72)
                                                              -----------  -----------  -----------  -----------

Net income (loss), pro forma................................  $      (197) $      (267) $      (588) $    (1,759)
                                                              ===========  ===========  ===========  ===========

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

Diluted net income (loss) per common share:
   Net income (loss), as reported...........................  $     (0.01) $      0.01  $     (0.01) $     (0.05)
   Net income (loss), pro forma.............................  $     (0.01) $      0.01  $     (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 nine months ended September 30, 2005 and
2004:  expected  volatility of 99.22%,  no dividend yield,  expected life of 2.5
years and risk-free interest rates of 4.75%.

         In  December  2004,  the FASB  issued  SFAS  No.  123  (revised  2004),
SHARE-BASED  PAYMENT,  which established  accounting  standards for transactions
where the  entity  exchanges  equity  instruments  for goods and  services.  The
revision of this statement focuses on the accounting for transactions  where the
entity obtains  employee  services in  share-based  payment  transactions.  This
statement  revision  eliminates the  alternative  use of APB 25 intrinsic  value
method  and  requires  that  entities  adopt  the  fair-value   method  for  all
share-based  transactions.  This  statement  is  effective  the next fiscal year
following  June 15, 2005. The Company will adopt the provisions of this standard
on a modified  prospective  basis in the first quarter of 2006,  and the Company
believes that the overall impact to the financial statements will be immaterial.

NOTE 4.  INVESTMENTS

         Investments consist of the following:
                                                                  September 30,
         (in thousands)                                               2005
                                                                 ---------------
         Investment in Sharps Compliance Corp:
           Cash investments...................................    $       970
           Settlement.........................................           (389)
           Impairment of investment...........................           (306)
           Gain on sale.......................................             57
           Other..............................................              2
           Proceeds from sale.................................           (334)
                                                                  -----------
           Total investments .................................    $      --
                                                                  ===========

                                       8

         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.  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 comprehensive 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   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 total approximately  $1,975,000 at
September  30,  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  approximately
$6,029,000 at September 30, 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 named in the Complaint 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 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 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 May 31, 2005,  Mr. Davis filed an amendment to the
Complaint to include James Risher, a current director,  and Newcastle  Partners,
L.P.  ("Newcastle") as additional  defendants.  On July 8, 2005, the Company and
certain  of the  defendants  filed a  supplemental  response  in  opposition  to

                                       9

plaintiff's  motion for  appointment of receiver.  A trial date is currently set
for March 6, 2006.

         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.  As of  September  30,  2005,  the
Company had met the $500,000 deductible as stipulated in the Company's directors
and officers  liability  insurance policy.  The directors and officers liability
insurance  policy carries a maximum  coverage limit of $5,000,000.  Because this
case is in the early  stages,  it is not possible to evaluate the  likelihood of
exceeding the policy limit. As of September 30, 2005, the Company has recorded a
receivable  from  the  insurance   carrier  of   approximately   $1,378,000  for
reimbursement  of legal and  professional  fees incurred in excess of the policy
deductible,  in accordance  with the provisions of the insurance  policy.  As of
November 11,  2005,  the Company had not  received  any  reimbursement  from the
insurance  carrier and continues to have ongoing  discussions with the insurance
carrier regarding  reimbursement  under the provisions of the policy. If for any
reason the  insurance  carrier does not fulfill its  obligation to reimburse the
Company under the insurance policy, nonpayment of the claim for reimbursement of
legal  and  professional  fees  could  have a  material  adverse  effect  on the
financial condition and results of operations of the Company.

         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 Mr.  Holmes and David
P. Tusa (former chief  financial  officer) 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) 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 September
30, 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 on June 18, 2004 (the  "Newcastle  Transaction")
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.

                                       10

NOTE 6. INVESTMENT IN UNCONSOLIDATED AFFILIATE

         In June 2004,  the Company sold all of its  interest in  Princeton  for
$10,000,000.  The sale of Princeton  generated a capital loss for federal income
tax purposes of approximately $67,000,000.  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 a  result  of the  sale of the  Company's
holdings in  Princeton,  during the six months ended June 30, 2004,  the Company
accelerated  the recording of its equity in net loss of Princeton to the date of
sale.  Princeton's  statement of  operations  for the eight months ended May 31,
2004 has been used to calculate the equity in net loss recorded in the Company's
statement of operations for the nine months ended September 30, 2004.

         Princeton's summarized statement of operations was as follows:

                                                           Eight
                                                          Months
                                                           Ended
                                                          May 31,
         (in thousands)                                    2004
                                                       -----------
         Total revenues..............................  $    16,965
         Gross profit................................        7,258
         Loss from operations........................       (9,188)
         Net loss....................................       (9,214)

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.

         According to public filings,  Mr. Holmes has been a member of the board
of directors of Sharps since July 1998. Mr. Tusa was appointed  Chief  Financial
Officer of Sharps in February  2003. A former 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 the  Company's
Common  Stock,  par  value  $.01 per share  ("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

                                       11

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 six months 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.

         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,
L.P.  ("NCM"),  Mr. Pully,  President of NCM, and Mr.  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
receives an annual salary of $150,000 as Chief Executive Officer of the Company.
NCM 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
NCM.  Pursuant to an oral  agreement,  the Company  subleases a portion of NCM's
space on a month-to-month basis at no charge.

         The Company also receives  accounting and administrative  services from
employees of NCM 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

                                       12

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  dividends  on the  Series A  Preferred  Stock  have been  paid.  In
addition,  whenever the Company shall declare or pay any dividends on its Common
Stock,  the holders of the 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 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 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. On June 18, 2005 the holders of the
Series A Preferred Stock elected to receive the Preferred  Dividends in cash for
the annual period ended June 18, 2005.

         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 May 2005,  the Company  purchased a 26-week U.S.  Treasury  bill for
approximately  $13,786,000.   The  Treasury  bill  was  sold  for  approximately
$13,852,000 during July 2005.

                                       13

NOTE 10. SUBSEQUENT EVENTS

         On October 5, 2005, in connection  with the Company's  business plan of
acquiring and investing in alternative asset management  companies,  the Company
entered into an agreement (the "Ascendant  Agreement") with Ascendant,  pursuant
to which the Company  acquired an interest in the net revenues of  Ascendant,  a
Berwyn, Pennsylvania based 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.  Pursuant to the
Ascendant  Agreement,  the  Company is entitled  to a 50%  interest,  subject to
certain adjustments,  in the net revenues of Ascendant,  which interest declines
as the assets  that  Ascendant  manages  reach  certain  levels.  The  Company's
interest in Ascendant was acquired for  $1,550,000  and is payable in four equal
installments with the first installment paid at closing,  the second installment
payable on January 5, 2006, the third  installment  payable on April 5, 2006 and
the fourth installment  payable on July 5, 2006. After the second anniversary of
the  Agreement  and upon the  occurrence  of certain  events,  Ascendant has the
option to  repurchase  a portion  of the  Company's  interest.  Pursuant  to the
Ascendant Agreement, the Company agreed to provide various marketing services to
Ascendant  and  Steven  J.  Pully,  CEO of the  Company,  was  appointed  to the
Investment  Advisory  Committee of  Ascendant.  The Company also entered into an
agreement with  Ascendant and the limited  partners and certain key employees of
Ascendant  pursuant  to which the  Company  has the option to  purchase  limited
partnership interests of Ascendant under certain circumstances.

                                       14

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, 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.

                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 and nine
months ended  September  30,  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")   expense  includes
management  salaries and benefits,  director's  fees, legal and accounting fees,
public company costs and other  administrative  costs incurred in direct support
of the business operations of the Company. SG&A expenses decreased by $4,000, or
2%, and  $3,665,000,  or 81% for the three and nine months ended  September  30,
2005, respectively, as compared to the corresponding periods of the prior fiscal
year.  SG&A  expenses for the nine months  ended  September  30, 2004,  included
approximately  $2,600,000  of  severance  paid to Messrs.  Holmes and Tusa,  the
Company's   former  Chief  Executive   Officer  and  Chief  Financial   Officer,
respectively.  For the three and nine months  ended  September  30,  2004,  SG&A
expenses also included approximately $700,000 of legal and professional expenses
related to the  proposed  proxy  statement  (which was  subsequently  withdrawn)
seeking  shareholder  approval  to  liquidate  the Company  and  completing  the
Newcastle  Transaction.  The remainder of the decrease in SG&A is due to reduced
salary and benefits as the number of employees  have  decreased from five to one
and a decrease  in rent  expense  as a result of the  sublease  entered  into on
October 8, 2004, to sublet the  Company's  office space located at 10101 Reunion
Place, Suite 970, San Antonio, Texas.

         Based upon the assets under management of Ascendant as of September 30,
2005, the Company expects to initially  receive net revenues from Ascendant on a
quarterly  basis ranging from $25,000 to $30,000,  which amount will increase if
the assets under management of Ascendant increase or will decrease if the assets
under management of Ascendant decrease. The Company will receive payment

                                       15

in  cash,  not  later  than 30 days  after  the  end of each  calendar  quarter,
beginning with the quarter ended December 31, 2005.

INTEREST INCOME

         Interest income  increased by $77,000 or 248%, and $232,000 or 407% for
the three and nine months ended September 30, 2005, respectively, as compared to
the  corresponding  periods  of the  prior  fiscal  year.  These  increases  are
attributable to increased yields available for short-term investments and higher
cash balances from the proceeds of the Newcastle Transaction and the sale of our
Princeton interest in June 2004.

EQUITY IN NET LOSS OF AFFILIATE

         Equity in net loss of affiliate totaled approximately $2,985,000 during
the nine months ended September 30, 2004. In June 2004, the Company sold all its
interest in Princeton for $10,000,000.

LIQUIDITY AND CAPITAL RESOURCES

         The   Company's   cash  and   short-term   investments   decreased   to
approximately  $13,076,000 at September 30, 2005,  from  $14,611,000 at December
31, 2004.  The  significant  items  affecting the Company's  cash and short-term
investments  during the nine months ended  September  30, 2005,  are as follows:
proceeds of approximately $334,000 from the sale of the Sharps common stock, the
payment  of  $200,000  for the  annual  Preferred  Dividends  and  approximately
$1,341,000 of legal and professional  fees related to the lawsuit filed by Craig
Davis. As of September 30, 2005, the Company had met the $500,000  deductible as
stipulated in the Company's  directors and officers liability  insurance policy.
The directors and officers liability insurance policy carries a maximum coverage
limit  of  $5,000,000.  Because  this  case is in the  early  stages,  it is not
possible to  evaluate  the  likelihood  of  exceeding  the policy  limit.  As of
September  30, 2005,  the Company has recorded a receivable  from the  insurance
carrier of approximately  $1,378,000 for reimbursement of legal and professional
fees  incurred  in excess  of the  policy  deductible,  in  accordance  with the
provisions of the insurance policy. As of November 11, 2005, the Company has not
received any  reimbursement  from the  insurance  carrier and  continues to have
ongoing discussions with the insurance carrier regarding reimbursement under the
provisions  of the  policy.  If for any reason the  insurance  carrier  does not
fulfill its  obligation to reimburse  the Company  under the  insurance  policy,
nonpayment of the claim for  reimbursement of legal and professional  fees could
have a  material  adverse  effect on the  financial  condition  and  results  of
operations of the Company.

         There  were no  capital  expenditures  during  the  nine  months  ended
September 30, 2005.

         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  recently  announced  business plan of acquiring and investing in
alternative  asset  management  companies.  The  Company's  interest  in the net
revenues of Ascendant was acquired for  $1,550,000  and is payable in four equal
installments with the first installment paid at closing,  the second installment
payable on January 5, 2006, the third  installment  payable on April 5, 2006 and
the fourth  installment  payable on July 5, 2006.  The Company  expects to incur
additional  operating  losses through fiscal 2005, which will continue to have a
negative impact on liquidity and capital resources.

                                       16

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  $1,975,000  at September  30,  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  $6,029,000  at September  30,  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 DISCLOSURES 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 September  30, 2005,  because the Company's
intention is to maintain a liquid portfolio. The Company has not used derivative
financial instruments in its operations.

ITEM 4.  CONTROLS AND PROCEDURES

         Disclosure  controls and  procedures 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.

                                       17

                            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 named in the Complaint 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 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 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 May 31, 2005,  Mr. Davis filed an amendment to the
Complaint  to  include  James  Risher,  a current  director,  and  Newcastle  as
additional defendants. On July 8, 2005, the Company and certain defendants filed
a supplemental  response in opposition to plaintiff's  motion for appointment of
receiver. A trial date is currently set for March 6, 2006.

         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.  As of  September  30,  2005,  the
Company had met the $500,000 deductible as stipulated in the Company's directors
and officers  liability  insurance policy.  The directors and officers liability
insurance  policy carries a maximum  coverage limit of $5,000,000.  Because this
case is in the early  stages,  it is not possible to evaluate the  likelihood of
exceeding the policy limit. As of September 30, 2005, the Company has recorded a
receivable  from  the  insurance   carrier  of   approximately   $1,378,000  for
reimbursement  of legal and  professional  fees incurred in excess of the policy
deductible,  in accordance  with the provisions of the insurance  policy.  As of
November 11,  2005,  the Company has not  received  any  reimbursement  from the
insurance  carrier and continues to have ongoing  discussions with the insurance
carrier regarding  reimbursement  under the provisions of the policy. If for any
reason the  insurance  carrier does not fulfill its  obligation to reimburse the
Company under the insurance policy, nonpayment of the claim for reimbursement of
legal  and  professional  fees  could  have a  material  adverse  effect  on the
financial condition and results of operations of the Company.

         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.

                                       18

         The Company has been  notified by counsel to both Mr.  Holmes and David
P. Tusa (former chief  financial  officer) 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 September 30, 2005.

         Pursuant to the Newcastle Transaction,  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.

ITEM 6.  EXHIBITS

         Exhibits:

         10.1   Revenue Sharing Agreement,  dated as of October 5, 2005, between
                New Century Equity Holdings Corp. and ACP Investments LP

         10.2   Principals Agreement,  dated as of October 5, 2005, by and among
                New Century Equity Holdings Corp., Gary Shugrue,  Constantine L.
                Catsavis and Timothy  Holmes,  ACP  Investments LP and the other
                signatories thereto

         31.1   Certification  of Chief  Executive  Officer in  Accordance  with
                Section 302 of the Sarbanes-Oxley Act

         31.2   Certification  of Chief  Financial  Officer in  Accordance  with
                Section 302 of the Sarbanes-Oxley Act

         32.1   Certification  of Chief  Executive  Officer in  Accordance  with
                Section 906 of the Sarbanes-Oxley Act

         32.2   Certification  of Chief  Financial  Officer in  Accordance  with
                Section 906 of the Sarbanes-Oxley Act

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

                                       20
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