|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 1934For the quarterly period ended June 30, 2002
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------

||_| |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934For 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
(State or other jurisdiction of
incorporation or organization) | 74-2781950
(I.R.S. Employer
Identification Number)
|----------------------------------------------------------------------- | --------------------------------------------------

|10101 Reunion Place, Suite 450, San Antonio, Texas
(Address of principal executive offices) | 78216
(Zip code)
|------------------------------------------------------------------------------------------- | ----------------

|(210) 302-0444
(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 periods 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


Indicated
below is the number of shares outstanding of the registrants only class of
common stock at August 14, 2002:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Title of Class
Common Stock, $0.01 par value | Number
of SharesOutstanding
34,217,620
|-------------------------------------------- | --------------------------------------

|
|

|
|

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES


INDEX
|----------------------------------------------------------

| |  |  |  | PAGE
| |  |  |  | ----

|PART I FINANCIAL INFORMATION
|----------------------------

|Item 1. |  | Interim Condensed Consolidated Financial Statements (Unaudited)                                                  |  |   
|------- |  | ---------------------------------------------------------------------------------------------------------------- |  | --
|        |  | Condensed Consolidated Balance Sheets  June 30, 2002 and December 31, 2001                                      |  | 3 
|        |  | Condensed Consolidated Statements of Operations  For the Quarters and Six Months   Ended June 30, 2002 and 2001 |  | 4 
|        |  | Condensed Consolidated Statements of Cash Flows  For the Six Months Ended   June 30, 2002 and 2001              |  | 5 
|        |  | Notes to Interim Condensed Consolidated Financial Statements                                                     |  | 6 
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results   of Operations                          |  | 13
|Item 3. |  | Quantitative and Qualitative Disclosure about Market Risk                                                        |  | 15

|PART II OTHER INFORMATION
|-------------------------

|Item 1. |  | Legal Proceedings                                   |  | 16
|------- |  | --------------------------------------------------- |  | --
|Item 4. |  | Submission of Matters to a Vote of Security Holders |  | 16
|Item 6. |  | Exhibits and Reports on Form 8-K                    |  | 16

|SIGNATURE |  |  |  | 17
|--------- |  |  |  | --

|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)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                | June 30,2002 |  | December 31,2001 |        
|--------------------------------------------------------------- | ------------ |  | ---------------- | -------
|
|                                                               
|ASSETS                                                         
|Current assets:                                                 |              |  |                  |        
|Cash and cash equivalents                                       |              |  | $                | 6,574  
|Accounts receivable, net                                        |              |  |                  | 553    
|Income tax receivable                                           |              |  |                  | 2,176  
|Inventory                                                       |              |  |                  | 1,099  
|Prepaid and other assets                                        |              |  |                  | 394    
|                                                                |              |  |                  |        
|Total current assets                                            |              |  |                  | 10,796 
|Property and equipment, net                                     |              |  |                  | 605    
|Other assets, net                                               |              |  |                  | 190    
|Investments in affiliates                                       |              |  |                  | 11,957 
|                                                                |              |  |                  |        
|Total assets                                                    |              |  | $                | 23,548 
|                                                                |              |  |                  |        
|                                                               
|LIABILITIES AND STOCKHOLDERS EQUITY                           
|Current liabilities:                                            |              | 
|Accounts payable                                                |              |  | $                | 523    
|Accrued liabilities                                             |              |  |                  | 1,209  
|Revolving credit note                                           |              |  |                  |       
|Net current liabilities from discontinued operations            |              |  |                  | 134    
|                                                                |              |  |                  |        
|Total current liabilities                                       |              |  |                  | 1,866  
|Executive deferred compensation and other liabilities           |              |  |                  | 44     
|Long-term debt to minority stockholders, net of discount        |              |  |                  | 567    
|                                                                |              |  |                  |        
|Total liabilities                                               |              |  |                  | 2,477  
|Commitments and contingencies                                   |              | 
|Minority interest in consolidated affiliate                     |              |  |                  | 35     
|Stockholders equity:                                           |              | 
|Preferred stock, $0.01 par value, 10,000,000 shares authorized; |              | 
|no shares issued or outstanding at June 30 or December 31       |              |  |                  |       
|Common stock, $0.01 par value, 75,000,000 shares authorized;    |              | 
|34,217,620 and 34,205,920 shares issued and outstanding at      |              | 
|June 30 and December 31, respectively                           |              |  |                  | 342    
|Additional paid-in capital                                      |              |  |                  | 70,346 
|Retained deficit                                                |              |  |                  | (49,652
|                                                                |              |  |                  |        
|Total stockholders equity                                      |              |  |                  | 21,036 
|                                                                |              |  |                  |        
|Total liabilities and stockholders equity                      |              |  | $                | 23,548 
|                                                                |              |  |                  |        

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

|3
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | Quarter EndedJune 30, |  | Six Months EndedJune 30, |       
|--------------------------------------------- | --------------------- |  | ------------------------ | ------
|
|Operating revenues                            |                       |  | $                        | 479   
|Cost of revenues                              |                       |  |                          | 262   
|                                              |                       |  |                          |       
|Gross profit (loss)                           |                       |  |                          | 217   
|                                             
|Selling, general and administrative expenses  |                       |  |                          | 1,294 
|Research and development expenses             |                       |  |                          | 481   
|Depreciation and amortization expenses        |                       |  |                          | 77    
|                                              |                       |  |                          |       
|Operating loss from continuing operations     |                       |  |                          | (1,635
|                                             
|Other income (expense):                       |                       | 
|Interest (expense) income, net                |                       |  |                          | (162  
|Equity in net loss of affiliates              |                       |  |                          | (2,287
|Consulting income                             |                       |  |                          | 938   
|Other income, net                             |                       |  |                          | 313   
|Minority interest in consolidated affiliate   |                       |  |                          | 543   
|                                              |                       |  |                          |       
|Total other expense, net                      |                       |  |                          | (655  
|                                              |                       |  |                          |       
|Loss from continuing operations before income |                       | 
|tax benefit                                   |                       |  |                          | (2,290
|Income tax benefit                            |                       |  |                          |      
|                                              |                       |  |                          |       
|Net loss from continuing operations           |                       |  |                          | (2,290
|                                             
|Discontinued operations:                      |                       | 
|Net income from disposal of discontinued      |                       | 
|operations                                    |                       |  |                          | 2,176 
|                                              |                       |  |                          |       
|Net loss                                      |                       |  | $                        | (114  
|                                              |                       |  |                          |       
|Basic and diluted:                            |                       | 
|Net loss from continuing operations per       |                       | 
|common share                                  |                       |  | $                        | (0.06 
|Net income from disposal of discontinued      |                       | 
|operations per common share                   |                       |  |                          | 0.06  
|                                              |                       |  |                          |       
|Net loss per common share                     |                       |  | $                        |      
|                                              |                       |  |                          |       
|                                             
|Weighted average common shares outstanding    |                       |  |                          | 34,218
|                                              |                       |  |                          |       

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

|4
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|-----------------------------------------------------------------------------------------------------------------------------

|                                                                         | Six Months EndedJune 30, | 
|------------------------------------------------------------------------ | ------------------------ | 
|
|Cash flows from operating activities:                                    |                          | 
|Net loss from continuing operations                                      |                          | 
|Adjustments to reconcile net loss from continuing operations to net cash |                          | 
|provided by (used in) operating activities:                              |                          | 
|Depreciation and amortization expenses                                   |                          | 
|Equity in net loss of affiliates                                         |                          | 
|Amortization of discount on long-term debt to minority stockholders      |                          | 
|Changes in operating assets and liabilities:                             |                          | 
|Decrease in accounts receivable                                          |                          | 
|Increase in inventory                                                    |                          | 
|Decrease (increase) in prepaid and other assets                          |                          | 
|Decrease in accounts payable                                             |                          | 
|Decrease in accrued liabilities                                          |                          | 
|Increase (decrease) in other liabilities and other noncash items         |                          | 
|                                                                         |                          | 
|Net cash provided by continuing operating activities                     |                          | 
|                                                                        
|Net cash used in discontinued operating activities                       |                          | 
|                                                                         |                          | 
|Net cash provided by (used in) operating activities                      |                          | 
|                                                                        
|Cash flows from investing activities:                                    |                          | 
|Purchases of property and equipment                                      |                          | 
|Investments in available-for-sale securities                             |                          | 
|Proceeds from sale of available-for-sale securities                      |                          | 
|Investments in and advances to affiliates                                |                          | 
|Redemption of investments in affiliates                                  |                          | 
|Other investing activities                                               |                          | 
|                                                                         |                          | 
|Net cash used in investing activities                                    |                          | 
|                                                                        
|Cash flows from financing activities:                                    |                          | 
|Proceeds from issuance of common stock                                   |                          | 
|Purchases of treasury stock                                              |                          | 
|Repayments on revolving credit note                                      |                          | 
|Minority interest in consolidated affiliate                              |                          | 
|                                                                         |                          | 
|Net cash used in financing activities                                    |                          | 
|                                                                         |                          | 
|                                                                        
|Net decrease in cash and cash equivalents                                |                          | 
|                                                                        
|Cash and cash equivalents, beginning of period                           |                          | 
|                                                                         |                          | 
|Cash and cash equivalents, end of period                                 |                          | 
|                                                                         |                          | 
|Supplemental disclosure of financial information:                        |                          | 
|Cash paid for interest                                                   |                          | 
|Cash paid for income taxes                                               |                          | 

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

|5
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO 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, formerly known
as Billing Concepts Corp., (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 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, 2001.
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.


In
accordance with Temporary Note 2T to Article 3 of Regulation S-X, the Companys Form
10-Q, for the quarter ended March 31, 2002 and filed with the Securities and Exchange Commission (SEC)
on May 14, 2002, was not reviewed by an independent auditor at that time. In conjunction
with the review of this Form 10-Q for the quarter ended June 30, 2002, the Companys independent
auditors have reviewed the Form 10-Q for the quarter ended March 31, 2002 and no changes resulted from
the review.


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


In
October 2000, the Company completed the sale of the Transaction Processing and
Software divisions to Platinum Holdings (Platinum) of Los Angeles,
California (the Transaction). In conjunction with the Transaction,
the Company may be entitled to receive additional consideration consisting of
potential royalty payments, assuming the achievement of certain post-closing
revenue targets, of $10.0 million related to the LEC Billing division, $5.0
million related to the Aptis division and $5.0 million related to the OSC
division. The post-closing revenue target for the LEC Billing division applied
to the eighteen-month period subsequent to the Transaction, while the
post-closing revenue targets for the Aptis and OSC divisions apply to the
three-year period subsequent to the Transaction. In May 2002, it was determined that
the post-closing
revenue targets for the LEC Billing division were not achieved and therefore,
the Company will not receive the corresponding $10.0 million royalty payment.
Management cannot assess the probability of the Aptis division or the OSC
division achieving its respective post-closing revenue targets necessary to
generate any remaining potential royalty payments to the Company.


The
Company is also entitled to receive payments totaling $7.5 million for
consulting services provided to Platinum over the twenty-four month period
subsequent to the Transaction. The Company has received aggregate payments of
$6.3 million for consulting services through June 30, 2002, which have been
reported in other income (expense) as consulting income.


Note 2. Acquisitions and Investments


During
the quarter ended March 31, 2002, the Company invested $1.5 million, of a total
$2.5 million equity financing, in Princeton eCom Corporation
(Princeton). In exchange for its investment,
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)



the Company received 1.5 million
shares of Princetons mandatorily redeemable convertible preferred stock. In April
2002, the Company committed to finance $3.75 million, of a total $8.5 million equity
commitment, to Princeton during the year ended December 31, 2002. During April and May
2002, the Company funded $2.4 million of its total $3.75 million commitment in exchange
for shares of Princetons mandatorily redeemable convertible preferred stock.


In
June 2002, Princeton completed a $10.0 million equity financing with an outside investor.
In conjunction with this $10.0 million financing, the Company received $1.5 million in
proceeds from the redemption of mandatorily redeemable convertible preferred stock of
Princeton. In addition, the Company is no longer required to fund its remaining $1.4
million commitment to Princeton. Subsequent to this transaction, the Companys
ownership of the outstanding and fully diluted shares (considering all issued options and
warrants as of June 30, 2002) of Princeton was 38.3% and 37.4%, respectively.


Note 3. Financial Information of Consolidated Affiliate


In
August 2001, the Company invested $1,060,000 in Tanisys Technology, Inc.
(Tanisys). For accounting purposes, the Company consolidates Tanisys
into the financial statements of the Company under the purchase method of
accounting. As the Company is consolidating Tanisys on a three-month lag (due to
the difference in fiscal years of the Company and Tanisys), Tanisys
balance sheets as of March 31, 2002 and September 30, 2001, including
adjustments made under the purchase method of accounting, have been consolidated
with the Companys balance sheets as of June 30, 2002 and December 31,
2001, respectively. Tanisys balance sheets consolidated herein are as
follows (in thousands):
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | March 31,2002 |  | September 30,2001                                        | 
| | ------------- |  | -------------------------------------------------------- | 
| |               |  | Cash and cash equivalents                                | 
| |               |  | Accounts receivable, net                                 | 
| |               |  | Inventory:                                               | 
| |               |  | Raw materials                                            | 
| |               |  | Work in process                                          | 
| |               |  | Finished goods                                           | 
| |               |  |                                                          | 
| |               |  | Total inventory                                          | 
| |               |  | Prepaid and other assets                                 | 
| |               |  |                                                          | 
| |               |  | Total current assets                                     | 
| |               |  | Property and equipment, net                              | 
| |               |  | Other assets, net                                        | 
| |               |  |                                                          | 
| |               |  | Total assets                                             | 
| |               |  |                                                          | 
|
| |               |  | Accounts payable                                         | 
| |               |  | Accrued liabilities                                      | 
| |               |  | Revolving credit note                                    | 
| |               |  |                                                          | 
| |               |  | Total current liabilities                                | 
| |               |  | Other liabilities                                        | 
| |               |  | Long-term debt to minority stockholders, net of discount | 
| |               |  |                                                          | 
| |               |  | Total liabilities                                        | 
| |               |  |                                                          | 
|
| |               |  | Minority interest in consolidated affiliate              | 
| |               |  | Retained deficit                                         | 

|
|

|7
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)


Tanisys
statements of operations for the quarter and six months ended March 31, 2002,
including adjustments made under the purchase method of accounting, have been
consolidated with the Companys statements of operations for the quarter
and six months ended June 30, 2002, respectively. Tanisys statements of
operations consolidated herein are as follows (in thousands):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | QuarterendedMarch 31,2002 |  | Six MonthsendedMarch 31,2002                 | 
| | ------------------------- |  | -------------------------------------------- | 
| |                           |  | Operating revenues                           | 
| |                           |  | Cost of revenues                             | 
| |                           |  |                                              | 
| |                           |  | Gross profit                                 | 
| |                           |  | Selling, general and administrative expenses | 
| |                           |  | Research and development expenses            | 
| |                           |  | Depreciation and amortization expenses       | 
| |                           |  |                                              | 
| |                           |  | Operating loss from continuing operations    | 
| |                           |  | Other income (expense):                      | 
| |                           |  | Interest expense, net                        | 
| |                           |  | Other expense, net                           | 
| |                           |  | Minority interest in consolidated affiliate  | 
| |                           |  |                                              | 
| |                           |  | Total other income, net                      | 
| |                           |  |                                              | 
| |                           |  | Net loss                                     | 
| |                           |  |                                              | 
|
| |                           |  | Net loss                                     | 
| |                           |  | Preferred stock dividend                     | 
| |                           |  | Minority interest in consolidated affiliate  | 
| |                           |  |                                              | 
| |                           |  | Net loss applicable to common stockholders   | 
| |                           |  |                                              | 

|Revolving credit note


In
March 2002, Tanisys entered into a new Accounts Receivable Purchase Agreement
(Debt Agreement) with Silicon Valley Bank (Silicon),
replacing the former Accounts Receivable Financing Agreement, to fund accounts
receivable and provide working capital up to a maximum of $2.5 million. The
applicable interest rate is 1.5% per month of the average daily balance
outstanding during the month. As of March 31, 2002, Tanisys owed nothing under
the Debt Agreement.


Going Concern


Numerous
factors affect Tanisys operating results, including, but not limited to,
general economic conditions, competition, the uncertainty of the semiconductor
market and changing technologies. All of these factors have had an adverse
effect on Tanisys financial position, results of operations and cash
flows. Tanisys incurred operating losses of $1.2 million and $2.1 million for
the six months ended March 31, 2002 and the year ended September 30, 2001,
respectively. Tanisys working capital was $0.6 million and $2.0 million at
March 31, 2002 and September 30, 2001, respectively, which contemplates continuation of
Tanisys as a going concern. Tanisys raised additional
capital in August 2001 necessary to continue its operations. The current
economic slowdown continues in the worldwide semiconductor industry resulting in
concern over the sustainability of Tanisys revenues and its operations. No
assurances can be made that Tanisys will be able to continue its operations or
that additional capital may be raised.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)


Note 4. Investments in Affiliates


Investments
in affiliates is comprised of the following (in thousands):
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | June 30,2002 |  | December 31,2001                          | 
| | ------------ |  | ----------------------------------------- | 
| |              |  | Investment in Princeton:                  | 
| |              |  | Cash investments                          | 
| |              |  | In-process research and development costs | 
| |              |  | Amortization and equity loss pick-up      | 
| |              |  | Impairment of investment                  | 
| |              |  | Redemption of investment                  | 
| |              |  | Other                                     | 
| |              |  |                                           | 
| |              |  | Net investment in Princeton               | 
|
| |              |  | Investment in Sharps Compliance Corp.:    | 
| |              |  | Cash investments                          | 
| |              |  | Other                                     | 
| |              |  |                                           | 
| |              |  | Net investment in Sharps Compliance Corp. | 
|
| |              |  | Investment in Microbilt Corp.:            | 
| |              |  | Equity investments                        | 
| |              |  | Other                                     | 
| |              |  |                                           | 
| |              |  | Net investment in Microbilt Corp.         | 
| |              |  |                                           | 
|
| |              |  | Total investments in affiliates           | 
| |              |  |                                           | 

|Note 5. Comprehensive Loss


In
January 2001, the Company invested $15.0 million in a portfolio of fixed income
securities. The Company classified these investments as available-for-sale
securities in accordance with Statement of Financial Accounting Standards
(SFAS) No. 115, Accounting for Certain Investments in Debt and
Equity Securities. These available-for-sale securities were measured at
fair value, with unrealized holding gains (losses) included as a component of
other comprehensive loss, in accordance with SFAS No. 130, Reporting
Comprehensive Income. During the quarter ended June 30, 2001, the Company
sold $1.5 million of the investments and subsequently reinvested the $1.5
million in the investments during the same quarter.


During
the quarter ended June 30, 2001, the Company incurred unrealized losses on the
investments in available-for-sale securities of $35,000, net of income tax
expense of $21,000, and a reclassification adjustment for gains of $9,000
(included in net loss), net of income tax expense of $4,000, for a total
comprehensive loss of $7,060,000. During the six months ended June 30, 2001, the
Company incurred unrealized gains on the investments in available-for-sale
securities of $88,000, net of income tax expense of $51,000, and a
reclassification adjustment for gains of $9,000 (included in net loss), net of
income tax expense of $4,000, for a total comprehensive loss of $8,904,000.
These investments in fixed income securities were sold in September 2001 due to
changes in the market conditions of fixed income securities.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9
|-

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)


Note 6. Investment in Unconsolidated Affiliate


Summarized Financial
Information


The
Company has made numerous investments in Princeton since September 1998. The Companys
ownership percentage of the outstanding stock of Princeton was 57.7% and 41.5% as of
March 31, 2002 and September 30, 2001, respectively. The Company accounts for its
investment in Princeton under the equity method of accounting (as the Company does not
exhibit control over Princeton) and records the equity in net loss of Princeton on a
three-month lag.


Princetons
summarized balance sheets as of March 31, 2002 and September 30, 2001 are as follows (in
thousands):
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | March 31,2002 |  | September 30,2001                  | 
| | ------------- |  | ---------------------------------- | 
| |               |  | Current assets                     | 
| |               |  | Non-current assets                 | 
| |               |  | Current liabilities                | 
| |               |  | Non-current liabilities            | 
| |               |  | Mandatorily redeemable convertible | 
| |               |  | preferred stock                    | 

|Princetons
statements of operations for the quarter and six months ended March 31, 2002 and
2001 have been used to calculate the equity in net loss recorded in the
Companys statements of operations for the quarter and six months ended
June 30, 2002 and 2001, respectively. Princetons summarized statements of
operations are as follows (in thousands):
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Quarters EndedMarch 31, |  | Six Months EndedMarch 31, | 
| | ----------------------- |  | ------------------------- | 
|
| |                         |  | Total revenues            | 
| |                         |  | Gross profit              | 
| |                         |  | Loss from operations      | 
| |                         |  | Net loss                  | 

|The
loss from operations of $25.0 million for the six months ended March 31, 2002,
includes impairment charges totaling $10.6 million. Approximately $7.8 million
of the impairment charges relate to the implementation of a strategic
restructuring plan to streamline Princetons operations by reducing
operating expenses primarily through workforce reductions and renegotiating
significant contracts and leases. The components of the restructuring charges
include $4.1 million for employee separations, $3.3 million for contract
settlements and $0.4 million for facility closings. The additional impairment
charges relate to the write-down of a portion of the asset value of
Princetons property and equipment. The impairment was recognized as the
future undiscounted cash flows for Princeton were estimated to be insufficient
to recover the related carrying values of the property and equipment.


Equity Financing


In
June 2002, Princeton completed a $10.0 million equity financing with an outside financial
investor. This equity financing completes an aggregate $31.0 million equity financing,
which commenced
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10
|--

|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)


during the quarter ended December
31, 2001. The funds are expected to be used for the development of more advanced billing
and payment technologies, products and services, as well as for working capital purposes.
Subsequent to this financing, the Company's ownership of the outstanding and fully diluted
shares (considering all issued options and warrants as of June 30, 2002) of Princeton was 38.3%
and 37.4%, respectively.


Acquisition of Quicken
Bill Manager


In
May 2001, Princeton announced its acquisition of Quicken Bill Manager from
Intuit Inc. (Intuit). Quicken Bill Manager provides online bill
presentment and payment services by processing payments for customers utilizing
Intuits Quicken personal financial management software. Under the terms of
the acquisition agreement, Princeton acquired the assets of Intuits
Quicken Bill Manager through the purchase of certain technologies from Intuit
and all of the outstanding shares of Venture Finance Services Corp., a wholly
owned subsidiary of Intuit.


The
pro forma adjustments to the Companys financial statements relate to the
additional equity in net loss of affiliates the Company would have recorded had
Princeton acquired Quicken Bill Manager at the beginning of the period
presented. The following pro forma financial information for the Company is
provided for the six months ended June 30, 2001, based upon the assumption that
Princeton had acquired Quicken Bill Manager as of October 1, 1999.


For
the six months ended June 30, 2001, the Company recorded equity in net loss of
affiliates of $8.2 million, loss from continuing operations before income tax
benefit of $11.3 million, net loss from continuing operations of $10.5 million
and net loss of $9.0 million. The basic and diluted net loss from continuing
operations per share and net loss per share were $0.30 and $0.26, respectively.
Had the transaction occurred on October 1, 1999, the Company would have recorded
an additional equity in net loss of affiliates of $6.5 million. Including the
pro forma adjustment, the Company would have recorded total equity in net loss
of affiliates of $14.7 million, loss from operations before income tax benefit
of $17.8 million, net loss from continuing operations of $17.0 million and net
loss of $15.5 million. The basic and diluted net loss from continuing operations
per share and net loss per share would have been $0.48 and $0.44, respectively.


During
the quarter ended March 31, 2002, Princeton suspended its development of the
Quicken Bill Manager as a result of an overall corporate shift in focus and an
effort to reduce expenditures. Princeton continues to retain front-end
technology acquired from Intuit, but is currently placing greater emphasis on
its core transaction processing businesses.


Note 7. Discontinued
Operations


In
June 2002, the Company filed its federal income tax return with the Internal
Revenue Service for the tax fiscal year ended September 30, 2001 (which includes
the Transaction completed in October 2000, as discussed in Note 1). Upon completion of this return, the
Company filed a refund claim totaling $2.2 million. The Company received the
$2.2 million refund in July 2002. The income tax refund is reflected as net
income from disposal of discontinued operations in the quarter ended June 30,
2002, as the refund relates to those companies sold in the Transaction.


The
Company continually reviews the accruals related to discontinued operations to
assess the adequacy of the accruals. During the six months ended June 30, 2001,
the Company reduced such accruals and recognized income from the disposal of
discontinued operations of $1.5 million, based upon estimates of future
liabilities related to the divested entities. The $1.5 million is reflected as
net income from disposal of discontinued operations in the six months ended June
30, 2001.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11
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|NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)


Note 8. Commitments and Contingencies


During
the year ended September 30, 1999, the Company entered into an agreement to
guarantee the terms of Princetons lease for office space at 650 College
Road, Princeton, New Jersey. This guarantee terminates should Princeton raise
$25.0 million of capital through an initial public offering. During the quarter
ended June 30, 2002, the landlord of the office space has agreed, subject to
lender approval, to replace the Companys guarantee with an alternative
security. Although no assurances can be made, it is Princetons intention
to provide sufficient security in order to eliminate the need for the
Companys guarantee. The Company does not believe it is probable that the
lease guarantee will be exercised.


Note 9. Related Party Transactions


In
April 2000, the Companys Board of Directors approved a restricted stock
grant to the Companys CEO. The restricted stock grant consists of
Princeton stock, equal to 2% of Princetons fully diluted shares. The
restricted stock grant vests on April 30, 2003. The Company expenses the fair
market value of the restricted stock grant over the three-year period ending
April 30, 2003. The Company recognized $150,000 and $150,000 during the quarters
ended June 30, 2002 and 2001, respectively, and $300,000 and $300,000 during the
six months ended June 30, 2002 and 2001, respectively, as compensation expense
related to the stock grant. The Company estimates it will recognize $600,000 as
compensation expense related to the stock grant during the year ending December
31, 2002.


The
Companys CEO served as Chairman of the Board of Tanisys at the time
of the Companys investment in Tanisys and until his resignation in
February 2002. The Company also appointed the Companys CFO and one of
its Board members to the Board of Tanisys. In March 2002, upon the
resignation of the Companys CEO as Chairman of the Board of Tanisys,
another member of the Companys Board became Tanisys Chairman of the Board and CEO.
This Board member is entitled to receive approximately $15,000 per month from Tanisys as compensation
for such services. As of June 30, 2002, this Board member has received payments totaling $42,000
of the total $59,000 of costs incurred. Three of the four members of the Board of Tanisys are
officers or directors of the Company.


The
Companys CEO also serves as Chairman of the Board of Princeton. The
Companys CFO served on the Board of Princeton from August 2001 until June
2002.


The
Companys CEO and one of its Board members serve on the Board of
Sharps Compliance Corp. (Sharps) and did so at the time the Company
invested in Sharps. The Companys CFO serves as an advisor to the Board of
Sharps.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|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 FINANCIALCONDITION 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 quarter and six
months ended June 30, 2002. 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,
2001. For purposes of the following discussion, references to year periods refer
to the Companys fiscal year ended December 31 and references to quarterly
periods refer to the Companys fiscal quarter ended June 30.


Results of Operations


Continuing Operations


For
the quarter and six months ended June 30, 2002, revenues are generated by the
Companys consolidated affiliate Tanisys Technology, Inc.
(Tanisys) and are comprised of sales of production-level equipment
along with related hardware and software, less returns and discounts. For the
quarter and six months ended June 30, 2001, revenues were generated by the
Companys former subsidiary FIData, Inc. (FIData) and were
comprised of transaction fees for processing loan applications, implementation
fees for new customers and a variety of customer service related fees.


Cost
of revenues for the quarter and six months ended June 30, 2002, are generated by
Tanisys and are comprised of the costs of all components and materials purchased
for the manufacture of products, direct labor and related overhead costs. Cost
of revenues for the quarter and six months ended June 30, 2001, were generated
by FIData and consisted of the costs incurred to offer a variety of customer
service opportunities to its customers.


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 for the quarter ended June
30, 2002, were $1.3 million ($0.9 million for corporate expenses and $0.4
million for Tanisys expenses), compared to $2.4 million for the quarter
ended June 30, 2001 ($1.0 million for corporate expenses and $1.4 million for
FIDatas expenses). For the quarter ended June 30, 2002, the cash portion
of the corporate expenses was $0.7 million of the total corporate expenses of
$0.9 million. SG&A expenses for the six months ended June 30, 2002, were
$2.7 million ($1.9 million for
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13
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|corporate expenses and $0.8 million
for Tanisysexpenses), compared to $4.5 million for the six months ended June 30,
2001 ($1.9 million for corporate expenses and $2.6 million for FIDatas expenses).
For the six months ended June 30, 2002, the cash portion of the corporate expenses was
$1.4 million of the total corporate expenses of $1.9 million.


Research
and development (R&D) expenses, generated entirely by
Tanisys operations, consist of all costs associated with the engineering
design and testing of new technologies and products. These costs reflect the
ongoing development of test systems for both Double Data Rate (DDR)
and Flash memory technologies, as well as a new distributed networking
architecture that can be applied to all memory technologies.


Net
other expense totaled $0.7 million in the quarter ended June 30, 2002, compared
to $4.5 million in the quarter ended June 30, 2001. Net other expense for the
quarter ended June 30, 2002, primarily included (i) the equity in net loss of
Princeton of $2.3 million, (ii) consulting income from Platinum of $0.9 million,
(iii) receipt of payment on a promissory note of $0.3 million from an Austin,
Texas-based technology company and (iv) the minority interest of $0.5 million
related to Tanisys. Net other expense for the quarter ended June 30, 2001,
primarily included the equity in net loss of Princeton of $5.8 million and
consulting income from Platinum of $0.9 million.


Discontinued Operations


During
the quarter ended June 30, 2002, the Company filed a federal income tax refund
with the Internal Revenue Service totaling $2.2 million. The Company received
the $2.2 million refund in July 2002. The income tax refund is reflected as net
income from disposal of discontinued operations in the quarter ended June 30,
2002.


The
Company continually reviews the accruals related to discontinued operations to
assess the adequacy of the accruals. During the six months ended June 30, 2001,
the Company reduced such accruals and recognized income from the disposal of
discontinued operations of $1.5 million, based upon estimates of future
liabilities related to the divested entities. The $1.5 million is reflected as
net income from disposal of discontinued operations in the six months ended June
30, 2001.


Princeton


Princetons
revenues increased to $6.4 million during the quarter ended March 31, 2002, from
$4.9 million during the quarter ended March 31, 2001. Revenues for the six
months ended March 31, 2002 also increased to $12.2 million, from $9.0 million
during the six months ended March 31, 2001. These increases are due to the increase
in its customer base coupled with an increase in adoption rates experienced in the electronic bill presentment and payment
industry. Princetons net loss of $4.3 million for the quarter ended March
31, 2002 decreased from the $8.3 million net loss for the quarter ended March
31, 2001. The decrease in the net loss is the result of the increase in revenues
generated as well as the reductions in expenses made during 2002.
Princetons net loss for the six months ended March 31, 2002 of $26.6
million increased from the $20.5 million net loss for the six months ended March
31, 2001. The net loss for the six months ended March 31, 2002 included
impairment charges totaling $10.6 million, related to employee separations,
contract settlements and facility closings. Excluding these impairments charges,
the net loss decreased by $4.5 million.


Liquidity and Capital Resources


The
Companys cash balance decreased to $6.6 million at June 30, 2002, from
$8.6 million at December 31, 2001. This decrease is primarily related to the
$3.9 million invested in Princeton during the six months ended June 30, 2002,
offset by the $1.5 million redemption of the Companys investment in
Princeton. The Companys working capital position decreased to $8.9 million
at June 30, 2002, from $9.5 million at December 31, 2001. The decrease in the
working capital was primarily attributable to the decrease in the cash balance,
offset by the increase in the income tax receivable. Net cash provided by
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|14
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|operating activities for the six
months ended June 30, 2002, was $1.5 million, compared to net cash used in operating
activities of $2.2 million for the six months ended June 30, 2001.


There
were no capital expenditures during the six months ended June 30, 2002. The
Company anticipates minimal capital expenditures before acquisitions, if any,
during the year ended December 31, 2002. The Company believes it will be able to
fund expenditures with cash on hand.


Corporate


During
the six months ending December 31, 2002, the Companys corporate cash
balance ($6.4 million at June 30, 2002, excluding Tanisys cash) is
expected to increase as a result of (i) the receipt of the $2.2 million income
tax refund in July 2002 and (ii) the receipt of the $1.3 million consulting
income from Platinum through October 2002. The total cash inflow of $3.5 million
is expected to be more than the anticipated cash expenditures of $1.3 million
(comprised of corporate cash expenses) for the six months ending December 31,
2002. The anticipated cash receipts and expenditures are expected to result in a
cash balance of approximately $8.5 million at December 31, 2002.


Princeton


During
the year ended September 30, 1999, the Company entered into an agreement to
guarantee the terms of Princetons lease for office space at 650 College
Road, Princeton, New Jersey. This guarantee terminates should Princeton raise
$25.0 million of capital through an initial public offering. During the quarter
ended June 30, 2002, the landlord of the office space has agreed, subject to
lender approval, to replace the Companys guarantee with an alternative
security. Although no assurances can be made, it is Princetons intention
to provide sufficient security in order to eliminate the need for the
Companys guarantee. The Company does not believe it is probable that the
lease guarantee will be exercised.


Tanisys


In
March 2002, Tanisys entered into a new Accounts Receivable Purchase Agreement
(Debt Agreement) with Silicon Valley Bank (Silicon),
replacing the former Accounts Receivable Financing Agreement, to fund accounts
receivable and provide working capital up to a maximum of $2.5 million. The
applicable interest rate is 1.5% per month of the average daily balance
outstanding during the month. As of March 31, 2002, Tanisys owed nothing under
the Debt Agreement.


Numerous
factors affect Tanisys operating results, including, but not limited to,
general economic conditions, competition, the uncertainty of the semiconductor
market and changing technologies. All of these factors have had an adverse
effect on Tanisys financial position, results of operations and cash
flows. Tanisys incurred operating losses of $1.2 million and $2.1 million for
the six months ended March 31, 2002 and the year ended September 30, 2001,
respectively. Tanisys working capital was $0.6 million and $2.0 million at
March 31, 2002 and September 30, 2001, respectively, which contemplates continuation of Tanisys as a going concern.
Tanisys raised additional capital in August 2001 necessary to continue its operations. The current
economic slowdown continues in the worldwide semiconductor industry resulting in
concern over the sustainability of Tanisys revenues and its operations. No
assurances can be made that Tanisys will be able to continue its operations or
that additional capital may be raised.


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 June 30, 2002, because the Companys intention is to
maintain a liquid portfolio to take advantage of investment opportunities. The
Company does not use derivative financial instruments in its operations.
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|15
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|PART II
OTHER INFORMATION


Item 1. Legal Proceedings


The
Company is not currently involved in any material litigation, claims or assessments.


Item 4. Submission of Matters to a Vote of Security Holders


The
Companys 2002 Annual Meeting of Stockholders was held on June 6, 2002, in
San Antonio, Texas. At the meeting, the Companys stockholders elected two
directors to each serve a three-year term expiring in 2005.


The
following table summarizes the number of votes cast for or withheld from each
matter.


ELECTION OF DIRECTORS
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name                  | Total VotesFor | Total VotesWithheld
|--------------------- | -------------- | -------------------
|Parris H. Holmes, Jr. | 25,895,849     | 2,379,112          
|Justin L. Ferrero     | 25,635,056     | 2,498,275          

|Item 6. Exhibits and Reports on Form 8-K
|----------------------------------------

| |  | (a) |  | Exhibits:
| |  | --- |  | ---------

| |  |  |  | 99.1 |  | Certification
by Chief Executive Officer in Accordance with Section 906 of Sarbanes-Oxley Act
| |  |  |  | ---- |  | ---------------------------------------------------------------------------------------------

| |  |  |  | 99.2 |  | Certification
by Chief Financial Officer in Accordance with Section 906 of Sarbanes-Oxley Act
| |  |  |  | ---- |  | ---------------------------------------------------------------------------------------------

| |  | (b) |  | Current
Reports on Form 8-K:
| |  | --- |  | ----------------------------

| | Form
8-K, dated July 2, 2002, filed July 5, 2002, announcing the engagement of Burton,
McCumber & Cortez, L.L.P. as the Companys independent auditors for the year
ending December 31, 2002.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Items 2, 3 and 5 are not
applicable and have been omitted.
|----------------------------------------------------------

|16
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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:
August 14, 2002 |  | By:                         /s/ DAVID P. TUSA
|--------------------- |  | ---------------------------------------------

| |  | David P. TusaExecutive Vice President, Chief Financial Officer and Corporate Secretary (Duly authorized
and principal financial officer)
| |  | ----------------------------------------------------------------------------------------------------------------------------------------

|
|

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