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 March 31, 2004|_|
  
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
  EXCHANGE ACT OF 1934For the transition period
          from               
          to Commission File
    Number0-28536  NEW CENTURY EQUITY HOLDINGS CORP.(Exact name of registrant as specified in its charter) Delaware
  
  74-2781950(State or other jurisdiction of 
  incorporation or organization)
  
  (I.R.S. Employer 
  Identification Number)10101 Reunion Place, Suite 970, San
  Antonio, Texas
  
  78216(Address of principal executive offices)
  
  (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 Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).  |_|
Yes  |X| No Indicated
below is the number of shares outstanding of the registrants only class of
common stock at May 13, 2004: Title of Class
  
  Number of Shares 
  OutstandingCommon Stock, $0.01 par value
  
  34,653,104    NEW CENTURY EQUITY HOLDINGS CORP. AND
SUBSIDIARIES

INDEX

PAGEPART I FINANCIAL INFORMATIONItem 1.
  Interim
  Condensed Consolidated Financial StatementsCondensed
  Consolidated Balance Sheets  March 31, 2004 (Unaudited) and December 31,
  2003
  3Unaudited
  Condensed Consolidated Statements of Operations  For the Three Months ended
  March 31, 2004 and 2003
  4Unaudited
  Condensed Consolidated Statements of Comprehensive Income (Loss)  For the
  Three Months ended March 31, 2004 and 2003
  5Unaudited
  Condensed Consolidated Statements of Cash Flows  For the Three Months ended
  March 31, 2004 and 2003
  6Notes
  to Unaudited Interim Condensed Consolidated Financial Statements
  7Item 2.
  Managements
  Discussion and Analysis of Financial Condition and Results of Operations
  12Item 3.
  Quantitative
  and Qualitative Disclosure about Market Risk
  14Item 4.
  Controls
  and Procedures
  15PART II OTHER INFORMATIONItem 1.
  Legal
  Proceedings
  15Item 6.
  Exhibits
  and Reports on Form 8-K
  15SIGNATURE
  162

PART I FINANCIAL
INFORMATION

Item 1. Interim
Condensed Consolidated Financial Statements

NEW CENTURY EQUITY
HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

March 31,
  2004
      
      December
  31,
  2003(Unaudited)ASSETSCurrent
  assets:Cash and
  cash equivalents
      
      $
      4,398
      
      $
      5,330Accounts
  receivable
      
      
      26
      
      
      28Prepaid and
  other assets
      
      
      222
      
      
      309Total
          current assets
      
      
      4,646
      
      
      5,667Property and
  equipment, net
      
      
      32
      
      
      83Other
  non-current assets
      
      
      53
      
      
      53Investments
  in affiliates
      
      
      5,656
      
      
      7,233Total assets
      
      $
      10,387
      
      $
      13,036LIABILITIES AND STOCKHOLDERS EQUITYCurrent
  liabilities:Accounts
  payable
      
      $
      59
      
      $
      58Accrued
  liabilities
      
      
      443
      
      
      1,252Total
  current liabilities
      
      
      502
      
      
      1,310Other
  non-current liabilities
      
      
      
      
      
      Total
  liabilities
      
      
      502
      
      
      1,310Commitments
  and contingencies  see Note 6Stockholders
  equity:Preferred
  stock, $0.01 par value, 10,000,000 shares authorized; no shares issued or
  outstanding
      
      
      
      
      
      Common
  stock, $0.01 par value, 75,000,000 shares authorized; 34,653,104 shares
  issued and outstanding
      
      
      347
      
      
      347Additional
  paid-in capital
      
      
      70,476
      
      
      70,476Accumulated
  other comprehensive income
      
      
      11
      
      
      Accumulated
  deficit
      
      
      (60,949
      )
      
      (59,097
      )Total
  stockholders equity
      
      
      9,885
      
      
      11,726Total
  liabilities and stockholders equity
      
      $
      10,387
      
      $
      13,036The accompanying notes are an
integral part of these interim condensed consolidated financial statements.

3

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

Three
  Months Ended
  March 31,2004
  
  2003Operating
  revenues
  
  $
  
  
  $
  Operating
  expenses:Selling,
  general and administrative expenses
  
  
  645
  
  
  680Depreciation
  and amortization expense
  
  
  16
  
  
  40Operating
  loss from continuing operations
  
  
  (661
  )
  
  (720
  )Other income
  (expense):Interest
  income, net
  
  
  10
  
  
  27Equity in
  net loss of affiliate
  
  
  (1,200
  )
  
  (647
  )Other
  (expense) income, net
  
  
  (1
  )
  
  12Total other
  expense, net
  
  
  (1,191
  )
  
  (608
  )Net loss
  from continuing operations
  
  
  (1,852
  )
  
  (1,328
  )Discontinued
  operations:Net income
  from disposal of discontinued operations
  
  
  
  
  
  147Net loss
  
  $
  (1,852
  )
  $
  (1,181
  )Basic and
  diluted net (loss) income per common share:Net loss
  from continuing operations
  
  $
  (0.05
  )
  $
  (0.04
  )Net income
  from disposal of discontinued operations
  
  
  
  
  
  0.01Net loss
  
  $
  (0.05
  )
  $
  (0.03
  )Weighted
  average common shares outstanding
  
  
  34,653
  
  
  34,218The accompanying notes are an
integral part of these interim condensed consolidated financial statements.

4

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

Three
  Months Ended
  March 31,2004
  
  2003Net loss
  
  $
  (1,852
  )
  $
  (1,181
  )Other comprehensive
  income:Unrealized
  holding gains, net of $0 tax
  
  
  11
  
  
  Comprehensive
  loss
  
  $
  (1,841
  )
  $
  (1,181
  )The accompanying notes are an
integral part of these interim condensed consolidated financial statements.

5

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

Three
  Months Ended
  March 31,2004
  
  2003Cash flows
  from operating activities:Net loss
  from continuing operations
  
  $
  (1,852
  )
  $
  (1,328
  )Adjustments
  to reconcile net loss from continuing operations to net cash (used in)
  provided by operating activities:Depreciation
  and amortization expenses
  
  
  16
  
  
  40Equity in
  net loss of affiliate
  
  
  1,200
  
  
  647Loss on
  disposition of property and equipment
  
  
  30
  
  
  Changes in
  operating assets and liabilities:Decrease
  (increase) in accounts receivable
  
  
  2
  
  
  (16
  )Decrease
  (increase) in prepaid and other assets
  
  
  87
  
  
  (64
  )Increase
  (decrease) in accounts payable
  
  
  1
  
  
  (7
  )Decrease in
  accrued liabilities
  
  
  (421
  )
  
  (24
  )Increase in
  other liabilities and other non-cash items
  
  
  
  
  
  136Net cash
  used in continuing operating activities
  
  
  (937
  )
  
  (616
  )Net cash
  provided by discontinued operating activities
  
  
  
  
  
  180Net cash
  used in operating activities
  
  
  (937
  )
  
  (436
  )Cash flows
  from investing activities:Proceeds
  from sale of property and equipment
  
  
  5
  
  
  Investments
  in affiliates
  
  
  
  
  
  (200
  )Net cash
  used in investing activities
  
  
  5
  
  
  (200
  )Cash flows
  from financing activities
  
  
  
  
  
  Net decrease
  in cash and cash equivalents
  
  
  (932
  )
  
  (636
  )Cash and
  cash equivalents, beginning of period
  
  
  5,330
  
  
  8,704Cash and
  cash equivalents, end of period
  
  $
  4,398
  
  $
  8,068Supplemental
  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.

6

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 (collectively, the
Company), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). 
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations.  In the opinion
of the Companys management, the accompanying interim condensed consolidated
financial statements reflect all adjustments, of a normal recurring nature,
that are necessary for a fair presentation of the Companys financial position,
results of operations and cash flows for such periods.  It is recommended that these interim
condensed consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2003.  Results of operations for the interim
periods are not necessarily indicative of results that may be expected for any
other interim periods or the full fiscal year.

Note 2. Recent Developments

Effective
March 25, 2004, the Company entered into a definitive agreement, subject to
stockholder approval, to sell all of its holdings in Princeton eCom Corporation
(Princeton) to existing and new investors of Princeton for $10.0 million in
cash.  This agreement was executed in
conjunction with an equity financing that infused an additional $10.3 million
in Princeton for working capital purposes. 
In conjunction with this financing, the Companys ownership percentage
of the preferred stock, the outstanding stock and the fully diluted stock of
Princeton decreased to 26.5%, 28.7% and 22.9%, respectively.  The Company also lost its right to appoint a
member to Princetons Board of Directors. 
The sale of the Companys holdings in Princeton and the related proposed
liquidation of the Company described below require shareholder approval.  The Companys Board of Directors has fixed
the close of business on May 7, 2004, as the record date for determining
stockholders entitled to notice of and to vote at the special meeting of
stockholders on July 6, 2004.

In addition,
the Companys Board of Directors unanimously approved a plan of liquidation of
the Company, contingent upon the sale of the Companys holdings in
Princeton.  If and when Princeton
engages in additional equity financings, the Companys inability to participate
will result in further dilution of the Companys ownership in Princeton.  In addition, the Company has no ongoing
operations and therefore no additional cash to continue to support the current
holdings or invest in new businesses. 
The Company currently anticipates that if the proposed sale of the
Companys holdings in Princeton and the proposed liquidation of the Company are
not approved, as early as mid-to-late 2005, the Company will have to begin the
process of liquidating portions of its holdings in Princeton to raise cash
necessary to pay the corporate overhead expenses as well as expenses associated
with being a public company.  The
Company filed a definitive proxy statement seeking shareholder approval of the
proposed sale of the Companys holdings in Princeton and the proposed
liquidation of the Company.

At July 6,
2004 (the date set for the special meeting of stockholders), the Companys cash
position is estimated to be approximately $4.1 million before payment of
transaction related fees.  In addition
to the Companys cash, the liquidation proceeds would include $10.0 million in
cash from the sale of the Companys holdings in Princeton.  The Company also currently holds 375,000
common shares in Sharps Compliance Corp. (Sharps) which would be sold for an
estimated $0.3 million.  The above items
represent approximately $14.4 million in estimated liquidation proceeds, before
related transaction expenses.

7

In
conjunction with the proposed liquidation, the Company anticipates utilizing
cash through completion of the liquidation, including but not limited to: (i)
ongoing operating costs of approximately $0.5 million for the period subsequent
to shareholder approval, (ii) payment of approximately $0.6 million to the
Companys Chief Executive Officer (CEO) for his interest in the Companys
holdings of Princeton, (iii) legal, consulting and other transaction related
fees estimated at $0.5 million, (iv) severance related expenditures totaling
approximately $2.6 million, including payments of approximately $2.5 million to
the Companys two executive officers, (iii) other costs, including payments of
accrued liabilities, insurance, vendor arrangement and lease termination and
other wind down costs estimated to range from $0.5 million to $1.4
million.  In addition, the Company has
initially determined that approximately $0.5 million to $0.7 million should be
reserved for any unknown liabilities that may arise.  As a result, the Company currently estimates that it should be
able to distribute to its shareholders, in one or more cash distributions over
time, approximately $8.1 million to $9.2 million, or $0.23 to $0.27 per share,
in liquidation.  These amounts are
estimates only and could ultimately be higher or lower.

Note 3. Stock Based Compensation

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

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

Three Months Ended
  March 31,(in thousands, except per share data)
  
  2004
  
  2003Net loss, as
  reported
  
  $
  (1,852
  )
  $
  (1,181
  )Less: Total
  stock based employee compensation expense determined under fair value based
  method for all awards, net of related tax effects
  
  
  (1
  )
  
  (10
  )Net loss,
  pro forma
  
  $
  (1,853
  )
  $
  (1,191
  )Basic and
  diluted net loss per common share:Net loss, as
  reported
  
  $
  (0.05
  )
  $
  (0.03
  )Net loss,
  pro forma
  
  $
  (0.05
  )
  $
  (0.03
  )The fair
value for these stock options was estimated at the respective grant date using
the Black-Scholes option-pricing model with the following weighted average
assumptions for the three months ended March 31, 2003: expected volatility of
96.3%, no dividend yield, expected life of 2.5 years and risk-free interest
rate of 1.8%.  No stock options were
issued during the three months ended March 31, 2004.

8

Note 4. Investments in Affiliates

Investments
in affiliates is comprised of the following:

(in thousands)
  
  March 31,
  2004
  
  December 31,
  2003Investment
  in Princeton:Cash
  investments
  
  $
  77,276
  
  $
  77,276Amortization
  and equity loss pick-up
  
  
  (64,186
  )
  
  (62,986
  )In-process
  research and development costs
  
  
  (4,465
  )
  
  (4,465
  )Impairment
  of investment
  
  
  (1,777
  )
  
  (1,777
  )Other
  
  
  (1,481
  )
  
  (1,481
  )Net
  investment in Princeton
  
  
  5,367
  
  
  6,567Investment
  in Sharps:Cash
  investments
  
  
  970
  
  
  970Settlement
  
  
  (389
  )
  
  Impairment
  of investment
  
  
  (306
  )
  
  (306
  )Unrealized
  holding gain
  
  
  11
  
  
  Other
  
  
  3
  
  
  2Net
  investment in Sharps
  
  
  289
  
  
  666Total
  investments in affiliates
  
  $
  5,656
  
  $
  7,233In January
2004, the Company entered into an agreement with the former majority
shareholders of Operator Service Company (OSC) to settle all claims related
to the April 2000 acquisition of OSC by the Company.  Under the terms of the agreement, the Company transferred to the
former OSC majority shareholders 525,000 shares of the common stock of Sharps
owned by the Company, valued at approximately $389,000.  Additionally, the former OSC majority shareholders
agreed to a voting rights agreement which allows the Company to direct the vote
of New Century shares owned by them. 
Subsequent to this settlement, the Company owns approximately 3.6% of
Sharps outstanding shares.

Note 5. Accrued liabilities

Accrued
liabilities is comprised of the following:

(in thousands)
  
  March 31,
  2004
  
  December 31,
  2003Accrued
  split dollar life insurance (see Note 8)
  
  
  $
  
  
  
  
  $
  561Accrued
  settlement (see Note 4)
  
  
  
  
  
  
  
  
  389Accrued
  legal fees
  
  
  
  154
  
  
  
  
  10Accrued
  vacation
  
  
  
  137
  
  
  
  
  136Accrued
  audit fees
  
  
  
  46
  
  
  
  
  62Accrued
  annual report fees
  
  
  
  68
  
  
  
  
  53Other
  
  
  
  38
  
  
  
  
  41Total
  accrued liabilities
  
  
  $
  443
  
  
  
  $
  1,252Note 6. Commitments and Contingencies

In October
2000, the Company sold its primary operation companies to Platinum Holdings
(Platinum).  Under the terms of this
sale, all leases and corresponding obligations associated with the Transaction
Processing and Software divisions were assumed by Platinum.  Prior to the 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 $4.7 million at March
31, 2004.  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 $8.1 million at
March 31, 2004.  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 on the Companys
financial statements.  In conjunction
with the Transaction, Platinum indemnified the Company should the underlying
operating companies not perform under the terms of the office leases.

9

Note 7. Investment in Unconsolidated
Affiliate

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. 
As of March 31, 2004, the Companys ownership percentage of the preferred
stock, the outstanding stock and the fully diluted stock of Princeton was
26.5%, 28.7% and 22.9%, respectively. 
As of December 31, 2003, the Companys ownership percentage of the
preferred stock, the outstanding stock and the fully diluted stock of Princeton
was 34.0%, 36.2% and 31.7%, respectively.

Princetons
summarized balance sheets as of December 31, 2003 and September 30, 2003, are
as follows:

(in thousands)
  
  December
  31,
  2003
  
  September 30,
  2003Current
  assets
  
  
  $
  42,043
  
  
  
  $
  34,750Non-current
  assets
  
  
  
  11,332
  
  
  
  
  12,681Current
  liabilities
  
  
  
  39,476
  
  
  
  
  30,386Non-current
  liabilities
  
  
  
  888
  
  
  
  
  486Mandatorily
  redeemable convertible preferred stock
  
  
  
  39,553
  
  
  
  
  39,587Princetons
statements of operations for the three months ended December 31, 2003 and 2002
have been used to calculate the equity in net loss recorded in the Companys
statements of operations for the three months ended March 31, 2004 and 2003,
respectively.  Princetons summarized
statements of operations are as follows:

  Three
  Months Ended
  December 31,(in thousands)
      
      2003
      
      2002Total
  revenues
      
  $
      5,889
      
      $
      8,640Gross profit
      
  
      1,940
      
      
      4,088Loss from
  operations
      
  
      (3,768
      )
      
      (2,119
      )Net loss
      
  
      (3,527
      )
      
      (1,817
      )During the
three months ended December 31, 2003, Princetons revenues were adversely
affected by the loss of certain customers. 
There can be no assurances that Princeton will replace the revenues
attributable to the lost customers.

In March
2004, Princeton completed a $10.3 million private equity financing for working
capital purposes, in which the Company did not participate.

10

Note 8. Related Party Transactions

In November
2001, the Company entered into an Amended and Restated Employment Agreement
(Employment Agreement) with the Companys Chairman and CEO.  As part of the Employment Agreement, the
Company entered into a Split-Dollar Life Insurance Agreement (Insurance
Agreement) with a trust beneficially owned by the CEO pursuant to which the
Company paid the annual insurance premium of $0.2 million.  The underlying life insurance policy (New
York Life policy number 46731037) had a face value of $4.5 million and required
remaining annual premium payments through March 2012, totaling $1.5
million.  In December 2003, the CEO and
the Company agreed to amend the Employment Agreement and terminate the
provisions of the Employment Agreement related to the Insurance Agreement in
exchange for payments by the Company to, and on behalf of, the CEO totaling
$0.7 million in cash.  Accordingly, the
Company assigned to the CEO, and the CEO assumed, all future obligations and
benefits related to the Insurance Agreement. 
The CEO released and discharged the Company from any further obligation
to provide or fund any life insurance for the benefit of the CEO, including the
Insurance Agreement.  The remaining
provisions of the Employment Agreement remain in full force and effect.  The entire $0.7 million was included in selling,
general and administrative expenses during the year ended December 31,
2003.  In December 2003, $0.2 million of
the total $0.7 million was paid.  The
remaining $0.5 million was accrued at December 31, 2003 and paid in January
2004.

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

In April
2000, the Board of Directors of the Company 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 vested on April 30, 2003.  The
Company expensed the fair market value of the restricted stock grant over the
three-year period ended April 30, 2003. 
The Company recognized $150,000 during the three months ended March 31,
2003, as compensation expense related to the stock grant.

The
Companys CEO served as Chairman of the Board of Tanisys Technology, Inc.
(Tanisys) at the time of the Companys investment in Tanisys and until his
resignation in February 2002.  A member
of the Companys Board served as Tanisys Chairman of the Board and CEO from
February 2002 until February 2003 and as a member of Tanisys Board from
February 2002 to March 2003.  This Board
member was entitled to receive approximately $15,000 per month from Tanisys as
compensation for services as Chairman of the Board and CEO.  The Company also appointed the Companys
Chief Financial Officer (CFO) and another one of its Board members to the
Board of Tanisys.  This Board member
resigned from the Board of Tanisys in February 2003 and the Companys CFO
resigned from the Board of Tanisys in March 2003.

The
Companys CEO served on the Board of Princeton from September 1998 until March
2004.  The Companys CEO served as
Chairman of the Board of Princeton from January 2002 until December 2002.  The Companys CFO served as a member of 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 and
did so at the time the Company invested in Sharps.  The Companys CFO was appointed CFO of Sharps in February
2003.  In March 2003, Sharps began
reimbursing the Company for certain expenses incurred by the Companys
CFO.  As of March 31, 2004,
approximately $15,000 was due to the Company by Sharps for the unpaid portion
of these expenses, all of which was collected in April 2004.

Note 9. Discontinued Operations

In August
2001, the Company invested $1,060,000 in Tanisys.  In February 2003, the Company sold its preferred stock in Tanisys
to ATE Worldwide LLC, whose majority shareholder is a leader in the
semiconductor testing equipment market. 
The Company received approximately $0.2 million in exchange for its
preferred stock, which is reported as net income from disposal of discontinued
operations during the three months ended March 31, 2003.

11

Item 2.

This
Quarterly Report on Form 10-Q contains certain forward-looking statements as
such term is defined in the Private Securities Litigation Reform Act of 1995
and information relating to the Company and its subsidiaries that are based on
the beliefs of the Companys management as well as assumptions made by and
information currently available to the Companys management.  When used in this report, the words
anticipate, believe, estimate, expect and intend and words or phrases
of similar import, as they relate to the Company or its subsidiaries or Company
management, are intended to identify forward-looking statements.  Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitation, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
products introductions and acceptance, technological change, changes in
industry practices, onetime events and other factors described herein and in
other filings made by the Company with the Securities and Exchange
Commission.  Based upon changing
conditions, should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected or intended.  The Company does
not intend to update these forward-looking statements.

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

General

The
following is a discussion of the interim condensed consolidated financial
condition and results of operations for New Century Equity Holdings Corp. and
subsidiaries (collectively, the Company), for the three months ended March
31, 2004.  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, 2003.

Results of Operations

Continuing Operations

Selling,
general and administrative (SG&A) expenses are comprised of all selling,
marketing and administrative costs incurred in direct support of the business
operations of the Company.  For the
three months ended March 31, 2004 and 2003, SG&A expenses totaled $0.6
million and $0.7 million, respectively. 
SG&A expenses for the three months ended March 31, 2003 includes
$0.2 million of compensation expense related to the restricted stock grant
issued to the Companys Chief Executive Officer.

  Equity
    in net loss of affiliate totaled $1.2 million and $0.6 million during the
    three months ended 
    March 31, 2004 and 2003, respectively.  The increase in the equity in
    net loss of affiliate is the result of an increase in the net loss generated
    by Princeton eCom Corporation (Princeton).

Princeton

Princetons
revenues decreased to $5.9 million during the three months ended December 31,
2003, from $8.6 million during the three months ended December 31, 2002.  Princetons net loss of $3.5 million for the
three months ended December 31, 2003, increased from $1.8 million for the three
months ended December 31, 2002.  During
the three months ended December 31, 2003, Princetons revenues and net loss
were adversely affected by the loss of certain customers.  There can be no assurances that Princeton
will replace the revenues attributable to the lost customers.

12

Earnings
before interest, taxes, depreciation and amortization (EBITDA) is a key
indicator used by management to evaluate the operating performance of
Princeton.  While EBITDA is not intended
to represent cash flow from operations as defined by generally accepted accounting
principles and should not be considered as an indicator of operating
performance or an alternative to cash flow as a measure of liquidity, it is
included herein to provide additional information with respect to Princetons
ability to meet future debt service, capital expenditure and working capital
requirements.  This calculation may
differ in method of calculation from similarly titled measures used by other
companies.  Princetons EBITDA is
calculated as follows:

Three
  Months Ended
  December 31,(in thousands)
  
  2003
  
  2002Net loss
  
  $
  (3,527
  )
  $
  (1,817
  )Less:Depreciation
  and amortization expense
  
  
  (1,642
  )
  
  (1,480
  )Interest
  (expense) income
  
  
  (10
  )
  
  10Income tax
  benefit
  
  
  250
  
  
  292EBITDA
  
  $
  (2,125
  )
  $
  (639
  )Discontinued Operations

In February
2003, the Company sold its preferred stock in Tanisys Technology, Inc. to ATE
Worldwide LLC, whose majority shareholder is a leader in the semiconductor
testing equipment market.  The Company
received approximately $0.2 million in exchange for its preferred stock, which
is reported as net income from disposal of discontinued operations during the
three months ended March 31, 2003.

Liquidity and Capital Resources

The
Companys cash balance decreased to $4.4 million at March 31, 2004, from $5.3
million at December 31, 2003.  The
decrease relates to the $0.5 million payment related to the termination of the
split dollar life insurance agreement with the Companys Chief Executive
Officer (CEO) and the cash portion of corporate expenses.  There were no capital expenditures during
the three months ended March 31, 2004. 
The Company anticipates minimal capital expenditures before
acquisitions, if any, during the remainder of 2004.

Effective
March 25, 2004, the Company entered into a definitive agreement, subject to
stockholder approval, to sell all of its holdings in Princeton eCom Corporation
(Princeton) to existing and new investors of Princeton for $10.0 million in
cash.  This agreement was executed in
conjunction with an equity financing that infused an additional $10.3 million
in Princeton for working capital purposes. 
In conjunction with this financing, the Companys ownership percentage
of the preferred stock, the outstanding stock and the fully diluted stock of
Princeton decreased to 26.5%, 28.7% and 22.9%, respectively.  The Company also lost its right to appoint a
member to Princetons Board of Directors. 
The sale of the Companys holdings in Princeton and the related proposed
liquidation of the Company described below require shareholder approval.  The Companys Board of Directors has fixed
the close of business on May 7, 2004, as the record date for determining
stockholders entitled to notice of and to vote at the special meeting of
stockholders on July 6, 2004.

In
addition, the Companys Board of Directors unanimously approved a plan of
liquidation of the Company, contingent upon the sale of the Companys holdings
in Princeton.  If and when Princeton
engages in additional equity financings, the Companys inability to participate
will result in further dilution of the Companys ownership in Princeton.  In addition, the Company has no ongoing
operations and therefore no additional cash to continue to support the current holdings
or invest in new businesses.  The
Company currently anticipates that if the proposed sale of the Companys
holdings in Princeton and the proposed liquidation of the Company are not
approved, as early as mid-to-late 2005, the Company will have to begin the
process of liquidating portions of its holdings in Princeton to raise cash
necessary to pay the corporate overhead expenses as well as expenses associated
with being a public company.  The Company filed a definitive proxy statement seeking shareholder approval
of the proposed sale of the Companys holdings in Princeton and the proposed
liquidation of the Company.

13

At July 6,
2004 (the date set for the special meeting of stockholders), the Companys cash
position is estimated to be approximately $4.1 million before payment of
transaction related fees.  In addition
to the Companys cash, the liquidation proceeds would include $10.0 million in
cash from the sale of the Companys holdings in Princeton.  The Company also currently holds 375,000
common shares in Sharps Compliance Corp. (Sharps) which would be sold for an
estimated $0.3 million.  The above items
represent approximately $14.4 million in estimated liquidation proceeds, before
related transaction expenses.

In conjunction
with the proposed liquidation, the Company anticipates utilizing cash through
completion of the liquidation, including but not limited to: (i) ongoing
operating costs of approximately $0.5 million for the period subsequent to
shareholder approval, (ii) payment of approximately $0.6 million to the
Companys CEO for his interest in the Companys holdings of Princeton, (iii)
legal, consulting and other transaction related fees estimated at $0.5 million,
(iv) severance related expenditures totaling approximately $2.6 million,
including payments of approximately $2.5 million to the Companys two executive
officers, (iii) other costs, including payments of accrued liabilities,
insurance, vendor arrangement and lease termination and other wind down costs
estimated to range from $0.5 million to $1.4 million.  In addition, the Company has initially determined that
approximately $0.5 million to $0.7 million should be reserved for any unknown
liabilities that may arise.  As a
result, the Company currently estimates that it should be able to distribute to
its shareholders, in one or more cash distributions over time, approximately
$8.1 million to $9.2 million, or $0.23 to $0.27 per share, in liquidation.  These amounts are estimates only and could
ultimately be higher or lower.

Lease Guarantees

In October
2000, the Company sold its primary operation companies to Platinum Holdings
(Platinum).  Under the terms of this
sale, all leases and corresponding obligations associated with the Transaction
Processing and Software divisions were assumed by Platinum.  Prior to the 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 $4.7 million at March
31, 2004.  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 $8.1 million at
March 31, 2004.  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 on the Companys
financial statements.  In conjunction
with the Transaction, Platinum indemnified the Company should the underlying
operating companies not perform under the terms of the office leases.

Item 3. Quantitative and Qualitative
Disclosure about Market Risk

The Company
is exposed to interest rate risk primarily through its portfolio of cash
equivalents and short-term marketable securities.  The Company does not believe that it has significant exposure to
market risks associated with changing interest rates as of March 31, 2004,
because the Companys intention is to maintain a liquid portfolio.  The Company does not use derivative
financial instruments in its operations.

14

Item 4. Controls and Procedures

Within the
ninety days prior to the date of 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 Rule 13a-14.  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.

PART II OTHER
INFORMATION

Item 1. Legal Proceedings

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

Item 6. Exhibits and Reports on Form 8-K

(a)
  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)(b)
  Current
  Reports on Form 8-K:Pursuant to
  General Instructions B.2. and B.6. of Form 8-K, to the extent that the Forms
  8-K listed below contain Item 9 and/or Item 12 disclosures, those Items of
  such Forms 8-K are not incorporated into this Form 10-Q or into any other
  form or report filed with the Commission into which this Form 10-Q would be
  incorporated by reference.Form 8-K,
  dated January 22, 2004, filed January 23, 2004, announcing an agreement
  between the Company and the former majority shareholders of Operator Service
  Company (OSC) to settle all claims related to the April 2000 acquisition of
  OSC by the Company.Form 8-K,
  dated and filed March 29, 2004, announcing a definitive agreement to sell the
  Companys holdings in Princeton eCom Corporation, the Companys Plan of
  Liquidation and Dissolution and the Companys results of operations for the
  fourth quarter and year ended December 31, 2003.Form 8-K,
  dated and filed May 12, 2004, announcing the Companys results of operations
  for the three months ended March 31, 2004.Items 2, 3, 4 and 5 are not applicable and
have been omitted.

15

SIGNATURE

Pursuant to
the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

NEW CENTURY
  EQUITY HOLDINGS CORP.(Registrant)Date: May
  13, 2004
  By:
  /s/ DAVID P. TUSADavid P. TusaExecutive Vice President, Chief FinancialOfficer and Corporate Secretary(Duly authorized and principal financial officer)16