================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (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, 2005 |_| 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 (IRS 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) 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. |_| 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. |_| 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 |_| No 1Indicate 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 an accelerated filer (as defined in Exchange Act Rule 12b-2). |_| 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 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 $7,935,714. As of March 30, 2006, the Registrant had 34,653,104 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 2006 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, 2005. 2 NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005 PAGE ---- PART I Item 1. Business........................................................ 4 Item 1A. Risk Factors.................................................... 6 Item 1B. Unresolved Staff Comments....................................... 11 Item 2. Properties...................................................... 11 Item 3. Legal Proceedings............................................... 11 Item 4. Submission of Matters to a Vote of Security Holders............. 13 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities............... 13 Item 6. Selected Financial Data......................................... 14 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 15 Item 7A. Quantitative and Qualitative Disclosure About Market Risk....... 20 Item 8. Financial Statements and Supplementary Data..................... 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................................ 46 Item 9A. Controls and Procedures......................................... 46 Item 9B. Other Information............................................... 46 PART III Item 10. Directors and Executive Officers of the Registrant.............. 47 Item 11. Executive Compensation.......................................... 47 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters................................. 47 Item 13. Certain Relationships and Related Transactions.................. 47 Item 14. Principal Accountant Fees and Services.......................... 47 PART IV Item 15. Exhibits and Financial Statement Schedules...................... 47 Signatures...................................................... 50 3 PART I ITEM 1. 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"), pursuant to which the Company currently receives 50% of the revenues generated by Ascendant. Ascendant is a Berwyn, Pennsylvania based alternative asset management company whose funds have investments in long/short equity funds and which distributes its registered funds primarily through various financial intermediaries and related channels. The Company's 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 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 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. Following the investment by Newcastle, the management team resigned and new executives and board members were appointed. During May 2005, the Company sold its equity interest in Sharps Compliance Corp. ("Sharps") for approximately $334,000. Following the sale of its Sharps interest, the Company no longer holds any investments made by former management and which reflected former management's strategy of investing in high-growth companies. RECENT DEVELOPMENTS 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 Company is a nominal defendant. Mr. Davis alleges in the Complaint that different director defendants breached their fiduciary duties to the Company. The allegations involve, among other things, transactions with, and payments to, Parris H. Holmes, Jr., a former executive officer and director, and whether the Company operated as an unregistered investment company. Mr. Davis seeks the appointment of a receiver for the Company under Section 226(a) of the Delaware General Corporation Law and other remedies. Management has spent extensive amounts of time and expense dealing with matters related to the Complaint and has been diligently working to resolve the asserted claims. The Company has had extensive meetings with the other parties to the litigation in an attempt to settle the litigation. There can be no assurance that the Company will be able to effect a settlement. 5 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 generated by Ascendant, which interest declines if the assets under management of Ascendant reach certain levels. Revenues generated by Ascendant include revenues from assets under management or any other sources or investments, net of any agreed commissions. The Company also agreed to provide various marketing services to Ascendant. Steven J. Pully, CEO of the Company, was appointed to the Investment Advisory Committee of Ascendant. The total potential purchase price under the terms of the Ascendant Agreement is $1,550,000, payable in four equal installments of $387,500. The first installment was paid at the closing and the second installment was paid on January 5, 2006. Subject to the provisions of the Ascendant Agreement, the third installment is payable on April 5, 2006 and the fourth installment is payable on July 5, 2006. The Ascendant Agreement provides for the repurchase of a portion of the revenue interest by Ascendant beginning two years after October 5, 2005, under certain circumstances, at a price which would yield a 25% annualized return to the Company. If the Company does not make an installment payment and Ascendant is not in breach of the Ascendant Agreement, Ascendant will have the right to acquire the Company's revenue interest at a price which would yield a 10% annualized return to the Company. If Ascendant were to materially breach its obligations under the Ascendant Agreement, Ascendant could be obligated to refund to the Company the amount of its investment. Such refund would not reduce the revenue interest acquired by the Company. Ascendant had assets under management of approximately $17,800,000 and $13,577,000 as of December 31, 2005 and 2004, respectively. Ascendant manages funds of funds with investments in long/short equity funds. In connection with the Ascendant Agreement, the Company also entered into a Principals Agreement with Ascendant and certain limited partners and key employees of Ascendant (the "Principals Agreement") pursuant to which the Company has the option to purchase limited partnership interests of Ascendant under certain circumstances. Effective March 14, 2006, in accordance with the terms of the Principals Agreement, the Company acquired a 7% limited partnership interest from a limited partner of Ascendant for a nominal amount. EMPLOYEES As of December 31, 2005, the Company had two employees. None of the Company's employees are represented by a union. The Company believes that its employee relations are good. ITEM 1A. 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 operating 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. 6 OUR BUSINESS COULD BE HARMED IF THERE IS A NON-FAVORABLE RESOLUTION TO THE DERIVATIVE ACTION COMMENCED AGAINST US BY CRAIG DAVIS OR IN OTHER LITIGATION OR REGULATORY PROCEEDINGS AGAINST THE COMPANY. As discussed in "Item 3. Legal Proceedings", certain of the Company's former and existing directors are defendants in a derivative action filed by Craig Davis, who allegedly is a stockholder of the Company. The Company is a nominal defendant. An adverse outcome in the lawsuit filed by Mr. Davis or any other claim, which may arise in the ordinary course of our business, may result in significant monetary damages, a liquidation of the Company's assets or injunctive relief against us, among other remedies. While management currently believes that resolving the lawsuit filed by Mr. Davis will not have a material adverse impact on our financial position or results of operations, litigation is subject to inherent uncertainties and management's view of these matters may change in the future. There exists the possibility of a material adverse impact on our financial position and the results of operations for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable. The Company is currently funding legal and professional fees of the defendants pursuant to indemnification arrangements that were in place during the respective terms of each of the defendants. The Company has met the $500,000 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 December 31, 2005, the Company has recorded a receivable from the insurance carrier of approximately $1,522,000 for reimbursement of legal and professional fees incurred in excess of the policy deductible, in accordance with the provisions of the insurance policy. 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. Nonpayment of the claim for reimbursement of legal and professional fees could have a material adverse effect on the financial condition and results of operations of the Company. The Company intends to vigorously seek enforcement of its rights under the policy. Among the claims filed by Mr. Davis is a claim that the Company operated as an illegal investment company in violation of the Investment Company Act of 1940 (the "Investment Company Act"). Although the Company does not believe that it has violated the Investment Company Act in the past, or at present, there can be no assurance that the Company has not, or is 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 the Company to redeploy its assets and use its 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 recently 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, expenses incurred in pursuing and operating new business activities and litigation expenses, during which time operating losses are likely to be generated. 7 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, WHICH MAY BE IMPACTED BY THE SECURITIES MARKETS. In the event that Ascendant does not meet growth targets, the Company may cease to make or delay additional funding, which could cause Ascendant to seek financial support from other sources. 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 negatively impact our revenues. 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. 8 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 would 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 adopted an amendment to our Shareholders Rights Plan ("Rights Plan") which reduces the triggering of the Rights Plan from 15% of the Common Stock to 5% percent of the Common Stock. The amendment was adopted to help preserve our NOL and capital loss carryforwards. There is no guarantee that the amendment of the 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 OUR STOCK IS ILLIQUID. Our stock is currently quoted on the OTC Bulletin Board ("OTCBB"), and has traded as low as $0.18 per share during 2005. 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 the Company's 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 the Company's 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, 2005, our total assets were approximately $14,578,000, of which $415,000 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 intangible impairment charge, our results of operations and financial position could be adversely affected. 10 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable ITEM 2. 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 is obligated to make monthly rental installments of approximately $3,000 through January 31, 2007, the expiration of the lease. The sublease agreement provides 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 300 Crescent Court, Suite 1110, Dallas, Texas 75201, which are also the offices of Newcastle Capital Management, L.P. ("NCM"). NCM is the general partner of Newcastle. Pursuant to an oral agreement, the Company occupies a portion of NCM's space on a month-to-month basis at no charge. ITEM 3. LEGAL PROCEEDINGS On August 11, 2004, Craig Davis, allegedly a stockholder of the Company, filed the Complaint in the Chancery Court of New Castle County, Delaware. 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. Mr. Davis alleges in the Complaint that different director defendants breached their fiduciary duties to the Company. The allegations involve, among other things, transactions with, and payments to, Mr. Holmes, a former executive officer and director, and whether the Company operated as an unregistered investment company in violation of the Investment Company Act of 1940. Mr. Davis seeks the appointment of a receiver for the Company under Section 226(a) of the Delaware General Corporation Law and other remedies. 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. The Company has had extensive meetings with the other parties to the litigation in an attempt to settle the litigation. There can be no assurance that the Company will be able to effect a settlement. The Company is currently funding legal and professional fees of the defendants pursuant to indemnification arrangements that were in place during the respective terms of each of the defendants. The Company has met the $500,000 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 December 31, 2005, the Company has recorded a receivable from the insurance carrier of approximately $1,522,000 for reimbursement of 11 legal and professional fees incurred in excess of the policy deductible, in accordance with the provisions of the insurance policy. 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. Nonpayment of the claim for reimbursement of legal and professional fees could have a material adverse effect on the financial condition and results of operations of the Company. The Company intends to vigorously seek enforcement of its rights under the policy. 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 6 to the accompanying financial statements) 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 6 to the accompanying 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. 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. 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, 2005, stating the reasons why it believes it is not an "investment company". The Company continues to provide certain confirmatory information requested by the SEC. See Item 1A. "Risk Factors--OUR BUSINESS COULD BE HARMED IF THERE IS A NON-FAVORABLE RESOLUTION TO THE DERIVATIVE ACTION COMMENCED AGAINST US BY CRAIG DAVIS OR IN OTHER LITIGATION OR REGULATORY PROCEEDINGS AGAINST THE COMPANY." During February 2006, the Company entered into an agreement with a former employee to settle a dispute over a severance agreement that 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. 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of fiscal 2005, no matter was submitted by the Company to a vote of its stockholders through the solicitation of proxies or otherwise. PART II ITEM 5. 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, 2004 through December 31, 2005. These price quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions: High Low ---- --- Year Ended December 31, 2004: 1st Quarter $0.39 $0.20 2nd Quarter $0.35 $0.22 3rd Quarter $0.34 $0.24 4th Quarter $0.34 $0.23 Year Ended December 31, 2005: 1st Quarter $0.31 $0.23 2nd Quarter $0.25 $0.21 3rd Quarter $0.28 $0.19 4th Quarter $0.31 $0.18 STOCKHOLDERS As of March 29, 2006, there were 34,653,104 shares of Common Stock outstanding, held by 509 holders of record. The last reported sales price of the Common Stock on March 29, 2006 was $0.21 per share. DIVIDEND POLICY 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 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. 13 ITEM 6. 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, 2005, 2004, 2003, 2002, and 2001 and the balance sheet data as of December 31, 2005, 2004, 2003, 2002 and 2001 presented below are derived from the audited Consolidated Financial Statements of the Company. The data presented below for the years ended December 31, 2005, 2004 and 2003 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 ENDED DECEMBER 31, ----------------------------------------------------------- (in thousands, except per share data) 2005 2004 2003 2002 2001 ---- ---- ---- ---- ---- Consolidated Statement of Operations Data: Operating revenues .................................. $ 33 $ -- $ -- $ -- $ 502 Gross (loss) profit ................................. 33 -- -- -- (62) Operating loss from continuing operations ........... (1,009) (4,854) (3,174) (3,560) (14,590) Net loss from continuing operations ................. (543) (1,903) (6,486) (18,538) (38,328) Net loss from discontinued operations, net of income taxes ................... -- -- -- (962) (98) Net (loss) income from disposal of discontinued operations, net of income taxes ............................................. -- -- (30) 2,254 2,385 Net loss ............................................ (543) (1,903) (6,516) (17,246) (36,041) Preferred stock dividend ............................ (200) (107) -- -- -- Net loss applicable to common stockholders .......... (743) (2,010) (6,516) (17,246) (36,041) Basic and diluted net (loss) income per common share: Net loss from continuing operations ............... $ (.02) $ (.06) $ (0.19) $ (0.54) $ (1.10) Net loss from discontinued operations, net of income taxes .................. -- -- -- (0.03) -- Net (loss) income from disposal of discontinued operations, net of income taxes ..................................... -- -- -- 0.07 0.07 Net loss .......................................... $ (.02) $ (.06) $ (0.19) $ (0.50) $ (1.03) Dividends per common share .......................... $ -- $ -- $ -- $ -- $ -- Weighted average common shares outstanding ....................................... 34,653 34,653 34,379 34,217 34,910 DECEMBER 31, ----------------------------------------------------------- (in thousands) 2005 2004 2003 2002 2001 ---- ---- ---- ---- ---- Consolidated Balance Sheet Data: Working capital ..................................... $ 13,554 $ 14,428 $ 4,357 $ 8,454 $ 9,532 Total assets ........................................ 14,578 15,095 13,036 20,124 39,577 Long-term obligations and redeemable preferred stock .................................. 2 2 -- -- -- Additional paid-in capital .......................... 75,428 75,428 70,476 70,346 70,342 Accumulated deficit ................................. $(61,850) $(61,107) $(59,097) $(52,581) $(35,335) 14 ITEM 7. 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, whereby the Company is currently entitled to a 50% interest, subject to certain adjustments, in the revenues generated by Ascendant, which interest declines as the assets that Ascendant manages 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 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 Agreement, the third installment is payable on April 5, 2006 and the fourth installment is payable on July 5, 2006. If the Company does not make an installment and Ascendant is not in breach of the Ascendant Agreement, Ascendant will have the right to acquire the Company's revenue interest at a price which would yield a 10% annualized return to the Company. If Ascendant were to materially breach its obligations under the Agreement, Ascendant could be obligated to refund the Company the amount of its investment. Such refund would not reduce the revenue interest acquired by the Company. Ascendant had assets under management of approximately $17,800,000 and $13,577,000 as of December 31, 2005 and 2004, respectively. During the quarter ended December 31, 2005, Ascendant generated revenues of approximately $66,000 of which the Company was entitled to approximately $33,000. Based upon the assets under management of Ascendant as of December 31, 2005, the Company expects to initially receive revenues from Ascendant on a quarterly basis ranging from $30,000 to $35,000, which amount will increase if the assets under management of Ascendant increase or will decrease if the assets under management of Ascendant decrease. The revenues earned by the Company are payable in cash within 30 days after the end of each quarter. After the second anniversary of the Ascendant Agreement and upon the occurrence of certain events, Ascendant has the option to repurchase a portion of the Company's revenue interest at a price which would yield a 25% annualized return to the Company. The Company also entered into the Principals Agreement with Ascendant and the limited partners and key employees of Ascendant pursuant to which the Company has the option to purchase limited partnership interests of Ascendant under certain circumstances. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative ("SG&A") expenses are comprised of all selling, marketing and administrative costs incurred in direct support of the business operations of the Company. During the year ended December 31, 2005, SG&A expenses totaled $1,035,000, compared to $4,826,000 during the year ended December 31, 2004 and $3,021,000 during the year ended December 31, 2003. The major components of SG&A expenses for the year ended December 31, 2005 are as follows: officers and directors compensation and benefits of approximately $237,000; audit and tax fees of approximately 15 $104,000; directors and officers insurance coverage of approximately $150,000; settlement costs associated with the resolution of a dispute over a severance agreement with a former employee of approximately $92,000; legal fees and other public company cost of approximately $143,000; and legal fees of approximately $260,000 which relate to the derivative action filed by Craig Davis (see "Part I - - Item 3. Legal Proceedings"), and were incurred prior the Company meeting the deductible as provider for in the directors and officers liability insurance policy. The decrease in SG&A for the year ended December 31, 2005 when compared to the year ended December 31, 2004 and December 31, 2003 is the result of the number of salaried employees being reduced from five to one and a significant reduction in executive compensation and benefits. SG&A expenses for the year ended December 31, 2004 included a total of approximately $2,600,000 of severance paid to Parris H. Holmes, Jr. and David P. Tusa, the Company's former Chief Executive Officer and Chief Financial Officer, respectively. SG&A expenses for 2004 also included approximately $700,000 for legal and professional expenses, of which approximately $240,000 relates to the Complaint filed by Craig Davis (see "Part I - Item 3. Legal Proceedings") and approximately $500,000 relates to completing the proposed proxy statement seeking stockholder approval to liquidate the Company (which was subsequently withdrawn) and completing the sale of approximately 4,807,692 newly issued shares of the Series A Preferred Stock to Newcastle on June 18, 2004. The Company also decreased its 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. 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 year ended December 31, 2005, depreciation and amortization expense totaled $7,000, compared to $28,000 during the year ended December 31, 2004 and $153,000 during the year ended December 31, 2003. 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, 2005. INTEREST INCOME Interest income totaled $423,000 during the year ended December 31, 2005, compared to $121,000 and $77,000 during the years ended December 31, 2004 and 2003, respectively. The increase in interest income for the year ended December 31, 2005, as compared the year ended December 31, 2004 was attributable to increased yields available for short-term investments and higher cash balances available for short-term investment as the Company's cash resources were increased by the Newcastle Transaction and the sale of Princeton (see Notes 1 and 4 of the accompanying Consolidated Financial Statements). EQUITY IN NET LOSS OF AFFILIATES Equity in net loss of affiliates totaled $0 during the year ended December 31, 2005, compared to $2,985,000 and $2,723,000 during the years ended December 31, 2004 and 2003, respectively. In June 2004, the Company sold all of its holdings in Princeton, which offers electronic bill presentment and payment services via the Internet and telephone. GAIN ON SALE OF EQUITY AFFILIATE The sale of Princeton for $10,000,000 in June 2004 generated a capital loss for federal income tax purposes of approximately $67,000,000 and a book gain of approximately $5,817,000 during the year ended December 31, 2004. 16 IMPAIRMENT OF INVESTMENTS During the year ended December 31, 2003, the Company evaluated the realizability of its investment in Sharps in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The Company compared the fair market value of its investment in Sharps to the carrying value of the investment to determine the impairment. Based upon the current fair market value, the Company determined that its investment in Sharps was permanently impaired by $306,000 and, accordingly, recorded an impairment write-down, which is included in other income (expense) as impairment of investments in affiliates. LITIGATION SETTLEMENT In November 1999, the Company completed the acquisition of FIData, Inc. ("FIData"), a company that provided Internet-based automated loan approval products to the financial services industry. In October 2001, the Company exchanged 100% of its stock of FIData for a 9% equity interest in Microbilt Corporation ("Microbilt"). In April 2003, the Company received notice that Bristol Investments, Ltd. ("Bristol") and Microbilt filed suit against the Company and one of its officers alleging breach of contract and misrepresentation in conjunction with the October 2001 merger of FIData into Microbilt. In October 2003, the Company settled the suit by surrendering its ownership of the common stock of Microbilt to Bristol. During the year ended December 31, 2003, net other expense includes a litigation settlement of $354,000, representing the transfer of the Company's investment in Microbilt to Bristol. This settlement resolves all claims brought by and against the Company and the officer. INCOME TAXES As a result of the operating losses incurred in recent years, no provision or benefit for income taxes was recorded for the years ended December 31, 2005, 2004 and 2003. DISCONTINUED OPERATIONS NET LOSS FROM DISPOSAL OF DISCONTINUED OPERATIONS During the year ended December 31, 2003, a net loss of $30,000 resulted from the disposal of the discontinued operations of Tanisys Technology Inc. LIQUIDITY AND CAPITAL RESOURCES The Company's cash balance and short-term investments decreased to $12,487,000 at December 31, 2005, from $14,611,000 at December 31, 2004. The significant cash receipts and disbursements affecting the cash balances and short-term investments for the year ended December 31, 2005, are as follows: a payment of $200,000 dividend on the Series A Preferred Stock; funding of legal cost related to the Complaint of $1,623,000 of which $1,522,000 is expected to be reimbursed under the terms of the directors and officers liability insurance policy; the first installment under the Ascendant Agreement of $387,500; and the funding of SG&A expenses which was partially offset by $423,000 of interest income and $334,000 in proceeds from the sale of Sharps during the year ended December 31, 2005. 17 The Company is currently funding legal and professional fees of the current and former director defendants in the Complaint pursuant to indemnification arrangements that were in place during the respective terms of each of the defendants. The Company has 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 December 31, 2005, the Company has recorded a receivable from the insurance carrier of approximately $1,522,000 for reimbursement of legal and professional fees incurred in excess of the policy deductible, in accordance with the provisions of the policy. 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. Nonpayment of the claim for reimbursement of legal and professional fees could have a material adverse effect on the financial condition and results of operations of the Company. The Company intends to vigorously seek enforcement of its rights under the policy. During the next 12 months, the Company's operating cash requirements are expected to consist principally of funding corporate expenses, the costs associated with maintaining a public company and expenses incurred in pursuing the Company's business plan. Additionally, the total potential purchase price under the terms of the Ascendant Agreement is $1,550,000, payable in four equal installments of $387,500. Subject to the provisions of the Ascendant Agreement, the third installment is payable on April 5, 2006 and the fourth installment is payable on July 5, 2006. If the Company does not make an installment and Ascendant is not in breach of the Ascendant Agreement, Ascendant will have the right to acquire the Company's revenue interest at a price which would yield a 10% annualized return to the Company. If Ascendant were to materially breach its obligations under the Ascendant Agreement, Ascendant could be obligated to refund the Company the amount of its investment. Such refund would not reduce the revenue interest acquired by the Company. The Company is not obligated to make the third or fourth installment and has not determined whether or not the installment payments will be made. The Company expects to incur additional operating losses through fiscal 2006 which will continue to have a negative impact on liquidity and capital resources. Capital expenditures totaled $0 and $3,000 during the years ended December 31, 2005 and 2004, respectively. LEASE GUARANTEES In October 2000, the Company completed the Platinum Transaction. Under the terms of the Platinum Transaction, all leases and corresponding obligations associated with the Transaction Processing and Software Business were assumed by Platinum. Prior to the Platinum Transaction, the Company guaranteed two operating leases for office space of the divested companies. The first lease is related to office space located in San Antonio, Texas, and expires in 2006. Under the original terms of the first lease, the remaining minimum undiscounted rent payments total approximately $1,519,000 at December 31, 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 $5,674,000 at December 31, 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. 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). 18 CONTRACTUAL OBLIGATIONS The Company's contractual obligations are as follows (in thousands): Payments due by period ------------------------------------------------------------------------ Less than More than Contractual Obligations Total 1 year 1-3 years 3-5 years 5 years - ------------------------------------- ----------- ----------- ----------- ---------- ---------- Long-term debt obligations........... $ - $ - $ - $ - $ - Capital lease obligations............ - - - - - Operating lease obligations.......... 39 36 3 - - Purchase obligations................. - - - - - Other long-term liabilities reflected on balance sheet under GAAP......................... 2 - 2 - - ----------- ----------- ----------- ---------- ---------- Total................................ $ 41 $ 36 $ 5 $ - $ - =========== =========== =========== ========== ========== The operating lease obligations reflected in the table above represent the Company's lease for office space, which is discussed further under Item 2 of this annual report. 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 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. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 regarding the SEC's interpretation of SFAS No. 123R and the valuation of share-based payments for public companies. The Company is evaluating the requirements of SFAS No. 123R and SAB No. 107 and expects that the adoption of SFAS No. 123R on January 1, 2006 will not have a material adverse effect on its financial position, results of operation and cash flows. In May 2005, the FASB issued SFAS No. 154, ACCOUNTING CHANGES AND ERROR CORRECTIONS--A REPLACEMENT OF APB OPINION NO. 20 AND FASB STATEMENT NO. 3. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. This statement requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. 19 This statement redefines restatements as the revising of previously issued financial statements to reflect the correction of an error. SFAS No. 154 requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. This statement also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of this standard to have a material effect on its financial position, results of operations or cash flows. In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" ("FSP 115-1"), which provides guidance on determining when investments in certain debt and equity securities are considered impaired, whether that impairment is other-than-temporary, and on measuring such impairment loss. FSP 115-1 also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. FSP 115-1 is required to be applied to reporting periods beginning after December 15, 2005. The Company does not expect the adoption of the standard to have a material effect on its financial position, results of operations or cash flows. 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. CONSOLIDATION OF SUBSIDIARIES In general, the accounting rules and regulations require the consolidation of entities in which the company holds an equity interest greater than 50% and the use of the equity method of accounting for entities in which the company holds an interest between 20% and 50%. Exceptions to these rules are (i) when a company does not exercise control over the decision making of an entity although the company does own over 50% of the entity and (ii) when a company does exercise control over the decision making of an entity but the company owns between 20% and 50% of the entity. As of December 31, 2003, the Company owned 34.0% of the outstanding shares of Princeton. In June 2004, the Company sold all of its interest in Princeton for $10,000,000. ITEM 7A. 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, 2005, because the Company's intention is to maintain a liquid portfolio. The Company has not used derivative financial instruments in its operations. 20 ITEM 8. 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. Page ---- Report of Management........................................................ 22 Report of Independent Registered Public Accounting Firm..................... 23 Consolidated Balance Sheets as of December 31, 2005 and 2004................ 24 Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003....................................................... 25 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2005, 2004 and 2003.......................................... 26 Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003....................................................... 27 Notes to Consolidated Financial Statements.................................. 28 21 REPORT OF MANAGEMENT The financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America. Management is responsible for preparing the consolidated financial statements and maintaining and monitoring the Company's system of internal accounting controls. The Company believes that the existing system of internal controls provides reasonable assurance that errors or irregularities that could be material to the financial statements are prevented or would be detected in a timely manner. Key elements of the Company's system of internal controls include careful selection of management personnel, appropriate segregation of conflicting responsibilities, periodic evaluations of Company financial and business practices, communication practices that provide assurance that policies and managerial authorities are understood throughout the Company, and periodic meetings between the Company's audit committee, senior financial management personnel and independent public accountants. The consolidated financial statements as of and for the years ended December 31, 2005 and 2004, were audited by Burton McCumber & Cortez, L.L.P., independent public accountants, who have also issued a report on the consolidated financial statements. /s/ STEVEN J. PULLY Steven J. Pully CHIEF EXECUTIVE OFFICER /s/ JOHN P. MURRAY John P. Murray CHIEF FINANCIAL OFFICER 22 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, 2005 and 2004, and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended December 31, 2005, 2004 and 2003. 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, 2005 and 2004, and the consolidated results of their operations and their consolidated cash flows for the years ended December 31, 2005, 2004 and 2003 in conformity with accounting principles generally accepted in the United States of America. /s/ BURTON McCUMBER & CORTEZ, L.L.P. Brownsville, Texas March 7, 2006 23 NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) December 31, 2005 2004 -------- -------- ASSETS Current assets: Cash and cash equivalents .......................................... $ 12,487 $ 1,716 Accounts receivable ................................................ 33 -- Insurance receivable and other assets .............................. 1,637 145 Short-term investments ............................................. -- 12,895 -------- -------- Total current assets .............................................. 14,157 14,756 Property and equipment ............................................... 183 183 Accumulated depreciation ............................................. (183) (176) -------- -------- Net property and equipment ......................................... -- 7 Investments .......................................................... -- 326 Other non-current assets ............................................. 6 6 Revenue interest ..................................................... 415 -- -------- -------- Total assets ....................................................... $ 14,578 $ 15,095 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ................................................... $ 53 $ 45 Accrued liabilities ................................................ 550 283 -------- -------- Total current liabilities ......................................... 603 328 Other non-current liabilities ........................................ 2 2 -------- -------- Total liabilities ................................................. 605 330 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 ................................................ (61,850) (61,107) Accumulated other comprehensive income ............................. -- 49 -------- -------- Total stockholders' equity ........................................ 13,973 14,765 -------- -------- Total liabilities and stockholders' equity ....................... $ 14,578 $ 15,095 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 24 NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) Year Ended December 31, 2005 2004 2003 -------- -------- -------- Operating revenues .................................. $ 33 $ -- $ -- Operating expenses: Selling, general and administrative expenses ...... 1,035 4,826 3,021 Depreciation and amortization expense .............. 7 28 153 -------- -------- -------- Operating loss from continuing operations ........... (1,009) (4,854) (3,174) Other income (expense): Interest income .................................... 423 121 77 Equity in net loss of affiliates ................... -- (2,985) (2,723) Gain on sale of equity affiliate ................... -- 5,817 -- Impairment of investments in affiliates ............ -- -- (306) Litigation settlement .............................. -- -- (354) Other (expense) income, net ........................ 43 (2) (6) -------- -------- -------- Total other (expense) income, net ................... 466 2,951 (3,312) -------- -------- -------- Net loss from continuing operations ................. (543) (1,903) (6,486) Discontinued operations: Net loss from disposal of discontinued operations, including income tax benefit of $0 ............... -- -- (30) -------- -------- -------- Net loss from discontinued operations ............. -- -- (30) -------- -------- -------- Net loss ............................................ (543) (1,903) (6,516) Preferred stock dividend ............................ (200) (107) -- -------- -------- -------- Net loss applicable to common stockholders .......... $ (743) $ (2,010) $ (6,516) ======== ======== ======== Basic and diluted net (loss) income per common share: Net loss from continuing operations ................ $ (.02) $ (0.06) $ (0.19) Net loss from discontinued operations .............. -- -- -- Net income from disposal of discontinued operations -- -- -- -------- -------- -------- Net loss ........................................... $ (.02) $ (0.06) $ (0.19) -------- -------- -------- Weighted average common shares outstanding .......... 34,653 34,653 34,379 -------- -------- -------- The accompanying notes are an integral part of these consolidated financial statements. 25 NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (IN THOUSANDS) Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit -------- -------- -------- -------- Balances at December 31, 2002 ............. 34,218 $ 342 $ 70,346 $(52,581) Issuance of common stock ................ 435 5 130 -- Net loss ................................ -- -- -- (6,516) -------- -------- -------- -------- Balances at December 31, 2003 ............. 34,653 347 70,476 (59,097) Issuance of preferred stock ............. -- -- 4,952 -- Comprehensive income (loss): Unrealized gain on investment ........ -- -- -- -- Net loss ............................. -- -- -- (2,010) Comprehensive loss ...................... -- -- -- (2,010) -------- -------- -------- -------- Balances at December 31, 2004 ............. 34,653 347 75,428 (61,107) Comprehensive income (loss): Reclassification of unrealized gain on investment ......................... -- -- -- -- Net loss ............................. -- -- -- (743) Comprehensive loss ...................... -- -- -- (743) -------- -------- -------- -------- Balances at December 31, 2005 ............. 34,653 $ 347 $ 75,428 $(61,850) ======== ======== ======== ======== Accumulated Other Preferred Stock Comprehensive Shares Amount Income Total -------- -------- -------- -------- Balances at December 31, 2002 ............. -- $ -- $ -- $ 18,107 Issuance of common stock ................ -- -- -- 135 Net loss ................................ -- -- -- (6,516) -------- -------- -------- -------- Balances at December 31, 2003 ............. -- -- -- 11,726 Issuance of preferred stock ............. 4,808 48 -- 5,000 Comprehensive income (loss): Unrealized gain on investment ........ -- -- 49 49 Net loss ............................. -- -- -- (2,010) Comprehensive loss ...................... -- -- 49 (1,961) -------- -------- -------- -------- Balances at December 31, 2004 ............. 4,808 48 49 14,765 Comprehensive income (loss): Reclassification of unrealized gain on investment ......................... -- -- (49) (49) Net loss ............................. -- -- -- (743) Comprehensive loss ...................... -- -- (49) (792) -------- -------- -------- -------- Balances at December 31, 2005 ............. 4,808 $ 48 $ -- $ 13,973 ======== ======== ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 26 NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) Year Ended December 31, 2005 2004 2003 -------- -------- -------- Cash flows from operating activities: Net loss from continuing operations ............................... $ (543) $ (1,903) $ (6,486) Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: Depreciation and amortization expense ............................ 7 27 153 Equity in net loss of and impairment of investments in affiliates -- 2,985 3,029 Gain on sale of equity affiliate ................................. -- (5,817) -- Loss on sale of treasury bill .................................... 14 -- -- Gain on sale of Sharps Compliance Corp. common stock ............. (57) -- -- Litigation settlement ............................................ -- -- 354 Loss on disposition of fixed assets .............................. -- 30 17 Accretion of discount on securities .............................. (185) (36) -- Changes in operating assets and liabilities: (Increase) decrease in accounts receivable ...................... (33) 28 (19) (Increase) decrease in insurance receivable and other assets .... (1,492) 171 156 Increase (decrease) in accounts payable ......................... 8 (13) 28 Increase (decrease) in accrued liabilities ...................... 267 (687) 486 Increase in other liabilities and other non-cash items .......... -- -- 136 -------- -------- -------- Net cash used in continuing operating activities .................... (1,238) (5,215) (2,146) Net cash provided by discontinued operating activities .............. -- -- 78 -------- -------- -------- Net cash used in operating activities ............................. (1,238) (5,215) (1,968) Cash flows from investing activities: Purchases of property and equipment ............................... -- (3) (6) Proceeds from sale of short-term investments ...................... 27,186 -- -- Purchase of short-term investments ................................ (13,786) (12,858) -- Purchase of revenue interest ...................................... (415) Investments in affiliates ......................................... -- -- (1,400) 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 activities ........................................ -- 62 -- -------- -------- -------- Net cash provided by (used in) investing activities ................. 12,209 (3,399) (1,406) Cash flows from financing activities: Cash dividends paid on preferred stock ............................ (200) -- -- Proceeds from sale of preferred stock ............................. 5,000 -- -------- -------- -------- Net cash (used in) provided by financing activities ................. (200) 5,000 -- -------- -------- -------- Net increase (decrease) in cash and cash equivalents ................ 10,771 (3,614) (3,374) Cash and cash equivalents, beginning of period ...................... 1,716 5,330 8,704 -------- -------- -------- Cash and cash equivalents, end of period ............................ $ 12,487 $ 1,716 $ 5,330 ======== ======== ======== Supplemental disclosure of non-cash transactions: Increase in fair market value of investments ....................... $ -- $ 49 $ -- Preferred stock dividend ........................................... $ -- $ 107 $ -- The accompanying notes are an integral part of these consolidated financial statements. 27 NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005, 2004 AND 2003 NOTE 1. BUSINESS ACTIVITY 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"), pursuant to which the Company currently receives 50% of the revenues generated by Ascendant. Ascendant is a Berwyn, Pennsylvania based alternative asset management company whose funds have investments in long/short equity funds and which distributes its registered funds primarily through various financial intermediaries and related channels. The Company's 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 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. Following the investment by Newcastle, the management team resigned and new executives and board members were appointed. During May, 2005, the Company sold its equity interest in Sharps Compliance Corp. ("Sharps") for approximately $334,000. Following the sale of its Sharps interest, the Company no longer holds any investments made by former management and which reflected former management's strategy of investing in high-growth companies. 28 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") (See Note 6). The Company has had extensive meetings with the other parties to the litigation in an attempt to settle the litigation. There can be no assurance that the Company will be able to effect a settlement. 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 Princeton was accounted for using the equity method of accounting. The Company's investment in Sharps was accounted for in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The Company's investment in Microbilt Corporation was accounted for under the cost method of accounting. All significant intercompany 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. 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 receivables. 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 29 represent the underlying value of the Company. The carrying amounts of cash and cash equivalents, current receivables and payables and long-term liabilities approximate fair value because of the nature of these instruments. REVENUE INTEREST The Company has determined that the revenue interest that it has 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. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets, which range from three to seven years. Upon disposition, the cost and related accumulated depreciation or amortization are removed from the accounts and the resulting gain or loss is reflected in other income (expense) for that period. Expenditures for maintenance and repairs are charged to expense as incurred and major improvements are capitalized. INVESTMENTS IN EQUITY SECURITIES The Company follows the standards of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," 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 No. 115, as Sharps' common stock is publicly traded. SFAS No. 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. 30 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 Deferred tax assets and liabilities are recorded based on enacted income tax rates that are expected to be in effect in the period in which the deferred tax asset or liability is expected to be settled or realized. A change in the tax laws or rates results in adjustments to the deferred tax assets and liabilities. The effects of such adjustments are required to be included in income in the period in which the tax laws or rates are changed. RECLASSIFICATIONS Certain amounts have been reclassified in the prior year to conform to the current year presentation. DISCONTINUED OPERATIONS SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets", establishes standards for accounting and reporting for long-lived assets to be disposed of by sale. The Company previously adopted SFAS No. 144 and determined that the operations of Tanisys Technology, Inc. ("Tanisys") qualified as discontinued operations and, accordingly, are reported separately from continuing operations. 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, 2005, 2004 and 2003, diluted EPS equals basic EPS, as potentially dilutive common stock equivalents are anti-dilutive in loss periods. STOCK-BASED COMPENSATION The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation," but elected to apply APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its stock option plans (see Note 9). 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. In accordance with the provisions of APB Opinion No. 25, the Company did not recognize compensation expense for employee stock purchased under the NCEH Employee Stock Purchase Plan ("ESPP"). 31 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. The Company believes that the overall impact to the financial statements will be immaterial. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 regarding the SEC's interpretation of SFAS No. 123R and the valuation of share-based payments for public companies. The Company is evaluating the requirements of SFAS No. 123R and SAB No. 107 and expects that the adoption of SFAS No. 123R on January 1, 2006 will not have a material adverse effect on its financial position, results of operation and cash flows. 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 and ESPP purchases 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. Year Ended December 31, (in thousands, except per share data) 2005 2004 2003 ------- ------- ------- Net loss, as reported .................................... $ (743) $(1,903) $(6,516) Less: Total stock based employee compensation expense determined under the fair value based method for all awards, net of related tax effects ..................... (32) (100) (347) ------- ------- ------- Net loss, pro forma ...................................... $ (775) $(2,003) $(6,863) ======= ======= ======= Basic and diluted net loss per common share: Net loss, as reported .................................. $ (0.02) $ (0.06) $ (0.19) ======= ======= ======= Net loss, pro forma .................................... $ (0.02) $ (0.06) $ (0.20) ======= ======= ======= 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%, 99.2% and 96.3% for the years ended December 31, 2005, 2004 and 2003, respectively; no dividend yield; expected life of 2.5 years for all option grants and 0.5 years for all ESPP purchases; and risk-free interest rates of 4.75%, 4.75%, and 1.8% for the years ended December 31, 2005, 2004 and 2003, respectively. 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 currently entitled to a 50% interest, subject to certain adjustments, in the revenues of Ascendant, which interest declines if the assets under management of Ascendant reach certain levels. Revenues generated by Ascendant include revenues from assets under management or any other sources or investments, net of any agreed commissions. The Company also agreed to provide various marketing services to Ascendant. Steven J. Pully, CEO of the Company, was appointed to the Investment Advisory Committee of Ascendant. The total potential purchase price under the terms of the Ascendant 32 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 Agreement, the third installment is payable on April 5, 2006 and the fourth installment is payable on July 5, 2006. If the Company does not make an installment payment and Ascendant is not in breach of the Ascendant Agreement, Ascendant will have the right to acquire the Company's revenue interest at a price which would yield a 10% annualized return to the Company. If Ascendant were to materially breach its obligations under the Agreement, Ascendant could be obligated to refund the Company the amount of its investment. Such refund would not reduce the revenue interest acquired by the Company. Ascendant had assets under management of approximately $17,800,000 and $13,577,000 as of December 31, 2005 and 2004, respectively. During the quarter ended December 31, 2005, Ascendant generated revenues of approximately $66,000 of which the Company was entitled to approximately $33,000. The revenues earned by the Company from the Ascendant revenue interest are payable in cash within 30 days after the end of each quarter. After the second anniversary of the Ascendant Agreement and upon the occurrence of certain events, Ascendant has the option to repurchase a portion of the Company's interest at a price which would yield a 25% annualized return to the Company. In connection with the Ascendant Agreement, the Company also entered into the Principals Agreement with Ascendant and certain limited partners and key employees of Ascendant (the "Principals Agreement") pursuant to which the Company has the option to purchase limited partnership interests of Ascendant under certain circumstances (see Note 19). NOTE 4. ACQUISITIONS AND INVESTMENTS PRINCETON The Company made its initial investment in Princeton in September 1998. Princeton is a privately held company located in Princeton, New Jersey, that specializes in electronic bill presentment and payment solutions utilizing the Internet and telephone. Beginning in 1998 and through 2003 the Company invested a total of approximately $77,300,000 in Princeton. In June 2004, the Company sold all its interest in Princeton for $10,000,000. The sale generated a capital loss for federal income tax purposes of approximately $67,000,000 and a book gain of approximately $5,800,000. FIDATA/MICROBILT In November 1999, the Company completed the acquisition of FIData, Inc. ("FIData"), a company that provided Internet-based automated loan approval products to the financial services industry. In October 2001, the Company exchanged 100% of its stock of FIData for a 9% equity interest in Microbilt Corporation ("Microbilt"). In April 2003, the Company received notice that Bristol Investments, Ltd. ("Bristol") and Microbilt filed suit against the Company and one of its officers alleging breach of contract and misrepresentation in conjunction with the October 2001 merger of FIData into Microbilt. In October 2003, the Company settled the suit by surrendering its ownership of the common stock of Microbilt to Bristol. During the year ended December 31, 2003, net other expense includes a litigation settlement of $354,000, representing the transfer of the Company's investment in Microbilt to Bristol. This settlement resolves all claims brought by and against the Company and the officer. 33 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. During the year ended December 31, 2003, the Company recorded an approximate $306,000 impairment write-down related to its investment in Sharps (see Note 10). 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. NOTE 5. ACCRUED LIABILITIES Accrued liabilities is comprised of the following: December 31, (in thousands) 2005 2004 ------ ------ Accrued public company cost .............. $ 129 $ 98 Accrued preferred stock dividend ......... 107 107 Accrued legal ............................ 223 64 Accrued settlement ....................... 85 -- Other .................................... 6 14 ------ ------ Total accrued liabilities .............. $ 550 $ 283 ====== ====== 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. 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 expires in 2006. Under the original terms of the first lease, the remaining minimum undiscounted rent payments total approximately $1,519,000 at December 31, 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 $5,674,000 at December 31, 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. 34 On August 11, 2004, Craig Davis, allegedly a stockholder of the Company, filed the Complaint in the Chancery Court of New Castle County, Delaware. 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. Mr. Davis alleges in the Complaint that different director defendants breached their fiduciary duties to the Company. The allegations involve, among other things, transactions with, and payments to, Mr. Holmes, a former executive officer and director, and whether the Company operated as an unregistered investment company. 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. 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 of the defendants filed a supplemental response in opposition to plaintiff's motion for appointment of receiver. The Company has had extensive meetings with the other parties to the litigation in an attempt to settle the litigation. There can be no assurance that the Company will be able to effect a settlement. The Company is currently funding legal and professional fees of the defendants pursuant to indemnification arrangements that were in place during the respective terms of each of the defendants. The Company has met the $500,000 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 December 31, 2005, the Company has recorded a receivable from the insurance carrier of approximately $1,522,000 for reimbursement of legal and professional fees incurred in excess of the policy deductible, in accordance with the provisions of the insurance policy. 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. Nonpayment of the claim for reimbursement of legal and professional fees could have a material adverse effect on the financial condition and results of operations of the Company. The Company intends to vigorously seek enforcement of its rights under the policy. 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 16) 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. 35 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 16) 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. Pursuant to the sale of 4,807,692 newly issued shares of the Series A Preferred Stock to Newcastle on June 18, 2004 the Company agreed to indemnify Newcastle from any liability, loss or damage, together with all costs and expenses related thereto that the Company may suffer which arises out of affairs of the Company, its board of directors or employees prior to the closing of the Newcastle Transaction. The Company's obligation to indemnify may be satisfied at the option of the purchaser by issuing additional Series A Preferred Stock to the purchaser, modifying the conversion price of the Series A Preferred Stock, a payment of cash or a redemption of Series A Preferred Stock or a combination of the foregoing. The Company and the purchaser have not yet determined whether events that have arisen since the closing will trigger the indemnity provisions. On December 12, 2005, the Company received a letter from the SEC, based on a review of the Company's Form 10-K filed for the year ended December 31, 2004, requesting that the Company provide a written explanation as to whether the Company is an "investment company" (as such term is defined in the Investment Company Act of 1940). The Company provided a written response to the SEC, dated January 12, 2005, stating the reasons why it believes it is not an "investment company". The Company continues to provide certain confirmatory information requested by the SEC. See Item 1A. of Form 10-K for the year ended December 31, 2005 - "Risk Factors--OUR BUSINESS COULD BE HARMED IF THERE IS A NON-FAVORABLE RESOLUTION TO THE DERIVATIVE ACTION COMMENCED AGAINST US BY CRAIG DAVIS OR IN OTHER LITIGATION OR REGULATORY PROCEEDINGS AGAINST THE COMPANY." 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. NOTE 7. 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 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. 36 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 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 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, 2005, 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 year ended December 31, 2005, and has no plans to make any future treasury stock purchases. 37 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, 2005, 2004 and 2003, is summarized as follows: Number Weighted Average of Shares Exercise Price --------- -------------- Outstanding, December 31, 2002............ 6,713,432 $4.88 Granted................................. 90,000 $0.29 Canceled................................ (1,025,245) $9.53 ---------- Outstanding, December 31, 2003............ 5,778,187 $3.98 Granted................................. 300,000 $0.28 Canceled................................ (3,308,583) $4.54 ---------- Outstanding, December 31, 2004............ 2,769,604 $2.90 Granted................................. 90,000 $0.24 Canceled................................ (643,406) $2.68 ---------- Outstanding, December 31, 2005............ 2,216,198 $2.86 ========== At December 31, 2005, 2004 and 2003, stock options to purchase an aggregate of 2,082,865, 2,500,854, and 4,995,062 shares were exercisable and had weighted average exercise prices of $3.02, $3.13, and $4.53 per share, respectively. 38 Stock options outstanding and exercisable at December 31, 2005, were as follows: Options Outstanding Options Exercisable ------------------------------------------ ------------------------------- Weighted Average Range of Remaining Remaining Weighted Weighted Exercise Number Life Average Number Average Prices Outstanding (years) Exercise Price Exercisable Exercise Price ------ ----------- ------- -------------- ----------- -------------- $ 0.24 - $ 1.98 1,135,451 3.1 $ 0.35 1,002,118 $ 0.37 $ 2.03 - $ 4.88 876,414 1.0 $ 3.27 876,414 $ 3.27 $ 5.69 - $ 16.84 204,333 1.6 $ 14.62 204,333 $ 14.62 ----------- ----------- 2,216,198 2.2 $ 2.86 2,082,865 $ 3.02 =========== =========== 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 were $0.24 and $0.24 for the year ended December 31, 2005, $0.25 and $0.28 for the year ended December 31, 2004 and $0.20 and $0.29 for the year ended December 31, 2003, respectively. NOTE 10. IMPAIRMENT During the year ended December 31, 2003, the Company evaluated the realizability of its investment in Sharps in accordance with SFAS No. 115. The Company compared the fair market value of its investment in Sharps to the carrying value of the investment to determine the impairment. Based upon the current fair market value, the Company determined that its investment in Sharps was permanently impaired by $306,000 and, accordingly, recorded an impairment write-down, which is included in other income (expense) as impairment of investments in affiliates. NOTE 11. 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, 2005, the Company held all short-term investments in cash. NOTE 12. LEASES The Company leases certain office space and equipment under operating leases. Rental expense was approximately $36,000, $58,000 and $164,000 for the years ended December 31, 2005, 2004 and 2003, respectively. Future minimum lease payments under non-cancelable operating leases as of December 31, 2005 are $36,000 for the year ending December 31, 2006 and $3,000 for the year ending December 31, 2007 and $0 for all years thereafter. Future minimum sub-lease receipts under sub-lease rentals for the year ending December 31, 2006 and the year ending December 31, 2007, are $30,000 and $2,500, respectively. The Company's corporate headquarters are currently located at 300 Crescent Court, Suite 1110, Dallas, Texas 75201, which are also the offices of Newcastle. Pursuant to an oral agreement, the Company occupies a portion of Newcastle's space on a month-to-month basis at no charge. 39 NOTE 13. INCOME TAXES The income tax benefit is comprised of the following: Year Ended December 31, (in thousands) 2005 2004 2003 -------- -------- -------- Current: Federal ............................................ $ -- $ -- $ -- State .............................................. -- -- -- -------- -------- -------- Total ............................................. $ -- $ -- $ -- ======== ======== ======== The income tax benefit differs from the amount computed by applying the statutory federal income tax rate of 35% to loss from continuing operations before income tax benefit. The reasons for these differences were as follows: Year Ended December 31, (in thousands) 2005 2004 2003 -------- -------- -------- Computed income tax benefit at statutory rate ....... $ 190 $ 666 $ 2,270 (Decrease) increase in taxes resulting from: Nondeductible losses in and impairments of affiliates -- (1,045) (1,060) Book gain on sale of equity affiliate ............... -- 2,036 -- Tax capital loss on sale of equity affiliate ........ -- 23,547 -- Permanent and other deductions, net ................. 20 (754) (218) Valuation allowance ................................. (210) (24,450) (992) -------- -------- -------- Income tax benefit .................................. $ -- $ -- $ -- ======== ======== ======== The tax effect of significant temporary differences, which comprise the deferred tax liability, is as follows: December 31, (in thousands) 2005 2004 --------- -------- Deferred tax asset: Net operating loss carryforward.................... $ 3,541 $ 3,331 Capital loss carryforward.......................... 23,547 23,547 Valuation allowance................................ (27,088) (26,878) Deferred tax liability: Estimated tax liability............................ -- -- --------- -------- Net deferred tax liability...................... $ -- $ -- ========= ======== As of December 31, 2005, the Company had a federal income tax loss carryforward of approximately $10,000,000, which begins expiring in 2019. In addition, the Company had a federal capital loss carryforward of approximately $67,000,000 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. 40 NOTE 14. 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, 2005, 2004 or 2003. The Company's matching contributions to this plan totaled approximately $7,500, $22,000 and $29,000 for the years ended December 31, 2005, 2004 and 2003, respectively. NOTE 15. SUMMARIZED FINANCIAL INFORMATION FOR UNCONSOLIDATED SUBSIDIARY 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 selling 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, 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, was used to calculate the equity in net loss recorded in the Company's statement of operations for the year ended December 31, 2004. Princeton's summarized balance sheet is as follows: May 31, September 30, (in thousands) 2004 2003 ---- ---- Current assets ................................... $47,528 $34,750 Non-current assets ............................... 9,464 12,681 Current liabilities .............................. 38,188 30,386 Non-current liabilities .......................... 1,209 486 Mandatorily redeemable convertible preferred stock 49,845 39,587 Princeton's summarized statements of operations are as follows: Eight Months Ended Year Ended May 31, September 30, (in thousands) 2004 2003 ---- ---- Revenues ..................... $ 16,695 $ 35,309 Gross profit ................. 7,258 16,026 Loss from operations ......... (9,188) (7,965) Net loss ..................... (9,214) (7,674) 41 NOTE 16. RELATED PARTIES 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 its 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 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 quarter 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 at no cost by the Company. 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. 42 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 recognized $150,000 during the year ended December 31, 2003, as compensation expense related to the stock grant. 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, Mark Schwarz, Chief Executive Officer and Chairman of Newcastle Capital Management, L.P. ("NCM"), Steve Pully, President of NCM, and John Murray, Chief Financial Officer of NCM, assumed positions as Chairman of the Board, Chief Executive Officer and Chief Financial Officer, respectively, of the Company. Mr. Pully receives an annual salary of $150,000 as Chief Executive Officer of the Company. NCM is the general partner of Newcastle, which owns 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 occupies a portion of NCM's space on a month-to-month basis at no charge. The Company also receives accounting and administrative services from employees of NCM at no charge. 43 NOTE 17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Three Months Ended ----------------------------------------------------------- December 31, September 30, June 30, March 31, (in thousands, except per share data) 2005 2005 2005 2005 ------------ ------------- -------- --------- Operating revenues .................................. $ 33 $ -- $ -- $ -- Operating loss from continuing operations ........... (121) (287) (246) (355) Net (loss) income ................................... 13 (193) (89) (274) Preferred stock dividend ............................ (50) (50) (50) (50) Net loss available to common stockholders ........... (37) (243) (139) (324) Basic and diluted net (loss) income per common share: Net (loss) income from continuing operations ....... 0.00 (0.01) (0.00) (0.01) Net (loss) income .................................. 0.00 (0.01) (0.00) (0.01) Three Months Ended ----------------------------------------------------------- December 31, September 30, June 30, March 31, (in thousands, except per share data) 2004 2004 2004 2004 ------------ ------------- -------- --------- Operating revenues .................................. $ -- $ -- $ -- $ -- Operating loss from continuing operations ........... (283) (292) (3,618) (661) Net (loss) income ................................... (217) (262) 428 (1,852) Preferred stock dividend ............................ (50) (50) (7) -- Net loss available to common stockholders ........... (267) (312) 421 (1,852) Basic and diluted net (loss) income per common share: Net (loss) income from continuing operations ....... (0.01) (0.01) 0.01 (0.05) Net (loss) income .................................. (0.01) (0.01) 0.01 (0.05) NOTE 18. DISCONTINUED OPERATIONS NET LOSS FROM DISPOSAL OF DISCONTINUED OPERATIONS During the year ended December 31, 2003, net loss from disposal of discontinued operations is comprised of income of approximately $147,000 from the sale of Tanisys and approximately $212,000 from the reduction of accruals related to discontinued operations, offset by a non-cash charge of approximately $389,000 to settle claims related to the OSC acquisition. 44 NOTE 19. SUBSEQUENT EVENTS (UNAUDITED) 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 pursuant to which the Company has the option to purchase limited partnership interests of Ascendant under certain circumstances. Effective March 14, 2006, in accordance with the terms of the Principals Agreement, the Company acquired a 7% limited partnership interest from a limited partner of Ascendant for a nominal amount. 45 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. 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. ITEM 9B. OTHER INFORMATION None. 46 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 will be furnished on or prior to April 30, 2006 (and is hereby incorporated by reference) by an amendment hereto or pursuant to a definitive proxy statement of the Company's 2006 Annual Meeting of Stockholders for the fiscal year ended December 31, 2005. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 will be furnished on or prior to April 30, 2006 (and is hereby incorporated by reference) by an amendment hereto or pursuant to a definitive proxy statement of the Company's 2006 Annual Meeting of Stockholders for the fiscal year ended December 31, 2005. ITEM 12. 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 30, 2006 (and is hereby incorporated by reference) by an amendment hereto or pursuant to a definitive proxy statement of the Company's 2006 Annual Meeting of Stockholders for the fiscal year ended December 31, 2005. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 will be furnished on or prior to April 30, 2006 (and is hereby incorporated by reference) by an amendment hereto or pursuant to a definitive proxy statement of the Company's 2006 Annual Meeting of Stockholders for the fiscal year ended December 31, 2005. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 14 will be furnished on or prior to April 30, 2006 (and is hereby incorporated by reference) by an amendment hereto or pursuant to a definitive proxy statement of the Company's 2006 Annual Meeting of Stockholders for the fiscal year ended December 31, 2005. PART IV ITEM 15. 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. 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. 47 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). 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, 1996, between BCC and U.S. Trust Company of Texas, N.A. (incorporated by reference from Exhibit 4.2 to the Registration Statement on Form 10-12G/A, dated July 11, 1996). 4.3 Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference from Form 10/A, Amendment No. 1, dated July 11, 1996). 4.4 Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference from Exhibit 4.1 to Form 8-K, dated June 30, 2004). 4.5 First Amendment to the Rights Agreement by and between New Century Equity Holdings, Corp. and The Bank of New York Trust Company, N.A. dated as of June 10, 2004 (incorporated by reference from Exhibit 4.3 to Form 10-12G/A, dated July 9, 2004). *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). 48 *10.5 BCC's 1996 Employee Stock Purchase Plan, amended as of January 30, 1998 (incorporated by reference from Exhibit 10.12 to Form 10-K, dated September 30, 1998). 10.6 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). 10.7 Put Option Agreement between BCC and Michael A. Harrelson, dated June 1, 1997 (incorporated by reference from Exhibit 10.1 to Form 10-Q, dated June 30, 1997). *10.8 Amended and Restated Employment Agreement between New Century Equity Holdings Corp.and Parris H. Holmes, Jr., dated January 11, 2002 (incorporated by reference from Exhibit 10.11 to Form 10-K, dated December 31, 2001). *10.9 Employment Agreement between New Century Equity Holdings Corp. and David P. Tusa, dated November 1, 2001 (incorporated by reference from Exhibit 10.12 to Form 10-K, dated December 31, 2001). 10.10 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). *10.11 BCC's 401(k) Retirement Plan (incorporated by reference from Exhibit 10.14 to Form 10-K, dated September 30, 2000). 10.12 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). 10.13 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) 10.14 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). 10.15 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). 10.16 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). 10.17 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). 21.1 List of Subsidiaries: 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. Certification of Chief Financial Officer in Accordance with Section 906 of the Sarbanes-Oxley Act (filed herewith). * Includes compensatory plan or arrangement. 49 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 30, 2006 By: /s/ Steven J. Pully ----------------------------- Steven J. Pully Chief 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 30th day of March 2006. SIGNATURE TITLE /s/ Steven J. Pully Chief Executive Officer - ---------------------------- (Principal Executive Officer) Steven J. Pully /s/ John P. Murray Chief Financial Officer - ---------------------------- (Principal Financial and Accounting Officer) John P. Murray /s/ Mark E. Schwarz Director and - ---------------------------- Chairman of the Board Mark E. Schwarz /s/ James Risher Director - ---------------------------- James Risher /s/ Jonathan Bren Director - ---------------------------- Jonathan Bren 50
- WHLM Dashboard
- Financials
- Filings
- ETFs
- Insider
- Institutional
- Shorts
-
10-K Filing
Wilhelmina International (WHLM) 10-K2005 FY Annual report
Filed: 31 Mar 06, 12:00am