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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 June 30, 2006

                                       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 a large  accelerated
filer,  an accelerated  filer,  or a  non-accelerated  filer.  See definition of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act.

Large Accelerated Filer |_|    Accelerated Filer |_|   Non-Accelerated Filer |X|

         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 August 14, 2006:

                                                      Number of Shares
                Title of Class                           Outstanding
                --------------                        ----------------
         Common Stock, $0.01 par value                   53,883,872

               NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES

                                      INDEX

                                                                                                         PAGE
PART I FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets - June 30, 2006 (Unaudited)
            and December 31, 2005.......................................................................   3

         Unaudited Condensed Consolidated Statements of Operations - For the Three
            and Six Months ended June 30, 2006 and 2005.................................................   4

         Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) -
            For the Three and Six Months ended June 30, 2006 and 2005...................................   5

         Unaudited Condensed Consolidated Statements of Cash Flows - For the
            Six Months ended June 30, 2006 and 2005.....................................................   6

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

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.....................................  16

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

PART II OTHER INFORMATION

Item 1.  Legal Proceedings..............................................................................  17

Item 1A. Risk Factors...................................................................................  18

Item 4.  Submission of Matters to a Vote of Security Holders............................................  19

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

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

                                                      2

                                         PART I FINANCIAL INFORMATION

                                         ITEM 1. FINANCIAL STATEMENTS

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

                                                                               June 30,            December 31,
                                                                                 2006                  2005
                                                                               --------            ------------
                                                                              (Unaudited)

                                                     ASSETS

Current assets:
  Cash and cash equivalents                                                     $ 12,013             $ 12,487
  Accounts receivable                                                                 34                   33
  Insurance receivable and other assets                                            1,020                1,637
  Settlement fund receivable                                                       3,200                 --
                                                                                --------             --------

Total current assets                                                              16,267               14,157

  Other non-current assets                                                          --                      6
  Revenue interest                                                                   803                  415
                                                                                --------             --------
Total assets                                                                    $ 17,070             $ 14,578
                                                                                ========             ========

                                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                              $      5             $     53
  Accrued liabilities                                                                351                  550
  Accrued settlement                                                               3,200                 --
                                                                                --------             --------
Total current liabilities                                                          3,556                  603

  Other non-current liabilities                                                     --                      2
                                                                                --------             --------
  Total liabilities                                                                3,556                  605
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                                                      75,445               75,428
  Accumulated deficit                                                            (62,326)             (61,850)
                                                                                --------             --------
Total stockholders' equity                                                        13,514               13,973
                                                                                --------             --------
Total liabilities and stockholders' equity                                      $ 17,070             $ 14,578
                                                                                ========             ========

    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             Six Months Ended
                                                                   June 30,                      June 30,
                                                              ------------------             ----------------
                                                             2006           2005           2006          2005
                                                             ----           ----           ----          ----

Operating revenues                                         $     56       $   --       $       69       $   --

Operating expenses:
   General and administrative expenses                           31            244            122            597
   Depreciation and amortization expense                       --                2           --                4
                                                           --------       --------       --------       --------

Operating income (loss)                                          25           (246)           (53)          (601)

Other income (expense):
   Derivative settlement costs                                 --             --             (600)          --
   Interest income, net                                         153            100            277            181
   Other (expense) income, net                                 --               57           --               57
                                                           --------       --------       --------       --------

Total other income (loss), net                                  153            157           (323)           238
                                                           --------       --------       --------       --------

Net income (loss)                                               178            (89)          (376)          (363)

Preferred stock dividend                                        (50)           (50)          (100)          (100)
                                                           --------       --------       --------       --------
Net income (loss) applicable to
   common stockholders                                     $    128       $   (139)      $   (476)      $   (463)
                                                           ========       ========       ========       ========

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

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             Six Months Ended
                                                                   June 30,                      June 30,
                                                              ------------------             ----------------
                                                             2006           2005           2006          2005
                                                             ----           ----           ----          ----

Net income (loss)                                          $    178       $    (89)      $   (376)      $   (363)

Other comprehensive income:
  Reclassification of unrealized gain on investment            --              (94)          --              (94)
  Unrealized holding gains (losses), net of $0 tax             --               (5)          --               40
                                                           --------       --------       --------       --------

Comprehensive income (loss)                                $    178       $   (188)      $   (376)      $   (417)
                                                           ========       ========       ========       ========

    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)

                                                                    SIX MONTHS ENDED
                                                                        JUNE 30,
                                                               --------------------------
                                                                 2006             2005
                                                                 ----             ----
Cash flows from operating activities:
Net loss                                                       $   (376)         $   (363)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization expenses                           --                   4
  Share based payment expense                                        17              --
  Gain on sale of Sharps Compliance Corp. common stock             --                 (57)
  Accretion of discount on securities                              --                (150)
  Changes in operating assets and liabilities:
   Increase in accounts receivable                                   (1)             --
   Decrease (increase) in prepaid and other assets                  621              (684)
   Increase (decrease) in accounts payable                          (48)                5
   Increase (decrease) in accrued liabilities                      (299)              188
                                                               --------          --------
Net cash used in operating activities                               (86)           (1,057)

Cash flows from investing activities:
  Proceeds from sale of short-term investments                     --              13,334
  Purchase of short-term investments                               --             (13,787)
  Purchase of revenue interest                                     (388)             --
                                                               --------          --------

Net cash used in investing activities                              (388)             (453)

Cash flows from financing activities:
  Cash dividends paid on preferred stock                           --                (200)
                                                               --------          --------

Net cash used in financing activities                              --                (200)

Net decrease in cash and cash equivalents                          (474)           (1,710)
Cash and cash equivalents, beginning of period                   12,487             1,716
                                                               --------          --------

Cash and cash equivalents, end of period                       $ 12,013          $      6
                                                               ========          ========

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                 $   --            $     40
  Preferred stock dividend                                     $    100          $    100
  Reclassification of gain on investment                       $   --            $    (94)

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

                                             6

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

NOTE 1.  BASIS OF PRESENTATION

         The interim condensed consolidated financial statements included herein
have  been  prepared  by New  Century  Equity  Holdings  Corp.  ("NCEH"  or "the
Company") and subsidiaries without audit,  pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC").  Although certain information
and footnote  disclosures  normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted  pursuant to those rules and regulations,
all adjustments  considered  necessary in order to make the financial statements
not misleading have been included.  In the opinion of the Company's  management,
the accompanying interim condensed consolidated financial statements reflect all
adjustments,  of a  normal  recurring  nature,  that  are  necessary  for a fair
presentation of the Company's financial position, results of operations and cash
flows  for  such  periods.  It  is  recommended  that  these  interim  condensed
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements  and the notes thereto  included in the  Company's  Annual
Report on Form 10-K for the year ended December 31, 2005.  Results of operations
for the interim  periods are not  necessarily  indicative of results that may be
expected for any other interim periods or the full fiscal year.

NOTE 2.  HISTORICAL OVERVIEW AND RECENT DEVELOPMENTS

         New Century  Equity  Holdings  Corp.  is a company in  transition.  The
Company is currently seeking to redeploy its assets to enhance stockholder value
and is  seeking,  analyzing  and  evaluating  potential  acquisition  and merger
candidates.  On  October  5,  2005,  the  Company  made  an  investment  in  ACP
Investments L.P. (d/b/a Ascendant Capital Partners)  ("Ascendant"),  pursuant to
which the Company currently receives 50% of the revenues generated by Ascendant.
Ascendant is a Berwyn,  Pennsylvania  based alternative asset management company
whose funds have  investments in long/short  equity funds and which  distributes
its registered  funds primarily  through various  financial  intermediaries  and
related  channels.   The  Company's  revenue  interest  in  Ascendant  currently
represents the Company's sole operating business.

         The  Company,  which  was  formerly  known as  Billing  Concepts  Corp.
("BCC"), was incorporated in the state of Delaware in 1996. BCC was previously a
wholly-owned  subsidiary of U.S. Long Distance  Corp.  ("USLD") and  principally
provided third-party billing  clearinghouse and information  management services
to the  telecommunications  industry (the  "Transaction  Processing and Software
Business").   Upon  its  spin-off   from  USLD,   BCC  became  an   independent,
publicly-held  company.  In October  2000,  the  Company  completed  the sale of
several wholly-owned  subsidiaries that comprised the Transaction Processing and
Software  Business  to  Platinum  Holdings  ("Platinum")  for  consideration  of
$49,700,000  (the "Platinum  Transaction").  The Company also received  payments
totaling  $7,500,000  for  consulting  services  provided to  Platinum  over the
twenty-four month period subsequent to the Platinum Transaction.

         Beginning in 1998,  the Company made multiple  investments in Princeton
eCom Corporation ("Princeton") totaling approximately $77,300,000 before selling
all of its  interest  for  $10,000,000  in June 2004.  The  Company's  strategy,
beginning with its investment in Princeton, of making investments in high-growth
companies was also facilitated through several other investments.

                                       7

         In early 2004,  the Company  announced  that it would seek  stockholder
approval to liquidate  the Company.  In June of 2004,  the board of directors of
the Company  determined  that it would be in the best interest of the Company to
accept an investment from Newcastle Partners, L.P. ("Newcastle"),  an investment
fund with a long track record of investing in public and private  companies.  On
June 18, 2004, the Company sold 4,807,692 newly issued shares of its Series A 4%
Convertible  Preferred  Stock (the "Series A Preferred  Stock") to Newcastle for
$5,000,000  (the  "Newcastle  Transaction").  The Series A  Preferred  Stock was
convertible into approximately thirty-five percent of the Company's Common Stock
(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
were  entitled  to  a  four  percent   annual  cash  dividend  (the   "Preferred
Dividends"). Following the investment by Newcastle, the management team resigned
and new executives and board members were appointed.  On July 3, 2006, Newcastle
converted  its Series A  Preferred  Stock into  19,230,768  shares of the Common
Stock.

         During  May  2005,  the  Company  sold its  equity  interest  in Sharps
Compliance Corp.  ("Sharps") for approximately  $334,000.  Following the sale of
its Sharps interest,  the Company no longer holds any investments made by former
management  and which  reflected  former  management's  strategy of investing in
high-growth companies.

         On August  11,  2004,  Craig  Davis,  allegedly  a  stockholder  of the
Company,  filed a lawsuit in the Chancery Court of New Castle  County,  Delaware
(the "Lawsuit").  The Lawsuit asserted direct claims, and also derivative claims
on the Company's behalf,  against five former and three current directors of the
Company.  On April 13, 2006, the Company  announced that it reached an agreement
with all of the  parties to the  Lawsuit to settle all claims  relating  thereto
(the  "Settlement").   On  June  23,  2006,  the  Chancery  Court  approved  the
Settlement,   and  on  July  25,   2006,   the   Settlement   became  final  and
non-appealable.  As part  of the  Settlement,  the  Company  set up a fund  (the
"Settlement  Fund"),  which will be distributed to  stockholders of record as of
July 28,  2006,  with a  payment  date of  August  11,  2006,  or a date as soon
thereafter  as  practicable.  The  portion of the  Settlement  Fund that will be
distributable  to  Stockholders  pursuant  to the  Settlement  is expected to be
approximately  $2,270,187  or  approximately  $.04 per  common  share on a fully
diluted basis,  provided that any Common Stock held by defendants in the Lawsuit
who  were  formerly  directors  of  the  Company  will  not be  entitled  to any
distribution  from  the  Settlement  Fund.  The  total  Settlement  proceeds  of
$3,200,000 are being funded by the Company's  insurance carrier and by Parris H.
Holmes,  Jr., the Company's former Chief Executive Officer,  who is contributing
$150,000.  Also  included  in the  total  Settlement  proceeds  is  $600,000  of
reimbursement  for  legal  and  professional  fees  paid to the  Company  by its
insurance carrier and subsequently  contributed by the Company to the Settlement
Fund.  The Company has  therefore  recognized a loss of $600,000  related to the
Lawsuit for the six months ended June 30, 2006. As part of the  Settlement,  the
Company and the other defendants in the Lawsuit agreed not to oppose the request
for fees and  expenses  by  counsel  to the  plaintiff  of  $929,813.  Under the
Settlement,  the plaintiff,  the Company and the other defendants (including Mr.
Holmes)  have also agreed to certain  mutual  releases of claims  arising out of
transactions referenced in the Lawsuit.

         The Company is currently  funding  legal and  professional  fees of the
current and former director defendants pursuant to indemnification  arrangements
that were in place during the respective  terms of each of the  defendants.  The
Company has met the $500,000 retention as stipulated in the Company's directors'
and officers' liability insurance policy. The directors' and officers' liability
insurance policy

                                       8

carries a maximum coverage limit of $5,000,000. As of June 30, 2006, the Company
has recorded a receivable from the insurance  carrier of approximately  $945,000
for  reimbursement  of legal and  professional  fees  incurred  in excess of the
policy retention,  net of the $600,000  reimbursement from the insurance carrier
as part of the  Settlement.  The Company  continues to have ongoing  discussions
with the insurance  carrier  regarding  reimbursement  of legal and professional
fees  under  the  provisions  of  the  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.  The
Company intends to vigorously  seek  enforcement of its rights under the policy.
The Settlement does not preclude the Company from seeking reimbursement of legal
and professional  fees up to an amount remaining within the policy limit,  which
is approximately $1,950,000 after considering the terms of the Settlement.

NOTE 3.  STOCK BASED COMPENSATION

         Effective  January 1, 2006,  the  Company  adopted  the  provisions  of
Statement of Financial  Accounting Standards No. 123(R),  "Share-Based  Payment"
(SFAS 123R) using the modified prospective transition method. Under this method,
previously  reported amounts should not be restated to reflect the provisions of
SFAS 123R. SFAS 123R requires the Company to record compensation expense for all
awards  granted  after the date of  adoption,  and for the  unvested  portion of
previously granted awards that remain  outstanding at the date of adoption.  The
fair value concepts have not changed  significantly  in SFAS 123R;  however,  in
adopting this standard, companies must choose among alternative valuation models
and amortization  assumptions.  After assessing alternative valuation models and
amortization assumptions, the Company will continue using both the Black-Scholes
valuation model and straight-line  amortization of compensation expense over the
requisite  service period for each separately  vesting portion of the grant. The
Company will  reconsider  use of this model if  additional  information  becomes
available in the future that indicates  another model would be more appropriate,
or if grants  issued in  future  periods  have  characteristics  that  cannot be
reasonably  estimated using this model. The Company utilizes  stock-based awards
as a form of compensation for employees, officers and directors.

         Amortization  of the fair  value of the stock  option  grants  has been
included in the Company's results since the grant date and totaled approximately
$17,000 for the quarter and six months  ended June 30, 2006,  respectively.  The
expense relates to the unvested portion of previously granted awards that remain
outstanding at the date of adoption.

         Previously,  the  Company  had applied  the  provisions  of  Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related  interpretations and elected to utilize the disclosure option of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123).

         For the quarter and six months ended June 30, 2005, the following table
illustrates  the  effect  on  net  loss  and  net  loss  per  common  share  had
compensation expense for the Company's stock option grants been determined based
on the fair value at the grant dates consistent with the methodology of SFAS No.
123 and SFAS No. 148, "Accounting for Stock-Based  Compensation - Transition and
Disclosure". For purposes of the pro forma disclosures, the estimated fair value
of options is  amortized  to pro forma  compensation  expense  over the options'
vesting periods.

                                       9

                                                    Three Months Ended  Six Months Ended
                                                         June 30,         June 30,
                                                    ------------------  ----------------
 (in thousands, except per share data)                     2005            2005
                                                           ----            ----
Net income (loss), as reported                           $   (89)         $  (363)
Less: Total stock based employee compensation
   expense determined under fair value based method
   for all awards, net of related tax effects                (20)             (27)
                                                         -------          -------

Net income (loss), pro forma                             $  (109)         $  (390)
                                                         =======          =======

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

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

   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 six  months  ended  June  30,  2005:  expected
   volatility  of 99.22%,  no  dividend  yield,  expected  life of 2.5 years and
   risk-free interest rates of 4.75%.

NOTE 4.  REVENUE INTEREST

         On  October  5,  2005,  the  Company  entered  into an  agreement  (the
"Ascendant  Agreement")  with  Ascendant  to acquire an interest in the revenues
generated by  Ascendant.  Pursuant to the  Ascendant  Agreement,  the Company is
currently  entitled to a 50% interest,  subject to certain  adjustments,  in the
revenues of Ascendant, which interest declines if the assets under management of
Ascendant reach certain levels. Revenues generated by Ascendant include revenues
from assets under  management  or any other sources or  investments,  net of any
agreed  commissions.  The  Company  also  agreed to  provide  various  marketing
services to Ascendant. Steven J. Pully, CEO of the Company, was appointed to the
Investment  Advisory Committee of Ascendant.  The total potential purchase price
under the terms of the Ascendant Agreement is $1,550,000,  payable in four equal
installments of $387,500.  The first installment was paid at the closing and the
second installment was paid on January 5, 2006. Subject to the provisions of the
Ascendant Agreement,  including  Ascendant's  compliance with the terms thereof,
the third  installment  was payable on April 5, 2006 and the fourth  installment
was payable on July 5, 2006. As of August 14, 2006,  the Company has elected not
to make the third or fourth installment payment.

         Subject to the terms of the  Ascendant  Agreement,  if the Company does
not make an installment  payment and Ascendant is not in breach of the Ascendant
Agreement,  Ascendant has the right to acquire the Company's revenue interest at
a price which would yield a 10%  annualized  return to the Company.  The Company
has been  notified by Ascendant  that  Ascendant is  exercising  this right as a
result of the  Company's  election not to make its third and fourth  installment
payments.  The Company  believes that  Ascendant has not satisfied the requisite
conditions to repurchase the Company's revenue interest.

         Ascendant had assets under management of approximately  $22,200,000 and
$17,800,000 as of June 30, 2006 and December 31, 2005, respectively. During June
2006,  Ascendant  notified  the Company  that its  original  calculation  of net
revenues  (after  deducting  certain third party expenses) for the quarter ended
March 31, 2006 was  incorrect and made a payment to the Company of an additional
$21,500.  Ascendant  notified the Company that its  calculation  of net revenues

                                       10

(after  deducting  certain third party  expenses) for the quarter ended June 30,
2006 was  approximately  $68,000,  and,  accordingly,  the  Company  recorded  a
receivable from Ascendant of  approximately  $34,000 as of June 30, 2006.  Under
the  Ascendant  Agreement,  revenues  earned by the Company  from the  Ascendant
revenue  interest (as  determined in accordance  with the terms of the Ascendant
Agreement)  are  payable in cash  within 30 days after the end of each  quarter.
Under the terms of the  Ascendant  Agreement,  Ascendant  has 45 days  following
notice by the Company to cure any material  breach by Ascendant of the Ascendant
Agreement, including with respect to payment obligations.

         After the second  anniversary  of the Ascendant  Agreement and upon the
occurrence of certain  events,  Ascendant has the option to repurchase a portion
of the Company's  revenue interest at a price which would yield a 25% annualized
return to the Company. In connection with the Ascendant  Agreement,  the Company
also entered into the Principals  Agreement  with Ascendant and certain  limited
partners and key employees of Ascendant (the "Principals Agreement") pursuant to
which the Company has the option to purchase  limited  partnership  interests of
Ascendant under certain  circumstances.  Effective March 14, 2006, in accordance
with the terms of the Principals  Agreement,  the Company  acquired a 7% limited
partnership interest from a limited partner of Ascendant for a nominal amount.

NOTE 5.  COMMITMENTS AND CONTINGENCIES

         In October 2000, the Company completed the Platinum Transaction.  Under
the terms of the Platinum Transaction,  all leases and corresponding obligations
associated with the Transaction Processing and Software Business were assumed by
Platinum.  Prior  to  the  Platinum  Transaction,  the  Company  guaranteed  two
operating leases for office space of the divested companies.  The first lease is
related to office  space  located in San  Antonio,  Texas,  and expires in 2006.
Under the original terms of the first lease, the remaining minimum  undiscounted
rent payments total approximately $608,000 at June 30, 2006. The second lease is
related to office space located in Austin, Texas, and expires in 2010. Under the
original  terms of the second lease,  the remaining  minimum  undiscounted  rent
payments total  approximately  $4,965,000 at June 30, 2006. 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.

         Pursuant to the sale of 4,807,692  newly issued  shares of the Series A
Preferred  Stock to Newcastle on June 18, 2004,  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.

         On December 12, 2005, the Company received a letter from the SEC, based
on a review of the  Company's  Form 10-K filed for the year ended  December  31,
2004,  requesting that the Company  provide a written  explanation as to whether
the  Company  is an  "investment  company"  (as  such  term  is  defined  in the
Investment  Company Act of 1940). The Company provided a written response to the
SEC,  dated  January 12, 2006,  stating the reasons why it believes it is not an
"investment company". The Company has provided certain confirmatory  information
requested by the SEC. In the event the SEC or a court took the position that the

                                       11

Company is an  investment  company,  the  Company's  failure to  register  as an
investment  company would not only raise the  possibility  of an  enforcement or
other legal action by the SEC and potential fines and penalties,  but also could
threaten  the validity of corporate  actions and  contracts  entered into by the
Company  during  the  period  it was  deemed  to be an  unregistered  investment
company, among other remedies.

         During  February  2006,  the Company  entered into an agreement  with a
former employee to settle a dispute over a severance  agreement the employee had
entered into with the Company.  The  severance  agreement  which was executed by
former  management  provided  for a payment of  approximately  $98,000  upon the
occurrence of certain events. The Company paid  approximately  $85,000 to settle
all claims associated with the severance agreement. During May 2006, the Company
entered  into an  agreement  to  settle  a  dispute  with a law  firm  that  had
previously  been  hired by the  Company.  In  accordance  with the  terms of the
agreement,  the Company received and recorded a refund of legal and professional
fees of $125,000  during May 2006.  In addition,  the Company  reversed  accrued
legal and professional  fees of  approximately  $38,000 during the quarter ended
March 31, 2006.

NOTE 6.  RELATED PARTY TRANSACTIONS

         In June  2004,  in  connection  with the  Newcastle  Transaction,  Mark
Schwarz,  Chief Executive Officer and Chairman of Newcastle Capital  Management,
L.P.  ("NCM"),  Steven  J.  Pully,  President  of NCM,  and John  Murray,  Chief
Financial  Officer of NCM,  assumed  positions  as Chairman of the Board,  Chief
Executive Officer and Chief Financial Officer, respectively, of the Company. Mr.
Pully  receives an annual salary of $150,000 as Chief  Executive  Officer of the
Company.  NCM is the general partner of Newcastle,  which owns 19,380,768 shares
of Common Stock.

         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  occupies 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 7.  SHARE CAPITAL

         On July 10, 2006, the Company  entered into a stockholders  rights plan
(the "Rights Plan") that replaced the Company's  stockholders  rights plan dated
July 10, 1996 (the "Old Rights  Plan") that  expired  according  to its terms on
July 10,  2006.  The Rights Plan  provides  for a dividend  distribution  of one
preferred share purchase right (a "Right") for each outstanding  share of Common
Stock.  The dividend was payable on July 10, 2006 to the Company's  stockholders
of record at the close of business on that date (the "Record  Date").  The terms
of the Rights and the Rights Plan are set forth in a Rights Agreement,  dated as
of July 10, 2006, by and between New Century Equity  Holdings Corp. and The Bank
of New York Trust Company, N.A., as Rights Agent.

                                       12

         The  Company's  Board of  Directors  adopted the Rights Plan to protect
stockholder value by protecting the Company's ability to realize the benefits of
its net operating loss carryforwards ("NOLs") and capital loss carryforwards. In
general terms, the Rights Plan imposes a significant  penalty upon any person or
group that acquires 5% or more of the outstanding Common Stock without the prior
approval  of its  Board of  Directors.  Stockholders  that own 5% or more of the
outstanding  Common  Stock as of the close of  business  on the Record  Date may
acquire up to an additional 1% of the  outstanding  Common Stock without penalty
so long as they  maintain  their  ownership  above the 5% level  (such  increase
subject  to  downward  adjustment  by the  Company's  Board of  Directors  if it
determines  that such increase will endanger the  availability  of the Company's
NOLs and/or its capital loss carryforwards). In addition, the Company's Board of
Directors has exempted  Newcastle,  the Company's largest  stockholder,  and may
exempt  any  person  or group  that  owns 5% or more if the  Board of  Directors
determines  that  the  person's  or  group's  ownership  will not  endanger  the
availability  of the  Company's  NOLs and/or its capital loss  carryforwards.  A
person or group that  acquires  a  percentage  of Common  Stock in excess of the
applicable  threshold  is called an  "Acquiring  Person."  Any Rights held by an
Acquiring  Person  are void and may not be  exercised.  The  Company's  Board of
Directors  authorized  the  issuance of one Right per each share of Common Stock
outstanding  on the Record Date.  If the Rights become  exercisable,  each Right
would allow its holder to purchase from the Company one one-hundredth of a share
of the Company's Series A Junior Participating  Preferred Stock, par value $0.01
(the "Preferred  Stock"),  for a purchase price of $10.00. Each fractional share
of Preferred Stock would give the stockholder  approximately  the same dividend,
voting  and  liquidation  rights  as does one share of  Common  Stock.  Prior to
exercise,  however,  a Right does not give its holder  any  dividend,  voting or
liquidation rights.

         The Company has never declared or paid any cash dividends on its Common
Stock. On June 30, 2006, Newcastle elected to receive the Preferred Dividends in
cash for the period from June 19, 2005 through  June 30, 2006.  On July 3, 2006,
Newcastle elected to convert all of its Series A Preferred Stock into 19,230,768
shares of Common Stock.

                                       13

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         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.

GENERAL

         The  following  is a  discussion  of the  interim  unaudited  condensed
consolidated  financial  condition  and  results of  operations  for New Century
Equity Holdings Corp. and  subsidiaries  for the three and six months ended June
30, 2006. 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, 2005.

RESULTS OF OPERATIONS

CONTINUING OPERATIONS

         General and administrative  ("G&A") expenses are comprised of all costs
incurred  in direct  support of the  business  operations  of the  Company.  G&A
expenses decreased by $213,000 or 87%, and $475,000 or 80% for the three and six
months  ended June 30,  2006,  respectively,  as compared  to the  corresponding
periods of the prior fiscal year. The decrease is  attributable to a decrease in
legal and  professional  fees. The Company  expensed  approximately  $250,000 in
legal and professional  fees related to the Lawsuit (See Part II, Item 2. "Legal
Proceedings")  during the six months ended June 30, 2005, as the Company had not
yet met the $500,000  retention as stipulated in the  Company's  directors'  and
officers' liability  insurance policy related to the Lawsuit.  Also, the Company
reversed accrued legal and professional fees of approximately $38,000 during the
quarter  ended  March 31, 2006 and  recorded a refund of legal and  professional
fees of $125,000  during the quarter ended June 30, 2006 in accordance  with the
terms of an agreement  to settle a dispute  with a law firm that had  previously
been hired by the Company.

INTEREST INCOME

         Interest income increased by $53,000 or 53%, and $96,000 or 53% for the
three and six months  ended June 30,  2006,  respectively,  as  compared  to the
corresponding  periods of the prior fiscal year. This increase was  attributable
to higher yields on cash balances available for short-term investment.

                                       14

DERIVATIVE SETTLEMENT COSTS

         On April 13, 2006,  the Company  announced that it reached an agreement
with all of the  parties to the Lawsuit to settle all claims  relating  thereto.
The total  Settlement  proceeds of $3,200,000  are being funded by the Company's
insurance  carrier and by Parris H.  Holmes,  Jr.,  the  Company's  former Chief
Executive  Officer,  who is  contributing  $150,000.  Also included in the total
Settlement proceeds is $600,000 of reimbursement for legal and professional fees
paid to the Company by its insurance carrier and subsequently contributed by the
Company to the Settlement  Fund. The Company has therefore  recognized a loss of
$600,000 related to the Lawsuit for the six months ended June 30, 2006.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's  cash balance  decreased to $12,013,000 at June 30, 2006,
from  $12,487,000 at December 31, 2005.  The decrease  relates to the following:
G&A  expenses  incurred  during the six months  ended June 30,  2006;  continued
funding of legal and professional fees related to the Lawsuit; the settlement of
a dispute  with a former  employee  over a  severance  agreement  and the second
installment  paid under the Ascendant  Agreement;  partially  offset by interest
income and revenues from Ascendant.  There were no capital  expenditures  during
the six months ended June 30, 2006.

         During the quarter ended June 30, 2006, the Company  continued  funding
legal and professional fees of the current and former director defendants in the
Lawsuit pursuant to  indemnification  arrangements that were in place during the
respective  terms of each of the  defendants.  The Company has met the  $500,000
retention 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. As of June 30, 2006, the Company
has recorded a receivable from the insurance  carrier of approximately  $945,000
for  reimbursement  of legal and  professional  fees  incurred  in excess of the
policy  retention,  net of the $600,000  reimbursement of legal and professional
fees from the insurance carrier as part of the Settlement. The Company continues
to have ongoing  discussions with the insurance carrier regarding  reimbursement
of legal and professional fees under the provisions of the 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.  The Company intends to vigorously seek enforcement of its rights under
the  policy.   The  Settlement  does  not  preclude  the  Company  from  seeking
reimbursement  of legal and  professional  fees up to an amount remaining within
the policy limit, which is approximately  $1,950,000 after considering the terms
of the Settlement.

         During the next 12 months,  the Company's  operating cash  requirements
are expected to consist  principally of funding  corporate  expenses,  the costs
associated with  maintaining a public company and expenses  incurred in pursuing
the Company's  business plan.  Additionally,  the total potential purchase price
under the terms of the Ascendant Agreement is $1,550,000,  payable in four equal
installments of $387,500.  Subject to the provisions of the Ascendant Agreement,
the third  installment  was payable on April 5, 2006 and the fourth  installment
was payable on July 5, 2006. As of August 14, 2006, the Company has not made the
third and fourth  installment  payments.  Subject to the terms of the  Ascendant
Agreement,  if the Company does not make an installment payment and Ascendant is
not in breach of the Ascendant Agreement, Ascendant has the right to acquire the
Company's  revenue interest at a price which would yield a 10% annualized return
to the Company.  The Company has been  notified by Ascendant  that  Ascendant is
exercising  this  right as a result of the  Company's  election  not to make its
third and fourth  installment  payment.  The Company believes that Ascendant has
not  satisfied the requisite  conditions  to  repurchase  the Company's  revenue
interest,  and at this time  believes it is not  obligated to make the third and
fourth  installment  payments  to  Ascendant.   The  Company  expects  to  incur

                                       15

additional  operating  losses  through fiscal 2006 which will continue to have a
negative impact on liquidity and capital resources.

LEASE GUARANTEES

         In October 2000, the Company completed the Platinum Transaction.  Under
the terms of the Platinum Transaction,  all leases and corresponding obligations
associated with the Transaction Processing and Software Business were assumed by
Platinum.  Prior  to  the  Platinum  Transaction,  the  Company  guaranteed  two
operating leases for office space of the divested companies.  The first lease is
related to office  space  located in San  Antonio,  Texas,  and expires in 2006.
Under the original terms of the first lease, the remaining minimum  undiscounted
rent payments total approximately $608,000 at June 30, 2006. The second lease is
related to office space located in Austin, Texas, and expires in 2010. Under the
original  terms of the second lease,  the remaining  minimum  undiscounted  rent
payments total  approximately  $4,965,000 at June 30, 2006. 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 June 30, 2006 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 are procedures that are designed with the objective
of ensuring that information  required to be disclosed in the Company's  reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), such
as this  Form  10-Q,  is  reported  in  accordance  with  the  rules of the SEC.
Disclosure  controls are also  designed with the objective of ensuring that such
information  is  accumulated   appropriately  and  communicated  to  management,
including the chief executive officer and chief financial officer as appropriate
to allow timely decisions regarding required disclosures.

         As of the end of the period covered by this report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's management,  including the Company's chief executive officer and chief
financial  officer,  of the  effectiveness  of the design and  operation  of the
Company's  disclosure  controls  and  procedures  pursuant to Exchange Act Rules
13a-15(e) and 15d-15(e). Based upon that evaluation, the chief executive officer
and chief financial officer concluded that the Company's disclosure controls and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to the Company (including its consolidated subsidiaries) required to be
included in the  Company's  periodic  SEC  filings.  No change in the  Company's
internal  control over financial  reporting (as defined in Rule 13a-15(f) of the
Exchange Act) occurred  during the period covered by this report that materially
affected or is  reasonably  likely to materially  affect the Company's  internal
control over financial reporting.

                                       16

         A control  system,  no matter  how well  conceived  and  operated,  can
provide only  reasonable,  not absolute,  assurance  that the  objectives of the
control system are met. Because of inherent  limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.

                            PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On August  11,  2004,  Craig  Davis,  allegedly  a  stockholder  of the
Company,  filed a lawsuit in the Chancery Court of New Castle  County,  Delaware
(the "Lawsuit").  The Lawsuit asserted direct claims, and also derivative claims
on the Company's behalf,  against five former and three current directors of the
Company.  On April 13, 2006, the Company  announced that it reached an agreement
with all of the  parties to the  Lawsuit to settle all claims  relating  thereto
(the  "Settlement").   On  June  23,  2006,  the  Chancery  Court  approved  the
Settlement,   and  on  July  25,   2006,   the   Settlement   became  final  and
non-appealable.  As part  of the  Settlement,  the  Company  set up a fund  (the
"Settlement  Fund"),  which will be distributed to  stockholders of record as of
July 28,  2006,  with a  payment  date of  August  11,  2006,  or a date as soon
thereafter  as  practicable.  The  portion of the  Settlement  Fund that will be
distributable  to  stockholders  pursuant  to the  Settlement  is expected to be
approximately  $2,270,187  or  approximately  $.04 per  common  share on a fully
diluted basis,  provided that any Common Stock held by defendants in the Lawsuit
who  were  formerly  directors  of  the  Company  will  not be  entitled  to any
distribution  from  the  Settlement  Fund.  The  total  Settlement  proceeds  of
$3,200,000 are being funded by the Company's  insurance carrier and by Parris H.
Holmes,  Jr., the Company's former Chief Executive Officer,  who is contributing
$150,000.  Also  included  in the  total  Settlement  proceeds  is  $600,000  of
reimbursement  for  legal  and  professional  fees  paid to the  Company  by its
insurance carrier and subsequently  contributed by the Company to the Settlement
Fund.  The Company has  therefore  recognized a loss of $600,000  related to the
Lawsuit for the six months ended June 30, 2006. As part of the  Settlement,  the
Company and the other defendants in the Lawsuit agreed not to oppose the request
for fees and  expenses  by  counsel  to the  plaintiff  of  $929,813.  Under the
Settlement,  the plaintiff,  the Company and the other defendants (including Mr.
Holmes)  have also agreed to certain  mutual  releases of claims  arising out of
transactions referenced in the Lawsuit.

         The Company is currently  funding  legal and  professional  fees of the
current and former director defendants pursuant to indemnification  arrangements
that were in place during the respective  terms of each of the  defendants.  The
Company has met the $500,000 retention 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.  As of June 30,
2006,  the Company  has  recorded a  receivable  from the  insurance  carrier of
approximately $945,000 for reimbursement of legal and professional fees incurred
in excess of the policy retention,  net of the $600,000  reimbursement  from the
insurance  carrier as part of the  Settlement.  The  Company  continues  to have
ongoing discussions with the insurance carrier regarding  reimbursement of legal
and  professional  fees under the  provisions  of the 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.  The Company intends to vigorously seek enforcement of its rights under
the  policy.   The  Settlement  does  not  preclude  the  Company  from  seeking
reimbursement  of legal and  professional  fees up to an amount remaining within
the policy limit, which is approximately  $1,950,000 after considering the terms
of the Settlement.

         Pursuant to the sale of 4,807,692  newly issued  shares of the Series A
Preferred  Stock to Newcastle on June 18, 2004,  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

                                       17

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.

         On December 12, 2005, the Company received a letter from the SEC, based
on a review of the  Company's  Form 10-K filed for the year ended  December  31,
2004,  requesting that the Company  provide a written  explanation as to whether
the  Company  is an  "investment  company"  (as  such  term  is  defined  in the
Investment  Company Act of 1940). The Company provided a written response to the
SEC,  dated  January 12, 2006,  stating the reasons why it believes it is not an
"investment  company".  The Company  continues to provide  certain  confirmatory
information  requested  by the SEC.  In the  event  the SEC or a court  took the
position that the Company is an  investment  company,  the Company's  failure to
register as an  investment  company would not only raise the  possibility  of an
enforcement or other legal action by the SEC and potential  fines and penalties,
but also could threaten the validity of corporate  actions and contracts entered
into by the  Company  during  the  period it was  deemed  to be an  unregistered
investment company, among other remedies.

         During  February  2006,  the Company  entered into an agreement  with a
former employee to settle a dispute over a severance  agreement the employee had
entered into with the Company.  The  severance  agreement  which was executed by
former  management  provided  for a payment of  approximately  $98,000  upon the
occurrence of certain events. The Company paid  approximately  $85,000 to settle
all claims associated with the severance agreement. During May 2006, the Company
entered  into an  agreement  to  settle  a  dispute  with a law  firm  that  had
previously  been  hired by the  Company.  In  accordance  with the  terms of the
agreement,  the Company received and recorded a refund of legal and professional
fees of $125,000  during May 2006.  In addition,  the Company  reversed  accrued
legal and professional  fees of  approximately  $38,000 during the quarter ended
March 31, 2006.

ITEM 1A. RISK FACTORS

         The Risk Factors  included in the Company's  Annual Report on Form 10-K
for the fiscal year ended  December 31, 2005 have not  materially  changed other
than as set forth below.

OUR  BUSINESS  COULD BE HARMED  IF THERE IS A  NON-FAVORABLE  RESOLUTION  TO THE
DERIVATIVE  ACTION COMMENCED AGAINST US BY CRAIG DAVIS OR IN OTHER LITIGATION OR
REGULATORY PROCEEDINGS AGAINST THE COMPANY.

         As  discussed  in Part II, Item 1. "Legal  Proceedings,"  on August 11,
2004,  Craig Davis,  allegedly a stockholder of the Company,  filed a lawsuit in
the Chancery Court of New Castle County,  Delaware.  The lawsuit asserted direct
claims, and also derivative claims on the Company's behalf,  against five former
and three  current  directors  of the Company.  On April 13,  2006,  the Company
announced that it reached an agreement with all of the parties to the lawsuit to
settle all claims relating thereto. On July 25, 2006 the Settlement became final
and non-appealable.

         The Company is currently  funding  legal and  professional  fees of the
current and former director defendants pursuant to indemnification  arrangements
that were in place during the respective  terms of each of the  defendants.  The
Company has met the $500,000 retention 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.  As of June 30,
2006,  the Company  has  recorded a  receivable  from the  insurance  carrier of
approximately $945,000 for reimbursement of legal and professional fees incurred
in excess of the policy retention,  net of the $600,000  reimbursement  from the
insurance  carrier as part of the  settlement.  The  Company  continues  to have
ongoing discussions with the insurance carrier regarding  reimbursement of legal

                                       18

and  professional  fees under the  provisions  of the 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.  The Company intends to vigorously seek enforcement of its rights under
the  policy.   The  settlement  does  not  preclude  the  Company  from  seeking
reimbursement  of legal and  professional  fees up to an amount remaining within
the policy limit, which is approximately  $1,950,000 after considering the terms
of the settlement.

         Among  the  claims  filed  by Mr.  Davis is a claim  that  the  Company
operated as an illegal investment company in violation of the Investment Company
Act of 1940 (the "Investment  Company Act").  Although the Company believes that
it has not violated the  Investment  Company Act in the past, or is presently in
violation  of the  Investment  Company Act,  there can be no assurance  that the
Company has not  violated or is  violating  the  Investment  Company Act. In the
event the SEC or a court took the  position  that the  Company is an  investment
company,  the Company's  failure to register as an investment  company would not
only raise the  possibility  of an  enforcement or other legal action by the SEC
and  potential  fines and  penalties,  but also could  threaten  the validity of
corporate actions and contracts entered into by the Company during the period it
was deemed to be an unregistered investment company, among other remedies.

THE ASSETS ON OUR BALANCE SHEET INCLUDE A REVENUE INTEREST IN ASCENDANT, AND ANY
IMPAIRMENT  OF THE  REVENUE  INTEREST  COULD  ADVERSELY  AFFECT  OUR  RESULTS OF
OPERATIONS AND FINANCIAL POSITION.

         As of June 30, 2006,  the  Company's  total  assets were  approximately
$17,070,000,  of which approximately $803,000 were intangible assets relating to
the revenue  interest in Ascendant.  The Company  cannot be certain that it will
ever realize the value of such intangible  assets. If the Company were to record
an  intangible  impairment  charge,  its  results of  operations  and  financial
position could be adversely affected.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On June 2, 2006,  the Company held its Annual  Meeting of  Stockholders
for the year ended  December  31, 2005 for the  purpose of  allowing  holders of
Common Stock and holders of Series A Preferred  Stock to ratify the  appointment
of Burton, McCumber and Cortez, L.L.P. as the Company's independent auditors for
fiscal 2006. The vote on this proposal was as follows:

 Proposal to Ratify Appointment of Independent Auditors     For          Withheld
 ------------------------------------------------------     ---          --------
 Burton, McCumber & Cortez, L.L.P.                          48,425,176   934,549

ITEM 6.  EXHIBITS

         Exhibits:

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

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

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

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

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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, 2006                    By: /s/ John P. Murray
                                               ----------------------------------
                                               John P. Murray
                                               Chief Financial Officer
                                               (Duly authorized and principal
                                               financial officer)

                                       20
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