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:March
                31, 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 RoadSanta
                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
      March 31, 2007 was 12,264,656.





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











PART
                I FINANCIAL INFORMATIONITEM
                1. FINANCIAL STATEMENTS (Unaudited)The
                consolidated Financial Statements are set forth at the end of this
                document.CONSOLIDATED
                FINANCIAL STATEMENTSConsolidated
                Balance Sheet
            F-1Consolidated
                Statements of Operations
            F-2Consolidated
                Statements of Cash Flows
            F-3Notes
                to Consolidated Financial Statements
            F-4
                - F-15ITEM
                2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATIONS
            3ITEM
                3. CONTROLS AND PROCEDURES
            8PART
                II OTHER INFORMATION
            9ITEM
                1. LEGAL PROCEEDING
            9ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            9ITEM
                3. DEFAULTS UPON SENIOR SECURITIES
            9ITEM
                4. SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS
            9ITEM
                5. OTHER INFORMATION
            9ITEM
                6. EXHIBITS
            11





2




**ITEM
      1. FINANCIAL STATEMENTS**





The
      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
      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 a 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.





3


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.





**OVERVIEW
      OF OPERATIONS**




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. 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.




4
 
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
        MARCH
        31, 2007 COMPARED TO MARCH 31, 2006.


Revenues.
      The Company generated revenues of $3,185,469 for the three months ended March
      31, 2007, which was a $1,485,622 or 87% increase from $1,699,847 for the three
      months ended March 31, 2006. The increase is the result of an increase in sales
      volume and higher selling prices of New Century machines due to a decrease
      in
      availability for competitive machines.





Gross
      Profit. Gross profit for the three months ended March 31, 2007, was $1,185,239
      or 37% of revenues, compared to $403,239, or 24% of revenues for the three
      months ended March 31, 2006, a 194% increase. The increase in gross profit
      is
      due to the increased volume of sales and higher selling prices.




Operating
      Income. Operating income for the three months ended March 31, 2007, was $465,966
      compared to an operating loss of ($51,790) for the three months ended March
      31,
      2006. The increase of $517,756 or 1000% in operating income is primarily due
      to
      the increase in sales revenues.





Interest
      Expense. Interest expense for the three months ended March 31, 2007, was
      $465,241 compared with $395,828 for the three months ended March 31, 2006.
      The
      18% increase in interest expense is due to a full three months of amortization
      in the first quarter of year 2007 compared with one and a half months in the
      quarter ended March 31, 2006 of following items:




-
            Approximately
                $84,000 of interest expense on convertible
                note;


-
            Approximately
                $292,000 of amortization of debt discounts from beneficial conversion
                feature, warrants and a conversion
                option;


-
            Approximately
                $90,000 of amortization of deferred financing costs related to warrants
                and common stock granted to third parties as financing cost on convertible
                note;




all
      associated to $3.5 million convertible notes payable issued on February 15,
      2006.





**FINANCIAL
      CONDITION, LIQUIDITY, CAPITAL RESOURCES**





The
      net
      cash increase of the Company during the three months ended March 31, 2007 was
      $264,488. The increase is due to net cash provided by operating activities
      of
      $611,272, offset by $346,784 net cash used in financing activities, cash used
      to
      pay down the Company’s convertible
      notes.




For
      the
      three months ended March 31, 2007, the cash provided by operating activities
      was
      $611,272, compared with $788,046 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.





For
      the
      three months ended March 31, 2007, the cash used in financing activities was
      $346,784, compared with $1,075,851 cash provided by financing activities in
      the
      three months ended March 31, 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.





5





**INFLATION
      AND CHANGING PRICES**





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





**GOING
      CONCERN**





The
      Company has an accumulated deficit of approximately $7,800,000. This condition,
      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. 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.





**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 following
      critical accounting policies 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 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.





6


**Method
      of Accounting for Long-Term Contracts**





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





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





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





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





**Estimates**





Critical
      estimates made by management are, among others, deferred tax asset valuation
      allowances, realization of inventories, collectibility of contracts receivable
      and the estimating of costs for long-term construction contracts. Actual results
      could differ from those estimates.




**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 2nd 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 as of March 31, 2007.





**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.





7


**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
      March 31, 2007 Form 10-QSB. Based upon that evaluation, the CEO and CFO
      concluded that, as of March 31, 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 March 31, 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 will
      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.





8





PART
      II.
      OTHER INFORMATION





Item
      1.
      Legal Proceedings





None.





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





During
      the quarter ended March 31, 2007, the Company issued 150,000 shares of common
      stock to Wall Street Savant, LLC, for investor marketing services, 100,000
      shares of common stock to Quarum Capital Services, Inc, for financial consulting
      services, and 300,000 shares of common stock to Investor Relation International,
      for investor relation services.


The
      shares were issued pursuant to an exemption from the registration rights of
      the
      Securities Act of 1933, as amended, Section 4(2) of the Act.





Item
      3.
      Defaults Upon Senior Securities





None.





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





Exhibit
              32.1
            Section
                906 Sarbanes Oxley Certification





9
 
 
  **NEW
        CENTURY COMPANIES, INC. AND SUBSIDIARY**
 **CONSOLIDATED
        BALANCE SHEET**
 **March
        31, 2007**
 **(Unaudited)**







**ASSETS****Current
                  Assets**Cash
              
              $
              317,806Contract
                  receivables
              
              
              473,693Inventories,
                  net
              
              
              1,333,056Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              872,335Deferred
                  financing costs, net
              
              
              358,292Prepaid
                  expenses and other current assets
              
              
              7,404Total
                  current assets
              
              
              3,362,586**Property
                  and Equipment, net**
              
              
              256,529**Deferred
                  Financing Costs, net**
              
              
              328,436Total
                  Assets
              
              $
              3,947,551**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities**Bank
                  Overdraft
              
              $
              34,090Accounts
                  payable and accrued expenses
              
              
              1,199,491Dividends
                  payable
              
              
              362,800Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              399,710Notes
                  payable
              
              
              12,000Convertible
                  notes payable, net of discount
              
              
              237,223Total
                  current liabilities
              
              
              2,245,314**Convertible
                  Notes Payable, net of discount**
              
              
              210,000**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, 27,780 shares issued and outstanding(liquidation
                  preference of $933,000)
              
              
              27,780Cumulative,
                  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;12,264,656
                  shares issued and outstanding
              
              
              1,226,466Subscriptions
                  receivable
              
              
              (462,500
              )Notes
                  receivable from stockholders
              
              
              (532,402
              )Deferred
                  consulting fees
              
              
              (234,092
              )Additional
                  paid-in capital
              
              
              8,995,064Accumulated
                  deficit
              
              
              (7,819,079
              )Total
                  stockholders' equity
              
              
              1,492,237Total
                  Liabilities and Stockholders' equity
              
              $
              3,947,551
  
 See
          accompanying notes to the consolidated financial statements.
  **F-1**
  
  **NEW
          CENTURY COMPANIES, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **For
        the Three Months Ended March 31, 2007 and 2006**
 **(Unaudited)**
  
 **2007**
                
                **2006****CONTRACT
                    REVENUES**
                
                $
                3,185,469
                
                $
                1,699,847**COST
                    OF SALES**
                
                
                2,000,230
                
                
                1,296,608**GROSS
                    PROFIT**
                
                
                1,185,239
                
                
                403,239**OPERATING
                    EXPENSES**Consulting
                    and other compensation
                
                
                429,363
                
                
                203,058Salaries
                    and related
                
                
                116,634
                
                
                64,331Selling,
                    general and administrative
                
                
                173,276
                
                
                187,640**TOTAL
                    OPERATING EXPENSES**
                
                
                719,273
                
                
                455,029**OPERATING
                    INCOME (LOSS)**
                
                
                465,966
                
                
                (51,790
                )**OTHER
                    EXPENSES**Loss
                    on forgiveness of debt
                
                
                (11,688
                )
                
                -Derivative
                    liability expense
                
                
                -
                
                
                (764,762
                )Interest
                    expense, including debt discount amortization
                
                
                (465,241
                )
                
                (395,828
                )**TOTAL
                    OTHER EXPENSES**
                
                
                (476,929
                )
                
                (1,160,590
                )**LOSS
                    BEFORE PROVISION FOR****INCOME
                    TAXES**
                
                
                (10,963
                )
                
                (1,212,380
                )**PROVISION
                    FOR INCOME TAXES**
                
                
                -
                
                
                -**NET
                    LOSS**
                
                $
                (10,963
                )
                $
                (1,212,380
                )**NET
                    LOSS APPLICABLE****TO
                    COMMON STOCKHOLDERS**
                
                $
                (10,963
                )
                $
                (924,505
                )**Basic
                    and diluted net loss available to****common
                    stockholders per common share**
                
                
                .0.00
                
                $
                (0.09
                )**Basic
                    and diluted weighted average common****shares
                    outstanding**
                
                
                11,983,543
                
                
                10,803,611
 
 
 See
        accompanying notes to the consolidated financial statements.
 **F-2**









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


**CONSOLIDATED
        STATEMENTS OF CASH FLOWS**


**For
        the Three Months Ended March 31, 2007 and 2006**


**(Unaudited)**







**2007**
              
              **2006**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (10,963
              )
              $
              (1,212,380
              )Adjustments
                  to reconcile net loss to net cashprovided
                  by (used in) operating activities:Depreciation
                  and amortization of property and equipment
              
              
              28,578
              
              
              39,028Amortization
                  of deferred financing costs
              
              
              89,574
              
              
              57,466Amortization
                  of Beneficial Conversion Features and other debt discounts
              
              
              291,667
              
              
              249,123Amortization
                  of deferred consulting fees
              
              
              98,977
              
              
              137,039Estmated
                  fair market value of common stock issued for consulting servicesand
                  related change in fair value
              
              
              247,500
              
              
              -Derivative
                  liability expense
              
              
              -
              
              
              764,762Changes
                  in operating assets and liabilities:Contracts
                  receivable
              
              
              (170,151
              )
              
              (625,005
              )Inventories
              
              
              (212,874
              )
              
              (112,985
              )Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              288,333
              
              
              132,622Prepaid
                  expenses and other current assets
              
              
              12,801
              
              
              (2,083
              )Notes
                  receivable from stockholders
              
              
              (7,000
              )
              
              -Accounts
                  payable and accrued expenses
              
              
              8,031
              
              
              (277,456
              )Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              (53,201
              )
              
              61,823Net
                  cash provided (used in) operating activities
              
              
              611,272
              
              
              (788,046
              )Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              -
              
              
              (20,000
              )Net
                  cash used in investing activities
              
              
              -
              
              
              (20,000
              )Cash
                  flows from financing activities:Restricted
                  cash
              
              
              123,898
              
              
              (1,500,000
              )Bank
                  overdraft
              
              
              15,318
              
              
              (27,649
              )Proceeds
                  of issuance of convertible notes payable
              
              
              -
              
              
              3,800,000Principal
                  payments on notes payable
              
              
              (486,000
              )
              
              (774,000
              )Deferred
                  financing costs
              
              
              -
              
              
              (422,500
              )Net
                  cash (used in) provided by financing activities
              
              
              (346,784
              )
              
              1,075,851Net
                  increase in cash
              
              
              264,488
              
              
              267,805Cash
                  at beginning of period
              
              
              53,318
              
              
              -Cash
                  at end of period
              
              $
              317,806
              
              $
              267,805Supplemental
                  disclosure of non-cash activities:Common
                  stock and warrants issued for deferred financing costs
              
              $
              -
              
              $
              641,790Conversion
                  of notes payable and interest to common stock
              
              $
              -
              
              $
              157,500BCF
                  and other debt discount on convertible notes payable
              
              $
              -
              
              $
              3,800,000Debt
                  discount on notes payable for note extension
              
              $
              -
              
              $
              18,900Waived
                  cumulative dividends on preferred stock
              
              $
              -
              
              $
              (287,875
              )




See
        accompanying notes to the consolidated financial statements.




**F-3**


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 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
      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 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 March 31, 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 moths ended March 31, 2007 are not
      necessarily indicative of the results for the full year ending December 31,
      2007.




**F-4**




***Going
      Concern***





The
      accompanying 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
      $7,800,000. 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
      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
      March 31, 2007, the Company’s inventory
      was
      determined to be approximately $1,333,000 net, based on approximately $197,000
      cost of labor, $825,000 cost of materials, $121,000 cost of subcontracted
      services, $476,000 overhead cost, offset by $286,000 reserve for estimated
      markdowns cost of inventory.




***Revenue
      Recognition***




The
      Company's revenues consist of contracts with vendors. 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 SOP 81-1.




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
      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
      statements 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 March 31, 2007, the Company estimated the
      markdowns, price concessions and warranty costs and concluded that 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.. Common
      stock equivalents, representing convertible Preferred Stock, convertible debt,
      options and warrants totaling





**F-6**





approximately
      8,240,816 shares at March 31, 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 March 31, 2007. There were 2,025,451 potentially dilutive
      and 13,392,330 potential common shares that were excluded from the diluted
      earnings per share calculation.




***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.
      $86,400 and $0 of share-based compensation expense was recognized in the
      accompanying consolidated financial statements for the three month periods
      ended
      March 31, 2007 and 2006, respectively.




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.
      At
      March 31, 2007, the Company had 1,750,000 options available for future issuance
      under their equity compensation plans.




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 March 31, 2007 is recognized
      in the period the forfeiture estimate is changed.




At
      March
      31, 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 March 31, 2007 was not
      applicable.




**F-7**




Options
      outstanding that have vested and are expected to vest as of March 31, 2007
      are
      as follows:




Number
                of
              Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Term
                in Years
            
            Aggregate
              Intrinsic
              Value
                (1)Vested
            
            
            1,250,000
            
            $
            0.32
            
            
            1.35
            
            $
            --Expected
                to vest
            
            
            2,000,000
            
            $
            0.20
            
            
            4.62
            
            $
            --Total
            
            
            3,250,000
            
            
            
            
            
            
            
            $
            --




( 1)
        These
        amounts represent the difference between the exercise price and $0.32, the
        closing market price of the Company's common stock on March 31, 2007 as quoted
        on the Over-the-Counter Bulletin Board under the symbol "NCNC.OB" for all
        in-the-money options outstanding.





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
            
            $
            0.25
            
            $
            130,000Grants
            
            
            --
            
            
            --
            
            
            --
            
            
            --Exercises
            
            
            --
            
            
            --
            
            
            --
            
            
            --Cancellations
            
            
            --
            
            
            --
            
            
            --
            
            
            --March
                31, 2007
            
            
            1,750,000
            
            
            3,250,000
            
            $
            0.25
            
            $
            --Options
                exercisable at:March
                31, 2007
            
            
            
            
            
            1,250,000
            
            $
            0.32




(1)
      Represents the added value as difference between the exercise price and the
      closing market price of the Company's common stock at the end of the reporting
      period (as of December 31, 2006 and March 31, 2007 the market price of the
      Company's common stock was $0.21 and $0.32, respectively).




**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 month periods ended March 31, 2007, the Company did not grant any options
      or warrants.





The
      following is a status of the warrants outstanding at March 31, 2007 and the
      changes during the three months ended March 31, 2007:





WeightedWarrants
            
            Average
                PriceOutstanding,
                December 31, 2006
            
            
            6,403,728
            
            $
            0.57Granted
            
            
            --
            
            
            --Exercised
            
            
            --
            
            
            --Cancelled/Terminated
            
            
            (25,000
            )
            
            (0.65
            )Total
                Outstanding, March 31, 2007
            
            
            6,378,728
            
            $
            0.57Exercisable,
                March 31, 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 March 31, 2007 and 2006, the Company amortized approximately
      $292,000 and $97,000, respectively, to interest expense.




***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 is recorded in the consolidated financial statements as a
      discount from the face amount of the notes. Such discounts are amortized to
      interest expense over the term of the notes.





***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 criteria 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 March 31, 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 aproximatelly $2,955,000, $2,155,000,
      $1,321,000 and $695,000 at the quarter ended March 31, 2006, June 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.





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 March 31, 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***





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 statements of operations at each subsequent reporting date.





**F-11**





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 March 31, 2007 which include completed contracts not
      completely billed represent the following:


Cumulative
                  costs to date
              
              $
              3,910,000Cumulative
                  gross profit to date
              
              
              4,123,000Cumulative
                  revenue earned
              
              
              8,033,000Less
                  progress billings to date
              
              
              (7,560,000
              )Net
                  under billings
              
              $
              473,000




The
      following is included in the accompanying consolidated balance sheet under
      these
      captions as of March 31, 2007:


Costs
                  and estimated earnings in excess of billingson
                  uncompleted contracts
              
              $
              873,000Billings
                  in excess of costs and estimated earningson
                  uncompleted contracts
              
              
              (400,000
              )Net
                  under billings
              
              $
              473,000





**F-12**




**3.
      DEBT FINANCING TRANSACTIONS**





During
      the three months ended March 31, 2006, the Company recorded approximately
      $1,007,000 of finance charges in relation to the unamortized portion of deferred
      financing costs for the debt financings.




During
      the three months ended March 31, 2006, the Company amortized approximately
      $97,000 of debt discounts, including beneficial conversion features, to interest
      expense.




During
      the three months ended March 31, 2007, the Company amortized approximately
      $292,000 of debt discounts, including beneficial conversion features, to
      interest expense.




During
        the three months ended March 31, 2006, the Company made cash payments of
        $24,000
        to reduce the principal balance on one of its outstanding secured notes payable.
        As of March 31, 2006, the balance of the note was $156,000.
  During
        the three months ended March 31, 2006, the Company did not made any principal
        payments on one of its secured convertible note payable. As of March 31,
        2006, the balance of the note was $3,500,000.
  Also,
        during the three months ended March 31, 2006, the Company made cash payments
        of
        $300,000 to reduce the principal balance on one of its outstanding convertible
        notes payable. As of March 31, 2006, the principal balance on that note was
        $300,000.




During
      the three months ended March 31, 2007, the Company made cash payments of $36,000
      to reduce the principal balance on one of its outstanding secured notes payable.
      As of March 31, 2007, the balance of the note is $12,000 which is included
      in
      the notes payable section of the accompanying consolidated balance
      sheet.




During
      the three months ended March 31, 2007, the Company made cash payments of
      $350,000 to reduce the principal balance on one of its outstanding secured
      convertible notes payable. As of March 31, 2007, the principal balance is
      approximately $2,683,000 which is presented net of debt discounts totaling
      approximately $2,236,000.




Also,
      during the three months ended March 31, 2007, the Company made cash payments
      of
      $100,000 to pay in full the principal balance on one of its outstanding
      convertible notes payable.





**4.
      EQUITY TRANSACTIONS**





During
      the quarter ended March 31, 2006, the Company issued 150,000 warrants valued
      at
      $127,500 (estimated using a Black-Scholes option pricing model on the dates
      of
      grant) to a third party for consulting services. Approximately $10,000 was
      recorded as consulting expense during the quarter ended March 31, 2006 and
      approximately $117,500 remained unamortized as deferred consulting fees at
      March
      31, 2006, which was recorded as an offset to stockholders’
      equity.





During
      March 2006, the Company paid $900,000 in cash and issued 250,000 shares of
      restricted common stock to one of its creditors to settle the outstanding
      principal balance and accrued interest on two defaulted notes payable, totaling
      approximately $1,041,000. The Company recorded the stock at fair value
      (estimated based on the trading price of the Company's stock on the date of
      grant) totaling $157,500. The value of the stock issued and the cash paid
      exceeded the value of the amount of the outstanding debt and accrued interest
      by
      approximately $17,000. Such amount which was recorded as a loss on debt
      extinguishment and included in selling, general and administrative expenses
      in
      the accompanying condensed consolidated statement of operations for the quarter
      ended March 31, 2006.





**F-13**




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 March 31, 2006, the Company recorded net increases to the fair values
      of
      such equity based compensation arrangements of approximately
      $115,000.





During
      the quarter ended March 31, 2006, the Company recorded approximately $137,000
      of
      consulting expense related to the amortization of deferred consulting fees
      on
      equity based compensation arrangements with third parties.





At
      March
      31, 2006, the Company had a total of 28,980 preferred shares Series C and 11,640
      preferred shares Series D issued and outstanding. As of December 31, 2005,
      the
      Company accumulated dividends totaling $565,875.





In
      March
      2006, ten of the Company's preferred shareholders elected to waive their rights
      to receive dividends. Therefore, the Company recorded a decrease in dividends
      payable of $287,875.





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 quarter
      ended March 31, 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 March 31, 2007, the Company recorded net increases to the fair values
      of
      such equity based compensation arrangements of approximately
      $25,000.




**F-14**


During
      the quarter ended March 31, 2007, the Company recorded approximately $98,800
      of
      consulting expense related to the amortization of deferred consulting fees
      on
      equity based compensation arrangements with third parties.





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





At
      March
      31, 2007, the Company had a total of 27,780 preferred shares Series C and 11,640
      preferred shares Series D issued and outstanding. As of December 31, 2006,
      the
      Company has accumulated dividends totaling $362,800. During the quarters ended
      March 31, 2006 and March 31, 2007, the Company did not accrue any
      dividends.





**5.
      SUBSEQUENT EVENTS**




On
      May 1,
      2007, the Company entered into an Amended and Restated Registration Rights
      Agreement (the “2 nd Amendment”) with CAMOFI. 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 Security
      Exchange Commission .





**F-15**





**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.




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


*Date:
              May 14,
              2007*
            
            */s/
              JOSEF CZIKMANTORI**Name:
                Josef Czikmantori**Title:
                Secretary and Director*






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