SECURITIES
      EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
                ACT OF 1934





o
            TRANSACTION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
                ACT OF 1934





For
                Quarter Ended:
            Commission
                File Number:September
                30, 2007
            0-7722








NEW
      CENTURY COMPANIES, INC.





(Exact
      name of Registrant as specified in its charter)








DELAWARE
            061034587(State
                or other jurisdiction of
            (IRS
                Employer IdentificationIncorporation
                or organization)
            Number)








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 o





Indicate
      by check mark whether the registrant is a shell company (as defined by Rule
      12b-2 of the Exchange Act). Yes o No x





The
      number of shares of Common Stock, par value $ 0.10 per share, outstanding as
      of
      September 30, 2007 was 13,444,656.





Transitional
      Small Business Disclosure Format (check one): Yes o No x





**Table
      of Contents**





PART
      I
      FINANCIAL INFORMATION





ITEM
      1.
      FINANCIAL STATEMENTS (Unaudited)





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




Condensed
                Consolidated Balance Sheet
            F-1Condensed
                Consolidated Statements of Operations
            F-2Condensed
                Consolidated Statements of Cash Flows
            F-3Notes
                to Condensed Consolidated Financial Statements
            F-4
                - F-16





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





ITEM
      3.
      CONTROLS AND PROCEDURES





PART
      II
      OTHER INFORMATION





ITEM
      1.
      LEGAL PROCEEDING





ITEM
      2.
      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





ITEM
      3.
      DEFAULTS UPON SENIOR SECURITIES





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





ITEM
      5.
      OTHER INFORMATION





ITEM
      6.
      EXHIBITS







**ITEM
      1. FINANCIAL STATEMENTS**





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





**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS**





The
      following discussion should be read in conjunction with the Company's unaudited
      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, 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.





**OVERVIEW**





The
      Company is engaged in acquiring, re-manufacturing and selling pre-owned Computer
      Numerically Controlled ("CNC") machine tools to manufacturing customers. The
      Company provides rebuilt, retrofit and remanufacturing services for numerous
      brands of machine tools. The remanufacturing of a machine tool, typically
      consisting of replacing all components, realigning the machine, adding updated
      CNC capability and electrical and mechanical enhancements, generally takes
      two
      to four months to complete. Once completed, a remanufactured machine is a "like
      new," state-of-the-art machine with a price ranging from $275,000 to $1,000,000,
      which is substantially less then the price of an equivalent new machine. The
      Company also manufactures original equipment CNC large turning lathes and
      attachments under the trade name Century Turn.





CNC
      machines use commands from onboard computers to control the movements of cutting
      tools and rotation speeds of the parts being produced. Computer controls enable
      operators to program operations such as part rotation, tooling selection and
      tooling movement for specific parts and then store the programs in memory for
      future use. The machines are able to produce parts while left unattended.
      Because of this ability, as well as superior speed of operation, a CNC machine
      is able to produce the same amount of work as several manually controlled
      machines, as well as reduce the number of operators required; generating higher
      profits with less re-work and scrap. Since the introduction of CNC tooling
      machines, continual advances in computer control technology have allowed for
      easier programming and additional machine capabilities.








A
      vertical turning machine permits the production of larger, heavier and more
      oddly shaped parts on a machine, which uses less floor space when compared
      to
      the traditional horizontal turning machine because the spindle and cam are
      aligned on a vertical plane, with the spindle on the bottom.





The
      primary industry segments in which the Company’s machines are utilized to make
      component parts are in aerospace, power generation turbines, military, component
      parts for the energy sector for natural gas and oil exploration and medical
      fields. The Company sells its products to customers located in United States,
      Canada and Mexico.





Over
      the
      last four years, the Company has designed and developed a large horizontal
      CNC
      turning lathe with productivity features new to the metalworking industry.
      The
      Company believes that a potential market for the Century Turn Lathe, in addition
      to the markets mentioned above, is aircraft landing gear.





We
      provide our manufactured and remanufactured machines as part of the machine
      tool
      industry. The machine tool industry worldwide is approximately a 30 billion
      dollar business annually. The industry is sensitive to market conditions and
      generally trends downward prior to poor economic conditions, and improves prior
      to an improvement in economic conditions.





Our
      machines are utilized in a wide variety of industry segments as follows:
      aerospace, energy, valves, fittings, oil and gas, machinery and equipment,
      and
      transportation. With the recent downturn in the aerospace industry, we have
      seen
      an increase in orders from new industries such as defense and medical
      industries.




The
      Company's current strategy is to expand its customer sales base with its present
      line of machine products. The Company's growth strategy also includes strategic
      acquisitions in addition to growing the current business. Plans for expansion
      are funded through current working capital from ongoing sales. As of September
      30, 2007, the Company’s working capital is $626,935. However, significant growth
      will require additional funds in the form of debt or equity, or a combination
      thereof. The Company's growth strategy also includes strategic acquisitions
      in
      addition to growing the current business. A significant acquisition will require
      additional financing.







**RESULTS
      OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO
      SEPTEMBER 30, 2006.**





**Revenues** .
      The
      Company generated revenues of $1,414,269 for the three months ended September
      30, 2007, which was a $581,862 or 29% decrease from $1,996,131 for the three
      months ended September 30, 2006. The decrease is the result of slower than
      usual
      summer sales and a tighter credit market.





**Gross
      Profit.** Gross
      profit for the three months ended September 30, 2007, was negative $34,561
      or 2%
      of revenues, compared to a positive $368,900 or 18% of revenues for the three
      months ended September 30, 2006, a 109% decrease. The decrease in gross profit
      is due to the rework of three remanufactured machines which needed
      additional labor cost.







**Operating
      Loss.** Operating loss for the three months ended September 30, 2007, was $457,790
      compared to operating loss of $18,661 for the three months ended September
      30,
      2006. The increase in loss of $439,129 is primarily due to decreased revenues
      for the quarter ended September 30, 2007.





**Interest
      Expense and Debt Discount Amortization.** Interest
      expense for the three months ended September 30, 2007, was $475,188 compared
      with $514,302 for the three months ended September 30, 2006. The decrease of
      $39,114 in interest expenses is due to a decrease in the balance outstanding
      on
      Convertible Note by payments or conversion of principal. The details of interest
      expenses for the three months ended September 30, 2007 are presented in the
      Table below.





**Liquidated
      Damages Expense.** The
      Company accrued approximately $55,000 of liquidated damages during the quarter
      ended September 30, 2007 on the CAMOFI $2.2 million convertible debt as a
      penalty for failure to respond within 14 calendar days to Securities Exchange
      Commission comments, made in respect to the Registration Statement, compared
      with $420,000 of liquidated damages during the quarter ended September 30,
      2006
      on the same CAMOFI debt as a penalty for failure to have a registration
      statement declared effective as required by our previous financing (See
      Registration Rights Obligation section).




**NEW
                  CENTURY COMPANIES, INC. AND SUBSIDIARY****INTEREST
                  AND LIQUIDATED DAMAGES EXPENSES****For
                  the Three Months Ended September 30, 2007 and
                  2006****(Unaudited)****(Rounded
                  to nearest thousand)**
 **For
                  the Three Months**
                **Ended
                  September 30,**
              
              **Variance****2007**
              
              **2006**
              
              $
              
              %**$3.5
                  million convertible note**Amortization
                  of debt discount (non-cash expense)
              
              $
              252,000
              *
              $
              292,000
              
              $
              (40,000
              )
              
              -14
              %Amortization
                  of deferred financing fees (non-cash expense)
              
              
              90,000
              
              
              84,000
              
              
              6,000
              
              
              7
              %Interest
                  on note
              
              
              133,000
              
              
              100,000
              
              
              33,000
              
              
              33
              %Liquidated
                  damages accrued for failure to register common stock conform with
                  Registration Rights Agreement of convertible note holders (non-cash
                  expense)
              
              
              55,000
              
              
              420,000
              
              
              (365,000
              )
              
              -87
              %**$300,000
                  convertible note**Amortization
                  of debt discount (non-cash expense)
              
              
              -
              
              
              -
              
              
              0
              
              
              -Amortization
                  of deferred financing and extension fees (non-cash
                  expense)
              
              
              -
              
              
              21,000
              
              
              (21,000
              )
              
              -100
              %Interest
                  on note
              
              
              -
              
              
              17,000
              
              
              (17,000
              )
              
              -100
              %**Interest
                  and adjustments on other notes payable and leases**
              
              
              1,000
              
              
              800
              
              
              200
              
              
              25
              %Total
              
              $
              531,000
              
              $
              934,800
              
              $
              (403,800
              )
              
              -43
              %







**RESULTS
      OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO SEPTEMBER
      30, 2006.**





**Revenues.** The
      Company generated revenues of $7,199,885 for the nine months ended September
      30,
      2007, a $1,206,134 or a 20% increase from $5,993,751 for the nine months ended
      September 30, 2006. The increase is the result of higher sales volume and higher
      selling prices of New Century machines on the first and second quarter of the
      fiscal year 2007.





**Gross
      Profit.** Gross
      profit for the nine months ended September 30, 2007, was $1,861,680 or 26%
      of
      revenues, compared to $1,578,860, or 26% of revenues for the nine months ended
      September 30, 2006, a 18% increase. The increase in gross profit is the result
      of increased sales during the first six months of the year 2007.





**Operating
      Income.** Operating income for the nine months ended September 30, 2007, was $200,792
      compared to operating income of $276,027 for the nine months ended September
      30,
      2006. The decrease of 27% in operating income is due primarily to an increase
      in
      consulting expenses for public relations and marketing services.





**Interest
      Expense and Debt Discount Amortization.** Interest
      expense for the nine months ended September 30, 2007 was $1,662,702 compared
      to
      $1,560,740 for the nine months ended September 30, 2006, an increase of $101,962
      . The decrease in interest expenses is due to decrease of balance outstanding
      on
      Convertible Note by payments or conversion of principal. (The details of
      interest expense for the nine months ended September 30, 2007 are presented
      below.)





**Liquidated
      Damages Expense.** The
      Company accrued approximately $55,000 of liquidated damages during the nine
      months ended September 30, 2007 on the CAMOFI $2.2 million convertible debt
      as a
      penalty for failure to respond within 14 calendar days to Securities Exchange
      Commission comments, made in respect to the Registration Statement, compared
      with $582,500 of liquidated damages during the nine months ended September
      30,
      2006 on the same CAMOFI debt as a penalty for failure to have a registration
      statement declared effective as required by our previous financing (See
      Registration Rights Obligation section).




**NEW
                  CENTURY COMPANIES, INC. AND SUBSIDIARY****INTEREST
                  AND LIQUIDATED DAMAGES EXPENSES****For
                  the Nine Months Ended September 30, 2007 and
                  2006****(Unaudited)****(Rounded
                  to nearest thousand)**
 **For
                  the Nine Months**
                **Ended
                  September 30,**
              
              **Variance****2007**
              
              **2006**
              
              $
              
              %**$3.5
                  million convertible note**Amortization
                  of debt discount (non-cash expense)
              
              $
              1,100,000
              *
              $
              700,000
              
              $
              400,000
              
              
              57
              %Amortization
                  of deferred financing fees (non-cash expense)
              
              
              269,000
              
              
              196,000
              
              
              73,000
              
              
              37
              %Interest
                  on notenon-cash
                  conversion into stock
              
              
              74,000
              
              
              -
              
              
              74,000cash
                  payments and accrual
              
              
              217,000
              
              
              234,000
              
              
              (17,000
              )
              
              -7
              %Liquidated
                  damages accrued for failure to register common stock conform with
                  Registration Rights Agreement of convertible note holders (non-cash
                  expense)
              
              
              55,000
              
              
              583,000
              
              
              (528,000
              )
              
              -91
              %**$300,000
                  convertible note**Amortization
                  of debt discount (non-cash expense)
              
              
              -
              
              
              300,000
              
              
              (300,000
              )
              
              -100
              %Amortization
                  of deferred financing and extension fees (non-cash
                  expense)
              
              
              -
              
              
              76,000
              
              
              (76,000
              )
              
              -100
              %Interest
                  on note
              
              
              -
              
              
              47,000
              
              
              (47,000
              )
              
              -100
              %**Interest
                  and adjustments on other notes payable and leases**
              
              
              3,000
              
              
              3,800
              
              
              (800
              )
              
              -21
              %Total
              
              $
              1,718,000
              
              $
              2,139,800
              
              $
              (421,800
              )
              
              -20
              %
  *
        Includes $278,000 of interest expense due to debt discount reduction related
        to
        $350,000 conversion of principal of the CAMOFI Note in to Company's common
        stock








**FINANCIAL
      CONDITION, LIQUIDITY, CAPITAL RESOURCES**








The
      net
      cash decrease during the nine months ended September 30, 2007 was $34,771.
      The
      decrease is due to $624,500 cash used in financing activities to pay down the
      Companies notes payable and to $32,225 net cash used in investing activities.







For
      the
      nine months ended September 30, 2007, the cash provided by operating activities
      was $476,323, compared with $1,590,530 cash used in operating activities in
      the
      corresponding period from 2006. The increase in cash provided by operating
      activities is a result of increased sales in the first six months of
      2007.





For
      the
      nine months ended September 30, 2007, the cash used in financing activities
      was
      $478,869, compared with $1,670,874 cash provided by financing activities in
      the
      nine months ended September 30, 2006. The decrease of cash provided by financing
      activities is primarily due to $3,800,000 of proceeds from the issuance of
      two
      convertible notes in 2006, compared to no cash proceeds from debt or equity
      in
      2007.








**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. The Company has an accumulated deficit of approximately $9,200,000.
      This factor, among others, raises substantial doubt about the Company's ability
      to continue as a going concern. The Company intends to fund operations through
      anticipated increased sales along with debt and equity financing arrangements
      which management believes may be insufficient to fund its capital expenditures,
      working capital and other cash requirements for the year ending December 31,
      2007. 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.





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


·
            The
                Company continues its aggressive program for selling inventory.


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


·
            The
                Company is seeking investment capital through the public and private
                markets.





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










**INFLATION
      AND CHANGING PRICES**





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








**REGISTRATION
      RIGHTS OBLIGATION**





On
      December 19, 2006, we entered into an Amended and Restated Registration Rights
      Agreement (the “Amended and Restated Agreement”) with CAMOFI. Pursuant to the
      Amended and Restated Agreement we agreed to file registration statements to
      cover the resale of the shares issuable upon conversion of the CAMOFI Note
      and
      warrants as follows: (i) on or before January 31, 2007, prepare and file with
      the United States Securities and Exchange Commission (“SEC”) a Registration
      Statement covering the resale of all common Stock issuable upon conversion
      of
      the 12% Senior Secured Convertible Note dated February 28, 2009, up to 33%
      of
      our issued and outstanding stock; (ii) within 90 days from
      effectiveness of the
      Registration Statement referred to in i) above, prepare and file a Registration
      Statement covering the resale of all common Stock issuable upon conversion
      of
      the 12% Senior Secured Convertible Note dated February 28, 2009 to the extent
      not registered above plus all shares of common stock underlying the Purchaser
      Warrants, up to 33% of our issued and outstanding stock; (iii) within 90 days
      from effectiveness of the Registration Statement referred to in ii) above,
      prepare and file a Registration Statement covering the resale of all common
      Stock issuable upon conversion of the 12% Senior Secured Convertible Note dated
      February 28, 2009 plus all shares of common stock underlying the Purchaser
      Warrants to extent not registered above, up to 33% of our issued and outstanding
      stock; and (iv) within 90 days from effectiveness of the Registration Statement
      referred to in iii) above, prepare and file a Registration Statement covering
      the resale of all additional Purchaser Warrants to extent not registered above,
      up to 33% of our issued and outstanding stock.





On
      May 1,
      2007, the Company entered into an Amended and Restated Registration Rights
      Agreement (the “2 nd Amendment”) with CAMOFI, the holder of 12% Senior Secured Convertible Note.
      Pursuant to the Amendment, CAMOFI agreed to waive any liquidated damages prior
      to the date of the 2 nd Amendment. Also, within 30 days after the date of the 2 nd Amendment, the Company agreed to file a registration statement to cover the
      resale of the shares issuable upon conversion of the CAMOFI Note up to 33%
      of
      the Company’s issued and outstanding stock, and, in 90 days after the date of
      filing, to have the registration statement declared effective by the Securities
      and Exchange Commission.  Pursuant to the Second Amended and Restated
      Registration Rights Agreement, CAMOFI agreed to waive any liquidated damages
      accrued prior to the date of the Amendment. However, the failure to timely
      file
      the Registration Statement and have the registration statement declared
      effective, will subject us to liquidated damages equal to 1.5% of the
      outstanding principal of the Notes for any registrable securities then held
      by
      CAMOFI for the first 30 days (or part thereof) after the default date and an
      additional 1.5% for any subsequent 30-day period (or part thereof), thereafter
      or a maximum of 10% of the remaining balance of the CAMOFI Notes. If we fail
      to
      pay any partial liquidated damages within seven days after the date payable,
      we
      will be required to pay interest thereon at a rate of 20% per annum (or such
      lesser maximum amount that is permitted to be paid by applicable law) to CAMOFI,
      accruing daily from the date such partial liquidated damages are due until
      such
      amounts, plus all such interest thereon, are paid in full.







On
      July
      17, 2007, The
      Company requested pursuant
      to Rule 477 under the Securities Act of 1933, as amended, that the Securities
      and Exchange Commission (the “Commission”) consent to the withdrawal by the
      Company of  its
      Registrant's Registration Statement on Form SB-2 filed with the Commission
      on
      May 31, 2007 (File No. 333-143388) (the "Registration Statement") .
      The
      Company requested the withdrawal because it has elected to renegotiate certain
      provisions of the Registration Rights Agreement with the Selling Stockholders
      and has determined not to pursue with the registration of the securities
      included in the Registration Statement at this time. No securities were offered
      or sold pursuant to the Registration Statement.





On
      July
      18, 2007, in view of the Securities and Exchange Commission’s (the “SEC”)
      position and interpretation of Rule 415 promulgated by the SEC pursuant to
      the
      Securities Act of 1933, as amended, CAMOFI waived its rights to have the Company
      register 33% of its issued and outstanding shares in the Registration statement
      that the Company filed on May 31, 2007 (the “Registration Statement”), as
      required by the May 1, 2007 Amended and Restated Registration Rights Agreement,
      and agreed to the inclusion of 3,000,000 shares of common stock of the Company
      representing 27% of the public float of the Company in the New Registration
      Statement, as described in the following paragraph. All of the other provisions
      of the Registration Rights Agreement remained the same.





On
      July
      19, 2007 the Company filed a new registration statement on Form SB-2 with the
      Securities and Exchange Commission for registration of 3,000,000 shares of
      selling shareholders common stock.





On
      October 18, 2007 the Company filed an amended registration statement on Form
      SB-2 with the Securities and Exchange Commission to answer to SEC comments
      on
      the registration statement filed on July 19, 2007.








We
      are
      currently not in compliance with our obligations under the Second Amended and
      Restated Agreement to have this Registration Statement declared effective within
      90 days of filing and to respond to comments of the SEC within 14 calendar
      days
      after receipt. If we do not obtain a waiver of such default by CAMOFI we will
      be
      obligated to pay liquidated damages to CAMOFI as described above.  We
      currently accrued $55,417 of liquidated damages.








**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 our consolidated financial statements and the accompanying
      notes. The amounts of assets and liabilities reported on our balance sheet
      and
      the amounts of revenues and expenses reported for each of our 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
      accounting policies stated below are significantly affected by judgments,
      assumptions and estimates used in the preparation of the financial statements:








**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 recorded to cost of goods sold and 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," as amended by SAB No. 104
      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 amended by SAB 104.
      The Company recognizes revenue of long-term contracts pursuant to SOP 81-1.





**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 (over billings) are classified as a current liability.










**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. As of
      September 30, 2007, the company’s inventory was determined to be approximately
      $1,490,000 net, based on approximately $204,000 cost of labor, $913,000 cost
      of
      materials, $117,000 cost of subcontracted services, $542,000 overhead cost,
      offset by a $286,000 reserve for estimated markdowns on inventory
      costs.




**Classification
      Of Warrant Obligation**





In
      connection with the issuance of the 12% Senior Secured Convertible Notes, the
      Company has an obligation to file registration statements covering the
      Registrable Securities underlying the warrants issued in connection with the
      convertible note, as defined in the Amended and 2 nd Amended
      Registration Rights Agreements. We evaluated the warrants in accordance with
      SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” and
      EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in, a Company's Own Stock”, and concluded that the warrants
      meet all the criteria required to be classified as equity.





**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 our accounting
      policies, outcomes cannot be predicted with confidence. Also see Note 1 of
      Notes
      to Consolidated Financial Statements, Summary of Significant Accounting
      Policies, which discusses accounting policies that must be selected by
      management when there are acceptable alternatives.






**ITEM
      3. CONTROLS AND PROCEDURES**




**EVALUATION
      OF CONTROLS AND PROCEDURES**





Under
      the
      supervision and with the participation of our management, including our Chief
      Executive Officer ("CEO") and Chief Financial Officer ("CFO"), we evaluated
      the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act
      as of
      a date (the "Evaluation Date") within 90 days prior to filing the Company's
      September 30, 2007 Form 10-QSB. Based upon that evaluation, the CEO and CFO
      concluded that, as of September 30, 2007, our disclosure controls and procedures
      were not effective in timely alerting management to the material information
      relating to us (or our consolidated subsidiaries) required to be included in
      our
      periodic filings with the SEC.











**CHANGES
      IN CONTROLS AND PROCEDURES**





There
      were no significant changes made in our internal controls over financial
      reporting during the quarter ended September 30, 2007 that have materially
      affected or are reasonably likely to materially affect these controls.








**LIMITATIONS
      ON THE EFFECTIVENESS OF INTERNAL CONTROL**





The
      Company's management, including the CEO, does not expect that our disclosure
      controls and procedures or our internal control over financial reporting
      necessarily prevent all fraud and material errors. An internal control system,
      no matter how well conceived and operated, can provide only reasonable, not
      absolute, assurance that the objectives of the control system are met. Further,
      the design of a control system must reflect the fact that there are resource
      constraints, and the benefits of controls must be considered relative to their
      costs. Because of the inherent limitations on all internal control systems,
      no
      evaluation of controls can provide absolute assurance that all control issues
      and instances of fraud, if any, within the Company have been detected. These
      inherent limitations include the realities that judgments in decision-making
      can
      be faulty, and that breakdowns can occur because of simple error or mistake.
      Additionally, controls can be circumvented by the individual acts of some
      persons, by collusion of two or more people, and/or by management override
      of
      the control. The design of any system of internal control is also based in
      part
      upon certain assumptions about the likelihood of future events, and there can
      be
      no assurance that any design will succeed in achieving its stated goals under
      all potential future conditions. Over time, controls may become inadequate
      because of changes in circumstances, and/or the degree of compliance with the
      policies and procedures may deteriorate. Because of the inherent limitations
      in
      a cost-effective internal control system, financial reporting misstatements
      due
      to error or fraud may occur and not be detected on a timely basis.





















**PART
      II. OTHER INFORMATION**





Item
      1.
      Legal Proceedings





None.





Item
      2.
      Unregistered Sales of Equity Securities and Use of Proceeds





None.





Item
      3.
      Defaults Upon Senior Securities





Starting
      July 2007, the Company is in default with all monthly payments on CAMOFI
      Convertible Note payable.





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





None.





Item
      5.
      Other Information





The
      Company is in process of filing a registration statement.





Item
      6.
      Exhibits




Exhibit
      31.1 Section 302 Sarbanes Oxley Certification for Chief Executive
      Officer


Exhibit
      31.2 Section 302 Sarbanes Oxley Certification for Chief Financial
      Officer


Exhibit
      32.1 Section 906 Sarbanes Oxley Certification







**NEW
                CENTURY COMPANIES, INC. AND SUBSIDIARY****CONDENSED
                CONSOLIDATED BALANCE SHEET****September
                30, 2007****(Unaudited)**




**ASSETS****Current
                  Assets**Cash
              
              $
              18,547Contract
                  receivables
              
              
              669,393Inventories,
                  net
              
              
              1,489,865Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              605,195Deferred
                  financing costs, net
              
              
              358,292Prepaid
                  expenses and other current assets
              
              
              21,902Total
                  current assets
              
              
              3,163,194**Property
                  and Equipment, net**
              
              
              300,830**Deferred
                  Financing Costs Long Term, net**
              
              
              149,288Total
                  Assets
              
              $
              3,613,312**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities**Bank
                  Overdraft
              
              $
              40,505Accounts
                  payable and accrued liabilities
              
              
              1,347,372Dividends
                  payable
              
              
              335,450Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              284,458Lease
                  payable
              
              
              29,988Convertible
                  notes payable, net of discount
              
              
              498,486Total
                  current liabilities
              
              
              2,536,259**Long-Term
                  Liabilities**Lease
                  payable - long term portion
              
              
              39,355Convertible
                  notes payable, net of discount
              
              
              290,783Total
                  long term liabilities
              
              
              330,138**Commitments
                  and Contingencies****Stockholders'
                  Equity**Cumulative,
                  convertible, Series B preferred stock, $1 par value,15,000,000
                  shares authorized, no shares issued and outstanding(liquidation
                  preference of $25 per share)
              
              
              -Cumulative,
                  convertible, Series C preferred stock, $1 par value,75,000
                  shares authorized, 26,880 shares issued and outstanding(liquidation
                  preference of $933,000)
              
              
              26,880Cumulative,
                  convertible, Series D preferred stock, $25 par value,75,000
                  shares authorized, 11,640 shares issued and outstanding(liquidation
                  preference of $416,000)
              
              
              291,000Common
                  stock, $0.10 par value, 50,000,000 shares authorized;13,444,656
                  shares issued and outstanding
              
              
              1,344,466Subscriptions
                  receivable
              
              
              (462,500
              )Notes
                  receivable from stockholders
              
              
              (553,402
              )Deferred
                  consulting fees and employees stock option expense
              
              
              (284,270
              )Additional
                  paid-in capital
              
              
              9,627,781Accumulated
                  deficit
              
              
              (9,243,040
              )Total
                  stockholders' equity
              
              
              746,915Total
                  Liabilities and Stockholders' equity
              
              $
              3,613,312
  See
        accompanying notes to the condensed consolidated financial statements.
 F-1


**NEW
                CENTURY COMPANIES, INC. AND SUBSIDIARY****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****For
                the Three and Nine Months Ended September 30, 2007 and
                2006****(Unaudited)**




**For
                the Three Months**
              **Ended
                Sep 30,**
            
            **For
                the Nine Months**
              **Ended
                September 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006****CONTRACT
                REVENUES**
            
            $
            1,414,269
            
            $
            1,996,131
            
            $
            7,199,885
            
            $
            5,993,751**COST
                OF SALES**
            
            
            1,448,830
            
            
            1,627,231
            
            
            5,338,205
            
            
            4,414,891**GROSS
                PROFIT**
            
            
            (34,561
            )
            
            368,900
            
            
            1,861,680
            
            
            1,578,860**OPERATING
                EXPENSES**Consulting
                and other compensation
            
            
            160,555
            
            
            104,464
            
            
            802,873
            
            
            432,422Salaries
                and related
            
            
            85,368
            
            
            86,826
            
            
            312,338
            
            
            212,948Selling,
                general and administrative
            
            
            177,306
            
            
            196,271
            
            
            545,677
            
            
            657,463**TOTAL
                OPERATING EXPENSES**
            
            
            423,229
            
            
            387,561
            
            
            1,660,888
            
            
            1,302,833**OPERATING
                INCOME (LOSS)**
            
            
            (457,790
            )
            
            (18,661
            )
            
            200,792
            
            
            276,027**OTHER
                (INCOME) EXPENSES**Gain
                (loss) on forgivenes of debt
            
            
            62,012
            
            
            (6,697
            )
            
            55,053
            
            
            7,204Derivative
                liability
            
            
            -
            
            
            834,285
            
            
            -
            
            
            869,047Liquidated
                damages
            
            
            (55,417
            )
            
            (420,000
            )
            
            (55,417
            )
            
            (582,500
            )Interest,
                including debt discount amortization
            
            
            (475,188
            )
            
            (514,302
            )
            
            (1,662,702
            )
            
            (1,560,740
            )**TOTAL
                OTHER EXPENSES**
            
            
            (468,593
            )
            
            (106,714
            )
            
            (1,663,066
            )
            
            (1,266,989
            )**LOSS
                BEFORE PROVISION FOR****INCOME
                TAXES**
            
            
            (926,383
            )
            
            (125,375
            )
            
            (1,462,274
            )
            
            (990,962
            )**PROVISION
                FOR INCOME TAXES**
            
            
            -
            
            
            -
            
            
            -
            
            
            -**NET
                LOSS**
            
            $
            (926,383
            )
            $
            (125,375
            )
            $
            (1,462,274
            )
            $
            (990,962
            )**NET
                LOSS APPLICABLE TO COMMON STOCKHOLDERS**
            
            $
            (899,033
            )
            $
            (125,375
            )
            $
            (1,434,924
            )
            $
            (745,487
            )**Basic
                net loss applicable to common stockholders****per
                common share**
            
            $
            (0.07
            )
            $
            (0.01
            )
            $
            (0.11
            )
            $
            (0.07
            )**Diluted
                net loss applicable to common stockholders****per
                common share**
            
            $
            (0.07
            )
            $
            (0.01
            )
            $
            (0.11
            )
            $
            (0.07
            )**Basic
                weighted average common shares outstanding**
            
            
            13,440,580
            
            
            11,435,487
            
            
            12,698,246
            
            
            11,176,819**Diluted
                weighted average common shares outstanding**
            
            
            13,440,580
            
            
            11,435,487
            
            
            12,698,246
            
            
            11,176,819


See
      accompanying notes to the condensed consolidated financial statements.


F-2


**NEW
                CENTURY COMPANIES, INC. AND SUBSIDIARY****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****For
                the Nine Months Ended September 2007 and 2006****(Unaudited)**




**2007**
              
              **2006**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (1,462,274
              )
              $
              (990,962
              )Adjustments
                  to reconcile net loss to net cashprovided
                  by (used in) operating activities:Depreciation
                  and amortization of property and equipment
              
              
              95,659
              
              
              111,737Net
                  gain on forgiveness of debt
              
              
              55,053
              
              
              (7,204
              )Amortization
                  of deferred financing costs
              
              
              268,722
              
              
              254,545Amortization
                  of debt discounts
              
              
              1,100,380
              
              
              1,020,628Amortization
                  of deferred consulting fees, deffered employee stock option expense,estmated
                  fair market value of common stock issued for consulting servicesand
                  related change in fair value
              
              
              696,116
              
              
              244,909Derivative
                  liability expense (credit)
              
              
              -
              
              
              (869,047
              )Changes
                  in operating assets and liabilities:Contracts
                  receivable
              
              
              (365,832
              )
              
              (452,895
              )Inventories
              
              
              (369,683
              )
              
              (656,757
              )Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              555,473
              
              
              (113,780
              )Prepaid
                  expenses and other current assets
              
              
              (1,697
              )
              
              (31,445
              )Notes
                  receivable from stockholders
              
              
              (28,000
              )
              
              -Accounts
                  payable and accrued liabilities
              
              
              100,859
              
              
              154,362Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              (168,453
              )
              
              (254,621
              )Net
                  cash provided by (used in) operating activities
              
              
              476,323
              
              
              (1,590,530
              )Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              (32,225
              )
              
              (20,000
              )Net
                  cash used in investing activities
              
              
              (32,225
              )
              
              (20,000
              )Cash
                  flows from financing activities:Restricted
                  cash
              
              
              123,898
              
              
              (566,310
              )Bank
                  overdraft
              
              
              21,733
              
              
              (27,649
              )Proceeds
                  of issuance of convertible notes payable
              
              
              -
              
              
              3,800,000Principal
                  payments on notes payable and capital leases
              
              
              (624,500
              )
              
              (1,112,667
              )Deferred
                  financing costs
              
              
              -
              
              
              (422,500
              )Net
                  cash (used in) provided by financing activities
              
              
              (478,869
              )
              
              1,670,874Net
                  increase (decrease) in cash
              
              
              (34,771
              )
              
              60,344Cash
                  at beginning of period
              
              
              53,318
              
              
              -Cash
                  at end of period
              
              $
              18,547
              
              $
              60,344Supplemental
                  disclosure of non-cash investing and financing activities:Accrued
                  cumulative dividends on preferred stock
              
              $
              42,400
              
              $
              42,400Reversal
                  of accrued dividends older than four years on preferred
                  stock
              
              $
              (69,750
              )
              $
              -Conversion
                  of notes payable and interest to common stock
              
              $
              424,317
              
              $
              170,250Common
                  stock and warrants issued for deferred financing costs
              
              $
              -
              
              $
              641,790Debt
                  discount on convertible notes payable
              
              $
              1,427,397
              
              $
              3,823,400Debt
                  discount on notes payable for note extension
              
              $
              -
              
              $
              18,900Waived
                  cumulative dividends on preferred stock
              
              $
              -
              
              $
              287,875Conversion
                  of Series C preferred stock to common stock
              
              $
              1,500
              
              $
              2,000




See
        accompanying notes to the condensed consolidated financial statements.
 F-3


**NEW
      CENTURY COMPANIES, INC. AND SUBSIDIARY**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND
      2006**







**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 substantially less than the price 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 trades on the OTC Bulletin Board under the symbol
      "NCNC.OB".




***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.




***Basis
      Of Presentation***





The
      accompanying unaudited interim condensed consolidated financial statements
      have
      been prepared by the Company, pursuant to the rules and regulations of the
      United States 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 (“GAAP”) 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, 2006, filed with
      the SEC. In
      the
      opinion of management, all adjustments necessary to present fairly, in
      accordance with GAAP, the Company's financial position as of September 30,
      2007,
      and the results of operations and cash flows for the interim periods presented,
      have been made. Such adjustments consist only of normal recurring adjustments.
      The results of operations for the three and nine months ended September 30,
      2007
      are not necessarily indicative of the results for the full year ending December
      31, 2007.




F-4




***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. The Company has an accumulated deficit of
      approximately $9,200,000. This factor, among others (See Note 3), raises
      substantial doubt about the Company's ability to continue as a going concern.
      The Company intends to fund operations through anticipated increased sales
      along
      with debt and equity financing arrangements which management believes may be
      insufficient to fund its capital expenditures, working capital and other cash
      requirements for the year ending December 31, 2007. 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.





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


·
            The
                Company continues its aggressive program for selling inventory.


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


·
            The
                Company is seeking investment capital through the public and private
                markets.





The condensed consolidated
      financial statements do not include any adjustments related to recoverability
      and classification of asset 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. As of
      September 30, 2007, the company’s inventory was determined to be approximately
      $1,490,000 net, based on approximately $204,000 cost of labor, $913,000 cost
      of
      materials, $117,000 cost of subcontracted services, $542,000 overhead cost,
      offset by a $286,000 reserve for estimated markdowns on inventory
      costs.




***Revenue
      Recognition***




The
      Company's revenues consist of contracts with customers. 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.




F-5


Staff
      Accounting Bulletin ("SAB") No. 104, "Revenue Recognition" 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 SEC. Management believes that
      the Company's revenue recognition policy conforms to SAB No. 104. The Company
      recognizes revenue on contracts pursuant to Statements of Position 81-1,
      Accounting for Performance of Construction-Type and Certain Production-Type
      Contracts.




The
      amount of revenue recognized at the financial 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
      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 condensed consolidated
      financial statement purposes. Costs incurred and revenue earned on contracts
      in
      progress in excess of billings (under billings) are classified as a current
      asset. Amounts billed in excess of costs and revenue earned (over billings)
      are
      classified as a current liability.




The
      Company accounts for shipping and handling fees and costs in accordance with
      Emerging Issues Task Force ("EITF") Issue No. 00-10 "Accounting for Shipping
      and
      Handling Fees and Costs." Shipping and handling fees and costs incurred by
      the
      Company are immaterial to the operations of the Company and are included in
      cost
      of sales.




In
      accordance with Statements of Financial Accounting Standards ("SFAS") No. 48,
      "Revenue Recognition when Right of Return Exists," revenue is recorded net
      of an
      estimate for markdowns, price concessions and warranty costs. Such reserve
      is
      based on management's evaluation of historical experience, current industry
      trends and estimated costs. As of September 30, 2007, the Company estimated
      the
      markdowns, price concessions and warranty costs and concluded amounts are
      immaterial and did not record any adjustment to revenues.




***Basic
      And Diluted Loss Per Common Share***





Under
      SFAS 128, “Earnings Per Share,” ** basic
      earnings per common share is computed by dividing income (loss) 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.





F-6





Common
      stock equivalents, representing convertible Preferred Stock, convertible debt,
      options and warrants totaling approximately 3,303,000 shares at September 30,
      2007 are not included in the diluted loss per share as they would be
      anti-dilutive. Accordingly, diluted and basic loss per share are the same for
      September 30, 2007.




***Stock
      Based Compensation***





Effective
      January 1, 2006, the Company adopted the provisions of SFAS No. 123-R,
      "Share-Based Payment," ("SFAS No. 123-R"). SFAS No. 123-R requires employee
      stock options and rights to purchase shares under stock participation plans
      to
      be accounted for under the fair value method and requires the use of an option
      pricing model for estimating fair value. Accordingly, share-based compensation
      is measured at the grant date, based on the fair value of the award. The
      exercise price of options is generally equal to the market price of the
      Company's common stock (defined as the closing price as quoted on the
      Over-the-Counter Bulletin Board administered by Nasdaq) on the date of grant.




From
      time
      to time, the Company's Board of Directors grants common share purchase options
      or warrants to selected directors, officers, employees, consultants and advisors
      in payment of goods or services provided by such persons on a stand-alone basis
      outside of any of the Company's formal stock plans. The terms of these grants
      are individually negotiated and generally expire within five years from the
      grant date.





Under
      the
      terms of the Company's 2000 Stock Option Plan, options to purchase an aggregate
      of 5,000,000 shares of common stock may be issued to officers, key employees
      and
      consultants of the Company. The exercise price of any option generally may
      not
      be less than the fair market value of the shares on the date of grant. The
      term
      of each option generally may not be more than five years.





Under
      the
      terms of the Company's non-statutory stock option plan, options to purchase
      an
      aggregate of 1,350,000 shares of common stock may be issued to non-employees
      for
      services rendered. These options are non-assignable and non-transferable, are
      exercisable over a five-year period from the date of grant, and vest on the
      date
      of grant.





On
      November 13, 2006, the Company granted 2,000,000 options to key employees.
      The
      options will vest and become exercisable on December 1, 2007. At September
      30,
      2007, the Company had 1,850,000 options available for future issuance under
      their equity compensation plans. $86,400 and $0 of share-based compensation
      expense was recognized in the accompanying condensed consolidated financial
      statements for the three month periods ended September 30, 2007 and 2006,
      respectively. $259,200 and $0 of share-based compensation expense was recognized
      in the accompanying condensed consolidated financial statements for the nine
      month periods ended September 30, 2007 and 2006, respectively.




F-7


In
      accordance with SFAS No. 123-R, the Company’s policy is to adjust share-based
      compensation on a quarterly basis for changes to the estimate of expected award
      forfeitures based on actual forfeiture experience. The effect of adjusting
      the
      forfeiture rate for all expense amortization after September 30, 2007 is
      recognized in the period the forfeiture estimate is changed.




At
      September 30, 2007, the Company estimated (using the Black Scholes pricing
      model) the fair value of options granted and no variance has been found.
      Therefore, the effect of forfeiture adjustments at the period ended September
      30, 2007 was not applicable.




Options
      outstanding that have vested and are expected to vest as of September 30, 2007
      are as follows:




Number
                of
              Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Term
                in Years
            
            Aggregate
              Intrinsic
              Value
                (1)Vested
            
            
            1,150,000
            
            $
            0.25
            
            
            0.31
            
            $
            126,500Expected
                to vest
            
            
            2,000,000
            
            $
            0.20
            
            
            2.62
            
            $
            320,000Total
            
            
            3,150,000
            
            
            
            
            
            
            
            $
            446,500




(1)These
                amounts represent the difference between $0.36, the closing market
                price
                of the Company's common stock on September 30, 2007 as quoted on
                the
                Over-the-Counter Bulletin Board under the symbol "NCNC.OB" for all
                in-the-money options outstanding, and the exercise
                price.





The
      Company’s policy for options outstanding that are expected to vest are net of
      estimated future forfeitures in accordance with the provisions of SFAS No.
      123-R, which are estimated when compensation costs are recognized. Additional
      information with respect to stock option activity is as
      follows:




Outstanding
                OptionsShares
              Available
              for
                Grant
            
            Number
              of
              Shares
            
            Weighted
              Average
              Exercise
            
            Intrinsic
              Value(1)December
                31, 2006
            
            
            1,750,000
            
            
            3,250,000
            
            $
            0.22
            
            $
            --Grants
            
            
            --
            
            
            --
            
            
            --
            
            
            --Exercises
            
            
            --
            
            
            --
            
            
            --
            
            
            --Cancellations
            
            
            100,000
            
            
            100,000
            
            
            1.10
            
            
            --September
                30, 2007
            
            
            1,850,000
            
            
            3,150,000
            
            $
            0.22
            
            $
            259,000Options
                exercisable at:September
                30, 2007
            
            
            
            
            
            1,150,000
            
            $
            0.25
            
            $
            126,500




(1)
      represents the added value as difference between the closing market price of
      the
      Company's common stock at the end of the reporting period (as of December 31,
      2006 and September 30, 2007, the market price of the Company's common stock
      was
      $0.21 and $0.36, respectively), and the exercise price.




F-8


The
      Company follows SFAS No. 123-R (as interpreted by EITF Issue No. 96-18,
      "Accounting for Equity Instruments That Are Issued To Other Than Employees
      for
      Acquiring, or in Conjunction with Selling, Goods or Services") to account for
      transactions involving services provided by third parties where the Company
      issues equity instruments as part of the total consideration. Pursuant to
      paragraph 7 of SFAS No. 123 (R), the Company accounts for such transactions
      using the fair value of the consideration received (i.e. the value of the goods
      or services) or the fair value of the equity instruments issued, whichever
      is
      more reliably measurable. The Company applies EITF Issue No. 96-18 to
      transactions when the value of the goods and/or services are not readily
      determinable and (1) the fair value of the equity instruments is more reliably
      measurable and (2) the counterparty receives equity instruments in full or
      partial settlement of the transactions, using the following
      methodology:




a)
      For
      transactions where goods have already been delivered or services rendered,
      the
      equity instruments are issued on or about the date the performance is complete
      (and valued on the date of issuance).





b)
      For
      transactions where the instruments are issued on a fully vested, non-forfeitable
      basis, the equity instruments are valued on or about the date of the
      contract.




c)
      For
      any transactions not meeting the criteria in (a) or (b) above, the Company
      re-measures the consideration at each reporting date based on its then current
      stock value.




From
      time
      to time, the Company issues warrants to employees and to third parties pursuant
      to various agreements, which are not approved by the shareholders. During the
      three and nine month periods ended September 30, 2007, the Company did not
      grant
      any options or warrants.





The
      following is a status of the warrants outstanding at September 30, 2007 and
      the
      changes during the nine months ended September 30, 2007:





WeightedWarrants
            
            Average
                PriceOutstanding,
                December 31, 2006
            
            
            6,403,728
            
            $
            0.57Granted
            
            
            --
            
            
            --Exercised
            
            
            --
            
            
            --Cancelled/Terminated
            
            
            (25,000
            )
            
            (0.65
            )Total
                Outstanding, September 30, 2007
            
            
            6,378,728
            
            $
            0.57Exercisable,
                September 30, 2007
            
            
            6,378,728
            
            
            0.57





F-9




***Deferred
      Financing Costs***





Direct
      costs of securing debt financing are capitalized and amortized over the term
      of
      the related debt. When a loan is paid in full, any unamortized financing costs
      are removed from the related accounts and charged to operations. During the
      three months ended September 30, 2007 and 2006, the Company amortized
      approximately $90,000 and $84,000, respectively, to interest expense. During
      the
      nine months ended September 30, 2007 and 2006, the Company amortized
      approximately $269,000 and $255,000, respectively, to interest expense. At
      September 30, 2007, the unamortized portion of deferred financing costs for
      the
      convertible note payable is approximately $507,000.





***Beneficial
      Conversion Feature Of Convertible Notes Payable***




The
      convertible feature of certain notes payable provides for a rate of conversion
      that is below market value. Such feature is normally characterized as a
      "Beneficial Conversion Feature" ("BCF"). Pursuant to EITF Issue No. 98-5,
      "Accounting for Convertible Securities with Beneficial Conversion Features
      or
      Contingently Adjustable Conversion Ratio" and EITF No. 00-27, "Application of
      EITF Issue No. 98-5 To Certain Convertible Instruments," the estimated fair
      value of the BCF recorded in the condensed consolidated financial statements
      resulted in a debt discount from the face amount of the notes. Such discounts
      are amortized to interest expense over the term of the notes (See Debt Discount
      Note).





***Classification
      Of Warrant Obligation***





In
      connection with the issuance of the 12% Senior Secured Convertible Notes, the
      Company has an obligation to file registration statements covering the
      registrable securities underlying the warrants issued in connection with the
      convertible note, as defined in the Amended Registration Rights Agreement.





The
      obligation to file the registration statement met the criterion of an embedded
      derivative to be bifurcated pursuant to SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities", as amended. Under this transaction, the
      Company was obligated to register for resale the common shares underlying the
      warrants, and as a result, the embedded derivative associated with this warrant
      obligation did not meet the scope exception of paragraph 11(a) of SFAS No.
      133.
      Specifically, at September 30, 2006, the Company did not have any uncommitted
      registered shares to settle the warrant obligation and accordingly, such
      obligation was classified as a liability (outside of stockholders' deficit)
      in
      accordance with EITF Issue No. 00-19, "Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company's Own Stock."
      The
      classification of the warrant obligation has been evaluated at each reporting
      date and reported as a liability until such time all of the criteria necessary
      for equity classification were met. The warrant liability was recorded
      originally, on February 28, 2006, the issuance date, at $2,190,000, and adjusted
      market-to-market every quarter to approximately $2,955,000, $2,155,000,
      $1,321,000 and $695,000 at the quarter ended March 31, 2006, September 30,
      2006,
      September 30, 2006, and December 19, 2006, correspondingly. The market-to-market
      adjustment was reversed to derivative liability expense.




F-10




On
      December 19, 2006, the Company entered into an amended agreement with the
      warrant holder, CAMOFI Master LDC, where by the warrant holder agreed to waive
      all liquidated damages incurred as a result of the Company’s inability to file a
      registration statement to register the shares underlying the warrants. In
      addition, a limit was placed on the amount of liquidated damages to be incurred
      in the event the Company fails to have an effective registration statement
      within the time period required by the amended agreement. The liquidated damages
      would be limited to 10% of the outstanding balance of the note. As a result,
      the
      warrants met all the criteria outlined in EITF 00-19 to be classified as equity.
      Accordingly, the warrants were reclassified to equity at December 19, 2006,
      and
      the $695,000 fair value of warrant liability was credited to additional paid
      in
      capital. The December 19, 2006 Amended Registration Rights Agreement was Amended
      on May 1, 2007, July 18, 2007 and October 18, 2007 (See details on Registration
      Rights Obligation Section in the Management Discussion and Analysis
      section).





Management
      evaluated the warrants in accordance with SFAS 133, “Accounting for Derivative
      Instruments and Hedging Activities” and EITF 00-19, “Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
      Stock”, and concluded that the warrants meet all the criteria required to be
      classified as equity.




***Income
      Taxes***





We
      adopted the provisions of Financial Standards Accounting Board Interpretation
      No. 48 Accounting for Uncertainty in Income Taxes ("FIN 48") an interpretation
      of FASB Statement No. 109 ("SFAS 109") on January 1, 2007. The implementation
      of
      FIN 48 did not result in any adjustment to the Company's beginning tax
      positions. The Company continues to fully recognize its tax benefits which
      are
      offset by a valuation allowance to the extent that it is more likely than not
      that the deferred tax assets will not be realized. As of September 30, 2007,
      the
      Company did not have any unrecognized tax benefits. The Company files a
      Consolidated Federal income tax return in the U.S. The Company files a separate
      income tax return in the State of California. The Company is no longer subject
      to U.S. Federal tax examinations for the years before 2004.





***Significant
      Recent Accounting Pronouncements***





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      157”). SFAS 157 provides guidance for using fair value to measure assets and
      liabilities. It also responds to investors’ requests for expanded information
      about the extent to which companies’ measure assets and liabilities at fair
      value, the information used to measure fair value, and the effect of fair value
      measurements on earnings. SFAS 157 applies whenever other standards require
      (or
      permit) assets or liabilities to be measured at fair value, and does not expand
      the use of fair value in any new circumstances. SFAS 157 is effective for
      financial statements issued for fiscal years beginning after November 15, 2007.
      We are currently evaluating the effect that the adoption of SFAS 157 will have
      on our consolidated results of operations and financial condition and are not
      yet in a position to determine such effects.




F-11


On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115.” This standard permits an entity to measure many financial
      instruments and certain other items at estimated fair value. Most of the
      provisions of SFAS No. 159 are elective; however, the amendment to SFAS No.
      115
      (“Accounting for Certain Investments in Debt and Equity Securities”) applies to
      all entities that own trading and available-for-sale securities. The fair value
      option created by SFAS No. 159 permits an entity to measure eligible items
      at
      fair value as of specified election dates. Among others, eligible items exclude
      (1) financial instruments classified (partially or in total) as permanent or
      temporary stockholders’ equity (such as a convertible debt security with a
      non-contingent beneficial conversion feature) and (2) investments in
      subsidiaries and interests in variable interest entities that must be
      consolidated. A for-profit business entity will be required to report unrealized
      gains and losses on items for which the fair value option has been elected
      in
      its consolidated statement of operations at each subsequent reporting date.





The
      fair
      value option (a) may generally be applied instrument by instrument, (b) is
      irrevocable unless a new election date occurs, and (c) must be applied to the
      entire instrument and not to only a portion of the instrument. SFAS No. 159
      is
      effective as of the beginning of the first fiscal year that begins after
      November 15, 2007. Early adoption is permitted as of the beginning of the
      previous fiscal year provided that the entity (i) makes that choice in the
      first
      120 days of that year, (ii) has not yet issued financial statements for any
      interim period of such year, and (iii) elects to apply the provisions of SFAS
      No. 157 (“Fair Value Measurements”). The adoption of SFAS No. 159 is not
      expected to have a significant impact on future financial
      statements.




**2.
      CONTRACTS IN PROGRESS**




Contracts
      in progress as of September 30, 2007 which include completed contracts not
      completely billed represent the following (approximated amounts):





Cumulative
                costs to date
            
            $
            6,572,000Cumulative
                gross profit to date
            
            
            5,480,000Cumulative
                revenue earned
            
            
            12,052,000Less
                progress billings to date
            
            
            (11,731,000
            )Net
                under billings
            
            $
            321,000




The
      following is included in the accompanying condensed consolidated balance sheet
      under these captions as of September 30, 2007 (approximated amounts) :





Costs
                and estimated earnings in excess of billingson
                uncompleted contracts
            
            $
            605,000Billings
                in excess of costs and estimated earningson
                uncompleted contracts
            
            
            (284,000
            )Net
                under billings
            
            $
            321,000





F-12








**3.
      DEBT FINANCING TRANSACTIONS**





Du ring
      the
      three months ended September 30, 2006, the Company made cash payments of $36,000
      to reduce the principal balance on one of its outstanding secured notes payable.
      As of September 30, 2006, the balance of the note was $84,000.




During
      the three months ended September 30, 2006, the Company made cash payments of
      approximately $117,000 to reduce the principal balance on one of its secured
      convertible notes payable. As of September 30, 2006, the balance of the note
      was
      $3,383,000.




Also,
      during the three months ended September 30, 2006, the Company made cash payments
      of $150,000 to reduce the principal balance on one of its outstanding
      convertible notes payable. As of September 30, 2006, the principal balance
      on
      that note was $150,000.




During
      the three months ended September 30, 2006, the Company made cash payments of
      $81,000 to pay off two of its outstanding secured notes payable.




Also,
      during the three months ended September 30, 2007, the Company made cash payments
      of approximately $7,500 to capital lease payable of which $4,000 were recorded
      as payments on the principal balance.




For
      the
      three months ended September 30, 2007, the Company is in default on payments
      on
      its secured convertible note payable The Company is currently renegotiating
      the
      term of the note and intend to pay the interest due shortly. As of September
      30,
      2007, the balance of the note was $2,217,000.





Du ring
      the
      nine months ended September 30, 2007, the Company made cash payments of $48,000
      to pay in full one of its outstanding secured notes payable




During
      the nine months ended September 30, 2007, the Company made cash payments of
      $100,000 to reduce the principal balance on one of its outstanding secured
      convertible notes payable.




During
      the nine months ended September 30, 2007, the Company made cash payments of
      $466,667 to reduce the principal balance on one of its outstanding secured
      convertible notes payable. Also, the Company’ Board of Directors approved
      conversion of $350,000 principal and approximately $74,317 of interest into
      675,000 shares of the Company’s common stock. As of September 30, 2007, the
      principal balance is approximately $2,217,000 which is presented net of debt
      discounts totaling approximately $789,000.




During
      the nine months ended September 30, 2007, the Company made cash payments of
      approximately $22,500 on the capital lease payable of which $9,833 were recorded
      as payments on the principal balance. As of September 30, 2007, the principal
      balance on that lease was $69,000.




F-13





**Debt
      Discount**





During
      the three months ended September 30, 2007 and 2006, the Company amortized
      approximately $252,000 related to a convertible note payable to CAMOFI Master
      LDC ("CAMOFI") and $313,000, respectively, of debt discounts to interest
      expense.





During
      the nine months ended September 30, 2007 and 2006, the Company amortized
      approximately $1,100,000 and $1,021,000, respectively, of debt discounts to
      interest expense. For the nine months ended September 30, 2006, $700,000 was
      related to a convertible note payable to CAMOFI and $300,000 was related to
      a
      convertible note payable to Motivated Minds, LLC (“Motivated
      Minds”).








**4.
      EQUITY TRANSACTIONS**





**Equity
      Compensation**





In
      February 2007, the Company issued 150,000 shares of common stock valued at
      $60,000 (based on the market price of the shares on the date the services were
      completed in accordance with EITF 96-18) to a third party for investor marketing
      services under a one month contract.





In
      February 2007, the Company issued 100,000 shares of common stock valued at
      $36,000 (based on the market price of the shares on the date the services were
      completed in accordance with EITF 96-18) to a third party for financial
      consulting services under a 13 day contract.





In
      February 2007, the Company issued 300,000 shares of common stock valued at
      $126,000 (based on the market price of the shares on the date the services
      were
      completed in accordance with EITF 96-18) to a third party for investor relation
      services under a one month contract.





All
      the
      above three contracts were recorded as public company expense in the first
      quarter of 2007 in the accompanying consolidated statements of
      operations.





In
      May
      2007, the Company issued 100,000 shares of common stock valued at $70,000 (based
      on the market price of the shares) to a third party for public investor
      relations services under one year contract. The common stock was recorded at
      the
      estimated fair value of the common stock on the date of the transaction as
      a
      deferred charge and is amortized to operating expense over the life of the
      agreement.





In
      June
      2007, the Company issued 300,000 shares of common stock valued at $210,000
      (based on the market price of the shares) to a third party for internet public
      investor relations services under a three year contract. The common stock was
      recorded at the estimated fair value of the common stock on the date of the
      transaction as a deferred charge and is amortized to operating expense over
      the
      life of the agreement.





F-14





In
      June
      2007, the Company issued 15,000 shares of common stock valued at $10,500 (based
      on the market price of the shares) to a third party for public investor
      relations services under a 90 days contract. The common stock was recorded
      at
      the estimated fair value of the common stock on the date of the transaction
      as a
      deferred charge and is amortized to operating expense over the life of the
      agreement.





In
      June
      2007, the Company issued 75,000 shares of common stock valued at $52,500 (based
      on the market price of the shares) to a third party for corporate consulting
      and
      market services under a 6 months contract. The common stock was recorded at
      the
      estimated fair value of the common stock on the date of the transaction as
      a
      deferred charge and is amortized to operating expense over the life of the
      agreement.





All
      the
      above four contracts were recorded as public company expense in the second
      quarter of 2007 in the accompanying consolidated statements of
      operations.




As
      described in Note 1, the Company enters into equity based compensation
      arrangements with non-employees where the value of the services are not readily
      determinable and the fair value of the equity instruments is more reliably
      measurable. Under most of these arrangements, the performance criteria required
      for a measurement date is not reached until the service period has been
      completed. As a result, the Company is required to re-measure the consideration
      at each reporting date based on its then current stock value. During the quarter
      ended September 30, 2007, the Company recorded net decreases to the fair values
      of such equity based compensation arrangements of approximately $37,500. During
      the nine months ended September 30, 2007, the Company recorded net increases
      to
      the fair values of such equity based compensation arrangements with third
      parties totaling $7,000.





During
      the three and nine months ended September 30, 2007 the Company amortized
      approximately $181,000 and $259,000, respectively, of consulting expense related
      to deferred consulting fees on such equity based compensation arrangements.
      As
      of September 30, 2007, the unamortized portion of consulting fees on such equity
      based compensation arrangements approximate $227,000.




F-15





**Dividends
      on preferred stock**





The
      preferred shares Series C and preferred shares Series D shares have a mandatory
      cumulative dividend of $1.25 per share, which is payable on a semi-annual basis
      in September and December each year to holders of record on November 30 and
      May
      31, does not have any voting rights and has liquidation
      preferences.





Accrued
      dividends on the Company’s preferred common stock older then four years are
      beyond the California Statute of Limitations and the dividends are no longer
      required to be paid. Therefore, the Company decreased dividends payable by
      $69,750 in September 2007 for those dividends older than four years that the
      Company does not intend to pay.





At
      September 30, 2007, the Company had a total of 26,680 preferred shares Series
      C
      and 11,640 preferred shares Series D issued and outstanding. On June 30, 2007
      the Company recorded an accrual of $42,400 dividends for preferred shares
      shareholders who did not waive their right to receive dividends. As of September
      30, 2007, the Company’s accumulated dividends payable has a balance of
      $335,450.





**Conversion
      of debt into shares of Company’s common stock**





In
      June
      2007, the Company’s Board of Directors approved the issuance of 675,000 shares
      of common stock as a conversion of principal and interest due on the 12% Senior
      Secured Convertible debt. The 675,000 shares of common stock were recorded
      at
      par value, and the difference between the par value (approximated $67,000)
      of
      the stock issued upon conversion and the amount converted (approximated
      $425,000) amounted $357,000 which was recorded as additional paid in
      capital.





The
      debt
      discount related to the convertible note was reduced pro-rata based on the
      debt
      reduction and approximately $278,000 was charged to interest expense
      .








**5.
      SUBSEQUENT EVENTS**





On
      October 18, 2007 the Company filed an amended registration statement on Form
      SB-2 with the Securities and Exchange Commission to answer to SEC comments
      on
      the registration statement filed on July 19, 2007.





On
      November 9, 2007 the Company filed an amended registration statement on Form
      SB-2 with the Securities and Exchange Commission to answer to SEC comments
      on
      the amended registration statement filed on October 18, 2007.





On
      November 13, 2007, the Securities and Exchange Commission declared effective
      the
      registration statement filed on October 18, 2007.







F-16




**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Company caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.





*Date:
                November 14, 2007*
            *NEW
                CENTURY COMPANIES, INC.**/s/
                DAVID DUQUETTE**Name:
                David Duquette**Title:
                Chairman, President and
                Director*





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Company and in the capacities and on the
      dates indicated.





*Date:
                November 14, 2007*
            */s/
                DAVID DUQUETTE**Name:
                David Duquette**Title:
                Chairman, President and Director**Date:
                November 14, 2007*
            */s/
                JOSEF CZIKMANTORI**Name:
                Josef Czikmantori**Title:
                Secretary and Director*