UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
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For the Fiscal Year ended December 31, 2003 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
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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)
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Delaware |
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74-2781950 |
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(State or other jurisdiction of |
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(IRS Employer |
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10101 Reunion Place, Suite 450, San Antonio, Texas |
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78216 |
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(Address of principal executive offices) |
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(Zip code) |
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(210) 302-0444 |
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(Registrant’s telephone number, including area code) |
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Securities Registered Pursuant to Section 12(b) of the Act: None |
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Securities Registered Pursuant to Section 12(g) of the Act: |
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Common Stock, Par Value $0.01 Per Share |
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(Title of Class) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |X| Yes |_| No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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 Rule 12b-2 of the Act). |_| Yes |X| No
The aggregate market value of the Registrant’s outstanding Common Stock held by non-affiliates of the Registrant as of June 30, 2003 was $11,291,815.
As of March 22, 2004, the Registrant had 34,653,104 shares of Common Stock outstanding.
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
Annual Report on Form 10-K
For the Year Ended December 31, 2003
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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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, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, 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. 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.
The Company provides access to all of its filings with the Securities and Exchange Commission (“SEC”) through its website at www.newcenturyequity.com, as soon as reasonably practicable after the reports are filed with the SEC. These filings are also available free of charge upon request from the Company’s investor relations department.
Introduction
New Century Equity Holdings Corp., formerly Billing Concepts Corp., (collectively, the “Company”) is focused on high-growth companies. The Company has an equity interest in Princeton eCom Corporation (“Princeton”), which offers electronic bill presentment and payment services via the internet and telephone. The Company also has an equity interest in Sharps Compliance Corp. (“Sharps”), which provides cost-effective medical-related disposal solutions for the healthcare, retail, residential and hospitality industries. The Company’s holdings as of December 31, 2003, are summarized as follows (in thousands, except ownership percentages):
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Investment |
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Ownership |
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Net Book |
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Princeton |
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36.2 |
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77,276 |
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6,567 |
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Sharps |
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8.5 |
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970 |
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666 |
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In March 2004, the Company’s ownership percentage in Princeton decreased to 28.9%, in conjunction with a $10.3 million equity financing of Princeton, in which the Company did not participate. In January 2004, the Company’s investment in Sharps decreased to $277,000, which represents 3.6% of the outstanding shares (see section “Continuing Operations – Sharps” for further discussion).
In October 2000, the Company completed the sale of its Transaction Processing and Software divisions to Platinum Holdings (“Platinum”) of Los Angeles, California (the “Transaction”), for initial consideration of $49.7 million. In conjunction with the Transaction, the Company may have received additional consideration consisting of royalty payments, assuming the achievement of certain post-closing revenue targets, of $10.0 million related to the LEC Billing division, $5.0 million related to the Aptis division and $5.0 million related to the OSC division. The post-closing revenue target for the LEC Billing division applied to the eighteen-month period subsequent to the Transaction, while the post-closing revenue targets for the Aptis and OSC divisions apply to the three-year period subsequent to the Transaction. None of the three divisions achieved the post-closing revenue targets necessary to generate a
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potential royalty payment to the Company. The Company also received payments totaling $7.5 million for consulting services provided to Platinum over the twenty-four month period subsequent to the Transaction, which were reported in other income (expense) as consulting income.
Continuing Operations – Princeton
Since 1998, the Company has made multiple investments in Princeton and accounts for its investments under the equity method of accounting. As of December 31, 2003, the Company’s ownership percentage of the preferred stock, the outstanding stock and the fully diluted stock of Princeton was approximately 34.0%, 36.2% and 31.7%, respectively. In March 2004, the Company’s percentage of the preferred stock, the outstanding stock and the fully diluted stock of Princeton decreased to 26.5%, 28.9% and 22.9%, respectively, in conjunction with a $10.3 million equity financing of Princeton, in which the Company did not participate.
Products
Princeton provides electronic bill presentment and payment (“EBPP”) solutions to businesses and financial institutions serving their consumers or other businesses. Princeton’s primary solutions include the following:
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Electronic Collection (eCollect): The electronic withdrawal of authorized funds from a customer’s credit card or bank account for the purposes of paying a delinquent account or making a one-time electronic bill payment. eCollect is accessible through a website, the telephone or a customer service specialist. |
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Consumer Billing (ePaybill): An integrated electronic billing solution that presents a bill to a customer electronically, through a biller’s website, and allows a customer to execute an electronic payment. |
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Business Billing (ePaybill Plus): An interactive electronic invoicing solution that eases the ability for small business customers or service companies with recurring monthly bills to receive and pay invoices. |
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Electronic Payment (Pay Anyone): Cost-effective, back office payment processing that integrates with a customer’s online banking service or home banking software provider. |
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Electronic Balance Transfer (eBalance Transfer): The transfer of outstanding balances to the customer’s credit services. Credit card and other balances, such as home equity loans, can be transferred electronically and consolidated into one credit service. |
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Electronic Lockbox (eLockbox): An error-detection platform designed to search for and correct errors prior to posting to the accounts receivable system. |
Each of Princeton’s solutions is designed to seamlessly integrate with its customers’ accounting systems. The use of electronic methods to deliver billing solutions and to receive payment is designed to allow the customer to reduce billing and collection costs, reduce the processing time typically experienced with the traditional paper method, have faster access to funds upon payment and to increase customer satisfaction by providing an interactive means by which the customer can access at their convenience.
Markets
Princeton markets its products to businesses and financial institutions which provide a large volume of bills to its customers. The consumer billing market is focused on businesses which bill consumers on a regular (typically monthly) basis. This market includes telecommunication companies, mortgage institutions, insurance companies and utility and cable companies. Princeton also provides services and solutions to the business billing market. This market includes small businesses and service companies with regular recurring monthly bills and large manufacturing enterprises that require a more comprehensive and complex invoicing solution such as NetTransact®, a Bottomline Technologies business invoicing solution hosted and implemented by Princeton for large business billers. The payment processing business is believed to be one of the fastest growing markets. The payment processing business is comprised of financial institutions that offer customers electronic bill payment services as part of online banking products, electronic collections and payments made as part of an electronic bill presentment and payment solution.
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Industry
Electronic bill payment is not a new industry. Automatic bank drafts and other forms of electronic payment services have been available for years. The growth of the Internet and the cost reduction pressures faced by companies today lend new urgency to implementing more efficient and cost effective electronic billing and payment options. EBPP is designed to create higher satisfaction among customers by making bill payment more convenient and offering an array of bill payment options. It also provides the potential for cost savings as companies convert from costly paper-based systems and more consumers adopt EBPP options. Many companies save from a significant reduction in outbound customer service calls on overdue accounts and mailings of initial bill and overdue payment notices. Additionally, the presence of frequently answered questions and other online customer service capabilities can reduce the number of customer service calls. To facilitate the handling of those inbound calls, Princeton offers a customer service interface that provides a real-time online exchange of customer and payment information.
Competition
The market for EBPP is highly competitive. Princeton competes with other providers and developers of EBPP solutions and services, as well as the internal departments of companies that choose to develop their own EBPP solutions. Two of Princeton’s competitors are large organizations with greater financial resources than Princeton. To date, Princeton has successfully competed with its competitors. Companies that offer broad solution capability have the opportunity to gain significant market share and establish long-term relationships with industry players. The principal competitive factors in Princeton’s market include responsiveness to client needs, timeliness of implementation, quality of service and technical expertise. The ability to compete depends on a number of competitive factors outside Princeton’s control. Some of these factors include comparable services and products, the extent of competitors’ responsiveness to customer needs and the ability of Princeton’s competitors to hire, retain and motivate key personnel.
Continuing Operations – Sharps
In October 2001, the Company participated in a private placement financing with publicly traded Sharps, a Houston, Texas-based company. The Company purchased 700,000 shares of common stock of Sharps for $770,000, of an aggregate $1.2 million financing. In January 2003, the Company purchased an additional 200,000 shares of common stock of Sharps for $200,000. As of December 31, 2003, the Company owned approximately 8.5% of the outstanding common stock of Sharps. The Company accounts for its investment in Sharps under Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”.
In January 2004, the Company entered into an agreement with the former majority shareholders of Operator Service Company (“OSC”) to settle all claims related to the April 2000 acquisition of OSC by the Company. Under the terms of the agreement, the Company transferred to the former OSC majority shareholders 525,000 shares of the common stock of Sharps owned by the Company, valued at approximately $389,000. Additionally, the former OSC majority shareholders agreed to a voting rights agreement which allows the Company to direct the vote of New Century shares owned by them. Subsequent to the transfer of the Sharps common stock shares, the Company’s interest in Sharps is 3.6% of the outstanding shares.
Products
Sharps is a leading developer of cost effective solutions for improving safety and efficiency related to the proper disposal of medical waste by industry and consumers. Sharps’ products include the Sharps Disposal by Mail System™, Pitch It™ IV Poles, Trip LesSystem™, Sharps Pump Return Box, Sharps Enteral Pump Return Box, Sharps SureTemp Tote™, Sharps e-Tools, Sharps Environmental Services and Sharps Consulting. Some products and services facilitate compliance with state and federal regulations by tracking, incinerating and documenting the disposal of medical waste. Additionally, some
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products and services facilitate compliance with educational and training requirements required by federal, state, local and regulatory agencies.
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Sharps Disposal by Mail System™: A comprehensive solution for the containment, transportation, destruction and tracking of medical waste for commercial (healthcare and non-healthcare) and retail industries. |
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Pitch It™ IV Pole: A cost effective, portable, lightweight and disposable alternative to traditional IV poles used for gravity-fed or pump-administered infusions. The innovative pole design provides opportunities for the home healthcare industry to improve logistical efficiencies by eliminating the costs and inconvenience of retrieving, cleaning, bagging, tagging and storing of traditional IV poles. |
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Trip LesSystem™: A solution for the home healthcare (commercial) industry that eliminates costly trips by healthcare providers to the patient’s home after therapy has been completed. |
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Sharps Pump Return Box and Sharps Enteral Pump Return Box: Asset return boxes for home healthcare providers, primarily for use with home infusion patients, that deliver and retrieve expensive equipment between the healthcare provider and the patient. |
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Sharps SureTemp Tote™: A disposable cooler that maintains a safe range for temperature-sensitive materials, such as IV medications, used in home infusion. |
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Sharps e-Tools: Online services including Sharps Tracer™ (manifest imaging and tracking program to track and certify the transportation and disposal of regulated medical waste), Asset Tracer™ (database which manages effectively all types of capital assets) and ComplianceTrak (employee centered compliance and education programs). |
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Sharps Environmental Services: Environmental solutions for customers with a wide variety of waste disposal needs, including the destruction and disposal of medical sharps waste, legal/confidential documents, pharmaceutical products and non-hazardous industrial waste. |
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Sharps Consulting: Broad range of services including legal and regulatory implications of present waste handling practices, communication of new legislation and industry best practices, intermediary with regulatory agencies and education regarding infection control practices and the dangers of improperly handled medical waste. |
Markets
Sharps’ target markets include the home healthcare industry, assisted living facilities and dental, veterinarian and physician markets (commercial healthcare); hospitality and other industrial markets (commercial non-healthcare); home self-injectors (retail) and other markets where Sharps’ products and services may be bundled or cross-sold to provide solutions to prospective customers. Sharps is involved in the mission to help separate the potentially infectious medical waste from the regular waste. The repeat order nature of Sharps’ business and an infrastructure, which is nationwide, has helped drive its growth. Sharps remains flexible and responsive to its customer needs in industries that demand effective cost and logistical solutions, quick response and technological innovation.
In May 2002, Sharps signed a three-year, renewable agreement with BD Consumer Health Care, a division of Becton, Dickinson and Company (“BD”), the world’s largest syringe manufacturer. The agreement names Sharps as the exclusive supplier of Sharps Disposal by Mail Systems™ for retail sale nationally. BD will market the mail-back disposal system to Sharps’ target market of home self-injectors in BD’s syringe boxes, diabetic newsletter and “Getting Started” kits for newly diagnosed diabetics. Sharps is also marketing to the retail customer through a joint sales and marketing agreement with Waste Management, Inc. (“WM”), a leading waste services provider. WM will market Sharps’ disposal by mail systems to WM’s 25 million residential customers.
Industry
The large, fragmented medical waste industry has experienced significant growth since its inception. The regulated medical waste industry arose with the Medical Waste Tracking Act of 1988, which Congress enacted in response to media attention after medical waste washed ashore on beaches, particularly in New York and New Jersey. Since the 1980s, the public and governmental regulators have increasingly restricted the handling and disposal of medical waste generated by the healthcare industry. Regulated medical waste is generally described as any medical waste that can cause an infectious disease,
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including single-use disposable items, such as needles, syringes, gloves and other medical supplies, cultures and stocks of infectious agents and blood and blood products. Today, almost all businesses have waste disposal concerns for safety and liability reasons. Regulated waste such as syringes, razor blades, bloodborne items, bio-hazard waste spills and other sharps waste can occur in the following situations: treating cuts, abrasions and burns; finding needles, syringes or blood-soaked items in the workplace; laundering blood-soaked linens or finding needles or razor blades in linens; and cleaning up broken glass with blood stains or bio-hazardous waste.
Competition
There are several competitors who offer disposal of medical waste services such as Stericycle, Inc.; however, no other company focuses primarily on the disposal of sharps medical waste, nationally, through transport by the United States Postal Service. While Sharps currently does not face any significant competition in the mail sharps disposal business, Sharps must compete with larger and better-capitalized companies.
Continuing Operations – FIData, Inc./MicroBilt Corporation
Products and Services
The Company, through its former wholly owned subsidiary FIData, Inc. (“FIData”), provided Internet-based loan approval products to the financial services industry. FIData developed and marketed a loan application engine for use primarily by credit unions and small financial institutions throughout the United States. The loan application engine allowed members of FIData’s customers to complete a customized template via the Internet and submit for review. FIData combined the information submitted on the application with the member’s credit bureau report to proceed through the application review process. FIData applied the underwriting criteria, as established by the applicable customer, to the application and credit bureau report to determine the response of the application. The results of this review allowed FIData to approve the loan application or refer the member to the customer for further consultation.
FIData’s loan application engine could be customized in a number of ways to suit the particular needs of its customers and their products. The loan application engine was customized to provide loan applications for a variety of consumer loans.
Operations
FIData’s loan application engine was delivered to its customers and their members via the customer’s individual website. Upon entering a customer’s website, the member clicked on the indicated link to route the member to FIData’s website/database. Customers paid FIData on a per-transaction basis. Every loan application processed, whether approved or referred, was deemed a transaction. In some situations, FIData provided additional services for implementation or training required to make the loan application engine operational. If a customer desired some unique enhancements to the loan application engine, FIData’s staff provided the services at an additional fee.
FIData’s revenues were generated from transaction fees for processing loan applications, implementation fees for new customers and a variety of customer service related fees. The transaction fees were based upon the number of loans processed and the fee per transaction charged to the customer. Implementation fees were based upon the number of new customers utilizing the loan application engine. The customer service fees included the time required to provide the additional services as requested by the customer.
Customers and Competition
FIData’s customer base was comprised primarily of credit unions and small financial institutions. FIData marketed its loan application engine to financial institutions that may not have the internal resources necessary to dedicate to the development and maintenance of a loan application engine.
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FIData competed with independent developers of similar loan application packages, as well as the internal resources of the financial institutions. Companies that offered a breadth of financial software packages had the opportunity to gain significant market share and establish long-term relationships with industry players. The principal competitive factors in its market included responsiveness to customer’s needs, timeliness of implementation and pricing. The ability to compete depended on a number of competitive factors outside of FIData’s control, including comparable services and products and the extent of a competitor’s responsiveness to customer needs.
Microbilt
In October 2001, the Company completed the merger of FIData into privately held Microbilt Corporation (“Microbilt”). Microbilt provides credit bureau data access and retrieval to the financial, healthcare, leasing, insurance, law enforcement, educational and utilities industries. In exchange for 100% of the stock of FIData, the Company received a 9.0% equity interest in Microbilt. The merger of FIData into Microbilt facilitates the significant operating, marketing and management synergies between the two companies. Microbilt offers the opportunity to provide a broader selection of financial solutions to the customers of FIData.
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 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. This settlement resolves all claims brought by and against the Company and one of its officers.
Continuing Operations - Coreintellect
In March 2000, the Company completed the purchase of a voting preferred stock investment of $6.0 million in Coreintellect, a company that developed and marketed internet-based business-to-business products for the acquisition, classification, retention and dissemination of business-critical knowledge and information. During the year ended December 31, 2001, the Company’s investment in Coreintellect was reduced to $0 by the Company’s portion of Coreintellect’s net losses. Coreintellect ceased operations in August 2001.
Discontinued Operations – Tanisys
In August 2001, the Company purchased 1,060,000 shares of Tanisys’ Series A Preferred Stock for $1.00 per share, of a total 2,575,000 shares purchased, in a private placement financing. As of December 31, 2002, the Company owned approximately 36.2% (based upon its voting interest) of the outstanding shares of Tanisys. For accounting purposes, the Company was deemed to have control of Tanisys and therefore, consolidated the financial statements of Tanisys. The Company consolidated Tanisys’ financial statements on a three-month lag, as the Company had a different year-end than Tanisys. Accordingly, the operating results of Tanisys from the purchase date to September 30, 2002, were included herein.
In February 2003, the Company sold its preferred stock in Tanisys to ATE Worldwide LLC, whose majority shareholder is a leader in the semiconductor testing equipment market. Accordingly, the operations of Tanisys have been classified as discontinued operations. The Company received approximately $0.2 million in exchange for its preferred stock.
Products and Services
Tanisys designed, manufactured and marketed production level automated test equipment for a wide variety of semiconductor memory technologies, including Dynamic Random Access Memory (“DRAM”), Synchronous Dynamic Random Access Memory (“SDRAM”), Double Data Rate Synchronous DRAM (“DDR”), Rambus DRAM (“RDRAM®”) and Flash Memory. Operating under the Tanisys name since 1994, Tanisys developed into an independent manufacturer of memory test systems for standard and custom semiconductor memory. These systems were used at semiconductor
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manufacturers, computer and electronics Original Equipment Manufacturers (“OEMs”) and independent memory module manufacturers. Tanisys marketed a line of memory test systems under the DarkHorse® Systems brand name. Tanisys’ customer base covered a number of worldwide markets including semiconductor manufacturers, memory module manufacturers, computing systems OEMs and contract manufacturing companies.
Customers, Sales and Marketing
In North America and Europe, a majority of Tanisys’ memory test systems were sold directly to semiconductor and independent memory module manufacturers. In Asia, Tanisys sold its test systems through distribution partners and independent sales representative organizations. Sales to distribution partners were recognized as revenue by Tanisys upon the shipment of products because the distribution partners, like Tanisys’ other customers, issued purchase orders with fixed pricing and were responsible for payment to Tanisys.
Competition
The memory module and memory test equipment industries were intensely competitive. These markets included a large number of established companies, several of which achieved a substantial market share. Certain of Tanisys’ competitors in these markets had substantially greater financial, marketing, technical, distribution and other resources, greater name recognition and larger customer bases than Tanisys. In the memory module test systems market, Tanisys competed primarily with companies supplying automatic test equipment. Tanisys also faced competition from new and emerging companies that entered the markets in which Tanisys participated.
Research and Development
The management of Tanisys believed that the timely development of new memory test systems and technologies was essential to maintain Tanisys’ competitive position. In the electronics market, Tanisys’ research and development activities focused primarily on new memory testing technology and improvement in its memory test products. Additionally, Tanisys provided research and development services for customers as either joint or contracted development. Tanisys devoted substantial research and development efforts to the design of new memory test systems that addressed the requirements of semiconductor companies, OEMs and independent memory module manufacturers. Tanisys’ research and development expenses were $1.5 million and $0.4 million during the year ended September 30, 2002 and the period from the purchase date to September 30, 2001, respectively, as consolidated herein. A portion of the research and development expense focused on creating a patent portfolio to protect Tanisys’ intellectual property and to create a competitive edge over its competitors.
Discontinued Operations – Transaction Processing
The Company, through its former wholly owned subsidiaries Billing Concepts, Inc., Enhanced Services Billing, Inc., BC Transaction Processing Services, Inc. and Operator Service Company (collectively, “Billing”), provided third-party billing clearinghouse and information management services to the telecommunications industry.
Discontinued Operations – Software
Aptis, Inc. (“Aptis”) developed, marketed and supported convergent billing and customer care software applications primarily to the telecommunications industry. Aptis offered products and services to these companies through licensing agreements and outsourcing arrangements.
Employees
As of December 31, 2003, the Company had five full-time corporate employees and no part-time employees. None of the Company’s employees are represented by a union. The Company believes that its employee relations are good.
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As of December 31, 2003, the Company leased approximately 8,000 square feet of space at 10101 Reunion Place, Suite 450, San Antonio, Texas, which serves as the corporate headquarters. In February 2002, the Company subleased approximately 3,000 square feet of this office space. The lease expired in January 2004. In February 2004, the Company leased approximately 1,700 square feet of space at 10101 Reunion Place, Suite 970, San Antonio, Texas, which will serve as the corporate headquarters beginning in April 2004. The Company believes that the new facility is adequate to meet its current and future needs.
The Company was engaged in discussions with the staff of the Federal Trade Commission’s (“FTC”) Bureau of Consumer Protection regarding a proposed complaint by the FTC alleging potential liability arising primarily from the alleged cramming of charges for non-regulated telecommunication services by certain of the Company’s customers. Cramming is the addition of charges to a telephone bill for programs, products or services the consumer did not knowingly authorize. These allegations related to business conducted by the subsidiaries sold by the Company on October 23, 2000. In August 2001, the Company reached a settlement with the FTC, which included a payment to the FTC of $350,000. This settlement fully resolves all issues related to the FTC’s inquiry.
In April 2003, the Company received notice that 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 a former subsidiary, FIData, into Microbilt. In October 2003, the Company settled the suit by surrendering its ownership of the common stock of Microbilt to Bristol. This settlement resolves all claims brought by and against the Company and one of its officers.
In January 2004, the Company entered into an agreement with the former majority shareholders of OSC to settle all claims related to the April 2000 acquisition of OSC by the Company. Under the terms of the agreement, the Company will transfer to the former OSC majority shareholders 525,000 shares of the common stock of Sharps owned by the Company, valued at approximately $389,000. Additionally, the former OSC majority shareholders agreed to a voting rights agreement which allows the Company to direct the vote of New Century shares owned by them. Subsequent to the transfer of the Sharps common stock shares, the Company’s interest in Sharps is 3.6% of the outstanding shares.
The Company is not currently involved in any material litigation, claims or assessments.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the three months ended December 31, 2003, no matter was submitted by the Company to a vote of its stockholders through the solicitation of proxies or otherwise.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company’s common stock, par value $0.01 per share (the “Common Stock”), is currently quoted on the Over-the-Counter Bulletin Board under the symbol “NCEH.OB”. From June 21, 2002 to October 9, 2003, the Common Stock was quoted on the Nasdaq SmallCap Market under the symbol “NCEH”. From February 8, 2001 to June 20, 2002, the Common Stock was quoted on the Nasdaq National Market under the symbol “NCEH”. Prior to February 8, 2001, the Common Stock was quoted on the Nasdaq National Market under the symbol “BILL”. The table below sets forth the high and low bid prices for the Common Stock from January 1, 2002, through December 31, 2003, as reported by Nasdaq. These price quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions:
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Year Ended
December 31, 2002: |
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1st Quarter |
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$ |
0.78 |
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0.39 |
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2nd Quarter |
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$ |
0.78 |
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0.14 |
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3rd Quarter |
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0.47 |
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0.29 |
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4th Quarter |
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0.39 |
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0.25 |
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Year Ended
December 31, 2003: |
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1st Quarter |
|
$ |
0.45 |
|
$ |
0.27 |
|
|
|
|
2nd Quarter |
|
$ |
0.59 |
|
$ |
0.19 |
|
|
|
|
3rd Quarter |
|
$ |
0.75 |
|
$ |
0.20 |
|
|
|
|
4th Quarter |
|
$ |
0.52 |
|
$ |
0.27 |
|
|
Stockholders
As of March 22, 2004, there were 34,653,104 shares of Common Stock outstanding, held by 538 holders of record. The last reported sales price of the Common Stock on March 22, 2004, was $0.34 per share.
Dividend Policy
The Company has never declared or paid any cash dividends on its Common Stock. The Company does not anticipate paying any cash dividends on its Common Stock, unless and until the Company makes liquidating distributions to its stockholders pursuant to the proposed plan of liquidation as discussed in this Annual Report on Form 10-K.
11
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, 2003, 2002 and 2001, the transition quarter ended December 31, 2000 and the years ended September 30, 2000 and 1999, and the balance sheet data as of December 31, 2003, 2002, 2001 and 2000, and September 30, 2000 and 1999, presented below are derived from the audited Consolidated Financial Statements of the Company. The data presented below for the years ended December 31, 2003, 2002 and 2001, 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 |
|
Quarter(1) |
|
Year Ended |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
December 31, |
|
September 30, |
|
||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
|
(in
thousands, except per share data) |
|
2003 |
|
2002 |
|
2001 |
|
2000 |
|
2000 |
|
1999 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Consolidated
Statement of Operations Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating
revenues |
|
$ |
— |
|
$ |
— |
|
$ |
502 |
|
$ |
163 |
|
$ |
410 |
|
$ |
— |
|
||
|
Gross (loss)
profit |
|
|
— |
|
|
— |
|
|
(62 |
) |
|
10 |
|
|
61 |
|
|
— |
|
||
|
Operating
loss from continuing operations |
|
|
(3,174 |
) |
|
(3,560 |
) |
|
(14,590 |
) |
|
(2,316 |
) |
|
(16,303 |
) |
|
(5,421 |
) |
||
|
Net loss
from continuing operations |
|
|
(6,486 |
) |
|
(18,538 |
) |
|
(38,328 |
) |
|
(5,086 |
) |
|
(26,579 |
) |
|
(5,224 |
) |
||
|
Net (loss)
income from discontinued operations, net of income taxes |
|
|
— |
|
|
(962 |
) |
|
(98 |
) |
|
— |
|
|
(6,565 |
) |
|
21,046 |
|
||
|
Net (loss)
income from disposal of discontinued operations, net of income taxes |
|
|
(30 |
) |
|
2,254 |
|
|
2,385 |
|
|
— |
|
|
(9,277 |
) |
|
— |
|
||
|
Net (loss)
income |
|
|
(6,516 |
) |
|
(17,246 |
) |
|
(36,041 |
) |
|
(5,086 |
) |
|
(42,421 |
) |
|
15,822 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Basic and
diluted net (loss) income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Net loss
from continuing operations |
|
$ |
(0.19 |
) |
$ |
(0.54 |
) |
$ |
(1.10 |
) |
$ |
(0.13 |
) |
$ |
(0.67 |
) |
$ |
(0.14 |
) |
|
|
|
Net (loss)
income from discontinued operations, net of income taxes |
|
|
— |
|
|
(0.03 |
) |
|
— |
|
|
— |
|
|
(0.16 |
) |
|
0.57 |
|
|
|
|
Net (loss)
income from disposal of discontinued
operations, net of income taxes |
|
|
— |
|
|
0.07 |
|
|
0.07 |
|
|
— |
|
|
(0.23 |
) |
|
— |
|
|
|
|
Net (loss)
income |
|
$ |
(0.19 |
) |
$ |
(0.50 |
) |
$ |
(1.03 |
) |
$ |
(0.13 |
) |
$ |
(1.06 |
) |
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
per common share |
|
$ |
— |
|
$ |
— |
|
$ |
— | ||||||||||||