UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION





Washington,
D.C. 20549








FORM
10-K








(Mark
One)


x       ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934


For the
Fiscal Year ended December 31, 2007





o        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
              incorporation
      or organization)
            (IRS
      Employer
              Identification
      Number)200
      Crescent Court, Suite 1400, Dallas, Texas
            75201(Address
      of principal executive offices)
            (Zip
      Code)





(214)
661-7488


(Registrant’s
telephone number, including area code)





Securities
Registered Pursuant to Section 12(b) of the Act:  None





Securities
Registered Pursuant to Section 12(g) of the Act:


Common
Stock, Par Value $0.01 Per Share


Series
A Junior Participating Preferred Stock Purchase Rights


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  o Yes x
No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  o Yes x
No





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
o No






1
 Table of Contents





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      Accelerated Filer  o
            
            Accelerated
      Filer  oNon-Accelerated
      Filer  x
            
            Smaller
      Reporting Company  o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  o Yes  x
No





The
aggregate market value of the registrant’s outstanding Common Stock held by
non-affiliates of the registrant computed by reference to the price at which the
Common Stock was last sold as of the last business day of the registrant’s most
recently completed second fiscal quarter was $8,970,807.





As of
March 28, 2008, the registrant had 53,883,872 shares of Common Stock
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE





Items 10,
11, 12, 13 and 14 of Part III of this Form 10-K incorporate by reference
portions of an amendment to this Form 10-K or portions of a definitive proxy
statement of the registrant for its 2008 Annual Meeting of Stockholders to be
held on a date to be determined, which in either case will be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year ended December 31, 2007.






2
 Table of Contents




NEWCENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES





Annual
Report on Form 10-K





For
the Year Ended December 31, 2007




PAGEPART
      IItem 1.
              Business
              4Item 1A.
              Risk Factors
              7Item 1B.
              Unresolved Staff Comments
              10Item 2.
              Properties
              10Item 3.
              Legal Proceedings
              11Item 4.
              Submission of Matters to a Vote of Security
      Holders
              12PART
      IIItem 5.
              Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases
      of Equity Securities
              12Item 6.
              Selected Financial Data
              14Item 7.
              Management’s Discussion and Analysis of Financial Condition
      and Results
      of Operations
              15Item 7A.
              Quantitative and Qualitative Disclosures About Market
      Risk
              19Item 8.
              Financial Statements and Supplementary
    Data
              20Item 9.
              Changes in and Disagreements with Accountants on Accounting
      and Financial
      Disclosure
              39Item 9A.
              Controls and Procedures
              39Item 9B.
              Other Information
              40PART
      IIIItem 10.
              Directors, Executive Officers and Corporate
      Governance
              41Item 11.
              Executive Compensation
              41Item 12.
              Security Ownership of Certain Beneficial Owners and
      Management and Related
      Stockholder Matters
              41Item 13.
              Certain Relationships and Related Transactions, and
      Director Independence
              41Item 14.
              Principal Accountant Fees and Services
              41PART
      IVItem 15.
              Exhibits and Financial Statement
    Schedules
              41Signatures
              43






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PART
I





ITEM1.  BUSINESS





This Annual Report on Form 10-K
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, one-time events and
other factors described herein and in other filings made by the Company with the
Securities and Exchange Commission (“SEC”).  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.





Introduction





New
Century Equity Holdings Corp. (“NCEH” or the “Company”) 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”).  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 interest in
Ascendant currently represents the Company’s sole operating
business.





Historical
Overview





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.






4
 Table of Contents





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 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
interest in Sharps, the Company no longer holds any investments made by former
management and which reflected former management’s strategy of investing in
high-growth companies.





Derivative
Lawsuit





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 was distributed to stockholders of record as
of July 28, 2006, with a payment date of August 11, 2006.  The portion
of the Settlement Fund distributed to stockholders pursuant to the Settlement
was $2,270,017 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 would not be entitled to any distribution from
the Settlement Fund.  The total Settlement proceeds of $3,200,000 were
funded by the Company’s insurance carrier and by Parris H. Holmes, Jr., the
Company’s former Chief Executive Officer, who contributed
$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.  Therefore, the Company  recognized a loss of $600,000
related to the Lawsuit for the year ended December 31, 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) also agreed to certain mutual
releases.





The
Settlement provided that, if the Company had not acquired a business that
generated revenues by March 1, 2007, the plaintiff maintained the right to
pursue a claim to liquidate the Company. This custodian claim was one of several
claims asserted in the Lawsuit.  Even if such a claim is elected to be
pursued, there is no assurance that it will be successful.  In
addition, the Company believes that it has preserved its right to assert that
the Ascendant investment meets the foregoing requirement to acquire a
business.





In
connection with the resolution of the Lawsuit, the Company has ceased funding of
legal and professional fees of the current and former director
defendants.  The funding of legal and professional fees was made
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.  During October 2007, the Company and the insurance
carrier agreed to settle all claims for reimbursement of legal and professional
fees associated with the Lawsuit for $240,000.






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 Table of Contents





Alternative
Asset Management Operations





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
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.  On November 5, 2007, John Murray,
Chief Financial Officer of the Company, was appointed to the Investment Advisory
Committee of Ascendant to serve in the place of the Company’s former
CEO.  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.  On April 5, 2006, the
Company elected not to make the April installment payment and subsequently
determined not to make the installment payment due July 5, 2006.  The
Company believed that it was not required to make the payments because Ascendant
did not satisfy all of the conditions in the Ascendant Agreement.





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 $37,500,000 and $27,100,000 as of
December 31, 2007 and December 31, 2006, respectively.  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.  Ascendant failed to make the required revenue sharing
payments for the quarters ended June 30, 2006, September 30, 2006 and December
31, 2006 and for the year ended December 31, 2007.  Under the terms of
the Ascendant Agreement, upon notice of an uncured material breach, Ascendant is
required to fully refund all amounts paid by the Company, and the Company’s
revenue interest remains outstanding.





The
Company has not recorded any revenue or received any revenue sharing payments
for the quarters ended September 30, 2006 and December 31, 2006 and for the year
ended December 31, 2007.  According to the Ascendant Agreement, if
Ascendant acquires the revenue interest from the Company, Ascendant must pay the
Company a return on the capital that it invested.  Pursuant to the
Ascendant Agreement, the required return on the Company’s invested capital will
not be impacted by any revenue sharing payments made or not made by
Ascendant.





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, among
other things, 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 nominal consideration.  The Principals Agreement contains certain
noncompete and nonsolicitation obligations of the partners of Ascendant that
apply during their employment and the twelve month period following the
termination thereof.






6
 Table of Contents





Since the
Ascendant revenue  interest meets the indefinite life criteria
outlined in SFAS No. 142,  "Goodwill andOther  Intangible  Assets"  ("SFAS  142"),
the  Company  does notamortize
this  intangible  asset,  but
instead  reviews this asset quarterly forimpairment.  Each
reporting period, the Company assesses whether events orcircumstances have
occurred which indicate that the indefinite life criteria areno longer met. If the
indefinite life criteria are no longer met, the Companyassesses whether the
carrying value of the asset exceeds its fair value, and animpairment loss is
recorded in an amount equal to any such excess.





The
Company assesses whether the entity in which the acquired revenueinterest exists meets
the indefinite life criteria based on a number of factorsincluding: the
historical and potential future operating  performance; thehistorical and potential
future rates of attrition among existing clients; thestability and longevity
of existing client relationships; the recent, as well aslong-term, investment
performance; the characteristics of the entities’ productsand investment styles;
the stability and depth of the management  team and thehistory and perceived
franchise or brand value.





Employees





As of
December 31, 2007, the Company had one employee.  The Company’s
employee is not represented by a union.  The Company believes that its
employee relations are good.





Item1A.RISK
FACTORS





The
following paragraphs discuss certain factors that may affect the Company’s
business, financial condition and operating results.  For the purposes
of the following paragraphs, unless the context otherwise requires, the terms
“we”, “us” and “our” refer to NCEH. You should consider carefully the risks and
uncertainties described below and the other information in this
report.  The risks set forth below are not the only ones we
face.  Additional risks and uncertainties that we are not aware of or
that we currently deem immaterial also may become important or impair our
business.  If any of the following risks actually occur, our business,
financial condition and results could be materially adversely affected, the
trading price of our Common Stock could decline and the likelihood of there
being any potential return to stockholders would diminish.





Our
results of operations could be harmed as a result of certain issues relating to
the settlement of the Davis litigation.





As
discussed in Item 3 “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, we announced
that we 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
Settlement provides that, if the Company has not acquired a business that
generates revenues by March 1, 2007, the plaintiff maintains the right to pursue
a claim to liquidate the Company.  This custodian claim was one of
several claims asserted in the Lawsuit.  Even if such a claim is
elected to be pursued, there is no assurance that it will be
successful.  In addition, the Company believes that it has preserved
its right to assert that the Ascendant investment meets the foregoing
requirement to acquire a business.






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The
SEC or a court may take the position that the Company was previously in
violation of the Investment Company Act of 1940.





Among the
claims filed by Mr. Davis was 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 we do not believe that we have
violated the Investment Company Act in the past, or at present, there can be no
assurance that we have not, or are not, in violation of, the Investment Company
Act.  In the event the SEC or a court took the position that we were
an investment company, our 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 us during the period we were
deemed to be an unregistered investment company, among other
remedies.




We
may be unable to redeploy our assets successfully.




As part
of our strategy to limit operating losses and enable us  to redeploy
our assets and use our cash and short-term investment assets to enhance
stockholder value, we are pursuing a strategy of identifying suitable
acquisition candidates, merger partners or otherwise developing new business
operations.  We may not be successful in acquiring such a business or
in operating any business that we acquire, merge with or
develop.  Although we made an investment in Ascendant, we may not be
successful in investing in or acquiring other businesses.  Failure to
redeploy our assets successfully will prevent us from becoming
profitable.  Future cash expenditures are expected to consist of
funding corporate expenses, the cost associated with maintaining a public
company and expenses incurred in pursuing and operating new business activities,
during which time operating losses are likely to be generated.




Any
acquisitions that we attempt or complete could prove difficult to integrate or
require a substantial commitment of management time and other
resources.





Our
strategy of acquiring other businesses involves a number of unique risks
including: (i) completing due diligence successfully; (ii) exposure to
unforeseen liabilities of acquired companies; and (iii) increased risk of costly
and time-consuming litigation, including stockholder lawsuits.  We may
be unable to address these problems successfully.  Moreover, our
future operating results will depend to a significant degree on our ability to
integrate acquisitions (if any) successfully and manage operations while also
controlling our expenses.  We may be unable to select, manage or
absorb or integrate any future acquisitions successfully, particularly
acquisitions of large companies.  Any acquisition, even if effectively
integrated, may not benefit our stockholders.




The
success of the investment in Ascendant will be impacted by the growth of its
assets under management and the success of the performance of its underlying
funds, each of which may be impacted by the securities markets.




The
operations of Ascendant will be affected by many economic factors, including the
performance of the securities markets.  Declines in the securities
markets, in general, and the equity markets, in particular, would likely reduce
Ascendant’s assets under management and consequently reduce our
revenues.  In addition, any continuing decline in the equity markets,
failure of these markets to sustain their prior rates of growth, or continued
volatility in these markets could result in investors withdrawing from the
equity markets or decreasing their rate of investment, either of which would
likely adversely affect Ascendant which, in turn, could impair our revenue
interest.  In addition, our decision not to make additional
installment payments under the Ascendant Agreement, and thereby cease funding
Ascendant, could have a material impact on Ascendant’s operations if Ascendant
is unable to grow its assets under management in order to sustain itself and
could cause Ascendant to take one or more of several actions, including to seek
financial support from other sources and/or cease operations.






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We may be unable to realize the
benefits of our net operating loss ("NOL") and capital loss
carryforwards.




NOLs and
capital losses may be carried forward to offset federal and state taxable income
and capital gains, respectively, in future years and eliminate income taxes
otherwise payable on such taxable income and capital gains, subject to certain
adjustments.  Based on current federal corporate income tax rates, our
NOL and capital loss carryforwards, if fully utilized, could provide a benefit
to us of future tax savings. However, our ability to use these tax benefits in
future years will depend upon the amount of our otherwise taxable income and
capital gains.  If we do not have sufficient taxable income and
capital gains in future years to use the tax benefits before they expire, we
will lose the benefit of these NOL and capital loss carryforwards,
permanently.  Consequently, our ability to use the tax benefits
associated with our NOL and capital loss carryforwards will depend largely on
our success in identifying suitable merger partners and/or acquisition
candidates, and once identified, consummating a merger with and/or acquisition
of these candidates.





Additionally,
if we underwent an ownership change within the meaning of Sections 382 and 383
of the Internal Revenue Code, the NOL and capital loss carryforward limitations
would impose an annual limit on the amount of the taxable income and capital
gain that may be offset by our NOL and capital loss generated prior to the
ownership change.  If an ownership change were to occur, we may be
unable to use a significant portion of our NOL and capital loss carryforwards to
offset taxable income and capital gains.  In general, an ownership
change occurs when, as of any testing date, the aggregate of the increase in
percentage points of the total amount of a corporation's stock owned by
"5-percent shareholders" (within the meaning of Section 382 and 383 of the
Internal Revenue Code) whose percentage ownership of the stock has increased as
of such date over the lowest percentage of the stock owned by each such
"5-percent shareholder" at any time during the three-year period preceding such
date, is more than 50 percentage points.  In general, persons who own
5% or more of a corporation's stock are "5-percent shareholders," and all other
persons who own less than 5% of a corporation's stock are treated, together as a
single, public group "5-percent shareholder," regardless of whether they own an
aggregate of 5% of a corporation's stock.





The
amount of NOL and capital loss carryforwards that we have claimed have not been
audited or otherwise validated by the U.S. Internal Revenue
Service.  The IRS could challenge our calculation of the amount of our
NOL and capital loss or our determinations as to when a prior change in
ownership occurred and other provisions of the Internal Revenue Code may limit
our ability to carry forward our NOL and capital loss to offset taxable income
and capital gains in future years.  If the IRS was successful with
respect to any such challenge, the potential tax benefit of the NOL and capital
loss carryforwards to us could be substantially reduced.





Any
transfer restrictions implemented by the Company to preserve our NOL may not be
effective or may have some unintended negative effects.





The board
of directors previously adopted an amendment to our former Shareholders Rights
Plan (“Rights Plan”) which reduced the triggering of the Rights Plan from 15% of
the Common Stock to 5% of the Common Stock. During the year ended December 31,
2006, the board of directors replaced this Rights Plan with a new plan with the
same lowered 5% threshold. This 5% threshold was adopted to help preserve our
NOL and capital loss carryforwards.  There is no guarantee that the
new Rights Plan will prevent a stockholder from acquiring more than 5% of the
Common Stock.





Any
transfer restrictions will require any person attempting to acquire a
significant interest in the Company to seek the approval of our board of
directors.  This may have an "anti-takeover" effect because our board
of directors may be able to prevent any future takeover.  Similarly,
any limits on the amount of capital stock that a stockholder may own could have
the effect of making it more difficult for stockholders to replace current
management.  Additionally, because transfer restrictions will have the
effect of restricting a stockholder's ability to dispose of or acquire our
Common Stock, the liquidity and market value of our Common Stock might
suffer.






9
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Our
Common Stock is illiquid.





Our
Common Stock is currently quoted on the OTC Bulletin Board (“OTCBB”), and has
traded as low as $0.19 per share during 2007.  Since our Common Stock
was delisted from a national exchange and is trading at a price below $5.00 per
share, it is subject to certain other rules of the Securities Exchange Act of
1934, as amended.   Such rules require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
"penny stock".  "Penny stock" is defined as any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions.  Such rules require the delivery of a disclosure
schedule explaining the penny stock market and the risks associated with that
market before entering into any penny stock transaction.  Disclosure
is also required to be made about compensation payable to both the broker-dealer
and the registered representative and current quotations for the
securities.  The rules also impose various sales practice requirements
on broker-dealers who sell penny stocks to persons other than established
customers and accredited investors.  For these types of transactions,
the broker-dealer must make a special suitability determination for the
purchaser and must receive the purchaser's written consent to the transaction
prior to the sale. Finally, monthly statements are required to be sent
disclosing recent price information for the penny stocks.  The
additional burdens imposed upon broker-dealers by such requirements could
discourage broker-dealers from effecting transactions in our Common
Stock.  This could severely limit the market liquidity of our Common
Stock and the ability of a stockholder to sell the Common Stock.





Our
success is dependent on our key personnel whom we may not be able to retain, and
we may not be able to hire enough additional qualified personnel to meet our
growing needs.





Our
performance is substantially dependent on the services and on the performance of
our officers and directors.  Our performance also depends on our
ability to attract, hire, retain, and motivate our officers and key
employees.  The loss of the services of any of the executive officers
or other key employees could have a material adverse effect on our business,
prospects, financial condition, and results of operations.  We have
not entered into employment agreements with any of our key personnel and
currently have no "Key Man" life insurance policies.  Our future
success may also depend on our ability to identify, attract, hire, train,
retain, and motivate other highly skilled technical, managerial, marketing and
customer service personnel.  Competition for such personnel are
intense, and there can be no assurance that we will be able to successfully
attract, assimilate or retain sufficiently qualified personnel.  The
failure to attract and retain the necessary technical, managerial, marketing and
customer service personnel could have a material adverse effect on our
business.





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
December 31, 2007, our total assets were approximately $13,519,000 of which
approximately $803,000 were intangible assets relating to the revenue interest
in Ascendant.  We cannot be certain that we will ever realize the
value of such intangible assets.  If we were to record an impairment
charge for the intangible asset, our results of operations could be adversely
affected.





ITEM1B.
UNRESOLVED STAFF
COMMENTS





Not
applicable






10
 Table of Contents





ITEM2.  PROPERTIES





In
February 2004, the Company leased approximately 1,700 square feet of space at
10101 Reunion Place, Suite 970, San Antonio, Texas, which served as the
corporate headquarters from April 2004 until September 2004.  On
October 8, 2004, the Company entered into a sublease agreement to sublet the
office space located at 10101 Reunion Place, Suite 970, San Antonio,
Texas.  Under the terms of the original lease, the Company was
obligated to make monthly rental installments of approximately $3,000 through
January 31, 2007, the expiration of the lease.  The sublease agreement
provided for the subtenant to make monthly rental installments of approximately
$2,500 per month through January 31, 2007.  The Company’s corporate
headquarters are currently located at 200 Crescent Court, Suite 1400, Dallas,
Texas 75201, which are also the offices of Newcastle Capital Management, L.P.
(“NCM”).  NCM is the general partner of Newcastle.  The
Company occupies a portion of NCM’s space on a month-to-month basis at $2,500
per month, pursuant to a services agreement entered into between the parties on
October 1, 2006.





ITEM3.LEGAL
PROCEEDINGS





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.





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 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 a refund of legal and
professional fees of $125,000 during May 2006.  In connection with
this matter, the Company reversed accrued legal and professional fees of
approximately $38,000 during the quarter ended March 31, 2006.





In a
letter to the Company dated October 16, 2007, a lawyer representing Steven J.
Pully (the former CEO) alleged that the Company filed false and misleading
disclosure with the  Securities and Exchange Commission with respect
to the elimination of Mr. Pully’s compensation (see the Company’s Forms 8-K
filed on September 5, 2007 and October 17, 2007).  No specifics were
provided as to such allegations.  The Company believes such
allegations are unfounded and, if a claim is made, the Company intends to
vigorously defend itself.






11
 Table of Contents





ITEM4.  SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS





During
the fourth quarter of fiscal 2007, no matter was submitted by the Company to a
vote of its stockholders through the solicitation of proxies or
otherwise.





PART
II





ITEM5.  MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES





Market
Information





The
Company’s Common Stock, par value $0.01 per share, is currently quoted on the
OTCBB under the symbol “NCEH.OB”. The table below sets forth the high and low
bid prices for the Common Stock from January 1, 2006 through December 31,
2007.  These price quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions:





High
            
            
            LowYear
      Ended December 31, 2006:1st
      Quarter
            
            $
            0.23
            
            
            $
            0.152nd
      Quarter
            
            $
            0.25
            
            
            $
            0.193rd
      Quarter
            
            $
            0.26
            
            
            $
            0.184th
      Quarter
            
            $
            0.23
            
            
            $
            0.20Year
      Ended December 31, 2007:1st
      Quarter
            
            $
            0.31
            
            
            $
            0.222nd
      Quarter
            
            $
            0.29
            
            
            $
            0.223rd
      Quarter
            
            $
            0.26
            
            
            $
            0.214th
      Quarter
            
            $
            0.23
            
            
            $
            0.18





Stockholders





As of
March 28, 2008, there were 53,883,872 shares of Common Stock outstanding, held
by 500 holders of record as of December 31, 2007.  The last reported
sales price of the Common Stock was $0.16 per share on March 27,
2008.





Dividend
Policy





The
Company has never declared or paid any cash dividends on its Common
Stock.   Approximately $2,270,017 was distributed to certain
stockholders pursuant to the Settlement in August 2006.  On June 30,
2006, Newcastle elected to receive 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.  The Company may not pay dividends on its Common Stock
unless all declared and unpaid Preferred Dividends have been paid.  In
addition, whenever the Company shall declare or pay any dividend on its Common
Stock, the holders of Series A Preferred Stock are entitled to receive such
Common Stock dividends on a ratably as-converted basis.





Performance
Graph





The
Company’s Common Stock has been traded publicly since August 5,
1996.  Prior to such date, there was no established market for the
Common Stock.  Set forth below is a line graph comparing the yearly
percentage change in the cumulative total stockholder return on our Common Stock
to the cumulative return of the S&P 500 Stock Index, the Russell MicroCap
Index and the S&P Data Processing and Outsourced Services Index for the
period commencing on December 31, 2002 and ending December 31, 2007 (the
“Measuring Period”). The Company selected the S&P Data Processing and
Outsourced Services Index as a basis of comparison as it believes the issuers
comprising this index are in the same line of






12
 Table of Contents




business
as Princeton eCom Corporation (“Princeton”), the investment in which the Company
held an interest up until June 2004. The graph assumes that the value of the
investment in the Company’s Common Stock and each index was $100 on December 31,
2002. The yearly change in cumulative total return is measured by dividing (1)
the sum of (i) the cumulative amount of dividends for the Measuring Period,
assuming dividend reinvestment, and (ii) the change in share price between the
beginning and end of the Measuring Period, by (2) the share price at the
beginning of the Measuring Period.









12/02
            
            
            
            12/03
            
            
            
            12/04
            
            
            
            12/05
            
            
            
            12/06
            
            
            
            12/07New
      Century Equity Holdings
            
            100.00
            
            
            
            123.08
            
            
            
            115.38
            
            
            
            81.73
            
            
            
            98.25
            
            
            
            90.80S&P
      500 Index
            
            100.00
            
            
            
            128.68
            
            
            
            142.69
            
            
            
            149.70
            
            
            
            173.34
            
            
            
            182.87S&P
      Data Processing & Outsourced Services Index
            
            100.00
            
            
            
            117.04
            
            
            
            123.40
            
            
            
            130.20
            
            
            
            143.68
            
            
            
            146.72Russell
      MicroCap Index
            
            100.00
            
            
            
            166.36
            
            
            
            189.89
            
            
            
            194.76
            
            
            
            226.98
            
            
            
            208.82





The
Performance Graph is based on historical data and is not necessarily indicative
of future performance. The Performance Graph is not deemed to be “soliciting
material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or
to the liabilities of Section 18 of the Exchange Act, and the Performance Graph
shall not be deemed incorporated by reference into any prior or subsequent
filing by the Company under the Securities Act or the Exchange Act, except to
the extent that the Company specifically incorporates it by reference to such
filing.






13
 Table of Contents





ITEM6.  SELECTED FINANCIAL
DATA





The
following table presents selected financial and other data for the
Company.  The statement of operations data for the years ended
December 31, 2007, 2006, 2005, 2004 and 2003 and the balance sheet data as of
December 31, 2007, 2006, 2005, 2004 and 2003 presented below are derived from
the audited Consolidated Financial Statements of the Company.  The
data presented below for the years ended December 31, 2007, 2006 and 2005 should
be read in conjunction with the Consolidated Financial Statements and the notes
thereto, Management’s Discussion and Analysis of Financial Condition and Results
of Operations and the other financial information included in this
report.








Year
      Ending December 31,(in
      thousands, except per share data)
            
            2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Consolidated
      Statement of Operations Data:Operating
      revenues
            
            $
            -
            
            
            $
            69
            
            
            $
            33
            
            
            $
            -
            
            
            $
            -Gross
      profit
            
            
            -
            
            
            
            69
            
            
            
            33
            
            
            
            -
            
            
            
            -Operating
      loss
            
            
            (552
            )
            
            
            (573
            )
            
            
            (1,009
            )
            
            
            (4,854
            )
            
            
            (3,174
            )Net
      income (loss)
            
            
            55
            
            
            
            (591
            )
            
            
            (543
            )
            
            
            (1,903
            )
            
            
            (6,516
            )Preferred
      stock dividend
            
            
            -
            
            
            
            (100
            )
            
            
            (200
            )
            
            
            (107
            )
            
            
            -Net
      income (loss) applicable to common stockholders
            
            
            55
            
            
            
            (691
            )
            
            
            (743
            )
            
            
            (2,010
            )
            
            
            (6,516
            )Basic
      and diluted net loss per common share:Net
      income (loss)
            
            $
            0.00
            
            
            $
            (0.02
            )
            
            $
            (0.02
            )
            
            $
            (0.06
            )
            
            $
            (0.19
            )Dividends
      per common share
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Weighted
      average common shares outstanding
            
            
            53,884
            
            
            
            44,268
            
            
            
            34,653
            
            
            
            34,653
            
            
            
            34,379





December
      31,Consolidated
      Balance Sheet Data:Working
      capital
            
            $
            12,585
            
            
            $
            12,513
            
            
            $
            13,554
            
            
            $
            14,428
            
            
            $
            4,357Total
      assets
            
            
            13,519
            
            
            
            13,490
            
            
            
            14,578
            
            
            
            15,095
            
            
            
            13,036Long-term
      obligations and redeemable preferred stock
            
            
            -
            
            
            
            -
            
            
            
            2
            
            
            
            2
            
            
            
            -Additional
      paid-in capital
            
            
            75,357
            
            
            
            75,340
            
            
            
            75,450
            
            
            
            75,428
            
            
            
            70,476Accumulated
      deficit
            
            $
            (62,508
            )
            
            $
            (62,563
            )
            
            $
            (61,872
            )
            
            $
            (61,107
            )
            
            $
            (59,097
            )






14
 Table of Contents




ITEM7.  MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


The
following discussion should be read in conjunction with the Business section
discussion, the Consolidated Financial Statements and the Notes thereto and the
other financial information included elsewhere in this Report.




Continuing
Operations





Operating
Revenues





On
October 5, 2005, the Company entered into the Ascendant Agreement with Ascendant
to acquire an interest in the revenues generated by
Ascendant.  Pursuant to the Ascendant Agreement, the Company is
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.  On November 5, 2007, John Murray,
Chief Financial Officer of the Company, was appointed to the Investment Advisory
Committee of Ascendant to serve in the place of the Company’s former
CEO.  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.  On April 5, 2006, the
Company elected not to make the April installment payment and subsequently
determined not to make the installment payment due July 5, 2006.  The
Company believed that it was not required to make the payments because Ascendant
did not satisfy all of the conditions in the Ascendant Agreement.





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 $37,500,000 and $27,100,000 as of
December 31, 2007 and December 31, 2006, respectively.  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.  Ascendant failed to make the required revenue sharing
payments for the quarters ended June 30, 2006, September 30, 2006 and December
31, 2006 and for the year ended December 31, 2007. Under the terms of the
Ascendant Agreement, upon notice of an uncured material breach, Ascendant is
required to fully refund all amounts paid by the Company, and the Company’s
revenue interest remains outstanding.





The
Company has not recorded any revenue or received any revenue sharing payments
for the quarters ended September 30, 2006 and December 31, 2006 and for the year
ended December 31, 2007.  According to the Ascendant Agreement, if
Ascendant acquires the revenue interest from the Company, Ascendant must pay the
Company a return on the capital that it invested.  Pursuant to the
Ascendant Agreement, the required return on the Company’s invested capital will
not be impacted by any revenue sharing payments made or not made by
Ascendant.






15
 Table of Contents





General
and Administrative Expenses





General
and administrative (“G&A”) expenses are comprised of all costs incurred in
direct support of the business operations of the Company.  During the
year ended December 31, 2007, G&A expenses totaled $552,000 compared to
$642,000 during the year ended December 31, 2006 and $1,035,000 during the year
ended December 31, 2005. The decrease in G&A for the year ended December 31,
2007, when compared to the year ended December 31, 2006, is primarily
attributable to a decrease in legal and professional fees and officer
compensation expense.  The decrease in G&A for the year ended
December 31, 2006, when compared to the year ended December 31, 2005, is
primarily attributable to the decrease in legal and professional fees and
directors & officers liability insurance expense.





Depreciation
and Amortization





Depreciation
and amortization expense is incurred with respect to certain assets, including
computer hardware, software, office equipment, furniture, goodwill and other
intangibles.  During the years ended December 31, 2007 and December
31, 2006, depreciation and amortization expense totaled $0, compared to $7,000
during the year ended December 31, 2005.  The decrease in depreciation
and amortization from prior periods is principally the result of fixed asset
sales.  The Company made no fixed asset purchases during the year
ended December 31, 2007.





Interest
Income





Interest
income totaled $607,000 during the year ended December 31, 2007, compared to
$582,000 and $423,000 during the years ended December 31, 2006 and 2005,
respectively.  The increase in interest income for the year ended
December 31, 2007, as compared to the year ended December 31, 2006, was
attributable to higher average cash balances. The increase in interest income
for the year ended December 31, 2006, as compared to the year ended December 31,
2005, was attributable to increased yields available for cash
balances.





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 were funded by the Company’s insurance
carrier and by Parris H. Holmes, Jr., the Company’s former Chief Executive
Officer, who contributed $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 recognized a net loss
of $600,000 related to the Lawsuit for the year ended December 31,
2006.





Income
Taxes





As a
result of the operating losses incurred for the  years ended December
31, 2006 and 2005 and the utilization of prior year net operating losses to
offset income for the year ended December 31, 2007, no provision or benefit for
income taxes was recorded for the years ended December 31, 2007, 2006 and
2005.





Liquidity
and Capital Resources





The
Company’s cash balance increased to $12,679,000 at December 31, 2007, from
$12,319,000 at December 31, 2006.  The majority of the increase is
attributable to the collection of an insurance receivable related to the Davis
Lawsuit and interest income in excess of cash paid for G&A
expenses.






16
 Table of Contents





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 was $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.  On April 5, 2006, the
Company elected not to make the April installment payment and subsequently
determined not to make the installment payment due July 5, 2006.





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, including as
a result of Ascendant’s failure to make required revenue sharing payments for
the quarters ended June 30, 2006, September 30, 2006 and December 31, 2006 and
for the year ended December 31, 2007, and at this time the Company believes it
is not obligated to make the third and fourth installment payments to
Ascendant.





Under the
terms of the Ascendant Agreement, upon notice of an uncured material breach,
Ascendant is required to fully refund all amounts paid by the Company, and the
Company’s revenue interest remains outstanding.  The Company has not
recorded any revenue or received any revenue sharing payments for the quarters
ended September 30, 2006 and December 31, 2006 and for the year ended December
31, 2007.  According to the Ascendant Agreement, if Ascendant acquires
the revenue interest from the Company, Ascendant must pay the Company a return
on the capital that it invested.  Pursuant to the Ascendant Agreement,
the required return on the Company’s invested capital will not be impacted by
any revenue sharing payments made or not made by Ascendant.  The
Company  may
incur  additional  operating  losses through
fiscal 2008
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
expired in 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 $2,837,000 at December 31, 2007.  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 the remaining lease guarantee and, therefore,
no liability has been accrued in the Company’s financial
statements.





Off-Balance-Sheet
Arrangements





The Company guaranteed two operating
leases for office space for certain of its wholly-owned subsidiaries prior to
the Platinum Transaction (see Liquidity and Capital Resources-Lease Guarantees
above). One such lease expired in 2006.






17
 Table of Contents





Contractual
Obligations





The Company’s contractual obligations
are as follows (in thousands):





Payments due by periodContractual Obligations
            
            Total
            
            
            Less
      than
                1
      year
            
            
            1-3
      years
            
            
            3-5
      years
            
            
            More
      than
                5
      yearsLong-term
      debt obligations
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Capital
      lease obligations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Operating
      lease obligations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Purchase
      obligations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Other
      long-term liabilitiesreflected
      on balance sheetunder
      GAAP
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -




Seasonality





The
Company’s current operations are not significantly affected by
seasonality.





Effect
of Inflation





Inflation
has not been a material factor affecting the Company’s
business.  General operating expenses, such as salaries, employee
benefits, insurance and occupancy costs, are subject to normal inflationary
pressures.





New
Accounting Standards





In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB No.
115,” (“SFAS 159”). SFAS 159 allows a company to irrevocably elect fair value as
the initial and subsequent measurement attribute for certain financial assets
and financial liabilities on a contract-by-contract basis, with changes in fair
value recognized in earnings. SFAS 159 is effective for fiscal years beginning
after November 15, 2007 and will be applied prospectively. The Company believes
the adoption of this statement will not have a material impact on its
consolidated financial statements.





Effective
January 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,” or
(“FIN 48”), which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial
statements in accordance with SFAS No. 109,
 “Accounting for Income Taxes.”
FIN 48 prescribes  a recognition  threshold and 
measurement  attribute  for  the  financial 
statement  recognition  and measurement of a tax position taken or
expected to be taken in a tax return.  FIN 48 also provides guidance on
de-recognition, classification, interest and
penalties, accounting in interim periods,
disclosure and transition.  There  was  no 
change  to  the  net  amount  of  assets 
and  liabilities recognized in the statement of financial condition as a
result of our adoption of FIN 48. At January 1, 2007, we had no unrecognized tax
benefits.





In
September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements”, (“SFAS 157”), which establishes a
framework for reporting fair value and expands disclosures about fair value
measurements. SFAS 157 was effective for the Company on January 1, 2008, with
the exception that the applicability of SFAS 157’s fair value measurement
requirements to nonfinancial assets and liabilities that are not required or
permitted to be recognized or disclosed at fair value on a recurring basis has
been delayed by the FASB for one year. The Company does not believe that the
requirements of SFAS 157 which were effective for the Company on January 1, 2008
will have a material impact on the Company’s consolidated financial statements.
The Company is currently evaluating the impact of the SFAS 157 requirements
which will be effective for the Company on January 1, 2009 on the Company’s
results of operations and financial position.







18
 Table of Contents




In
December 2007, the FASB released Statement of Financial Accounting Standards No.
141(R), Business Combinations (revised 2007) (“SFAS 142(R)”), which changes many
well-established business combination accounting practices and significantly
affects how acquisition transactions are reflected in the financial statements.
Additionally, SFAS 141(R) will affect how companies negotiate and structure
transactions, model financial projections of acquisitions and communicate to
stakeholders. SFAS 141(R) must be applied prospectively to business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The Company is
currently evaluating the impact the adoption of this statement could have on its
financial condition, results of operations and cash flows.





In
December 2007, the FASB released Statement of Financial Accounting Standards No.
160, Noncontrolling Interests in Consolidated Financial Statements an amendment
of ARB No. 51 (“SFAS 160”), which establishes accounting and reporting standards
for the noncontrolling interests in a subsidiary and for the deconsolidation of
a subsidiary. SFAS 160 requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
noncontrolling interests and requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the noncontrolling interest. Previously, net
income attributable to the noncontrolling interest was reported as an expense or
other deduction in arriving at consolidated net income. SFAS 160 is effective
for financial statements issued for fiscal years beginning after December 15,
2008. The Company believes the adoption of this statement will not have a
material impact on its consolidated financial statements.





Critical
Accounting Policies





Impairment
of Investments





The
Company evaluates its investments in affiliates when events or changes in
circumstances, such as a significant economic slowdown, indicate that the
carrying value of the investments may not be recoverable.  Reviews are
performed to determine whether the carrying value is impaired and if the
comparison indicates that impairment exists, the investment is written down to
fair value.  Significant management judgment based on estimates is
required to determine whether and how much an investment is
impaired.





ITEM7A.  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK





The
Company is exposed to interest rate risk through its portfolio of cash
equivalents and short-term investments.  The Company does not believe
that it has significant exposure to market risks associated with changing
interest rates as of December 31, 2007, because the Company’s intention is to
maintain a liquid portfolio.  The Company has not used derivative
financial instruments in its operations.






19
 Table of Contents





ITEM8.  FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA





The
Consolidated Financial Statements of the Company and the related reports of the
Company’s independent registered public accounting firm thereon, are included in
this report at the page indicated.





PageReport
      of Independent Registered Public Accounting Firm
            21Consolidated
      Balance Sheets as of December 31, 2007 and 2006
            22Consolidated
      Statements of Operations for the Years Ended December 31, 2007, 2006 and
      2005
            23Consolidated
      Statements of Stockholders’ Equity for the Years Ended December 31, 2007,
      2006 and 2005
            24Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and
      2005
            25Notes
      to Consolidated Financial Statements
            26









20
 Table of Contents





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


New
Century Equity Holdings Corp.





We have
audited the accompanying consolidated balance sheets of New Century Equity
Holdings Corp. (a Delaware corporation) and Subsidiaries as of December 31, 2007
and 2006, and the related consolidated statements of operations, stockholders’
equity and cash flows for the years ended December 31, 2007, 2006 and
2005.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (U.S.).  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of New Century
Equity Holdings Corp. and Subsidiaries as of December 31, 2007 and 2006, and the
consolidated results of their operations and their consolidated cash flows for
the years ended December 31, 2007, 2006 and 2005 in conformity with accounting
principles generally accepted in the United States of America.





/s/ BURTON McCUMBER & CORTEZ,
L.L.P.





Brownsville,
Texas


March 25,
2008






21
 Table of Contents





NEW
CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(In
thousands, except share data)











December
      31,2007
            
            
            2006ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            12,679
            
            
            $
            12,319Insurance
      receivable and other assets
            
            
            37
            
            
            
            368Total
      current assets
            
            
            12,716
            
            
            
            12,687Revenue
      interest
            
            
            803
            
            
            
            803Total
      assets
            
            $
            13,519
            
            
            $
            13,490LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            -
            
            
            $
            13Accrued
      liabilities
            
            
            131
            
            
            
            161Current
      and total liabilities
            
            
            131
            
            
            
            174Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $0.01 par value, 10,000,000 shares authorized; none
      outstanding
            
            
            -
            
            
            
            -Common
      stock, $0.01 par value, 75,000,000 shares authorized; 53,883,872 shares
      issued and outstanding
            
            
            539
            
            
            
            539Additional
      paid-in capital
            
            
            75,357
            
            
            
            75,340Accumulated
      deficit
            
            
            (62,508
            )
            
            
            (62,563
            )Total
      stockholders’ equity
            
            
            13,388
            
            
            
            13,316Total
      liabilities and stockholders’ equity
            
            $
            13,519
            
            
            $
            13,490




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






22
 Table of Contents




NEW
CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(In
thousands, except per share data)





Year
      Ended December 31,2007
            
            
            2006
            
            
            2005Operating
      revenues
            
            $
            -
            
            
            $
            69
            
            
            $
            33Operating
      expenses:General
      and administrative expenses
            
            
            552
            
            
            
            642
            
            
            
            1,035Depreciation
      and amortization expense
            
            
            -
            
            
            
            -
            
            
            
            7Operating
      loss
            
            
            (552
            )
            
            
            (573
            )
            
            
            (1,009
            )Other
      income (expense):Derivative
      settlement costs
            
            
            -
            
            
            
            (600
            )
            
            
            -Interest
      income
            
            
            607
            
            
            
            582
            
            
            
            423Other,
      net
            
            
            -
            
            
            
            -
            
            
            
            43Total
      other income (expense), net
            
            
            607
            
            
            
            (18
            )
            
            
            466Net
      Income (loss)
            
            
            55
            
            
            
            (591
            )
            
            
            (543
            )Preferred
      stock dividend
            
            
            -
            
            
            
            (100
            )
            
            
            (200
            )Net
      income (loss) applicable to common stockholders
            
            $
            55
            
            
            $
            (691
            )
            
            $
            (743
            )Basic
      and diluted net income (loss) per common share:Net income (loss)
            
            $
            .00
            
            
            $
            (.02
            )
            
            $
            (.02
            )Weighted
      average common shares outstanding
            
            
            53,884
            
            
            
            44,268
            
            
            
            34,653








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






23
 Table of Contents




NEW
CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY





For
the Years Ended December 31, 2007, 2006 and 2005


(In
thousands)





Common
      Stock
            
            
            Additional
              Paid-in
            
            
            Accumulated
            
            
            Preferred
      Stock
            
            
            Accumulated
      Other ComprehensiveShares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            Shares
            
            
            Amount
            
            
            Income
            
            
            TotalBalances
      at December 31, 2004
            
            
            34,653
            
            
            $
            347
            
            
            $
            75,428
            
            
            $
            (61,107
            )
            
            
            4,808
            
            
            $
            48
            
            
            $
            49
            
            
            $
            14,765Comprehensive
      income (loss):Reclassification
      of unrealized gain on investment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (49
            )
            
            
            (49
            )Net
      loss applicable to common stockholders
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (743
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (743
            )Comprehensive
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (743
            )
            
            
            -
            
            
            
            -
            
            
            
            (49
            )
            
            
            (792
            )Balances
      at December 31, 2005
            
            
            34,653
            
            
            
            347
            
            
            
            75,428
            
            
            
            (61,850
            )
            
            
            4,808
            
            
            
            48
            
            
            
            -
            
            
            
            13,973SAB
      108 cumulative effect adjustment (note 14)
            
            
            -
            
            
            
            -
            
            
            
            22
            
            
            
            (22
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      January 1, 2006, as adjusted
            
            
            34,653
            
            
            
            347
            
            
            
            75,450
            
            
            
            (61,872
            )
            
            
            4,808
            
            
            
            48
            
            
            
            -
            
            
            
            13,973Fair
      market value of services
            
            
            -
            
            
            
            -
            
            
            
            17
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            17Share
      based payment expense
            
            
            -
            
            
            
            -
            
            
            
            17
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            17Comprehensive
      income (loss):Conversion
      of preferred stock
            
            
            19,231
            
            
            
            192
            
            
            
            (144
            )
            
            
            -
            
            
            
            (4,808
            )
            
            
            (48
            )
            
            
            -
            
            
            
            -Net
      loss applicable to common stockholders
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (691
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (691
            )Comprehensive
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (691
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (691
            )Balances
      at December 31, 2006
            
            
            53,884
            
            
            
            539
            
            
            
            75,340
            
            
            
            (62.563
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            13,316Share
      based payment expense
            
            
            -
            
            
            
            -
            
            
            
            17
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            17Comprehensive
      income (loss):Net
      Income applicable to common stockholders
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            55
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            55Comprehensive
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            55
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            55Balances
      at December 31, 2007
            
            
            53,884
            
            
            $
            539
            
            
            $
            75,357
            
            
            $
            (62,508
            )
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            13,388















24
 Table of Contents






NEW
CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(In
thousands)





Year
      Ended December 31,2007
            
            
            2006
            
            
            2005Cash
      flows from operating activities:Net
      income (loss)
            
            $
            55
            
            
            
            (591
            )
            
            $
            (543
            )Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Depreciation
      and amortization expense
            
            
            -
            
            
            
            -
            
            
            
            7Loss
      on sale of Treasury bill
            
            
            -
            
            
            
            -
            
            
            
            14Gain
      on sale of Sharps Compliance Corp. common stock
            
            
            -
            
            
            
            -
            
            
            
            (57
            )Share
      based payment expense
            
            
            17
            
            
            
            17
            
            
            
            -Charge
      off of revenue interest receivable
            
            
            -
            
            
            
            34
            
            
            
            -Fair
      market value of services
            
            
            -
            
            
            
            17Accretion
      of discount on securities
            
            
            -
            
            
            
            -
            
            
            
            (185
            )Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
            
            
            -
            
            
            
            (1
            )
            
            
            (33
            )(Increase)
      decrease in insurance receivable and other assets
            
            
            331
            
            
            
            1,275
            
            
            
            (1,492
            )Increase
      (decrease) in accounts payable
            
            
            (13
            )
            
            
            (40
            )
            
            
            8Increase
      (decrease) in accrued liabilities
            
            
            (28
            )
            
            
            (284
            )
            
            
            267Net
      cash provided by (used in) operating activities
            
            
            362
            
            
            
            427
            
            
            
            (2,014
            )Cash
      flows from investing activities:Purchases
      of property and equipment
            
            
            (2
            )
            
            
            -
            
            
            
            -Proceeds
      from sale of short-term investments
            
            
            -
            
            
            
            -
            
            
            
            27,186Purchase
      of short-term investments
            
            
            -
            
            
            
            -
            
            
            
            (13,786
            )Purchase
      of revenue interest
            
            
            -
            
            
            
            (388
            )
            
            
            (415
            )Net
      cash provided by (used in) investing activities
            
            
            (2
            )
            
            
            (388
            )
            
            
            12,985Cash
      flows from financing activities:Cash
      dividends paid on preferred stock
            
            
            -
            
            
            
            (207
            )
            
            
            (200
            )Net
      cash used in financing activities
            
            
            -
            
            
            
            (207
            )
            
            
            (200
            )Net
      increase (decrease) in cash and cash equivalents
            
            
            360
            
            
            
            (168
            )
            
            
            10,771Cash
      and cash equivalents, beginning of period
            
            
            12,319
            
            
            
            12,487
            
            
            
            1,716Cash
      and cash equivalents, end of period
            
            $
            12,679
            
            
            $
            12,319
            
            
            $
            12,487Supplemental
      disclosure of non-cash transactions:Increase
      in fair market value of investments
            
            $
            
            
            
            $
            -
            
            
            $
            -Preferred
      stock dividend
            
            $
            
            
            
            $
            107
            
            
            $
            -





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






25
 Table of Contents




NEW
CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2007, 2006 and 2005





Note
1.  Business Activity





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”).  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 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.





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 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
interest in Sharps, the Company no longer holds any investments made by former
management and which reflected former management’s strategy of investing in
high-growth companies.





Derivative
Lawsuit





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 was distributed to stockholders of record as
of July 28, 2006, with a payment date of August 11, 2006.  The portion
of the Settlement Fund distributed to stockholders pursuant to the Settlement
was






26
 Table of Contents




$2,270,017
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 would not be entitled to any distribution from the Settlement
Fund.  The total Settlement proceeds of $3,200,000 were funded by the
Company’s insurance carrier and by Parris H. Holmes, Jr., the Company’s former
Chief Executive Officer, who contributed $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.  Therefore, the
Company  recognized a loss of $600,000 related to the Lawsuit for the
year ended December 31, 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) also agreed to certain mutual releases.





The
Settlement provided that, if the Company had not acquired a business that
generated revenues by March 1, 2007, the plaintiff maintained the right to
pursue a claim to liquidate the Company. This custodian claim was one of several
claims asserted in the Lawsuit.  Even if such a claim is elected to be
pursued, there is no assurance that it will be successful.  In
addition, the Company believes that it has preserved its right to assert that
the Ascendant investment meets the foregoing requirement to acquire a
business.





In
connection with the resolution of the Lawsuit, the Company has ceased funding of
legal and professional fees of the current and former director
defendants.  The funding of legal and professional fees was made
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.  During October 2007, the Company and the insurance
carrier agreed to settle all claims for reimbursement of legal and professional
fees associated with the Lawsuit for $240,000.





Note 2.  Summary of Significant Accounting
Policies





Principles
of Consolidation and Basis of Presentation





The
accompanying consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries and subsidiaries in which the Company is
deemed to have control for accounting purposes.  The Company’s
investment in Sharps was accounted for in accordance with Statement of Financial
Accountings Standards No. 115 (SFAS No. 115), “Accounting for Certain
Investments in Debt and Equity Securities”.  All significant
inter-company accounts and transactions have been eliminated in
consolidation.





Estimates
in the Financial Statements





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






27
 Table of Contents





Cash
and Cash Equivalents





The
Company considers all highly liquid investments with original maturities of
three months or less to be cash and cash equivalents.





Revenue
Recognition





The
Company's consolidated revenues represent revenue from the revenue interest in
Ascendant. Such revenues are recognized monthly as services are rendered and are
based upon a percentage of the market value of assets under management (see Note
3).





Accounts
Receivable and Allowance for Doubtful Accounts





Accounts
receivable are accounted for at fair value, do not bear interest and are
short-term in nature. The Company maintains an allowance for doubtful accounts
for estimated losses resulting from the inability to collect on accounts
receivable.  Based on management's assessment, the Company provides
for estimated uncollectible amounts through a charge to earnings and a credit to
the valuation allowance.  Balances that remain outstanding after the
Company has used reasonable collection efforts are written off through a charge
to the valuation allowance and a credit to accounts receivable.  The
Company generally does not require collateral.





Financial
Instruments





SFAS No.
107, “Disclosures About Fair Value of Financial Instruments”, requires the
disclosure of fair value information about financial instruments, whether or not
recognized on the balance sheet, for which it is practicable to estimate the
value.  SFAS No. 107 excludes certain financial instruments from its
disclosure requirements.  Accordingly, the aggregate fair market value
amounts are not intended to represent the underlying value of the
Company.  The carrying amounts of cash and cash equivalents, current
receivables and current liabilities approximate fair value because of the nature
of these instruments.





Revenue
Interest




The
Company has determined that the revenue interest that it acquired in 2005 meets
the indefinite life criteria outlined in SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142").  Accordingly, the Company does
not amortize this intangible asset, but instead reviews this asset quarterly for
impairment.  Each reporting period, the Company assesses whether
events or circumstances have occurred which indicate that the indefinite life
criteria are no longer met.  If the indefinite life criteria are no
longer met, the Company assesses whether the carrying value of the asset exceeds
its fair value, and an impairment loss is recorded in an amount equal to any
such excess.




The
Company assesses whether the entity in which the acquired revenue interest
exists meets the indefinite life criteria based on a number of factors
including: the historical and potential future operating performance; the
historical and potential future rates of attrition among existing clients; the
stability and longevity of existing client relationships; the recent, as well as
long-term, investment performance; the characteristics of the firm's products
and investment styles; the stability and depth of the management team and the
history and perceived franchise or brand value.




28
 Table of Contents




Investments
in Equity Securities





The
Company follows the standards of SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities,” (“SFAS 115”) for those investments
in which the securities are publicly traded. For those investments in which the
securities are privately held, the Company follows the guidance of Accounting
Principles Board (“APB”) Opinion No. 18, “The Equity Method of Accounting for
Investments in Common Stock”.  The Company accounted for its
investment in Sharps under SFAS  115, as Sharps’ common stock is
publicly traded.  SFAS 115 establishes standards for accounting and
reporting for investments in equity securities that have readily determinable
fair values and for all investments in debt securities. Unrealized holdings
gains and losses, other than those considered permanent, related to the
Company’s investment in Sharps are excluded from net loss and reported as a
separate component of other comprehensive income.





Short-Term
Investments





The
Company invests its excess cash in money market accounts, U.S. Treasury bills,
and short-term debt securities.  Investments with an original maturity
at the time of purchase over three months but less than a year are classified as
short-term investments.  Investments with an original maturity at the
time of purchase of greater than one year are classified as long-term
investments. Management determines the appropriate classification of investments
at the time of purchase and reevaluates such designations at the end of each
period.




Concentrations
of Credit Risk




Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash investments. The Company maintains
cash and cash equivalents and short-term investments.Cash deposits at a financial institution may
from time to time exceed Federal Deposit Insurance Corporation insurance
limits.





Treasury
Stock





In 2000,
the Company’s board of directors approved the adoption of a common stock
repurchase program.  Under the terms of the program, the Company may
purchase an aggregate $25,000,000 of the Company’s Common Stock in the open
market or in privately negotiated transactions.  The Company records
repurchased Common Stock at cost (see Note 8).





Income
Taxes





Income
taxes are accounted for under the asset and liability
method.  Deferred income tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards.  Deferred income tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  The effect on deferred income tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the
enactment date.  The Company continually assesses the need for a tax
valuation allowance based on all available information.  As of
December 31, 2007, and as a result of this assessment, the Company does not
believe that its deferred tax assets are more likely than not to be
realized.  In addition, the Company continuously evaluates its tax
contingencies in accordance with Financial Accounting Standards Board (FASB)
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109,” (“FIN 48”).






29
 Table of Contents





Reclassifications





Certain
amounts have been reclassified in the prior year to conform to the current year
presentation.





Net
Loss per Common Share





SFAS No.
128, “Earnings Per Share”, establishes standards for computing and presenting
earnings per share (“EPS”) for entities with publicly-held common stock or
potential common stock.  As the Company had a net loss from continuing
operations for the years ended December 31, 2006 and 2005 diluted EPS equals
basic EPS, as potentially dilutive common stock equivalents are anti-dilutive in
loss periods.





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.





The fair
value of the stock option grants included in the Company’s statement of
operations totaled approximately $17,000 for the years ended December 31, 2007
and 2006.  The expense relates to the unvested portion of previously
granted awards that remain outstanding at the date of adoption.






30
 Table of Contents




Previously,
the Company had applied the provisions of Accounting Principles Board Opinion
No. 25, “Accounting for Stock Issued to Employees” 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
year ended December 31, 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 123 and SFAS 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.





Year
      Ended December 31,(in
      thousands, except per share data)
            
            2005Net
      loss, as reported
            
            $
            (743
            )Less:  Total
      stock based employee compensation expense determined under the fair value
      based method for all awards, net of related tax effects
            
            (32)Net
      loss, pro forma
            
            $
            (775
            )Basic
      and diluted net loss per common share:Net
      loss, as reported
            
            $
            (0.02
            )Net
      loss, pro forma
            
            $
            (0.02
            )





The fair
value for these options was estimated at the respective grant dates using the
Black-Scholes option-pricing model with the following weighted average
assumptions: expected volatility of  99.2%;  no dividend
yield; expected life of 2.5 years and a risk-free interest rate of
4.75%.





Note
3. 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
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.  On November 5, 2007, John Murray,
Chief Financial Officer of the Company, was appointed to the Investment Advisory
Committee of Ascendant to serve in the place of the Company’s former
CEO.  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.  On April 5, 2006, the
Company elected not to make the April installment payment and subsequently
determined not to make the installment payment due July 5, 2006.  The
Company believed that it was not required to make the payments because Ascendant
did not satisfy all of the conditions in the Ascendant Agreement.





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 $37,500,000 and $27,100,000 as of
December 31, 2007 and December 31, 2006, respectively.  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.  Ascendant failed to make the required revenue sharing
payments for the quarters ended June 30, 2006, September 30, 2006 and December
31, 2006 and for the year ended December 31, 2007.  Under the terms of
the Ascendant Agreement, upon notice of an uncured material breach, Ascendant is
required to fully refund all amounts paid by the Company, and the Company’s
revenue interest remains outstanding.






31
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The
Company has not recorded any revenue or received any revenue sharing payments
for the quarters ended September 30, 2006 and December 31, 2006 and for the year
ended December 31, 2007.  According to the Ascendant Agreement, if
Ascendant acquires the revenue interest from the Company, Ascendant must pay the
Company a return on the capital that it invested.  Pursuant to the
Ascendant Agreement, the required return on the Company’s invested capital will
not be impacted by any revenue sharing payments made or not made by
Ascendant.





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, among
other things, 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 nominal consideration.  The Principals Agreement contains certain
noncompete and nonsolicitation obligations of the partners of Ascendant that
apply during their employment and the twelve month period following the
termination thereof.





Since the
Ascendant revenue  interest meets the indefinite life criteria
outlined in SFAS 142,  , the  Company  does
notamortize
this  intangible  asset,  but
instead  reviews this asset quarterly forimpairment.  Each
reporting period, the Company assesses whether events orcircumstances have
occurred which indicate that the indefinite life criteria areno longer met. If the
indefinite life criteria are no longer met, the Companyassesses whether the
carrying value of the asset exceeds its fair value, and animpairment loss is
recorded in an amount equal to any such excess.





The
Company assesses whether the entity in which the acquired revenueinterest exists meets
the indefinite life criteria based on a number of factorsincluding: the
historical and potential future operating  performance; thehistorical and potential
future rates of attrition among existing clients; thestability and longevity
of existing client relationships; the recent, as well aslong-term, investment
performance; the characteristics of the entities’ productsand investment styles;
the stability and depth of the management  team and thehistory and perceived
franchise or brand value.





Note
4.  Acquisitions and Investments





Sharps





In
October 2001, the Company participated in a private placement financing with
publicly traded Sharps. Sharps, a Houston, Texas-based company provides
medical-related waste services to the healthcare, retail, residential and
hospitality markets.  The Company purchased 700,000 shares of Sharps’
common stock for $770,000.  In January 2003, the Company purchased an
additional 200,000 shares of Sharps’ common stock for $200,000.





In
January 2004, the Company entered into an agreement with the former majority
stockholders of Operator Service Company (“OSC”) to settle all claims related to
the April 2000 acquisition of OSC by the Company.  Under the terms of
the agreement, the Company transferred to the former OSC majority stockholders
525,000 shares of the common stock of Sharps owned by the Company, valued at
approximately $389,000.  During the period from April 1, 2005 through
May 5, 2005, the Company sold its equity interest in Sharps for approximately
$334,000, resulting in a $57,000 gain for financial reporting
purposes.






32
 Table of Contents




Note 5.  Accrued
Liabilities





Accrued
      liabilities are comprised of the following:December
      31,(in
      thousands)
            
            2007
            
            
            2006Accrued
      public company cost
            
            $
            83
            
            
            $
            108Accrued
      legal
            
            
            8
            
            
            
            13Other
            
            
            40
            
            
            
            40Total
      accrued liabilities
            
            $
            131
            
            
            $
            161





Note
6.  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
expired in 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 $2,837,000 at December 31, 2007.  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 the remaining lease guarantee 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.





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 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.






33
 Table of Contents





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 a refund of legal and
professional fees of $125,000 during May 2006.  In connection with
this matter, the Company reversed accrued legal and professional fees of
approximately $38,000 during the quarter ended March 31, 2006.





In a
letter to the Company dated October 16, 2007, a lawyer representing Steven J.
Pully (the former CEO) alleged that the Company filed false and misleading
disclosure with the  Securities and Exchange Commission with respect
to the elimination of Mr. Pully’s compensation (see the Company’s Forms 8-K
filed on September 5, 2007 and October 17, 2007).  No specifics were
provided as to such allegations.  The Company believes such
allegations are unfounded and, if a claim is made, the Company intends to
vigorously defend itself.





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.





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 the Company’s 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, other
than approximately $2,270,017 distributed to the stockholders pursuant to the
Settlement in August 2006 (See Note 1).  On June 30, 2006, Newcastle
elected to receive 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.







34
 Table of Contents





Note
8.  Treasury Stock





In 2000,
the Company’s board of directors approved the adoption of a common stock
repurchase program.  Under the terms of the program, the Company may
purchase an aggregate $25,000,000 of the Company’s Common Stock in the open
market or in privately negotiated transactions.  Through December 31,
2007, the Company had purchased an aggregate $20,100,000, or 8,300,000 shares,
of treasury stock under this program.  The Company made no treasury
stock purchases during the years ended December 31, 2005, December 31, 2006 and
December 31, 2007, and has no plans to make any future treasury stock
purchases.





Note
9.  Stock Options and Stock Purchase Warrants





The
Company has adopted the NCEH 1996 Employee Comprehensive Stock Plan
(“Comprehensive Plan”) and the NCEH 1996 Non-Employee Director Plan (“Director
Plan”) under which officers and employees, and non-employee directors,
respectively, of the Company and its affiliates are eligible to receive stock
option grants.  Employees of the Company are also eligible to receive
restricted stock grants under the Comprehensive Plan.  The Company has
reserved 14,500,000 and 1,300,000 shares of its Common Stock for issuance
pursuant to the Comprehensive Plan and the Director Plan,
respectively.  Under each plan, options vest and expire pursuant to
individual award agreements; however, the expiration date of unexercised options
may not exceed ten years from the date of grant under the Comprehensive Plan and
seven years from the date of grant under the Director Plan.





Option
activity for the years ended December 31, 2007, 2006 and 2005, is summarized as
follows:





Number
              of Shares
            
            
            Weighted
      Average
              Exercise PriceOutstanding,
      December 31, 2004
            
            
            2,769,604
            
            
            $
            2.90Granted
            
            
            90,000
            
            
            $
            0.24Canceled
            
            
            (643,406
            )
            
            $
            2.68Outstanding,
      December 31, 2005
            
            
            2,216,198
            
            
            $
            2.86Granted
            
            
            -
            
            
            
            -Canceled
            
            
            (1,241,198
            )
            
            $
            1.73Outstanding,
      December 31, 2006
            
            
            975,000
            
            
            $
            4.30Granted
            
            
            -
            
            
            
            -Canceled
            
            
            (735,000
            )
            
            $
            5.61Outstanding,
      December 31, 2007
            
            
            240,000
            
            
            $
            0.27





At
December 31, 2007, 2006 and 2005, stock options to purchase an aggregate of
240,000, 908,334 and 2,082,865, shares were exercisable and had weighted average
exercise prices of  $0.27,  $4.59 and $3.02 per share,
respectively.






35
 Table of Contents





Options Outstanding
              
              Options
ExercisableRange
      of
                Exercise
                Prices
              
              Number
                Outstanding
              
              Weighted
      Average
                Remaining
                Life
                (years)
              
              Remaining
                Average
                Exercise
      Price
              
              Weighted
                Number
                Exercisable
              
              Weighted
                Average
                Exercise
      Price$0.24
      - $0.28
              
              240,000
              
              5.5
              
              $0.27
              
              240,000
              
              $0.27
 
 
 The
weighted average fair value and weighted average exercise price of options
granted where the exercise price was equal to the market price of the underlying
stock at the grant date was $0.24 for the year ended December 31, 2005. There
were no option grants for the years ended December 31, 2007 and
2006.
 
 Note
10. Short-Term Investments
 
 In
October 2004, the Company purchased a 26 week U.S. Treasury bill for
approximately $12,859,000 which matured on May 5, 2005 for
$13,000,000.  In May 2005, the Company purchased a 26 week U.S.
Treasury bill for approximately $13,786,000 which was sold on July 27, 2005 for
approximately $13,863,000.  As of December 31, 2007, the Company held
all short-term investments in cash.
 
 Note
11.  Leases
 
 The
Company leases certain office space and equipment under operating
leases.  Rental expense was approximately $31,000, $45,000 and $36,000
for the years ended December 31, 2007, 2006 and 2005,
respectively.  The Company has no future minimum lease payments under
non-cancelable operating leases as of December 31, 2007.
 
 Note
12. Income Taxes
 
 The
income tax benefit (expense) is comprised of the following:
 
 Year
      Ended December 31,(in
      thousands)
              
              2007
              
              
              2006
              
              
              2005Current:Federal
              
              $
              -
              
              
              $
              -
              
              
              $
              -State
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              $
              -
              
              
              $
              -
              
              
              $
              -
 The
income tax benefit (expense) differs from the amount computed by applying the
statutory federal income tax rate of 35% to the net loss before income tax
benefit.  The reasons for these differences were as
follows:
 
 Year
      Ended December 31,(in
      thousands)
              
              2007
              
              
              2006
              
              
              2005Computed
      income tax benefit (expense) at statutory rate
              
              $
              (19
              )
              
              $
              207
              
              
              $
              190(Decrease)
      increase in taxes resulting from:Permanent
      and other deductions, net
              
              
              8
              
              
              
              9
              
              
              
              20Valuation
      allowance
              
              
              11
              
              
              
              (216
              )
              
              
              (210
              )Income
      tax benefit
              
              $
              -
              
              
              $
              -
              
              
              $
              -
   36
 Table of Contents
  The tax
effect of significant temporary differences, which comprise the deferred tax
liability, is as follows:
 
 December
      31,(in
      thousands)
              
              2007
              
              
              2006Deferred
      tax asset:Net
      operating loss carryforward
              
              $
              4,760
              
              
              $
              4,771Capital
      loss carryforward
              
              
              24,559
              
              
              
              24,559Valuation
      allowance
              
              
              (29,319
              )
              
              
              (29,330
              )Deferred
      tax liability:Estimated
      tax liability
              
              
              -
              
              
              
              -Net
      deferred tax liability
              
              $
              -
              
              
              $
              -
 
 As of
December 31, 2007, the Company had a federal income tax loss carryforward of
approximately $13,400,000, which begins expiring in 2019.  In
addition, the Company had a federal capital loss carryforward of approximately
$70,300,000 which expires in 2009.  Realization of the Company’s
carryforwards is dependent on future taxable income and capital
gains.  At this time, the Company cannot assess whether or not the
carryforward will be realized; therefore, a valuation allowance has been
recorded as shown above.
 
 Ownership
changes, as defined in the Internal Revenue Code, may have limited the amount of
net operating loss carryforwards that can be utilized annually to offset future
taxable income.  Subsequent ownership changes could further affect the
limitation in future years.
 
 Note
13.  Benefit Plans
 
 The
Company established the NCEH 401(k) Plan (the “Plan”) for eligible employees of
the Company.  Generally, all employees of the Company who are at least
twenty-one years of age and who have completed one-half year of service are
eligible to participate in the Plan.  The Plan is a defined
contribution plan which provides that participants may make voluntary salary
deferral contributions, on a pretax basis, between 1% and 15% of their
compensation in the form of voluntary payroll deductions, up to a maximum amount
as indexed for cost-of-living adjustments.  The Company will match a
participant’s salary deferral, up to 5% of a participant’s
compensation.  The Company may make additional discretionary
contributions.  No discretionary contributions were made during the
years ended December 31, 2007, 2006 or 2005.  The Company’s matching
contributions to this plan totaled approximately $5,000, $7,500 and $7,500 for
the years ended December 31, 2007, 2006 and 2005, respectively.
 
 Note
14.  Related Parties
 
 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, former 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 received an annual salary of $150,000 as Chief
Executive Officer of the Company.  Mr. Pully resigned as Chief
Executive Officer of the Company effective October 15, 2007.  Mr.
Schwarz is performing the functions of Chief Executive Officer.  NCM
is the general partner of Newcastle, which owns 19,380,768 shares of Common
Stock of the Company.
 
 The
Company’s corporate headquarters are currently located at 200 Crescent Court,
Suite 1400, Dallas, Texas 75201, which are also the offices of
NCM.  The Company occupies a portion of NCM space on a month-to-month
basis at $2,500 per month, pursuant to a services agreement entered into between
the parties. NCM is the general partner of Newcastle.  The Company
incurred expenses pursuant to the services agreement totaling $30,000 and $7,500
for the years ended December 31, 2007 and 2006, respectively.  The
Company owed NCM -0- and $7,500 as of December 31, 2007 and 2006,
respectively.
   37
 Table of Contents
 
 The
Company also receives accounting and administrative services from employees of
NCM pursuant to such agreement.
  In
September 2006, the SEC staff issued Staff Accounting Bulletin No. 108 ("SAB
108"), which  provides  interpretive  guidance on
how the effects of the carryover  or  reversal  of
prior year  misstatements  should be
considered  in quantifying  a current
year  misstatement. SAB 108 requires the use of both the "iron
curtain" and  "rollover"  approach
in  quantifying  the  materiality  of
misstatements.  SAB 108 provides transitional  guidance for
the  correction  of errors in prior periods.
 
 The
Company adopted SAB 108 as of September 30, 2006.  Upon initial
application of SAB 108, the Company evaluated the uncorrected financial
statement misstatements that were previously considered  immaterial
under the "rollover" method using the dual methodology required by SAB
108.  As a result of this dual methodology  approach of SAB
108, the Company corrected the cumulative error in its accounting for the fair
market value of office space provided at no charge and accounting and
administrative services received for the fiscal year ended December 31, 2006, by
recording an expense of $16,500 with a corresponding credit to additional
paid-in capital.  In accordance with the transitional guidance in SAB
108, the Company also made an adjustment of $22,500 within stockholders' equity
that increased additional paid-in capital and increased accumulated deficit for
such costs prior to January 1, 2006.
 
 Note
15.  Selected Quarterly Financial Data (Unaudited)
 
 Three
      Months EndedDecember
      31,
              
              
              September
      30,
              
              
              June
      30,
              
              
              March
      31,(in
      thousands, except per share data)
              
              2007
              
              
              2007
              
              
              2007
              
              
              2007Operating
      revenues
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Operating
      loss
              
              
              (103
              )
              
              
              (121
              )
              
              
              (149
              )
              
              
              (179
              )Net
      income (loss)
              
              
              37
              
              
              
              34
              
              
              
              7
              
              
              
              (23
              )Net
      income (loss) available to common stockholders
              
              
              37
              
              
              
              34
              
              
              
              7
              
              
              
              (23
              )Basic
      and diluted net income (loss) per common share:Net
      income (loss)
              
              
              0.00
              
              
              
              0.00
              
              
              
              0.00
              
              
              
              (0.00
              )
 
 Three
      Months EndedDecember
      31,
              
              
              September
      30,
              
              
              June
      30,
              
              
              March
      31,(in
      thousands, except per share data)
              
              2006
              
              
              2006
              
              
              2006
              
              
              2006Operating
      revenues
              
              $
              -
              
              
              $
              -
              
              
              $
              56
              
              
              $
              13Operating
      income (loss)
              
              
              (275
              )
              
              
              (235
              )
              
              
              20
              
              
              
              (83
              )Net
      income (loss)
              
              
              (123
              )
              
              
              (82
              )
              
              
              173
              
              
              
              (559
              )Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              (50
              )
              
              
              (50
              )Net
      income (loss) available to common stockholders
              
              
              (123
              )
              
              
              (82
              )
              
              
              123
              
              
              
              (609
              )Basic
      and diluted net income (loss) per common share:Net
      income (loss)
              
              
              (0.0
              )
              
              
              (0.0
              )
              
              
              .01
              
              
              
              (.02
              )
   38
 Table of Contents
  ITEM9.  CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  None.
 
 ITEM9A.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-K, 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 for 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.  There were no
significant changes in the Company’s internal controls or in other factors that
could significantly affect these controls subsequent to the date of the
Company’s evaluation.
 
 Management's
Report on Internal Control Over Financial Reporting
 
 Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act.  The Company's internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America ("GAAP").  The Company's internal control
over financial reporting includes those policies and procedures
that:
 
 ●
              pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;
 
 ●
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with GAAP, and that
      receipts and expenditures of the Company are being made only in accordance
      with authorizations of management and directors of the Company;
      and
 
 ●
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company's assets that
      could have a material effect on the financial
  statements.
   39
 Table of Contents
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 As
required by Section 404 of the Sarbanes-Oxley Act of 2002, management assessed
the effectiveness of the Company's internal control over financial reporting as
of December 31, 2007. In making this assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") in Internal Control-Integrated Framework.
 
 Based on
our assessment and those criteria, management concluded that the Company
maintained effective internal control over financial reporting as of December
31, 2007.
  This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
 
 ITEM9B.  OTHER
INFORMATION
 None.
   
 40
 Table of Contents
  PART
III
   ITEM10.  DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
 The
information required by Item 10 will be furnished on or prior to April 29, 2008
(and is hereby incorporated by reference) by an amendment hereto or pursuant to
a definitive proxy statement of the Company’s 2008 Annual Meeting of
Stockholders for the fiscal year ended December 31, 2007.
 
 ITEM11.  EXECUTIVE
COMPENSATION
 
 The
information required by Item 11 will be furnished on or prior to April 29, 2008
(and is hereby incorporated by reference) by an amendment hereto or pursuant to
a definitive proxy statement of the Company’s 2008 Annual Meeting of
Stockholders for the fiscal year ended December 31, 2007.
  ITEM12.SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 The
information required by Item 12 will be furnished on or prior to April 29, 2008
(and is hereby incorporated by reference) by an amendment hereto or pursuant to
a definitive proxy statement of the Company’s 2008 Annual Meeting of
Stockholders for the fiscal year ended December 31, 2007.
  ITEM13.CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 The
information required by Item 13 will be furnished on or prior to April 29, 2008
(and is hereby incorporated by reference) by an amendment hereto or pursuant to
a definitive proxy statement of the Company’s 2008 Annual Meeting of
Stockholders for the fiscal year ended December 31, 2007.
  ITEM14.  PRINCIPAL ACCOUNTANT FEES AND
SERVICES
 The
information required by Item 14 will be furnished on or prior to April 29, 2008
(and is hereby incorporated by reference) by an amendment hereto or pursuant to
a definitive proxy statement of the Company’s 2008 Annual Meeting of
Stockholders for the fiscal year ended December 31, 2007.
 
 PART
IV
  ITEM15.  EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
 (a)   Documents
Filed as Part of Report
 
 1.     Financial
Statements:
 
 The
Consolidated Financial Statements of the Company and the related report of the
Company’s independent public accountants thereon have been filed under Item 8
hereof.
 
 2.     Financial
Statement Schedules:
 
 The
information required by this item is not applicable.
  41
 Table of Contents
 
 3.     Exhibits:
 
 The
exhibits listed below are filed as part of or incorporated by reference in this
report.  Where such filing is made by incorporation by reference to a
previously filed document, such document is identified in
parentheses.  See the Index of Exhibits included with the exhibits
filed as a part of this report.
 
 Exhibit
 Number                                                     Description
of Exhibits
 
 2.1
              Plan
      of Merger and Acquisition Agreement between BCC, CRM Acquisition Corp.,
      Computer Resources Management, Inc. and Michael A. Harrelson, dated June
      1, 1997 (incorporated by reference from Exhibit 2.1 to Form 10-Q, dated
      June 30, 1997).
 2.2
              Stock
      Purchase Agreement between BCC and Princeton TeleCom Corporation, dated
      September 4, 1998 (incorporated by reference from Exhibit 2.2 to Form
      10-K, dated September 30, 1998).
 2.3
              Stock
      Purchase Agreement between BCC and Princeton eCom Corporation, dated
      February 21, 2000 (incorporated by reference from Exhibit 2.1 to Form 8-K,
      dated March 16, 2000).
 2.4
              Agreement
      and Plan of Merger between BCC, Billing Concepts, Inc., Enhanced Services
      Billing, Inc., BC Transaction Processing Services, Inc., Aptis, Inc.,
      Operator Service Company, BC Holding I Corporation, BC Holding II
      Corporation, BC Holding III Corporation, BC Acquisition I Corporation, BC
      Acquisition II Corporation, BC Acquisition III Corporation and BC
      Acquisition IV Corporation, dated September 15, 2000 (incorporated by
      reference from Exhibit 2.1 to Form 8-K, dated September 15,
      2000).
 2.5
              Stock
      Purchase Agreement by and among New Century Equity Holdings Corp., Mellon
      Ventures, L.P., Lazard Technology Partners II LP, Conning Capital Partners
      VI, L.P. and Princeton eCom Corporation, dated March 25, 2004
      (incorporated by reference from Exhibit 10.1 to Form 8-K, dated March 29,
      2004).
 2.6
              Series
      A Convertible 4% Preferred Stock Purchase Agreement by and between New
      Century Equity Holdings Corp. and Newcastle Partners, LP, dated June 18,
      2004 (incorporated by reference from Exhibit 2.1 to Form 8-K, dated June
      30, 2004).
 3.1
              Amended
      and Restated Certificate of Incorporation of BCC (incorporated by
      reference from Exhibit 3.1 to Form 10/A, Amendment No. 1, dated July 11,
      1996); as amended by Certificate of Amendment to Certificate of
      Incorporation, filed with the Delaware Secretary of State, amending
      Article I to change the name of the Company to Billing Concepts Corp. and
      amending Article IV to increase the number of authorized shares of common
      stock from 60,000,000 to 75,000,000, dated February 27, 1998 (incorporated
      by reference from Exhibit 3.4 to Form 10-Q, dated March 31,
      1998).
 3.2
              Amended
      and Restated Bylaws of BCC (incorporated by reference from Exhibit 3.3 to
      Form 10-K, dated September 30,
1998).
 3.3
              Certificate
      of Elimination of Series A Junior Participating Preferred Stock, filed
      with the Secretary of State of Delaware on July 10, 2006 (incorporated by
      reference from Exhibit 3.1 to Form 8-K, dated July 10,
    2006).
 4.1
              Form
      of Stock Certificate of Common Stock of BCC (incorporated by reference
      from Exhibit 4.1 to Form 10-Q, dated March 31,
  1998).
 4.2
              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. (incorporated
      by reference from Exhibit 4.2 to Form 8-K, dated July 10,
      2006).
 4.3
              Certificate
      of Designation of Series A Junior Participating Preferred Stock, filed
      with the Secretary of State of Delaware on July 10, 2006 (incorporated by
      reference from Exhibit 3.2 to Form 8-K, dated July 10,
    2006).
 4.4
              Form
      of Rights Certificate (incorporated by reference from Exhibit 4.1 to Form
      8-K, dated July 10, 2006).
   42
 Table of Contents
 
 *10.1
              BCC’s
      1996 Employee Comprehensive Stock Plan amended as of August 31, 1999
      (incorporated by reference from Exhibit 10.8 to Form 10-K, dated September
      30, 1999).
 *10.2
              Form
      of Option Agreement between BCC and its employees under the 1996 Employee
      Comprehensive Stock Plan (incorporated by reference from Exhibit 10.9 to
      Form 10-K, dated September 30,
1999).
 *10.3
              Amended
      and Restated 1996 Non-Employee Director Plan of BCC, amended as of August
      31, 1999 (incorporated by reference from Exhibit 10.10 to Form 10-K, dated
      September 30, 1999).
 *10.4
              Form
      of Option Agreement between BCC and non-employee directors (incorporated
      by reference from Exhibit 10.11 to Form 10-K, dated September 30,
      1998).
 10.5
              Office
      Building Lease Agreement between Billing Concepts, Inc. and Medical Plaza
      Partners (incorporated by reference from Exhibit 10.21 to Form 10/A,
      Amendment No. 1, dated July 11, 1996), as amended by First Amendment to
      Lease Agreement, dated September 30, 1996 (incorporated by reference from
      Exhibit 10.31 to Form 10-Q, dated March 31, 1998), Second Amendment to
      Lease Agreement, dated November 8, 1996 (incorporated by reference from
      Exhibit 10.32 to Form 10-Q, dated March 31, 1998), and Third Amendment to
      Lease Agreement, dated January 24, 1997 (incorporated by reference from
      Exhibit 10.33 to Form 10-Q, dated March 31,
  1998).
 10.6
              Office
      Building Lease Agreement between Prentiss Properties Acquisition Partners,
      L.P. and Aptis, Inc., dated November 11, 1999 (incorporated by reference
      from Exhibit 10.33 to Form 10-K, dated September 30,
  1999).
 *10.7
              BCC’s
      401(k) Retirement Plan (incorporated by reference from Exhibit 10.14 to
      Form 10-K, dated September 30,
2000).
 10.8
              Office
      Building Lease Agreement between BCC and EOP-Union Square Limited
      Partnership, dated November 6, 2000 (incorporated by reference from
      Exhibit 10.16 to Form 10-K, dated December 31,
  2001).
 10.9
              Office
      Building Sublease Agreement between BCC and CCC Centers, Inc., dated
      February 11, 2002 (incorporated by reference from Exhibit 10.17 to Form
      10-K, dated December 31, 2001).
 10.10
              Office
      Building Lease Agreement between SAOP Union Square, L.P. and New Century
      Equity Holdings Corp., dated February 11, 2004 (incorporated by reference
      from Exhibit 10.18 to Form 10-K, dated December 31,
  2003).
 10.11
              Sublease
      agreement entered into by and between New Century Equity Holdings Corp.
      and the Law Offices of Alfred G. Holcomb, P.C. (incorporated by reference
      from Exhibit 10.1 to Form 10-Q, dated September 30,
  2004).
 10.12
              Revenue
      Sharing Agreement, dated as of October 5, 2005, between New Century Equity
      Holdings Corp. and ACP Investments LP (incorporated by reference from
      Exhibit 10.1 to Form 10-Q, dated September 30,
  2005).
 10.13
              Principals
      Agreement, dated as of October 5, 2005, by and among New Century Equity
      Holdings Corp. and ACP Investments LP (incorporated by reference from
      Exhibit 10.2 to Form 10-Q, dated September 30,
  2005).
 14.1
              New
      Century Equity Holdings Corp. Code of Ethics (incorporated by reference
      from Exhibit 14.1 to Form 10-K, dated December 31,
  2003).New
      Century Equity Holdings of Texas, Inc. (incorporated in
    Delaware).New
      Century Equity Holdings, Inc. (incorporated in Texas).23.1
              Consent
      of Burton, McCumber & Cortez, L.L.P. (filed herewith).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).32.2.1
              Certification
      of Chief Financial Officer in Accordance with Section 906 of the
      Sarbanes-Oxley Act (filed
herewith).
  *
Includes compensatory plan or arrangement.
   43
 Table of Contents
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) 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:  March
      28, 2008
              By:
              /s/
      Mark SchwarzMark
      SchwarzChief
      Executive Officer
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 28th day of
March 2008.
 
 Signature
              Title/s/
      Mark Schwarz
              Chief
      Executive OfficerMark
      Schwarz
              (Principal
      Executive Officer)/s/
      John P. Murray
              Chief
      Financial OfficerJohn
      P. Murray
              (Principal
      Financial and Accounting Officer)/s/
      Mark E. Schwarz
              Director
      andMark
      E. Schwarz
              Chairman
      of the Board/s/
      James Risher
              DirectorJames
      Risher/s/
      Jonathan Bren
              DirectorJonathan
      BrenSteve
      Pully
              Director
 
 44