UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 0-28536
---------------
NEW CENTURY EQUITY HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2781950
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 CRESCENT COURT, SUITE 1110, DALLAS, TEXAS 75201
(Address of principal executive offices) (Zip code)
(214) 661-7488
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes |_| No
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). |_| Yes |X| No
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). |_| Yes |X| No
Indicated below is the number of shares outstanding of the registrant's
only class of common stock at November 11, 2005:
Number of Shares
Title of Class Outstanding
----------------------------- -----------------------------
Common Stock, $0.01 par value 34,653,104
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Interim Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets - September 30, 2005 (Unaudited)
and December 31, 2004........................................................ 3
Unaudited Condensed Consolidated Statements of Operations - For the Three
and Nine Months ended September 30, 2005 and 2004............................ 4
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) -
For the Three and Nine Months ended September 30, 2005 and 2004.............. 5
Unaudited Condensed Consolidated Statements of Cash Flows - For the
Nine Months ended September 30, 2005 and 2004................................ 6
Notes to Unaudited Interim Condensed Consolidated Financial Statements.......... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations................................................................ 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk...................... 17
Item 4. Controls and Procedures......................................................... 17
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................................... 18
Item 6. Exhibits........................................................................ 19
SIGNATURE ............................................................................. 20
2
PART I FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
September 30, December 31,
2005 2004
------------------ ------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ............................................ $ 13,076 $ 1,716
Insurance receivable and other current assets ........................ 1,452 145
Short-term investments ............................................... -- 12,895
----------- -----------
Total current assets ................................................ 14,528 14,756
Property and equipment, net ............................................ -- 7
Other non-current assets ............................................... 6 6
Investments ............................................................ -- 326
----------- -----------
Total assets ......................................................... $ 14,534 $ 15,095
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................................... $ 51 $ 45
Accrued liabilities .................................................. 471 283
----------- -----------
Total current liabilities .............................................. 522 328
Other non-current liabilities .......................................... 2 2
----------- -----------
Total liabilities ................................................... 524 330
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized;
4,807,692 shares designated as Series A convertible preferred stock
issued and outstanding............................................... 48 48
Common stock, $0.01 par value, 75,000,000 shares authorized;
34,653,104 shares issued and outstanding............................ 347 347
Additional paid-in capital ............................................. 75,428 75,428
Accumulated deficit .................................................... (61,813) (61,107)
Accumulated other comprehensive income (loss) .......................... -- 49
----------- -----------
Total stockholders' equity ............................................ 14,010 14,765
----------- -----------
Total liabilities and stockholders' equity ........................... $ 14,534 $ 15,095
=========== ===========
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
3
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2005 2004 2005 2004
----------- ---------- ----------- -----------
Operating revenues ........................................... $ -- $ -- $ -- $ --
Operating expenses:
Selling, general and administrative expenses .............. 284 288 881 4,546
Depreciation and amortization expense ..................... 3 4 7 26
-------- -------- -------- --------
Operating loss ............................................... (287) (292) (888) (4,572)
Other income (expense):
Interest income, net ...................................... 108 31 289 57
Equity in net loss of affiliate ........................... -- -- -- (2,985)
Gain on sale of equity affiliate .......................... -- -- -- 5,817
Other (expense) income, net ............................... (14) (1) 43 (4)
-------- -------- -------- --------
Total other income, net ...................................... 94 30 332 2,885
-------- -------- -------- --------
Net income (loss) ............................................ (193) (262) (556) (1,687)
Preferred stock dividend ..................................... (50) (50) (150) (57)
-------- -------- -------- --------
Net income (loss) applicable to
common stockholders ....................................... $ (243) $ (312) $ (706) $ (1,744)
======== ======== ======== ========
Basic and diluted net income (loss) per common share:
Net income (loss) ......................................... $ (0.01) $ (0.01) $ (0.02) $ (0.05)
======== ======== ======== ========
Weighted average common shares outstanding ................... 34,653 34,653 34,653 34,653
======== ======== ======== ========
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
4
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
(IN THOUSANDS)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2005 2004 2005 2004
----------- ---------- ----------- -------------
Net income (loss) ..................................... $ (193) $ (262) $ (556) $(1,687)
Other comprehensive income:
Reclassification of unrealized loss (gain) on ....... 5 -- (94) --
investment
Unrealized holding gains (losses), net of $0 tax .... -- (8) 45 7
------- ------- ------- -------
Comprehensive income (loss) ........................... $ (188) $ (270) $ (605) $(1,680)
======= ======= ======= =======
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
5
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Nine Months Ended
September 30,
2005 2004
------------- -------------
Cash flows from operating activities:
Net loss .............................................................................. $ (556) $ (1,687)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expenses .............................................. 7 25
Equity in net loss of affiliate ..................................................... -- 2,985
Gain on sale of equity affiliate .................................................... -- (5,817)
Loss on disposition of property and equipment ....................................... -- 28
Loss on sale of treasury bill ....................................................... 14 --
Gain on sale of Sharps Compliance Corp. common stock ................................ (57) --
Accretion of discount on securities ................................................. (185) --
Changes in operating assets and liabilities:
Decrease in accounts receivable .................................................... -- 28
(Increase) decrease in insurance receivable and other assets ....................... (1,307) 301
Increase in accounts payable ....................................................... 6 103
Increase (decrease) in accrued liabilities ......................................... 238 (628)
-------- --------
Net cash used in operating activities ................................................. (1,840) (4,662)
Cash flows from investing activities:
Proceeds from sale of short-term investments ........................................ 27,186 --
Purchase of short-term investments .................................................. (13,786) --
Purchases of property and equipment ................................................. -- (3)
Proceeds from sale of property and equipment ........................................ -- 12
Proceeds from sale of equity affiliate (all holdings in Princeton) .................. -- 10,000
Proceeds from sale of equity affiliate (all holdings in Princeton) allocated
to former chief executive officer ................................................... -- (600)
Other investing ..................................................................... -- 40
-------- --------
Net cash provided by investing activities ............................................. 13,400 9,449
Cash flows from financing activities:
Cash dividends paid on preferred stock .............................................. (200) --
Proceeds from sale of preferred stock ............................................... -- 5,000
-------- --------
Net cash provided by (used in) financing activities ................................... (200) 5,000
Net increase (decrease) in cash and cash equivalents .................................. 11,360 9,787
Cash and cash equivalents, beginning of period ........................................ 1,716 5,330
-------- --------
Cash and cash equivalents, end of period .............................................. $ 13,076 $ 15,117
======== ========
Supplemental disclosure of financial information:
Cash paid for interest .............................................................. $ -- $ --
Cash paid for income taxes .......................................................... $ -- $ --
Supplemental disclosure of non-cash transactions:
Increase in fair market value of investments ........................................ $ -- $ 7
Preferred stock dividend ............................................................ $ 150 $ 57
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
6
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The following (a) condensed consolidated balance sheet as of December
31, 2004, which has been derived from audited financial statements, and (b) the
unaudited interim condensed consolidated financial statements have been prepared
by New Century Equity Holdings Corp. and subsidiaries (collectively, the
"Company"), pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures made are adequate to make the information
not misleading. In the opinion of the Company's management, the accompanying
interim condensed consolidated financial statements reflect all adjustments, of
a normal recurring nature, that are necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for such
periods. It is recommended that these interim condensed consolidated financial
statements be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004. Results of operations for the interim periods are
not necessarily indicative of results that may be expected for any other interim
periods or the full fiscal year.
NOTE 2. HISTORICAL OVERVIEW AND RECENT DEVELOPMENTS
The Company was formerly known as Billing Concepts Corp. ("BCC") and
was incorporated in the state of Delaware in 1996. BCC was previously a
wholly-owned subsidiary of U.S. Long Distance Corp. ("USLD"). Upon its spin-off
from USLD, BCC became an independent, publicly-held company. Beginning in 1998,
the Company made multiple investments in Princeton eCom Corporation
("Princeton") totaling approximately $77,300,000 before selling all of its
interest for $10,000,000 in June 2004. During the period from April 1, 2005
through May 5, 2005, the Company sold its equity interest in Sharps Compliance
Corp. ("Sharps") for approximately $334,000.
The Company is pursuing a business plan of acquiring and investing in
alternative asset management companies, including management companies of fund
of funds that invest in hedge funds. On October 5, 2005, the Company entered
into an agreement with ACP Investments LP (d/b/a Ascendant Capital Partners)
("Ascendant"), pursuant to which the Company acquired an interest in Ascendant,
a Berwyn, Pennsylvania based asset management company whose funds have
investments in long/short equity funds and which distributes its registered
funds primarily through various financial intermediaries and related channels.
See Note 10 for further discussion.
NOTE 3. STOCK BASED COMPENSATION
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation," but elected to
apply Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in accounting for its stock
option plans. Accordingly, the Company has not recognized compensation expense
for stock options granted where the exercise price is equal to or greater than
the market price of the underlying stock at the date of grant.
7
The following table illustrates the effect on net income (loss) and net
income (loss) per common share had compensation expense for the Company's stock
option grants been determined based on the fair value at the grant dates
consistent with the methodology of SFAS No. 123 and SFAS No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure". For purposes of the
pro forma disclosures, the estimated fair value of options is amortized to pro
forma compensation expense over the options' vesting periods.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
(in thousands, except per share data) 2005 2004 2005 2004
----------- ----------- ----------- -----------
Net income (loss), as reported.............................. $ (193) $ (262) $ (556) $ (1,687)
Less: Total stock based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects............... (4) (5) (32) (72)
----------- ----------- ----------- -----------
Net income (loss), pro forma................................ $ (197) $ (267) $ (588) $ (1,759)
=========== =========== =========== ===========
Basic net income (loss) per common share:
Net income (loss), as reported........................... $ (0.01) $ (0.01) $ (0.01) $ (0.05)
Net income (loss), pro forma............................. $ (0.01) $ (0.01) $ (0.01) $ (0.05)
Diluted net income (loss) per common share:
Net income (loss), as reported........................... $ (0.01) $ 0.01 $ (0.01) $ (0.05)
Net income (loss), pro forma............................. $ (0.01) $ 0.01 $ (0.01) $ (0.05)
The fair value for these stock options was estimated at the respective
grant date using the Black-Scholes option-pricing model with the following
weighted average assumptions for the nine months ended September 30, 2005 and
2004: expected volatility of 99.22%, no dividend yield, expected life of 2.5
years and risk-free interest rates of 4.75%.
In December 2004, the FASB issued SFAS No. 123 (revised 2004),
SHARE-BASED PAYMENT, which established accounting standards for transactions
where the entity exchanges equity instruments for goods and services. The
revision of this statement focuses on the accounting for transactions where the
entity obtains employee services in share-based payment transactions. This
statement revision eliminates the alternative use of APB 25 intrinsic value
method and requires that entities adopt the fair-value method for all
share-based transactions. This statement is effective the next fiscal year
following June 15, 2005. The Company will adopt the provisions of this standard
on a modified prospective basis in the first quarter of 2006, and the Company
believes that the overall impact to the financial statements will be immaterial.
NOTE 4. INVESTMENTS
Investments consist of the following:
September 30,
(in thousands) 2005
---------------
Investment in Sharps Compliance Corp:
Cash investments................................... $ 970
Settlement......................................... (389)
Impairment of investment........................... (306)
Gain on sale....................................... 57
Other.............................................. 2
Proceeds from sale................................. (334)
-----------
Total investments ................................. $ --
===========
8
In January 2004, the Company entered into an agreement with the former
majority stockholders of Operator Service Company ("OSC") to settle all claims
related to the April 2000 acquisition of OSC by the Company. Under the terms of
the agreement, the Company transferred to the former OSC majority stockholders
525,000 shares of the common stock of Sharps owned by the Company, valued at
approximately $389,000. During the period from April 1, 2005 through May 5,
2005, the Company sold its equity interest in Sharps for approximately $334,000,
resulting in a $57,000 gain for financial reporting purposes, net of $94,000
reclassified from other comprehensive income.
NOTE 5. COMMITMENTS AND CONTINGENCIES
In October 2000, the Company completed the sale of several wholly-owned
subsidiaries that principally provided third-party billing clearinghouse and
information management services to the telecommunications industry (the
"Transaction Processing and Software Business") to Platinum Holdings
("Platinum"), for consideration of approximately $49,700,000 (the "Platinum
Transaction"). Under the terms of the Platinum Transaction, all leases and
corresponding obligations associated with the Transaction Processing and
Software Business were assumed by Platinum. Prior to the Platinum Transaction,
the Company guaranteed two operating leases for office space of the divested
companies. The first lease is related to office space located in San Antonio,
Texas, and expires in 2006. Under the original terms of the first lease, the
remaining minimum undiscounted rent payments total approximately $1,975,000 at
September 30, 2005. The second lease is related to office space located in
Austin, Texas, and expires in 2010. Under the original terms of the second
lease, the remaining minimum undiscounted rent payments total approximately
$6,029,000 at September 30, 2005. In conjunction with the Platinum Transaction,
Platinum agreed to indemnify the Company should the underlying operating
companies not perform under the terms of the office leases. The Company can
provide no assurance as to Platinum's ability, or willingness, to perform its
obligations under the indemnification. The Company does not believe it is
probable that it will be required to perform under these lease guarantees and,
therefore, no liability has been accrued in the Company's financial statements.
On August 11, 2004, Craig Davis, allegedly a stockholder of the
Company, filed a complaint in the Chancery Court of New Castle County, Delaware
(the "Complaint"). The Complaint asserts direct claims, and also derivative
claims on the Company's behalf, against five former and three current directors
of the Company. The individual defendants named in the Complaint are Parris H.
Holmes, Jr., C. Lee Cooke, Jr., Justin L. Ferrero, Gary D. Becker, J. Stephen
Barley, Stephen M. Wagner, Mark E. Schwarz, and Steven J. Pully; the Company is
a nominal defendant. In his Complaint, Mr. Davis seeks the appointment of a
receiver for the Company under Section 226(a) of the Delaware General
Corporation Law and other remedies. Mr. Davis alleges that different director
defendants breached their fiduciary duties to the Company. The allegations
involve, among other things, transactions with, and payments to, Mr. Holmes, and
whether the Company operated as an unregistered investment company.
The Company and certain of the defendants responded to the Complaint by
filing a motion to dismiss or stay the action on October 18, 2004 and on
November 3, 2004 filed a memorandum of law in support of such positions. The
motion to dismiss filed by the Company and various defendants was heard by the
Chancery Court of New Castle County, Delaware on January 18, 2005. The court
denied the motion to dismiss. On May 6, 2005, the Company and certain of the
defendants filed a response in opposition to plaintiff's motion for receiver.
Mediation among parties named in the Complaint took place in Wilmington,
Delaware on May 13, 2005. On May 31, 2005, Mr. Davis filed an amendment to the
Complaint to include James Risher, a current director, and Newcastle Partners,
L.P. ("Newcastle") as additional defendants. On July 8, 2005, the Company and
certain of the defendants filed a supplemental response in opposition to
9
plaintiff's motion for appointment of receiver. A trial date is currently set
for March 6, 2006.
The Company is currently funding legal expenses of the defendants
pursuant to indemnification arrangements that were in place during the
respective terms of each of the defendants. As of September 30, 2005, the
Company had met the $500,000 deductible as stipulated in the Company's directors
and officers liability insurance policy. The directors and officers liability
insurance policy carries a maximum coverage limit of $5,000,000. Because this
case is in the early stages, it is not possible to evaluate the likelihood of
exceeding the policy limit. As of September 30, 2005, the Company has recorded a
receivable from the insurance carrier of approximately $1,378,000 for
reimbursement of legal and professional fees incurred in excess of the policy
deductible, in accordance with the provisions of the insurance policy. As of
November 11, 2005, the Company had not received any reimbursement from the
insurance carrier and continues to have ongoing discussions with the insurance
carrier regarding reimbursement under the provisions of the policy. If for any
reason the insurance carrier does not fulfill its obligation to reimburse the
Company under the insurance policy, nonpayment of the claim for reimbursement of
legal and professional fees could have a material adverse effect on the
financial condition and results of operations of the Company.
On October 27, 2004 the board of directors appointed Messrs. Pully,
Risher and Schwarz to a special litigation committee to investigate the claims
of the plaintiff. Prior to the filing of the Complaint, the Company had
commenced an investigation of various transactions involving former management,
including, among other things, the payment of approximately $600,000 to Mr.
Holmes in connection with a restricted stock agreement (see Note 7) and the
reimbursement of various expenses involving meals and entertainment, travel and
other reimbursed expenses. As part of the investigative work commenced by the
Company prior to the filing of the Complaint, the Company sought reimbursement
from Mr. Holmes for various amounts paid to him. The Company and Mr. Holmes were
unable to agree on the amount that Mr. Holmes should reimburse the Company.
The Company has been notified by counsel to both Mr. Holmes and David
P. Tusa (former chief financial officer) that each of Messrs. Holmes and Tusa
believe that approximately $60,000 and $34,000, respectively, are owed to each
of them under their respective consulting agreements. In addition to notifying
both Messrs. Holmes and Tusa that their consulting services were not required
and that no obligation therefore existed under their respective agreements, both
have also been notified that the Company is investigating various transactions,
including, among other things, the payment of approximately $600,000 to Mr.
Holmes in connection with a restricted stock agreement (see Note 7) and the
reimbursement of various expenses involving meals and entertainment, travel and
other reimbursed expenses. The Company disputes that any additional amounts are
owed under the consulting agreements and, therefore, has not provided for such
amounts in the accompanying financial statements for the period ended September
30, 2005.
Pursuant to the sale of approximately 4.8 million newly issued shares
of the Company's Series A 4% Convertible Preferred Stock (the "Series A
Preferred Stock") to Newcastle on June 18, 2004 (the "Newcastle Transaction")
the Company agreed to indemnify Newcastle from any liability, loss or damage,
together with all costs and expenses related thereto that the Company may suffer
which arises out of affairs of the Company, its board of directors or employees
prior to the closing of the Newcastle Transaction. The Company's obligation to
indemnify may be satisfied at the option of the purchaser by issuing additional
Series A Preferred Stock to the purchaser, modifying the conversion price of the
Series A Preferred Stock, a payment of cash or a redemption of Series A
Preferred Stock or a combination of the foregoing. The Company and the purchaser
have not yet determined whether events that have arisen since the closing will
trigger the indemnity provisions.
10
NOTE 6. INVESTMENT IN UNCONSOLIDATED AFFILIATE
In June 2004, the Company sold all of its interest in Princeton for
$10,000,000. The sale of Princeton generated a capital loss for federal income
tax purposes of approximately $67,000,000. Prior to the selling of its interest
in Princeton in June 2004, the Company accounted for its investment in Princeton
under the equity method of accounting and recorded the equity in net loss of
Princeton on a three-month lag. As a result of the sale of the Company's
holdings in Princeton, during the six months ended June 30, 2004, the Company
accelerated the recording of its equity in net loss of Princeton to the date of
sale. Princeton's statement of operations for the eight months ended May 31,
2004 has been used to calculate the equity in net loss recorded in the Company's
statement of operations for the nine months ended September 30, 2004.
Princeton's summarized statement of operations was as follows:
Eight
Months
Ended
May 31,
(in thousands) 2004
-----------
Total revenues.............................. $ 16,965
Gross profit................................ 7,258
Loss from operations........................ (9,188)
Net loss.................................... (9,214)
NOTE 7. RELATED PARTY TRANSACTIONS
Parris H. Holmes, Jr. (former Chairman of the Board and Chief Executive
Officer of the Company) served on the Board of Princeton from September 1998
until March 2004. Mr. Holmes served as Chairman of the Board of Princeton from
January 2002 until December 2002. David P. Tusa (former Chief Financial Officer
of the Company) served as a member of the Board of Princeton from August 2001
until June 2002.
According to public filings, Mr. Holmes has been a member of the board
of directors of Sharps since July 1998. Mr. Tusa was appointed Chief Financial
Officer of Sharps in February 2003. A former member of the Company's board of
directors, Lee Cooke, served on the board of directors of Sharps from March 1992
until November 2004.
In August 2003, the Company issued 435,484 shares of the Company's
Common Stock, par value $.01 per share ("Common Stock") to Mr. Holmes in
exchange for a salary reduction of $135,000 for the employment period of October
1, 2003 to September 30, 2004. These shares were issued under the New Century
Equity Holdings Corp. 1996 Employee Comprehensive Stock Plan, which allows for
this type of issuance without any material amendments.
In November 2001, the Company entered into an Amended and Restated
Employment Agreement ("Employment Agreement") with Mr. Holmes. As part of the
Employment Agreement, the Company entered into a Split-Dollar Life Insurance
Agreement ("Insurance Agreement") with a trust beneficially owned by Mr. Holmes
pursuant to which the Company paid the annual insurance premium of approximately
$172,000. The underlying life insurance policy had a face value of $4,500,000
and required remaining annual premium payments through March 2012, totaling
$1,500,000. In December 2003, Mr. Holmes and the Company agreed to amend the
Employment Agreement and terminate the provisions of the Employment Agreement
related to the Insurance Agreement in exchange for payments by the Company to,
and on behalf of, Mr. Holmes totaling approximately $700,000 in cash.
Accordingly, the Company assigned to Mr. Holmes, and Mr. Holmes assumed, all
11
future obligations and benefits related to the Insurance Agreement. Mr. Holmes
released and discharged the Company from any further obligation to provide or
fund any life insurance for the benefit of Mr. Holmes, including the Insurance
Agreement. The entire $700,000 was included in general and administrative
expenses during the year ended December 31, 2003. In December 2003, $200,000 of
the total $700,000 was paid. The remaining $500,000 was accrued at December 31,
2003 and paid in January 2004. In conjunction with the Insurance Agreement, the
Company relinquished its rights under two other split-dollar life insurance
policies previously entered into with Mr. Holmes. All premiums had been paid
under the two policies prior to 2004. The Company paid approximately $3,800 on
behalf of Mr. Holmes in connection with the transfer of rights to Mr. Holmes.
Prior to the Newcastle Transaction, during the six months ended June
30, 2004, the Company sold certain office furniture to Mr. Holmes for
approximately $7,000 and provided Mr. Holmes with title to the automobile that
had been furnished to him by the Company at no cost. The Company had purchased
the office furniture for approximately $28,000 during the period October 1994
through April 2003 and the furniture had a book value of $4,000. Pursuant to the
terms of his employment agreement, Mr. Holmes was provided with an automobile.
The automobile was acquired by the Company for $75,000 in 2000. At the time of
transfer, the net book value of the automobile was zero and the fair market
value was $20,000. In accordance with the terms of Mr. Holmes' employment
agreement, the income taxes incurred by Mr. Holmes as a result of the transfer
of title to him were borne by the Company.
The Company paid Mr. Holmes approximately $600,000 on June 2, 2004,
purportedly as a result of a restricted stock grant as described below. In April
2000, the board of directors of the Company approved a restricted stock grant to
Mr. Holmes. The restricted stock grant consisted of 400,000 shares of Princeton
common stock and was modified in June 2001 to provide for certain anti-dilution
and ratchet protections. The restricted stock grant vested on April 30, 2003.
The Company expensed the fair market value of the restricted stock grant over
the three-year period ended April 30, 2003. The Company has commenced an
investigation of various transactions involving former management, including,
among other things, the $600,000 payment.
In June 2004, in connection with the Newcastle Transaction, Mr.
Schwarz, Chief Executive Officer and Chairman of Newcastle Capital Management,
L.P. ("NCM"), Mr. Pully, President of NCM, and Mr. Murray, Chief Financial
Officer of NCM, assumed positions as Chairman of the Board, Chief Executive
Officer and Chief Financial Officer, respectively, of the Company. Mr. Pully
receives an annual salary of $150,000 as Chief Executive Officer of the Company.
NCM is the general partner of Newcastle, which owns 4,807,692 shares of Series A
Preferred Stock and 150,000 shares of Common Stock of the Company.
The Company's corporate headquarters are currently located at 300
Crescent Court, Suite 1110, Dallas, Texas 75201, which are also the offices of
NCM. Pursuant to an oral agreement, the Company subleases a portion of NCM's
space on a month-to-month basis at no charge.
The Company also receives accounting and administrative services from
employees of NCM at no charge.
NOTE 8. SHARE CAPITAL
On July 10, 1996, the Company, upon authorization of the board of
directors, adopted a Shareholder Rights Plan ("Rights Plan") and declared a
dividend of one preferred share purchase right on each share of its outstanding
Common Stock. The rights will become exercisable if a person or group acquires
12
15% or more of the Company's Common Stock or announces a tender offer, the
consummation of which would result in ownership by a person or group of 15% or
more of the Company's Common Stock. These rights, which expire on July 10, 2006,
entitle stockholders to buy one ten-thousandth of a share of a new series of
participating preferred shares at a purchase price of $130 per one
ten-thousandth of a preferred share. The Rights Plan was designed to ensure that
stockholders receive fair and equal treatment in the event of any proposed
takeover of the Company.
On June 10, 2004, the Company amended its July 10, 1996 Shareholder
Rights Agreement by reducing the Common Stock ownership threshold for triggering
the distribution of rights under such agreement from fifteen percent to five
percent. Newcastle and its successors and assigns are exempted from the five
percent ownership limitation. The purpose of such amendment was to help ensure
the preservation of the Company's net operating loss and capital loss
carryforwards.
The Company has never declared or paid any cash dividends on its Common
Stock. The Company may not pay dividends on its Common Stock unless all declared
and unpaid dividends on the Series A Preferred Stock have been paid. In
addition, whenever the Company shall declare or pay any dividends on its Common
Stock, the holders of the Series A Preferred Stock are entitled to receive such
Common Stock dividends on a ratably as-converted basis.
The Series A Preferred Stock is convertible into approximately
thirty-five percent of the Common Stock, at any time after the expiration of
twelve months from the date of its issuance at a conversion price of $0.26 per
share of Common Stock, subject to adjustment for dilution. The holders of the
Series A Preferred Stock are entitled to a four percent annual cash dividend
(the "Preferred Dividends"). The Preferred Dividends shall accrue and shall be
cumulative from the date of initial issuance of the shares of the Series A
Preferred Stock, whether or not declared by the Company's board of directors. In
lieu of cash dividends, the holders of Series A Preferred Stock may elect to
receive such number of shares of Series A Preferred Stock that is equal to the
aggregate dividend amount divided by $1.04. On June 18, 2005 the holders of the
Series A Preferred Stock elected to receive the Preferred Dividends in cash for
the annual period ended June 18, 2005.
So long as any shares of the Series A Preferred Stock remain
outstanding, (1) the Company's board of directors shall not exceed four members,
(2) the Company may not increase its authorized capitalization and (3) the
Company may not create rights, rankings or preferences that adversely affect the
rights, rankings and preferences of the Series A Preferred Stock, without the
written consent of the holders of at least a majority of the shares of Series A
Preferred Stock then outstanding, voting as a separate class. So long as any
shares of the Series A Preferred Stock remain outstanding, the holders of shares
of Series A Preferred Stock shall be entitled (1) to vote as a separate class to
elect two directors to the Company's board of directors and to pass upon any
matters that affect the rights, value or ranking of the Series A Preferred Stock
and (2) to vote on all other matters on which holders of Common Stock shall be
entitled to vote, casting such number of votes in respect of such shares of
Series A Preferred Stock as shall equal the largest whole number of shares of
Common Stock into which such shares of Series A Preferred Stock are then
convertible. The other powers, preferences, rights, qualifications and
restrictions of the Series A Preferred Stock are more fully set forth in the
Certificate of Designations of Series A Convertible Preferred Stock filed with
the Secretary of State of the State of Delaware simultaneously with the closing
of the Newcastle Transaction.
NOTE 9. INVESTMENT IN SECURITIES AVAILABLE-FOR-SALE
In May 2005, the Company purchased a 26-week U.S. Treasury bill for
approximately $13,786,000. The Treasury bill was sold for approximately
$13,852,000 during July 2005.
13
NOTE 10. SUBSEQUENT EVENTS
On October 5, 2005, in connection with the Company's business plan of
acquiring and investing in alternative asset management companies, the Company
entered into an agreement (the "Ascendant Agreement") with Ascendant, pursuant
to which the Company acquired an interest in the net revenues of Ascendant, a
Berwyn, Pennsylvania based asset management company whose funds have investments
in long/short equity funds and which distributes its registered funds primarily
through various financial intermediaries and related channels. Pursuant to the
Ascendant Agreement, the Company is entitled to a 50% interest, subject to
certain adjustments, in the net revenues of Ascendant, which interest declines
as the assets that Ascendant manages reach certain levels. The Company's
interest in Ascendant was acquired for $1,550,000 and is payable in four equal
installments with the first installment paid at closing, the second installment
payable on January 5, 2006, the third installment payable on April 5, 2006 and
the fourth installment payable on July 5, 2006. After the second anniversary of
the Agreement and upon the occurrence of certain events, Ascendant has the
option to repurchase a portion of the Company's interest. Pursuant to the
Ascendant Agreement, the Company agreed to provide various marketing services to
Ascendant and Steven J. Pully, CEO of the Company, was appointed to the
Investment Advisory Committee of Ascendant. The Company also entered into an
agreement with Ascendant and the limited partners and certain key employees of
Ascendant pursuant to which the Company has the option to purchase limited
partnership interests of Ascendant under certain circumstances.
14
ITEM 2.
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS CERTAIN "FORWARD-LOOKING"
STATEMENTS AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 AND INFORMATION RELATING TO THE COMPANY AND ITS SUBSIDIARIES THAT
ARE BASED ON THE BELIEFS OF THE COMPANY'S MANAGEMENT AS WELL AS ASSUMPTIONS MADE
BY AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN
THIS REPORT, THE WORDS "ANTICIPATE", "BELIEVE", "ESTIMATE", "EXPECT" AND
"INTEND" AND WORDS OR PHRASES OF SIMILAR IMPORT, AS THEY RELATE TO THE COMPANY
OR ITS SUBSIDIARIES OR COMPANY MANAGEMENT, ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT RISKS,
UNCERTAINTIES AND ASSUMPTIONS RELATED TO CERTAIN FACTORS INCLUDING, WITHOUT
LIMITATION, COMPETITIVE FACTORS, GENERAL ECONOMIC CONDITIONS, THE INTEREST RATE
ENVIRONMENT, GOVERNMENTAL REGULATION AND SUPERVISION, SEASONALITY, CHANGES IN
INDUSTRY PRACTICES, ONETIME EVENTS AND OTHER FACTORS DESCRIBED HEREIN AND IN
OTHER FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.
BASED UPON CHANGING CONDITIONS, SHOULD ANY ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES MATERIALIZE, OR SHOULD ANY UNDERLYING ASSUMPTIONS PROVE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED,
BELIEVED, ESTIMATED, EXPECTED OR INTENDED. THE COMPANY DOES NOT INTEND TO UPDATE
THESE FORWARD-LOOKING STATEMENTS.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following is a discussion of the interim condensed consolidated
financial condition and results of operations for New Century Equity Holdings
Corp. and subsidiaries (collectively, the "Company"), for the three and nine
months ended September 30, 2005. It should be read in conjunction with the
Unaudited Interim Condensed Consolidated Financial Statements of the Company,
the notes thereto and other financial information included elsewhere in this
report, and the Company's Annual Report on Form 10-K for the year ended December
31, 2004.
RESULTS OF OPERATIONS
CONTINUING OPERATIONS
Selling, general and administrative ("SG&A") expense includes
management salaries and benefits, director's fees, legal and accounting fees,
public company costs and other administrative costs incurred in direct support
of the business operations of the Company. SG&A expenses decreased by $4,000, or
2%, and $3,665,000, or 81% for the three and nine months ended September 30,
2005, respectively, as compared to the corresponding periods of the prior fiscal
year. SG&A expenses for the nine months ended September 30, 2004, included
approximately $2,600,000 of severance paid to Messrs. Holmes and Tusa, the
Company's former Chief Executive Officer and Chief Financial Officer,
respectively. For the three and nine months ended September 30, 2004, SG&A
expenses also included approximately $700,000 of legal and professional expenses
related to the proposed proxy statement (which was subsequently withdrawn)
seeking shareholder approval to liquidate the Company and completing the
Newcastle Transaction. The remainder of the decrease in SG&A is due to reduced
salary and benefits as the number of employees have decreased from five to one
and a decrease in rent expense as a result of the sublease entered into on
October 8, 2004, to sublet the Company's office space located at 10101 Reunion
Place, Suite 970, San Antonio, Texas.
Based upon the assets under management of Ascendant as of September 30,
2005, the Company expects to initially receive net revenues from Ascendant on a
quarterly basis ranging from $25,000 to $30,000, which amount will increase if
the assets under management of Ascendant increase or will decrease if the assets
under management of Ascendant decrease. The Company will receive payment
15
in cash, not later than 30 days after the end of each calendar quarter,
beginning with the quarter ended December 31, 2005.
INTEREST INCOME
Interest income increased by $77,000 or 248%, and $232,000 or 407% for
the three and nine months ended September 30, 2005, respectively, as compared to
the corresponding periods of the prior fiscal year. These increases are
attributable to increased yields available for short-term investments and higher
cash balances from the proceeds of the Newcastle Transaction and the sale of our
Princeton interest in June 2004.
EQUITY IN NET LOSS OF AFFILIATE
Equity in net loss of affiliate totaled approximately $2,985,000 during
the nine months ended September 30, 2004. In June 2004, the Company sold all its
interest in Princeton for $10,000,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and short-term investments decreased to
approximately $13,076,000 at September 30, 2005, from $14,611,000 at December
31, 2004. The significant items affecting the Company's cash and short-term
investments during the nine months ended September 30, 2005, are as follows:
proceeds of approximately $334,000 from the sale of the Sharps common stock, the
payment of $200,000 for the annual Preferred Dividends and approximately
$1,341,000 of legal and professional fees related to the lawsuit filed by Craig
Davis. As of September 30, 2005, the Company had met the $500,000 deductible as
stipulated in the Company's directors and officers liability insurance policy.
The directors and officers liability insurance policy carries a maximum coverage
limit of $5,000,000. Because this case is in the early stages, it is not
possible to evaluate the likelihood of exceeding the policy limit. As of
September 30, 2005, the Company has recorded a receivable from the insurance
carrier of approximately $1,378,000 for reimbursement of legal and professional
fees incurred in excess of the policy deductible, in accordance with the
provisions of the insurance policy. As of November 11, 2005, the Company has not
received any reimbursement from the insurance carrier and continues to have
ongoing discussions with the insurance carrier regarding reimbursement under the
provisions of the policy. If for any reason the insurance carrier does not
fulfill its obligation to reimburse the Company under the insurance policy,
nonpayment of the claim for reimbursement of legal and professional fees could
have a material adverse effect on the financial condition and results of
operations of the Company.
There were no capital expenditures during the nine months ended
September 30, 2005.
During the next 12 months, the Company's operating cash requirements
are expected to consist principally of funding corporate expenses, the costs
associated with maintaining a public company and expenses incurred in pursuing
the Company's recently announced business plan of acquiring and investing in
alternative asset management companies. The Company's interest in the net
revenues of Ascendant was acquired for $1,550,000 and is payable in four equal
installments with the first installment paid at closing, the second installment
payable on January 5, 2006, the third installment payable on April 5, 2006 and
the fourth installment payable on July 5, 2006. The Company expects to incur
additional operating losses through fiscal 2005, which will continue to have a
negative impact on liquidity and capital resources.
16
LEASE GUARANTEES
In October 2000, the Company completed the Platinum Transaction. Under
the terms of the Platinum Transaction, all leases and corresponding obligations
associated with the Transaction Processing and Software Business were assumed by
Platinum. Prior to the Platinum Transaction, the Company guaranteed two
operating leases for office space of the divested companies. The first lease is
related to office space located in San Antonio, Texas, and expires in 2006.
Under the original terms of the first lease, the remaining minimum undiscounted
rent payments total $1,975,000 at September 30, 2005. The second lease is
related to office space located in Austin, Texas, and expires in 2010. Under the
original terms of the second lease, the remaining minimum undiscounted rent
payments total $6,029,000 at September 30, 2005. In conjunction with the
Platinum Transaction, Platinum agreed to indemnify the Company should the
underlying operating companies not perform under the terms of the office leases.
The Company can provide no assurance as to Platinum's ability, or willingness,
to perform its obligations under the indemnification. The Company does not
believe it is probable that it will be required to perform under these lease
guarantees and, therefore, no liability has been accrued in the Company's
financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk primarily through its
portfolio of cash equivalents and short-term marketable securities. The Company
does not believe that it has significant exposure to market risks associated
with changing interest rates as of September 30, 2005, because the Company's
intention is to maintain a liquid portfolio. The Company has not used derivative
financial instruments in its operations.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed with the objective of
ensuring that information required to be disclosed in the Company's reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), such
as this Form 10-Q, is reported in accordance with the rules of the SEC.
Disclosure controls are also designed with the objective of ensuring that such
information is accumulated appropriately and communicated to management,
including the chief executive officer and chief financial officer as appropriate
to allow timely decisions regarding required disclosures.
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's chief executive officer and chief
financial officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rules
13a-15(e) and 15d-15(e). Based upon that evaluation, the chief executive officer
and chief financial officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be
included in the Company's periodic SEC filings. No change in the Company's
internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) occurred during the period covered by this report that materially
affected or is reasonably likely to materially affect the Company's internal
control over financial reporting.
A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Because of inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.
17
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 11, 2004, Craig Davis, allegedly a stockholder of the
Company, filed a complaint in the Chancery Court of New Castle County, Delaware
(the "Complaint"). The Complaint asserts direct claims, and also derivative
claims on the Company's behalf, against five former and three current directors
of the Company. The individual defendants named in the Complaint are Parris H.
Holmes, Jr., C. Lee Cooke, Jr., Justin L. Ferrero, Gary D. Becker, J. Stephen
Barley, Stephen M. Wagner, Mark E. Schwarz, and Steven J. Pully; the Company is
a nominal defendant. In his Complaint, Mr. Davis seeks the appointment of a
receiver for the Company under Section 226(a) of the Delaware General
Corporation Law and other remedies. Mr. Davis alleges that different director
defendants breached their fiduciary duties to the Company. The allegations
involve, among other things, transactions with, and payments to, Mr. Holmes, and
whether the Company operated as an unregistered investment company.
The Company and certain of the defendants responded to the Complaint by
filing a motion to dismiss or stay the action on October 18, 2004 and on
November 3, 2004 filed a memorandum of law in support of such positions. The
motion to dismiss filed by the Company and various defendants was heard by the
Chancery Court of New Castle County, Delaware on January 18, 2005. The court
denied the motion to dismiss. On May 6, 2005, the Company and certain of the
defendants filed a response in opposition to plaintiff's motion for receiver.
Mediation among parties named in the Complaint took place in Wilmington,
Delaware on May 13, 2005. On May 31, 2005, Mr. Davis filed an amendment to the
Complaint to include James Risher, a current director, and Newcastle as
additional defendants. On July 8, 2005, the Company and certain defendants filed
a supplemental response in opposition to plaintiff's motion for appointment of
receiver. A trial date is currently set for March 6, 2006.
The Company is currently funding legal expenses of the defendants
pursuant to indemnification arrangements that were in place during the
respective terms of each of the defendants. As of September 30, 2005, the
Company had met the $500,000 deductible as stipulated in the Company's directors
and officers liability insurance policy. The directors and officers liability
insurance policy carries a maximum coverage limit of $5,000,000. Because this
case is in the early stages, it is not possible to evaluate the likelihood of
exceeding the policy limit. As of September 30, 2005, the Company has recorded a
receivable from the insurance carrier of approximately $1,378,000 for
reimbursement of legal and professional fees incurred in excess of the policy
deductible, in accordance with the provisions of the insurance policy. As of
November 11, 2005, the Company has not received any reimbursement from the
insurance carrier and continues to have ongoing discussions with the insurance
carrier regarding reimbursement under the provisions of the policy. If for any
reason the insurance carrier does not fulfill its obligation to reimburse the
Company under the insurance policy, nonpayment of the claim for reimbursement of
legal and professional fees could have a material adverse effect on the
financial condition and results of operations of the Company.
On October 27, 2004, the board of directors appointed Messrs. Pully,
Risher and Schwarz to a special litigation committee to investigate the claims
of the plaintiff. Prior to the filing of the Complaint, the Company had
commenced an investigation of various transactions involving former management,
including, among other things, the payment of approximately $600,000 to Mr.
Holmes in connection with a restricted stock agreement (see Note 7) and the
reimbursement of various expenses involving meals and entertainment, travel and
other reimbursed expenses. As part of the investigative work commenced by the
Company prior to the filing of the Complaint, the Company sought reimbursement
from Mr. Holmes for various amounts paid to him. The Company and Mr. Holmes were
unable to agree on the amount that Mr. Holmes should reimburse the Company.
18
The Company has been notified by counsel to both Mr. Holmes and David
P. Tusa (former chief financial officer) that each of Messrs. Holmes and Tusa
believe that approximately $60,000 and $34,000, respectively, are owed to each
of them under their respective consulting agreements. In addition to notifying
both Messrs. Holmes and Tusa that their consulting services were not required
and that no obligation therefore existed under their respective agreements, both
have also been notified that the Company is investigating various transactions,
including, among other things, the payment of approximately $600,000 to Mr.
Holmes in connection with a restricted stock agreement (see Note 7 to the
condensed consolidated financial statements) and the reimbursement of various
expenses involving meals and entertainment, travel and other reimbursed
expenses. The Company disputes that any additional amounts are owed under the
consulting agreements and, therefore, has not provided for such amounts in the
accompanying financial statements for the period ended September 30, 2005.
Pursuant to the Newcastle Transaction, the Company agreed to indemnify
Newcastle from any liability, loss or damage, together with all costs and
expenses related thereto that the Company may suffer which arises out of affairs
of the Company, its board of directors or employees prior to the closing of the
Newcastle Transaction. The Company's obligation to indemnify may be satisfied at
the option of the purchaser by issuing additional Series A Preferred Stock to
the purchaser, modifying the conversion price of the Series A Preferred Stock, a
payment of cash or a redemption of Series A Preferred Stock or a combination of
the foregoing. The Company and the purchaser have not yet determined whether
events that have arisen since the closing will trigger the indemnity provisions.
ITEM 6. EXHIBITS
Exhibits:
10.1 Revenue Sharing Agreement, dated as of October 5, 2005, between
New Century Equity Holdings Corp. and ACP Investments LP
10.2 Principals Agreement, dated as of October 5, 2005, by and among
New Century Equity Holdings Corp., Gary Shugrue, Constantine L.
Catsavis and Timothy Holmes, ACP Investments LP and the other
signatories thereto
31.1 Certification of Chief Executive Officer in Accordance with
Section 302 of the Sarbanes-Oxley Act
31.2 Certification of Chief Financial Officer in Accordance with
Section 302 of the Sarbanes-Oxley Act
32.1 Certification of Chief Executive Officer in Accordance with
Section 906 of the Sarbanes-Oxley Act
32.2 Certification of Chief Financial Officer in Accordance with
Section 906 of the Sarbanes-Oxley Act
19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NEW CENTURY EQUITY HOLDINGS CORP.
(Registrant)
Date: November 14, 2005 By: /s/ John P. Murray
-----------------------------
John P. Murray
CHIEF FINANCIAL OFFICER
(Duly authorized and principal financial officer)
20
