SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(X)   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

(_)   TRANSACTION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934

For Quarter Ended:                              Commission File Number:
   June 30, 2004                                          0-7722


                           NEW CENTURY COMPANIES, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


           DELAWARE                                      061034587
--------------------------------------------------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
Incorporation or organization)


                           9835 Santa Fe Springs Road
                           Santa Fe Springs, CA 90670
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)


                                 (562) 906-8455
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required to file such  reports) and (2) has been subject to filing  requirements
for the past 90 days.

                                   Yes [X] No [_]

The number of shares of Common Stock, par value $ .10 per share,  outstanding as
of August 13, 2004 was 6,995,265.

Transitional Small Business Disclosure Format (check one): Yes [_] No [X]


<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

      The condensed  consolidated  Financial Statements are set forth at the end
of this document.

                                                                        Page

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     Condensed Consolidated Balance Sheet                                10

     Condensed Consolidated Statements of Operations                     11

     Condensed Consolidated Statements of Cash Flows                     12

     Notes to Condensed Consolidated Financial Statements               13-18


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

ITEM 3.    CONTROLS AND PROCEDURES

PART II    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

ITEM 2.    CHANGES IN SECURITIES

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 5.    OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K


                                       2
<PAGE>

ITEM 1. FINANCIAL STATEMENTS

      The condensed  consolidated  Financial Statements are set forth at the end
of this document.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

      The following  discussion should be read in conjunction with the Company's
condensed  consolidated  financial  statements  and the notes thereto  appearing
elsewhere in this Form 10-QSB.  Certain statements contained herein that are not
related  to  historical  results,  including,  without  limitation,   statements
regarding the  Company's  business  strategy and  objectives,  future  financial
position,  expectations about pending litigation and estimated cost savings, are
forward-looking  statements  within the meaning of Section 27A of the Securities
Act and Section 21E of the  Securities  Exchange  Act of 1934,  as amended  (the
"Securities  Exchange  Act") and involve risks and  uncertainties.  Although the
Company believes that the assumptions on which these forward-looking  statements
are based are reasonable,  there can be no assurance that such  assumptions will
prove to be accurate  and actual  results  could  differ  materially  from those
discussed  in the  forward-looking  statements.  Factors  that  could  cause  or
contribute  to such  differences  include,  but are not limited  to,  regulatory
policies,  competition  from other  similar  businesses,  and market and general
policies,  competition  from other  similar  businesses,  and market and general
economic factors.  All forward-looking  statements contained in this Form 10-QSB
are qualified in their entirety by this statement.

PLAN OF OPERATIONS

The  earnings  of the  Company  for the three  months  ended June 30,  2004 were
positive  as a  result  of a  decrease  in  operating  expenses  and a  gain  on
forgiveness of accounts payable. The Company's current strategy is to expand its
customer  sales  base  with its  present  line of  machine  products.  Plans for
expansion are expected to be funded through current working capital from ongoing
sales. However,  significant growth will require additional funds in the form of
debt or equity,  or a combination  thereof.  However,  there can be no assurance
these funds will be available.


                                       3
<PAGE>

RESULTS OF OPERATIONS  FOR THE THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO JUNE
30, 2003.

      Revenues.  The  Company  generated  revenues of  $1,581,761  for the three
months ended June 30, 2004, which was a $356,071 or 18% decrease from $1,937,832
for the three  months  ended  June 30,  2003.  The  decrease  is the result of a
deficiency in working capital, which has limited our ability to fulfill customer
orders.  Additionally,  the  overall  market  for  machine  tools  is  cyclical,
reflecting economic conditions,  production capacity utilization, changes in tax
and fiscal policies,  corporate profitability and financial condition as well as
the general level of business  confidence.  The Company  cannot predict for what
period of time the decreased level of customer purchases will continue,  whether
the level of customer  purchases  will  decline  further,  or the level at which
incoming orders will be.

      Gross Profit.  Gross profit for the three months ended June 30, 2004,  was
$61,210 or 4% of  revenues,  compared to  $(42,012) or negative 2% for the three
months ended June 30, 2003. The $103,222  increase in gross profit was generated
by a decrease in cost of sales of $459,293,  due to the increased  productivity.
The Company's  management  increased their effort in cutting material losses and
increased efficiency of labor.

      Net Operating  Loss.  Net operating  loss  decreased to ($217,020) for the
three months  ended June 30, 2004  compared to  $(407,450)  for the three months
ended June 30, 2003 as a result of  management  efforts to  dramatically  reduce
operating expenses, such us consulting,  salaries and general and administrative
expenses, thereby increasing operational productivity.

      Net Income.  Net income  increased  to $283,034 for the three months ended
June 30, 2004  compared to a net loss of  $(436,234)  for the three months ended
June 30, 2003 as a result of a $545,058 gain on forgiveness of accounts payable.

      Interest  Expense.  Interest  expense for the three  months ended June 30,
2004,  increase to $45,004 compared to $28,784,  for the three months ended June
30, 2003, primarily due to the accrual of interest on four default notes payable
due to the  inability of the Company to pay off its notes  payable.  The Company
used these funds for the continuation of the operating activities.

RESULTS OF  OPERATIONS  FOR THE SIX MONTHS ENDED JUNE 30, 2004  COMPARED TO JUNE
30, 2003.

      Revenues.  The Company generated revenues of $2,561,069 for the six months
ended June 30, 2004,  which was a $1,094,903 or 30% decrease from $3,655,972 for
the six months ended June 30,  2003.  The decrease is the result of a deficiency
in working  capital,  which has limited our ability to fulfill  customer orders.
Additionally,  the overall  market for  machine  tools is  cyclical,  reflecting
economic conditions,  production capacity utilization, changes in tax and fiscal
policies, corporate profitability and financial condition as well as the general
level of business confidence. The Company cannot predict for what period of time
the decreased  level of customer  purchases will continue,  whether the level of
customer  purchases will decline further,  or the level at which incoming orders
will be.

      Gross  Profit.  Gross profit for the six months  ended June 30, 2004,  was
$26,517 or 1% of  revenues,  compared to  $(127,600)  or negative 3% for the six
months ended June 30, 2003. The $154,117  increase in gross profit was generated
by a decrease in cost of sales of $1,249,020, due to the increased productivity.
The Company's  management  increased their effort in cutting material losses and
increased efficiency of labor.

      Net Loss.  Net loss  decreased to ($251,852) for the six months ended June
30, 2004  compared to  $(1,504,456)  for the six months ended June 30, 2003 as a
result of management efforts to dramatically reduce operating expenses,  such as
consulting, salaries and general and administrative expenses, thereby increasing
operational productivity and the $545,058 gain on vendors' forgiveness.

                                       4
<PAGE>

      Interest Expense. Interest expense for the six months ended June 30, 2004,
decrease to $86,802  compared  to  $142,217,  for the six months  ended June 30,
2003,  primarily  due to the  repayment of $900,000  short-term  loan in January
2003. In January 2003,  the Company paid $60,000  additional  interest for $900,
000 and $500,000 short-term loans.

      FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES

      At June 30,  2004,  cash was $0 as compared to $20,660  at June 30, 2003.
The decrease is due to net cash used in operating activities of ($648,043).  The
Company has a substantial  working  capital  deficit and requires an infusion of
funds in the form of equity and/or debt. However, there is no guarantee that the
Company will raise  sufficient funds to execute its business plan. To the extent
that the Company is unable to raise  sufficient  funds,  the Company's  business
plan will be required to be substantially  modified, its operations curtailed or
protection under bankruptcy/reorganization laws sought.

      The Company is currently  addressing its liquidity  issue by the following
actions: The Company continues its aggressive program for selling inventory that
has been  produced or is  currently  in  production.  The Company  continues  to
implement plans to further reduce  operating  costs.  The Company is continually
seeking  investment  capital  through the public markets.  However,  there is no
guarantee  that any of these  strategies  will  enable  the  Company to meet its
obligations for the foreseeable future.

INFLATION AND CHANGING PRICES

      The Company  does not foresee  any  adverse  effects on its  earnings as a
result of inflation or changing prices.

GOING CONCERN

      The Company has  incurred  operating  losses in the last two years,  has a
working  capital  deficit  and  a  significant   stockholders'   deficit.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.

CRITICAL ACCOUNTING POLICIES

      The  preparation  of  financial  statements  and  related  disclosures  in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make judgments,  assumptions and estimates that
affect the amounts reported in the condensed  consolidated  financial statements
and the accompanying  notes.  The amounts of assets and liabilities  reported on
the balance sheet and the amounts of revenues and expenses  reported for each of
the fiscal  periods are affected by estimates  and  assumptions,  which are used
for,  but not  limited to, the  accounting  for  revenue  recognition,  accounts
receivable,  doubtful accounts and inventories. Actual results could differ from
these estimates.  The following critical  accounting  policies are significantly
affected by judgments,  assumptions and estimates used in the preparation of the
financial statements:

      Concentration of Credit Risk

      The Company sells products to customers  throughout the United States. The
Company's ability to collect receivables is affected by economic fluctuations in
the geographic areas served by the Company. Although the Company does not obtain
collateral   with  which  to  secure  its   contracts   receivable,   management
periodically reviews contracts receivable and assesses the financial strength of
its customers  and, as a consequence,  believes that the receivable  credit risk
exposure is limited.


                                       5
<PAGE>

      Long-Lived Assets

      In July 2001, the Financial  Accounting  Standards  Board ("FASB")  issued
Statements of Financial  Accounting  Standards ("SFAS") No. 144, "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
Of." SFAS 144 addresses financial accounting and reporting for the impairment or
disposal of  long-lived  assets.  SFAS 144 requires  that  long-lived  assets be
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that  their  carrying  amount  may not be  recoverable.  If the cost  basis of a
long-lived  asset is greater than the  projected  future  undiscounted  net cash
flows from such asset  (excluding  interest),  an impairment loss is recognized.
Impairment losses are calculated as the difference  between the cost basis of an
asset  and its  estimated  fair  value.  SFAS 144  also  requires  companies  to
separately  report  discounted  operations  and  extends  that  reporting  to  a
component of an entity that either has been  disposed of (by sales,  abandonment
or in a distribution to owners) or is classified as held for sale.  Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
costs to sell. The Company adopted SFAS 144 on January 1, 2002. The provision of
this statement for assets held for sale or other disposal generally are required
to  be  applied  prospectively  after  the  adoption  date  to  newly  initiated
commitments to plan to sell such assets, as defined, by management. As a result,
management cannot determine the potential effects that adoption of SFAS 144 will
have on the  Company's  financial  statements  with  respect to future  disposal
decision,  if any. To date,  management has determined  that no such  impairment
exists and therefore,  no adjustments  have been made to the carrying  values of
long-lived assets.  There can be no assurance,  however,  that market conditions
will not change or demand for the  Company's  products or services will continue
which could result in impairment of long-lived assets in the future.

      Revenue Recognition

      Service  revenues are billed and recognized in the period the services are
rendered.

      The  Company  accounts  for  shipping  and  handling  fees  and  costs  in
accordance  with EITF 00-10  "Accounting  for  Shipping  and  Handling  Fees and
Costs."  Such fees and costs  incurred  by the  Company  are  immaterial  to the
operations of the Company.

      In  accordance  with SFAS 48,  "Revenue  Recognition  when Right of Return
Exists," revenue is recorded net of an estimate of markdowns,  price concessions
and  warranty  costs.  Such  reserve  is based  on  management's  evaluation  of
historical experience, current industry trends and estimated costs.

      In December  1999, the  Securities  and Exchange  Commission  issued Staff
Accounting Bulletin 101 ("SAB 101"),  "Revenue  Recognition," which outlines the
basic criteria that must be met to recognize  revenue and provides  guidance for
presentation  of revenue  and for  disclosure  related  to  revenue  recognition
policies  in  financial  statements  filed  with  the  Securities  and  Exchange
Commission.  Management  believes that the Company's revenue  recognition policy
for  services  and product  sales  conforms to SAB 101.  The Company  recognizes
revenue  on  long-term   contracts  pursuant  to  Statement  of  Position  81-1,
"Accounting for Performance of Construction - Type and Certain Production - Type
Contracts."

      Method of Accounting for Long-Term Contracts

The Company uses the percentage-of-completion method of accounting for long-term
contracts and,  therefore,  takes into account the cost,  estimated earnings and
revenue   to   date   on   fixed-fee   contracts   not   yet   completed.    The
percentage-of-completion  method is used because management considers total cost
to be the best  available  measure  of  progress  on the  contracts.  Because of
inherent  uncertainties in estimating costs, it is at least reasonably  possible
that the estimates used will change within the near term.


                                       6
<PAGE>

      The amount of revenue  recognized at the statement  date is the portion of
the total contract price that the cost expended to date bears to the anticipated
final cost, based on current estimates of cost to complete. It is not related to
the progress billings to customers. Contract costs include all materials, direct
labor, machinery, subcontract costs and allocations of indirect overhead.

      Because long-term  contracts may extend over a period of time,  changes in
job  performance,  changes in job  conditions and revisions of estimates of cost
and  earnings  during the  course of the work are  reflected  in the  accounting
period in which the facts that require the revision  become known. At the time a
loss on a contract  becomes known,  the entire amount of the estimated  ultimate
loss is recognized in the consolidated financial statements.

      Contracts  that are  substantially  complete  are  considered  closed  for
consolidated  financial  statement  purposes.  Revenue  earned on  contracts  in
progress in excess of  billings  (under  billings)  is  classified  as a current
asset. Amounts billed in excess of revenue earned  (overbillings) are classified
as a current liability.

      Other Significant Accounting Policies

      Other  significant  accounting  policies not  involving  the same level of
measurement  uncertainties as those discussed above, are nevertheless  important
to an  understanding  of the  financial  statements.  The  policies  related  to
consolidation  and loss  contingencies  require  difficult  judgments on complex
matters that are often subject to multiple  sources of  authoritative  guidance.
Certain of these  matters are among  topics  currently  under  reexamination  by
accounting  standards setters and regulators.  Although no specific  conclusions
reached by these  standards  setters appear likely to cause a material change in
the Company's accounting policies, outcomes cannot be predicted with confidence.
Also see Note 1 of the Notes to  Condensed  Consolidated  Financial  Statements,
Organization and Significant  Accounting  Policies,  which discusses  accounting
policies  that  must  be  selected  by  management  when  there  are  acceptable
alternatives.

ITEM 3. CONTROLS AND PROCEDURES

      Our Chief Executive  Officer who is also our Chief  Financial  Officer has
evaluated  the  effectiveness  of the design  and  operation  of our  disclosure
controls  and  procedures  in  accordance  with Rule  13a-14  of the  Securities
Exchange Act of 1934 (the "Exchange Act"). Based on his evaluation, he concluded
that,  as of the end of the  period  covered  by  this  report,  our  disclosure
controls  and  procedures  were  effective  in enabling  us to record,  process,
summarize and report in a timely manner the information required to be disclosed
in reports we file under the Exchange Act.

      No change in our internal control over financial reporting occurred during
the three  months  ended  June 30,  2004  that has  materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.


                                       7
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      None.

ITEM 2. CHANGES IN SECURITIES

      During the quarter  ended June 30, 2004, we issued 23,640 shares of Series
      D Convertible  Preferred Stock in a private  placement to three accredited
      investors.  The shares were issued  pursuant to an  exemption  provided by
      Section 4(2) of the Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      1.    A note  payable  to an  unaffiliated  third  party in the  amount of
            $500,000  with an interest  rate of 10% per annum,  matured in April
            2003 and is currently in default.

      2.    A note  payable  to an  unaffiliated  third  party in the  amount of
            $250,000 that was extended until December 31, 2003. Originally,  the
            Company  issued to the note  holder  warrants  to  purchase  100,000
            shares of the Company's restricted common stock at an exercise price
            of $2.00  valued  at  $106,000  (based on the  Black-Scholes  option
            pricing  model),  which the Company  amortized  to interest  expense
            during the year ended  December  31,  2002.  As part of an extension
            agreement,  the Company  effectively  cancelled the original 100,000
            warrants and issued  warrants to purchase  200,000  shares of common
            stock at an  exercise  price of $1.00,  which  vested upon grant and
            expired in December 2003.

      3.    A note  payable  to an  unaffiliated  third  party in the  amount of
            $250,000  that  was  extended  until  May 2,  2003.  As  part  of an
            extension  agreement,  the Company issued warrants to purchase 5,000
            shares of common stock at an exercise  price of $1.25,  which vested
            upon grant and expire in March 2008.

      4.    A promissory  note to an  unaffiliated  third party in the amount of
            $215,000  with an interest  rate of 15% per annum,  matured in March
            2002 and is currently in default.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits:

            31.1  302 Sarbanes  Oxley  Certification  of David  Duquette,  Chief
                  Executive Officer and Chief Financial Officer

            32.1  906 Sarbanes Oxley Certification

      (b)   Reports on Form 8-K:

            None.



                                       8
<PAGE>


                                   SIGNATURES

      In accordance  with the  requirements  of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.


August 16, 2004                         /s/ David Duquette
                                        ----------------------------------
                                        Name:  David Duquette
                                        Title: Chief Executive Officer and
                                               Chief Financial Officer


                                       9
<PAGE>


--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET
                            June 30, 2004 (unaudited)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                 ASSETS
Current Assets
<S>                                                                         <C>
      Cash                                                                  $        --
      Contracts receivable                                                       39,767
      Inventories, net                                                        1,171,640
      Costs in excess of billings on uncompleted contracts                      493,182
      Prepaid expenses and other current assets                                  20,310
                                                                            -----------

           Total current assets                                               1,724,899

Property and Equipment, net                                                     469,125
                                                                            -----------

                                                                            $ 2,194,024
                                                                            ===========


                  LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
      Bank overdraft                                                        $   138,237
      Accounts payable and accrued expenses                                   1,930,752
      Dividends payable                                                         274,500
      Billings in excess of costs on uncompleted contracts                      303,259
      Notes payable                                                           1,215,000
      Current portion of obligations under capital lease                         79,575
                                                                            -----------

           Total current liabilities                                          3,941,323

Obligations Under Capital Lease, net of current portion                          25,865
                                                                            -----------

Total Liabilities                                                             3,967,188
                                                                            -----------

Commitments and Contingencies

Stockholders' Deficit
      Cumulative, convertible, Series B preferred stock, $1 par value,
      15,000,000 shares authorized, no shares issued and outstanding                 --
      Cumulative, convertible, Series C preferred stock, $1 par value,
      75,000 shares authorized, 63,600 shares issued and outstanding
      (liquidation preference of $1,865,000)                                     63,600
      Cumulative, convertible, Series D preferred stock, $25 par value,
      75,000 shares authorized, 23,640 shares issued and outstanding
      (liquidation preference of $591,000)                                      591,000
      Common stock, $0.10 par value, 50,000,000 shares authorized;
        6,995,265 shares issued and outstanding                                 699,527
      Subscriptions receivable                                                 (462,500)
      Notes receivable from stockholders                                       (466,159)
      Deferred consulting fees                                                   (6,563)
      Additional paid-in capital                                              3,972,854
      Accumulated deficit                                                    (6,164,923)
                                                                            -----------

      Total stockholders' deficit                                            (1,773,164)
                                                                            -----------

                                                                            $ 2,194,024
                                                                            ===========
</TABLE>

--------------------------------------------------------------------------------

See accompanying notes to the condensed consolidated financial statements.

                                       10
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            For the Three and Six Months Ended June 30, 2004 and 2003

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          For the Three Months             For the Six Months
                                                          Ended June 30, 2004              Ended June 30, 2004
                                                     ----------------------------      ----------------------------
                                                        2004             2003             2004              2003
                                                     -----------      -----------      -----------      -----------
                                                     (unaudited)      (unaudited)      (unaudited)      (unaudited)
<S>                                                  <C>              <C>              <C>              <C>
  NET SALES                                          $ 1,581,761      $ 1,937,832      $ 2,561,069      $ 3,655,972

  COST OF SALES                                        1,520,551        1,979,844        2,534,552        3,783,572
                                                     -----------      -----------      -----------      -----------

  GROSS PROFIT (LOSS)                                     61,210          (42,012)          26,517         (127,600)
                                                     -----------      -----------      -----------      -----------

OPERATING EXPENSES
  Consulting and other compensation                       18,654           86,781          186,513          165,337
  Salaries and related                                    73,784           99,214          128,748          202,733
  Selling, general and administrative                    185,792          179,015          421,364          401,141
  Loss of deposit                                             --              428               --          465,428
                                                     -----------      -----------      -----------      -----------
  TOTAL OPERATING EXPENSES                               278,230          365,438          736,625        1,234,639
                                                     -----------      -----------      -----------      -----------

OPERATING LOSS                                          (217,020)        (407,450)        (710,108)      (1,362,239)
                                                     -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSE)
  Gain on forgiveness of accounts payable                545,058               --          545,058               --
  Interest Income                                             --               --               --               --
  Interest Expense                                       (45,004)         (28,784)         (86,802)        (142,217)
                                                     -----------      -----------      -----------      -----------
  TOTAL OTHER INCOME (EXPENSE)                           500,054          (28,784)         458,256         (142,217)


INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES                                         283,034         (436,234)        (251,852)      (1,504,456)

PROVISION FOR INCOME TAXES                                    --               --               --            1,600
                                                     -----------      -----------      -----------      -----------

NET INCOME (LOSS)                                    $   283,034      $  (436,234)     $  (251,852)     $(1,506,056)
                                                     ===========      ===========      ===========      ===========

NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS                               $   243,284      $  (465,109)     $  (331,352)     $(1,563,806)
                                                     ===========      ===========      ===========      ===========
Basic net income (loss) available to
common stockholders per common share                 $      0.03      $     (0.08)     $     (0.05)     $     (0.26)
                                                     ===========      ===========      ===========      ===========
Diluted net income (loss) available to
common stockholders per common share                 $      0.03      $     (0.08)     $     (0.05)     $     (0.26)
                                                     ===========      ===========      ===========      ===========
Basic weighted average common shares
  outstanding                                          6,995,265        5,946,383        6,953,598        5,935,433
                                                     ===========      ===========      ===========      ===========
Diluted weighted average common shares
  outstanding                                          8,816,848        5,946,383        6,953,598        5,935,433
                                                     ===========      ===========      ===========      ===========
</TABLE>

--------------------------------------------------------------------------------

See accompanying notes to the condensed consolidated financial statements.

                                       11
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For The Six Months Ended June 30, 2004 and 2003

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 2004             2003
                                                                              -----------      -----------
                                                                              (unaudited)      (unaudited)
<S>                                                                           <C>              <C>
Cash flows from operating activities:
     Net loss                                                                 $  (251,852)     $(1,506,056)
     Adjustments to reconcile net loss to net cash
      (used in) provided by operating activities:
        Depreciation and amortization of property and equipment                   138,128          150,319
        Gain on forgiveness of accounts payable                                   545,058               --
        Amortization of consulting fees                                           103,250           27,668
        Amortization of debt discount on notes payable                                 --           45,000
        Estimated fair market value of common stock issued for
           consulting services                                                     50,000           72,000
        Estimated fair market value of warrants issued in connection
           with notes payable                                                          --           17,350
        Changes in operating assets and liabilities:
           Contracts receivable                                                   110,684          544,741
           Inventories                                                            (14,697)         177,289
           Costs in excess of billings on uncompleted contracts                  (172,650)        (280,952)
           Prepaid expenses and other current assets                                5,381          (67,422)
           Deposits                                                                    --          465,000
           Accounts payable and accrued expenses                                 (896,990)         (47,964)
           Billings in excess of costs on uncompleted contracts                  (264,355)         815,329
                                                                              -----------      -----------

     Net cash (used in) provided by operating activities                         (648,043)         412,302
                                                                              -----------      -----------

Cash flows from investing activities:
     Purchases of property and equipment                                           (1,396)         (10,257)
                                                                              -----------      -----------

     Net cash used in investing activities                                         (1,396)         (10,257)
                                                                              -----------      -----------

Cash flows from financing activities:
     Proceeds from issuance of preferred stock                                    521,000               --
     Bank overdraft                                                                13,679           37,524
     Proceeds from the issuance of notes payable                                       --          455,000
     Principal repayments on notes payable                                             --         (900,000)
     Principal repayments on obligations under capital lease                      (41,209)         (54,185)
                                                                              -----------      -----------

     Net cash provided by (used in) financing activities                          493,470         (461,661)
                                                                              -----------      -----------

Net decrease in cash                                                             (155,969)         (59,616)

Cash at beginning of period                                                       155,969           80,276
                                                                              -----------      -----------

Cash at end of period                                                         $        --      $    20,660
                                                                              ===========      ===========

Supplemental disclosure of non-cash activities -
        Dividends payable                                                     $    79,500      $    28,875
                                                                              ===========      ===========
</TABLE>

--------------------------------------------------------------------------------

   See accompanying notes to the condensed consolidated financial statements.

                                       12
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

--------------------------------------------------------------------------------

1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF OPERATIONS

New Century  Companies,  Inc. and Subsidiary  (collectively,  the "Company"),  a
California  corporation,  was incorporated March 1996 and is located in Southern
California.  The Company provides after-market  services,  including rebuilding,
retrofitting and remanufacturing of metal cutting machinery.  Once completed,  a
remanufactured  machine is "like new" with state-of-the-art  computers,  and the
cost to the  Company's  customers is  approximately  40% to 50% of that of a new
machine.

The Company  currently  sells its services by direct sales and through a network
of machinery  dealers  across the United  States.  Its  customers  are generally
medium to large sized manufacturing  companies in various industries where metal
cutting is an integral part of their  businesses.  The Company  grants credit to
its customers who are predominately located in the western United States.

The  Company  completed  a  reverse  merger  in May 2001 and  trades  on the OTC
Bulletin Board under the symbol "NCNC.OB."

BASIS OF PRESENTATION

      The  accompanying  aunaudited  interim  condensed  consolidated  financial
statements  have  been  prepared  by the  Company,  pursuant  to the  rules  and
regulations  of the  Securities  and Exchange  Commission  (the "SEC").  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of  America  have  been  omitted  pursuant  to such SEC rules and
regulations;  nevertheless,  the  Company  believes  that  the  disclosures  are
adequate to make the  information  presented  not  misleading.  These  financial
statements and the notes hereto should be read in conjunction with the financial
statements,  accounting  policies and notes  thereto  included in the  Company's
Annual  Report on Form 10-KSB for the year ended  December 31, 2003,  filed with
the SEC.  In the  opinion of the  Company,  all  adjustments,  including  normal
recurring adjustments necessary of the Company for the interim periods have been
included.  The results of operations for the interim period are not  necessarily
indicative of the results for the full year.

PRINCIPLES OF CONSOLIDATION

The  condensed  consolidated  financial  statements  include the accounts of New
Century   Companies,   Inc.  and  its  wholly  owned  subsidiary,   New  Century
Remanufacturing  (collectively,  the "Company").  All  significant  intercompany
accounts and transactions have been eliminated in consolidation.

GOING CONCERN

The accompanying  condensed consolidated financial statements have been prepared
assuming the Company will continue as a going concern, which contemplates, among
other things,  the realization of assets and  satisfaction of liabilities in the
normal course of business. As of June 30, 2004, the Company has negative working
capital of approximately  $2,200,000,  an accumulated  deficit of $6,100,000 and
recurring losses from operations. These factors, among others, raise substantial
doubt about the Company's  ability to continue as a going  concern.  The Company
intends to fund operations through increased sales and debt and equity financing
arrangements  which management  believes may be insufficient to fund its capital
expenditures,  working capital and other cash  requirements  for the fiscal year
ending  December  31,  2004.  Therefore,  the  Company  will be required to seek
additional funds to finance its long-term operations.  The successful outcome of
future  activities  cannot be  determined at this time and there is no assurance
that if achieved, the Company will have sufficient funds to execute its intended
business plan or generate positive operating results.


                                       13
<PAGE>


--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

--------------------------------------------------------------------------------


1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

GOING CONCERN (continued)

In response to these problems, management has taken the following actions:

      o     The Company continues its aggressive program for selling inventory.

      o     The Company continues to implement plans to further reduce operating
            costs.

      o     The  Company  is  seeking  investment  capital  through  the  public
            markets.

      o     The Company has secured approximately  $4,100,000 of new orders from
            January 2004 through June 2004.

The condensed  consolidated  financial statements do not include any adjustments
related to recoverability  and  classification of assets carrying amounts or the
amount and classification of liabilities that might result should the Company be
unable to continue as a going concern.

INVENTORY

Inventories  are stated at the lower of cost or net  realizable  value.  Cost is
determined under the first-in,  first-out method.  Inventories represent cost of
work in  process  on units not yet under  contract.  Cost  includes  all  direct
material  and labor,  machinery,  subcontractors  and  allocations  of  indirect
overhead.

REVENUE RECOGNITION

Service  revenues  are billed and  recognized  in the  period the  services  are
rendered.

The Company accounts for shipping and handling fees and costs in accordance with
EITF 00-10  "Accounting for Shipping and Handling Fees and Costs." Such fees and
costs incurred by the Company are immaterial to the operations of the Company.

In accordance with SFAS 48, "Revenue  Recognition  when Right of Return Exists,"
revenue is recorded  net of an  estimate of  markdowns,  price  concessions  and
warranty costs.  Such reserve is based on management's  evaluation of historical
experience, current industry trends and estimated costs.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  101 ("SAB  101"),  "Revenue  Recognition,"  which  outlines  the basic
criteria  that  must be met to  recognize  revenue  and  provides  guidance  for
presentation  of revenue  and for  disclosure  related  to  revenue  recognition
policies  in  financial  statements  filed  with  the  Securities  and  Exchange
Commission.  Management  believes that the Company's revenue  recognition policy
for  services  and product  sales  conforms to SAB 101.  The Company  recognizes
revenue  of  long-term   contracts  pursuant  to  Statement  of  Position  81-1,
"Accounting for  Performance of  Construction-Type  and Certain  Production-Type
Contracts" (see below).


                                       14
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

--------------------------------------------------------------------------------


1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

METHOD OF ACCOUNTING FOR LONG-TERM CONTRACTS

The Company uses the  percentage-of-completion  method of  accounting to account
for long-term contracts and, therefore,  takes into account the cost,  estimated
earnings  and revenue to date on  fixed-fee  contracts  not yet  completed.  The
percentage-of-completion  method is used because management considers total cost
to be the best  available  measure  of  progress  on the  contracts.  Because of
inherent  uncertainties in estimating costs, it is at least reasonably  possible
that the estimates used will change within the near term.

The amount of revenue  recognized  at the  statement  date is the portion of the
total  contract  price that the cost  expended to date bears to the  anticipated
final cost, based on current estimates of cost to complete. It is not related to
the progress billings to customers. Contract costs include all materials, direct
labor, machinery, subcontract costs and allocations of indirect overhead.

Because  long-term  contracts  may extend over a period of time,  changes in job
performance,  changes in job  conditions  and revisions of estimates of cost and
earnings during the course of the work are reflected in the accounting period in
which the facts that require the revision  become known. At the time a loss on a
contract  becomes  known,  the entire amount of the  estimated  ultimate loss is
recognized in the consolidated financial statements.

Contracts that are substantially complete are considered closed for consolidated
financial statement purposes.  Revenue earned on contracts in progress in excess
of billings (under billings) is classified as a current asset. Amounts billed in
excess of revenue earned (overbillings) are classified as a current liability.

BASIC AND DILUTED LOSS PER COMMON SHARE

Under SFAS 128,  "Earnings  Per  Share,"  basic  earnings  per  common  share is
computed  by  dividing   income   available  to  common   stockholders   by  the
weighted-average  number of common shares assumed to be  outstanding  during the
period of computation.  Diluted  earnings per share is computed similar to basic
earnings  per share  except that the  denominator  is  increased  to include the
number of  additional  common  shares  that would have been  outstanding  if the
potential common shares had been issued and if the additional common shares were
dilutive (there were 1,821,583 and 871,853 additional potential common shares of
June 30, 2004 and 2003,  respectively).  With the  exception of the three months
ended June 30,  2004,  the Company has incurred net losses and basic and diluted
loss per share are equal  because  additional  potential  common shares would be
anti-dilutive.


                                       15
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

--------------------------------------------------------------------------------


1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

BASIC AND DILUTED LOSS PER COMMON SHARE (continued)

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted earnings (loss) per share computations for the three month and
six month periods ended June 30, 2004 and 2004:

<TABLE>
<CAPTION>
                                                         FOR THE THREE MONTHS ENDED
                                                                  JUNE 30,
                                                        ----------------------------
                                                           2004             2003
                                                        -----------      -----------
<S>                                                     <C>              <C>
Net income (loss)                                       $   283,034      $  (436,234)
Current cumulative preferred dividends                      (39,750)         (28,875)
                                                        -----------      -----------
Numerator for basic and diluted loss per share:

Net income (loss) applicable to common stockholders         243,284         (465,109)

Denominator for basic and diluted loss per share:

Weighted average shares                                   6,995,265        5,946,383
                                                        -----------      -----------

Basic income (loss) per share                           $      0.03      $     (0.08)
                                                        ===========      ===========
Diluted income (loss) per share                         $      0.03      $     (0.08)
                                                        ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                          FOR THE SIX MONTHS ENDED
                                                                  JUNE 30,
                                                        ----------------------------
                                                           2004               2003
                                                        -----------      -----------
<S>                                                     <C>              <C>
Net loss                                                $  (251,852)     $(1,506,056)
Current cumulative preferred dividends                      (79,500)         (57,750)
                                                        -----------      -----------

Numerator for basic and diluted loss per share:

Net loss applicable to common stockholders                 (331,352)      (1,563,806)

Denominator for basic and diluted loss per share:

Weighted average shares                                   6,953,598        5,935,433
                                                        -----------      -----------

Basic and diluted loss per share                        $     (0.05)     $     (0.26)
                                                        ===========      ===========
</TABLE>


                                       16
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

--------------------------------------------------------------------------------


1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

STOCK BASED COMPENSATION

At June 30, 2004, the Company has one stock-based employee compensation plan and
one stock-based  non-employee  compensation  plan. The Company  accounts for the
employee  compensation plan under the recognition and measurement  principles of
APB 25, and related  interpretation.  The Company  accounts for the non-employee
compensation  plan under the  recognition  measurement  principles  of SFAS 123.
There was no employee  stock-based  compensation cost recognized in net loss for
the six month  periods ended June 30, 2004 and 2003.  All options  granted under
these plans had an exercise  price equal to the market  value of the  underlying
common stock on the date of grant. There was no stock based  compenstation under
SFAS 123 for any of the periods included in these interim financial  statements.
Hence, the disclosure requirements under SFAS 148 are not required.


NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements discussed in the notes to the December 31, 2003
and 2002 financial  statements filed previously with the Securities and Exchange
Commission in Form 10-KSB that were required to be adopted during the year ended
December 31, 2004 did not have a significant  impact on the Company's  financial
statements.


                                       17
<PAGE>

--------------------------------------------------------------------------------

                   NEW CENTURY COMPANIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

--------------------------------------------------------------------------------


1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

RECLASSIFICATIONS

Certain  reclassifications  have  been made to the 2003  condensed  consolidated
financial statements to conform to the 2004 presentation.

2.    CONTRACTS IN PROGRESS

Contracts in progress as of June 30, 2004 were as follows:

Cumulative costs to date                                            $ 5,281,395
Cumulative gross profit to date                                       3,444,003
                                                                    -----------

Cumulative revenue earned                                             8,725,398

Less progress billings to date                                       (8,535,475)
                                                                    -----------

     Net overbillings                                               $   189,923
                                                                    ===========


The following is included in the accompanying condensed consolidated balance
sheet as of June 30, 2004:

Costs and estimated earnings on contracts
   in progress in excess of billings                                  $ 493,182
Billings in excess of costs and estimated earnings
   on contracts in progress                                            (303,259)
                                                                      ---------

     Net overbillings                                                 $ 189,923
                                                                      =========


3.    EQUITY TRANSACTIONS

During the quarter ended June 30, 2004,  23,640 shares of  convertible  Series D
preferred  stock were issued in exchange for $521,000 in cash in connection with
a Private Placement Memorandum ("PPM"), net of $30,000 paid to the broker/dealer
and $40,000 of advances  which were  exchanged for shares.  Such offering  costs
were included as an offset to  additional  paid-in  capital in the  accompanying
condensed consolidated balance sheet. Since the related conversion rate is 50:1,
the  effective  conversion  rate of  $0.50  resulted  in a  deemed  discount  of
$153,660,  which  was  included  in  accumulated  deficit.   Additionally,   the
broker/dealer was granted Three-Year Placement Warrants,  as defined in the PPM,
with a cashless  exercise  feature to purchase  25,000  shares of the  Company's
common  stock at prices  ranging  from $0.50 to $1.00.  No expense was  recorded
related to the  granting  of such  warrants as they are  considered  an offering
cost.


                                       18