UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

Commission File Number 0-28536

NEW CENTURY EQUITY HOLDINGS CORP.
(Exact name of registrant as specified in its charter)

(210) 302-0444
(Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |X| Yes |_| No

     Indicated below is the number of shares outstanding of the registrant’s only class of common stock at August 14, 2002:

NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES

INDEX

PART I FINANCIAL INFORMATION

PART II OTHER INFORMATION

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PART I FINANCIAL INFORMATION

Item 1. Interim Condensed Consolidated Financial Statements

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

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

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

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

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

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

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1. Basis of Presentation

     The interim condensed consolidated financial statements included herein have been prepared by New Century Equity Holdings Corp. and subsidiaries, formerly known as Billing Concepts Corp., (collectively, the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the accompanying interim condensed consolidated financial statements reflect all adjustments, of a normal recurring nature, that are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for such periods. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001. Results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year.

     In accordance with Temporary Note 2T to Article 3 of Regulation S-X, the Company’s Form 10-Q, for the quarter ended March 31, 2002 and filed with the Securities and Exchange Commission (“SEC”) on May 14, 2002, was not reviewed by an independent auditor at that time. In conjunction with the review of this Form 10-Q for the quarter ended June 30, 2002, the Company’s independent auditors have reviewed the Form 10-Q for the quarter ended March 31, 2002 and no changes resulted from the review.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

     In October 2000, the Company completed the sale of the Transaction Processing and Software divisions to Platinum Holdings (“Platinum”) of Los Angeles, California (the “Transaction”). In conjunction with the Transaction, the Company may be entitled to receive additional consideration consisting of potential 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. In May 2002, it was determined that the post-closing revenue targets for the LEC Billing division were not achieved and therefore, the Company will not receive the corresponding $10.0 million royalty payment. Management cannot assess the probability of the Aptis division or the OSC division achieving its respective post-closing revenue targets necessary to generate any remaining potential royalty payments to the Company.

     The Company is also entitled to receive payments totaling $7.5 million for consulting services provided to Platinum over the twenty-four month period subsequent to the Transaction. The Company has received aggregate payments of $6.3 million for consulting services through June 30, 2002, which have been reported in other income (expense) as consulting income.

Note 2. Acquisitions and Investments

     During the quarter ended March 31, 2002, the Company invested $1.5 million, of a total $2.5 million equity financing, in Princeton eCom Corporation (“Princeton”). In exchange for its investment,

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)

the Company received 1.5 million shares of Princeton’s mandatorily redeemable convertible preferred stock. In April 2002, the Company committed to finance $3.75 million, of a total $8.5 million equity commitment, to Princeton during the year ended December 31, 2002. During April and May 2002, the Company funded $2.4 million of its total $3.75 million commitment in exchange for shares of Princeton’s mandatorily redeemable convertible preferred stock.

     In June 2002, Princeton completed a $10.0 million equity financing with an outside investor. In conjunction with this $10.0 million financing, the Company received $1.5 million in proceeds from the redemption of mandatorily redeemable convertible preferred stock of Princeton. In addition, the Company is no longer required to fund its remaining $1.4 million commitment to Princeton. Subsequent to this transaction, the Company’s ownership of the outstanding and fully diluted shares (considering all issued options and warrants as of June 30, 2002) of Princeton was 38.3% and 37.4%, respectively.

Note 3. Financial Information of Consolidated Affiliate

     In August 2001, the Company invested $1,060,000 in Tanisys Technology, Inc. (“Tanisys”). For accounting purposes, the Company consolidates Tanisys into the financial statements of the Company under the purchase method of accounting. As the Company is consolidating Tanisys on a three-month lag (due to the difference in fiscal years of the Company and Tanisys), Tanisys’ balance sheets as of March 31, 2002 and September 30, 2001, including adjustments made under the purchase method of accounting, have been consolidated with the Company’s balance sheets as of June 30, 2002 and December 31, 2001, respectively. Tanisys’ balance sheets consolidated herein are as follows (in thousands):

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)

     Tanisys’ statements of operations for the quarter and six months ended March 31, 2002, including adjustments made under the purchase method of accounting, have been consolidated with the Company’s statements of operations for the quarter and six months ended June 30, 2002, respectively. Tanisys’ statements of operations consolidated herein are as follows (in thousands):

Revolving credit note

     In March 2002, Tanisys entered into a new Accounts Receivable Purchase Agreement (“Debt Agreement”) with Silicon Valley Bank (“Silicon”), replacing the former Accounts Receivable Financing Agreement, to fund accounts receivable and provide working capital up to a maximum of $2.5 million. The applicable interest rate is 1.5% per month of the average daily balance outstanding during the month. As of March 31, 2002, Tanisys owed nothing under the Debt Agreement.

Going Concern

     Numerous factors affect Tanisys’ operating results, including, but not limited to, general economic conditions, competition, the uncertainty of the semiconductor market and changing technologies. All of these factors have had an adverse effect on Tanisys’ financial position, results of operations and cash flows. Tanisys incurred operating losses of $1.2 million and $2.1 million for the six months ended March 31, 2002 and the year ended September 30, 2001, respectively. Tanisys’ working capital was $0.6 million and $2.0 million at March 31, 2002 and September 30, 2001, respectively, which contemplates continuation of Tanisys as a going concern. Tanisys raised additional capital in August 2001 necessary to continue its operations. The current economic slowdown continues in the worldwide semiconductor industry resulting in concern over the sustainability of Tanisys’ revenues and its operations. No assurances can be made that Tanisys will be able to continue its operations or that additional capital may be raised.

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)

Note 4. Investments in Affiliates

     Investments in affiliates is comprised of the following (in thousands):

Note 5. Comprehensive Loss

     In January 2001, the Company invested $15.0 million in a portfolio of fixed income securities. The Company classified these investments as available-for-sale securities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. These available-for-sale securities were measured at fair value, with unrealized holding gains (losses) included as a component of other comprehensive loss, in accordance with SFAS No. 130, “Reporting Comprehensive Income”. During the quarter ended June 30, 2001, the Company sold $1.5 million of the investments and subsequently reinvested the $1.5 million in the investments during the same quarter.

     During the quarter ended June 30, 2001, the Company incurred unrealized losses on the investments in available-for-sale securities of $35,000, net of income tax expense of $21,000, and a reclassification adjustment for gains of $9,000 (included in net loss), net of income tax expense of $4,000, for a total comprehensive loss of $7,060,000. During the six months ended June 30, 2001, the Company incurred unrealized gains on the investments in available-for-sale securities of $88,000, net of income tax expense of $51,000, and a reclassification adjustment for gains of $9,000 (included in net loss), net of income tax expense of $4,000, for a total comprehensive loss of $8,904,000. These investments in fixed income securities were sold in September 2001 due to changes in the market conditions of fixed income securities.

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)

Note 6. Investment in Unconsolidated Affiliate

Summarized Financial Information

     The Company has made numerous investments in Princeton since September 1998. The Company’s ownership percentage of the outstanding stock of Princeton was 57.7% and 41.5% as of March 31, 2002 and September 30, 2001, respectively. The Company accounts for its investment in Princeton under the equity method of accounting (as the Company does not exhibit control over Princeton) and records the equity in net loss of Princeton on a three-month lag.

     Princeton’s summarized balance sheets as of March 31, 2002 and September 30, 2001 are as follows (in thousands):

     Princeton’s statements of operations for the quarter and six months ended March 31, 2002 and 2001 have been used to calculate the equity in net loss recorded in the Company’s statements of operations for the quarter and six months ended June 30, 2002 and 2001, respectively. Princeton’s summarized statements of operations are as follows (in thousands):

     The loss from operations of $25.0 million for the six months ended March 31, 2002, includes impairment charges totaling $10.6 million. Approximately $7.8 million of the impairment charges relate to the implementation of a strategic restructuring plan to streamline Princeton’s operations by reducing operating expenses primarily through workforce reductions and renegotiating significant contracts and leases. The components of the restructuring charges include $4.1 million for employee separations, $3.3 million for contract settlements and $0.4 million for facility closings. The additional impairment charges relate to the write-down of a portion of the asset value of Princeton’s property and equipment. The impairment was recognized as the future undiscounted cash flows for Princeton were estimated to be insufficient to recover the related carrying values of the property and equipment.

Equity Financing

     In June 2002, Princeton completed a $10.0 million equity financing with an outside financial investor. This equity financing completes an aggregate $31.0 million equity financing, which commenced

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)

during the quarter ended December 31, 2001. The funds are expected to be used for the development of more advanced billing and payment technologies, products and services, as well as for working capital purposes. Subsequent to this financing, the Company's ownership of the outstanding and fully diluted shares (considering all issued options and warrants as of June 30, 2002) of Princeton was 38.3% and 37.4%, respectively.

Acquisition of Quicken Bill Manager

     In May 2001, Princeton announced its acquisition of Quicken Bill Manager from Intuit Inc. (“Intuit”). Quicken Bill Manager provides online bill presentment and payment services by processing payments for customers utilizing Intuit’s Quicken personal financial management software. Under the terms of the acquisition agreement, Princeton acquired the assets of Intuit’s Quicken Bill Manager through the purchase of certain technologies from Intuit and all of the outstanding shares of Venture Finance Services Corp., a wholly owned subsidiary of Intuit.

     The pro forma adjustments to the Company’s financial statements relate to the additional equity in net loss of affiliates the Company would have recorded had Princeton acquired Quicken Bill Manager at the beginning of the period presented. The following pro forma financial information for the Company is provided for the six months ended June 30, 2001, based upon the assumption that Princeton had acquired Quicken Bill Manager as of October 1, 1999.

     For the six months ended June 30, 2001, the Company recorded equity in net loss of affiliates of $8.2 million, loss from continuing operations before income tax benefit of $11.3 million, net loss from continuing operations of $10.5 million and net loss of $9.0 million. The basic and diluted net loss from continuing operations per share and net loss per share were $0.30 and $0.26, respectively. Had the transaction occurred on October 1, 1999, the Company would have recorded an additional equity in net loss of affiliates of $6.5 million. Including the pro forma adjustment, the Company would have recorded total equity in net loss of affiliates of $14.7 million, loss from operations before income tax benefit of $17.8 million, net loss from continuing operations of $17.0 million and net loss of $15.5 million. The basic and diluted net loss from continuing operations per share and net loss per share would have been $0.48 and $0.44, respectively.

     During the quarter ended March 31, 2002, Princeton suspended its development of the Quicken Bill Manager as a result of an overall corporate shift in focus and an effort to reduce expenditures. Princeton continues to retain front-end technology acquired from Intuit, but is currently placing greater emphasis on its core transaction processing businesses.

Note 7. Discontinued Operations

     In June 2002, the Company filed its federal income tax return with the Internal Revenue Service for the tax fiscal year ended September 30, 2001 (which includes the Transaction completed in October 2000, as discussed in Note 1). Upon completion of this return, the Company filed a refund claim totaling $2.2 million. The Company received the $2.2 million refund in July 2002. The income tax refund is reflected as net income from disposal of discontinued operations in the quarter ended June 30, 2002, as the refund relates to those companies sold in the Transaction.

     The Company continually reviews the accruals related to discontinued operations to assess the adequacy of the accruals. During the six months ended June 30, 2001, the Company reduced such accruals and recognized income from the disposal of discontinued operations of $1.5 million, based upon estimates of future liabilities related to the divested entities. The $1.5 million is reflected as net income from disposal of discontinued operations in the six months ended June 30, 2001.

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NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)

Note 8. Commitments and Contingencies

     During the year ended September 30, 1999, the Company entered into an agreement to guarantee the terms of Princeton’s lease for office space at 650 College Road, Princeton, New Jersey. This guarantee terminates should Princeton raise $25.0 million of capital through an initial public offering. During the quarter ended June 30, 2002, the landlord of the office space has agreed, subject to lender approval, to replace the Company’s guarantee with an alternative security. Although no assurances can be made, it is Princeton’s intention to provide sufficient security in order to eliminate the need for the Company’s guarantee. The Company does not believe it is probable that the lease guarantee will be exercised.

Note 9. Related Party Transactions

     In April 2000, the Company’s Board of Directors approved a restricted stock grant to the Company’s CEO. The restricted stock grant consists of Princeton stock, equal to 2% of Princeton’s fully diluted shares. The restricted stock grant vests on April 30, 2003. The Company expenses the fair market value of the restricted stock grant over the three-year period ending April 30, 2003. The Company recognized $150,000 and $150,000 during the quarters ended June 30, 2002 and 2001, respectively, and $300,000 and $300,000 during the six months ended June 30, 2002 and 2001, respectively, as compensation expense related to the stock grant. The Company estimates it will recognize $600,000 as compensation expense related to the stock grant during the year ending December 31, 2002.

     The Company’s CEO served as Chairman of the Board of Tanisys at the time of the Company’s investment in Tanisys and until his resignation in February 2002. The Company also appointed the Company’s CFO and one of its Board members to the Board of Tanisys. In March 2002, upon the resignation of the Company’s CEO as Chairman of the Board of Tanisys, another member of the Company’s Board became Tanisys’ Chairman of the Board and CEO. This Board member is entitled to receive approximately $15,000 per month from Tanisys as compensation for such services. As of June 30, 2002, this Board member has received payments totaling $42,000 of the total $59,000 of costs incurred. Three of the four members of the Board of Tanisys are officers or directors of the Company.

     The Company’s CEO also serves as Chairman of the Board of Princeton. The Company’s CFO served on the Board of Princeton from August 2001 until June 2002.

     The Company’s CEO and one of its Board members serve on the Board of Sharps Compliance Corp. (“Sharps”) and did so at the time the Company invested in Sharps. The Company’s CFO serves as an advisor to the Board of Sharps.

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Item 2.

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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION
AND RESULTS OF OPERATIONS

General

     The following is a discussion of the interim condensed consolidated financial condition and results of operations for New Century Equity Holdings Corp. and subsidiaries (collectively, the “Company”), for the quarter and six months ended June 30, 2002. It should be read in conjunction with the unaudited Interim Condensed Consolidated Financial Statements of the Company, the notes thereto and other financial information included elsewhere in this report, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2001. For purposes of the following discussion, references to year periods refer to the Company’s fiscal year ended December 31 and references to quarterly periods refer to the Company’s fiscal quarter ended June 30.

Results of Operations

Continuing Operations

     For the quarter and six months ended June 30, 2002, revenues are generated by the Company’s consolidated affiliate Tanisys Technology, Inc. (“Tanisys”) and are comprised of sales of production-level equipment along with related hardware and software, less returns and discounts. For the quarter and six months ended June 30, 2001, revenues were generated by the Company’s former subsidiary FIData, Inc. (“FIData”) and were comprised of transaction fees for processing loan applications, implementation fees for new customers and a variety of customer service related fees.

     Cost of revenues for the quarter and six months ended June 30, 2002, are generated by Tanisys and are comprised of the costs of all components and materials purchased for the manufacture of products, direct labor and related overhead costs. Cost of revenues for the quarter and six months ended June 30, 2001, were generated by FIData and consisted of the costs incurred to offer a variety of customer service opportunities to its customers.

     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. SG&A expenses for the quarter ended June 30, 2002, were $1.3 million ($0.9 million for corporate expenses and $0.4 million for Tanisys’ expenses), compared to $2.4 million for the quarter ended June 30, 2001 ($1.0 million for corporate expenses and $1.4 million for FIData’s expenses). For the quarter ended June 30, 2002, the cash portion of the corporate expenses was $0.7 million of the total corporate expenses of $0.9 million. SG&A expenses for the six months ended June 30, 2002, were $2.7 million ($1.9 million for

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corporate expenses and $0.8 million for Tanisys’expenses), compared to $4.5 million for the six months ended June 30, 2001 ($1.9 million for corporate expenses and $2.6 million for FIData’s expenses). For the six months ended June 30, 2002, the cash portion of the corporate expenses was $1.4 million of the total corporate expenses of $1.9 million.

     Research and development (“R&D”) expenses, generated entirely by Tanisys’ operations, consist of all costs associated with the engineering design and testing of new technologies and products. These costs reflect the ongoing development of test systems for both Double Data Rate (“DDR”) and Flash memory technologies, as well as a new distributed networking architecture that can be applied to all memory technologies.

     Net other expense totaled $0.7 million in the quarter ended June 30, 2002, compared to $4.5 million in the quarter ended June 30, 2001. Net other expense for the quarter ended June 30, 2002, primarily included (i) the equity in net loss of Princeton of $2.3 million, (ii) consulting income from Platinum of $0.9 million, (iii) receipt of payment on a promissory note of $0.3 million from an Austin, Texas-based technology company and (iv) the minority interest of $0.5 million related to Tanisys. Net other expense for the quarter ended June 30, 2001, primarily included the equity in net loss of Princeton of $5.8 million and consulting income from Platinum of $0.9 million.

Discontinued Operations

     During the quarter ended June 30, 2002, the Company filed a federal income tax refund with the Internal Revenue Service totaling $2.2 million. The Company received the $2.2 million refund in July 2002. The income tax refund is reflected as net income from disposal of discontinued operations in the quarter ended June 30, 2002.

     The Company continually reviews the accruals related to discontinued operations to assess the adequacy of the accruals. During the six months ended June 30, 2001, the Company reduced such accruals and recognized income from the disposal of discontinued operations of $1.5 million, based upon estimates of future liabilities related to the divested entities. The $1.5 million is reflected as net income from disposal of discontinued operations in the six months ended June 30, 2001.

Princeton

     Princeton’s revenues increased to $6.4 million during the quarter ended March 31, 2002, from $4.9 million during the quarter ended March 31, 2001. Revenues for the six months ended March 31, 2002 also increased to $12.2 million, from $9.0 million during the six months ended March 31, 2001. These increases are due to the increase in its customer base coupled with an increase in adoption rates experienced in the electronic bill presentment and payment industry. Princeton’s net loss of $4.3 million for the quarter ended March 31, 2002 decreased from the $8.3 million net loss for the quarter ended March 31, 2001. The decrease in the net loss is the result of the increase in revenues generated as well as the reductions in expenses made during 2002. Princeton’s net loss for the six months ended March 31, 2002 of $26.6 million increased from the $20.5 million net loss for the six months ended March 31, 2001. The net loss for the six months ended March 31, 2002 included impairment charges totaling $10.6 million, related to employee separations, contract settlements and facility closings. Excluding these impairments charges, the net loss decreased by $4.5 million.

Liquidity and Capital Resources

     The Company’s cash balance decreased to $6.6 million at June 30, 2002, from $8.6 million at December 31, 2001. This decrease is primarily related to the $3.9 million invested in Princeton during the six months ended June 30, 2002, offset by the $1.5 million redemption of the Company’s investment in Princeton. The Company’s working capital position decreased to $8.9 million at June 30, 2002, from $9.5 million at December 31, 2001. The decrease in the working capital was primarily attributable to the decrease in the cash balance, offset by the increase in the income tax receivable. Net cash provided by

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operating activities for the six months ended June 30, 2002, was $1.5 million, compared to net cash used in operating activities of $2.2 million for the six months ended June 30, 2001.

     There were no capital expenditures during the six months ended June 30, 2002. The Company anticipates minimal capital expenditures before acquisitions, if any, during the year ended December 31, 2002. The Company believes it will be able to fund expenditures with cash on hand.

Corporate

     During the six months ending December 31, 2002, the Company’s corporate cash balance ($6.4 million at June 30, 2002, excluding Tanisys’ cash) is expected to increase as a result of (i) the receipt of the $2.2 million income tax refund in July 2002 and (ii) the receipt of the $1.3 million consulting income from Platinum through October 2002. The total cash inflow of $3.5 million is expected to be more than the anticipated cash expenditures of $1.3 million (comprised of corporate cash expenses) for the six months ending December 31, 2002. The anticipated cash receipts and expenditures are expected to result in a cash balance of approximately $8.5 million at December 31, 2002.

Princeton

     During the year ended September 30, 1999, the Company entered into an agreement to guarantee the terms of Princeton’s lease for office space at 650 College Road, Princeton, New Jersey. This guarantee terminates should Princeton raise $25.0 million of capital through an initial public offering. During the quarter ended June 30, 2002, the landlord of the office space has agreed, subject to lender approval, to replace the Company’s guarantee with an alternative security. Although no assurances can be made, it is Princeton’s intention to provide sufficient security in order to eliminate the need for the Company’s guarantee. The Company does not believe it is probable that the lease guarantee will be exercised.

Tanisys

     In March 2002, Tanisys entered into a new Accounts Receivable Purchase Agreement (“Debt Agreement”) with Silicon Valley Bank (“Silicon”), replacing the former Accounts Receivable Financing Agreement, to fund accounts receivable and provide working capital up to a maximum of $2.5 million. The applicable interest rate is 1.5% per month of the average daily balance outstanding during the month. As of March 31, 2002, Tanisys owed nothing under the Debt Agreement.

     Numerous factors affect Tanisys’ operating results, including, but not limited to, general economic conditions, competition, the uncertainty of the semiconductor market and changing technologies. All of these factors have had an adverse effect on Tanisys’ financial position, results of operations and cash flows. Tanisys incurred operating losses of $1.2 million and $2.1 million for the six months ended March 31, 2002 and the year ended September 30, 2001, respectively. Tanisys’ working capital was $0.6 million and $2.0 million at March 31, 2002 and September 30, 2001, respectively, which contemplates continuation of Tanisys as a going concern. Tanisys raised additional capital in August 2001 necessary to continue its operations. The current economic slowdown continues in the worldwide semiconductor industry resulting in concern over the sustainability of Tanisys’ revenues and its operations. No assurances can be made that Tanisys will be able to continue its operations or that additional capital may be raised.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

     The Company is exposed to interest rate risk primarily through its portfolio of cash equivalents and short-term marketable securities. The Company does not believe that it has significant exposure to market risks associated with changing interest rates as of June 30, 2002, because the Company’s intention is to maintain a liquid portfolio to take advantage of investment opportunities. The Company does not use derivative financial instruments in its operations.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 4. Submission of Matters to a Vote of Security Holders

     The Company’s 2002 Annual Meeting of Stockholders was held on June 6, 2002, in San Antonio, Texas. At the meeting, the Company’s stockholders elected two directors to each serve a three-year term expiring in 2005.

     The following table summarizes the number of votes cast for or withheld from each matter.

ELECTION OF DIRECTORS

Item 6. Exhibits and Reports on Form 8-K

Items 2, 3 and 5 are not applicable and have been omitted.

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SIGNATURE

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

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