**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




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




For
      the
      quarterly period ended March 31, 2008




o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
                1934




Commission
      file number: 000-09459




**NEW
      CENTURY COMPANIES, INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **061034587**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                Number)




**9831
      Romandel Ave.**


**Santa
      Fe Springs, CA 90670**


(Address
      of principal executive offices)




**(562)
      906-8455**


(Registrant’s
      telephone number, including area code)




Not
      applicable


(Former
      name, former address and former fiscal year, if changed since last
      report)




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 such filing requirements
      for the past 90 days.  Yes x No
      o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
      the
      Exchange Act).





Large
                accelerated filero
            
            Accelerated
                filer oNon-accelerated
                filer o
            
            Smaller
                reporting companyx




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




As
      of May
      12, 2008, the Company had 14,119,656 shares of common stock, $0.10 par value,
      issued and outstanding.





Documents
      incorporated by reference: None








**NEW
      CENTURY COMPANIES, INC.**





**INDEX**





**Page No.****PART
                I - FINANCIAL INFORMATION**Item
                1. Financial StatementsCondensed
                Consolidated Balance Sheets - March 31, 2008 (Unaudited) and
                December 31, 2007
            
            
            F-1Condensed
                Consolidated Statements of Operations (Unaudited) - Three Months
                Ended
                March 31, 2008 and 2007
            
            
            F-2Condensed
                Consolidated Statements of Cash Flows (Unaudited) - Three Months
                Ended
                March 31, 2008 and 2007
            
            
            F-3Notes
                to Condensed Consolidated Financial Statements
            
            
            F-4Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            
            
            1Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            
            
            5Item
                4. Controls and Procedures
            
            
            5**PART
                II - OTHER INFORMATION**Item
                1. Legal Proceedings
            
            
            9Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            
            9Item
                3. Defaults Upon Senior Securities
            
            
            9Item
                4. Submission of Matters to a Vote of Security
                Holders
            
            
            9Item
                5. Other Information
            
            
            9Item
                6. Exhibits
            
            
            9SIGNATURES
            
            
            10




**Forward-Looking
      Statements**




This
      Quarterly Report on Form 10-Q contains certain forward-looking statements within
      the meaning of Section 27A of the Securities Act of 1933, and Section 21E of
      the
      Securities Exchange Act of 1934. For example, statements regarding the Company’s
      financial position, business strategy and other plans and objectives for future
      operations, and assumptions and predictions about future product demand, supply,
      manufacturing, costs, marketing and pricing factors are all forward-looking
      statements. These statements are generally accompanied by words such as
“intend,” anticipate,” “believe,” “estimate,” “potential(ly),” “continue,”
“forecast,” “predict,” “plan,” “may,” “will,” “could,” “would,” “should,”
“expect” or the negative of such terms or other comparable terminology. The
      Company believes that the assumptions and expectations reflected in such
      forward-looking statements are reasonable, based on information available to
      it
      on the date hereof, but the Company cannot provide assurances that these
      assumptions and expectations will prove to have been correct or that the Company
      will take any action that the Company may presently be planning. However, these
      forward-looking statements are inherently subject to known and unknown risks
      and
      uncertainties. Actual results or experience may differ materially from those
      expected or anticipated in the forward-looking statements. Factors that could
      cause or contribute to such differences include, but are not limited to,
      regulatory policies, available cash, research results, competition from other
      similar businesses, and market and general economic factors. This discussion
      should be read in conjunction with the condensed consolidated financial
      statements and notes thereto included in Item 1 of this Quarterly Report on
      Form 10-Q.







**ITEM
      1. FINANCIAL STATEMENTS**







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


**CONDENSED
      CONSOLIDATED BALANCE SHEET**


**March
      31, 2008 and December 31, 2007**


**(Unaudited)**





**March
                31,**
            
            **December
                31,****2008**
            
            **2007****ASSETS****Current
                Assets**Cash
            
            $
            -
            
            $
            281,729Contract
                receivables, net
            
            
            499,054
            
            
            438,876Inventories,
                net
            
            
            715,207
            
            
            886,107Costs
                and estimated earnings in excess of billings on uncompleted
                contracts
            
            
            593,432
            
            
            570,797Deferred
                financing costs
            
            
            328,433
            
            
            358,292Prepaid
                expenses and other current assets
            
            
            237,050
            
            
            14,183Total
                current assets
            
            
            2,373,176
            
            
            2,549,984**Property
                and Equipment, net**
            
            
            248,335
            
            
            269,092**Deferred
                Financing Costs, net**
            
            
            -
            
            
            59,715Total
                Assets
            
            $
            2,621,511
            
            $
            2,878,791**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Bank
                Overdraft
            
            $
            31,661
            
            $
            18,962Accounts
                payable and accrued liabilities
            
            
            1,923,486
            
            
            2,074,666Dividends
                payable
            
            
            376,725
            
            
            376,725Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            498,114
            
            
            88,025Notes
                payable, net of current portion
            
            
            26,144
            
            
            25,597Convertible
                notes payable, net of discount of 923,610 for March 31, 2008 and
                $1,175,504 for December 31, 2007
            
            
            1,643,057
            
            
            1,391,163Total
                current liabilities
            
            
            4,499,187
            
            
            3,975,138**Long
                Term Liabilities**Notes
                payable, long term portion
            
            
            30,934
            
            
            37,679Total
                long term liabilities
            
            
            30,934
            
            
            37,679**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 $910,000)
            
            
            26,880
            
            
            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)
            
            
            291,000
            
            
            291,000Common
                stock, $0.10 par value, 50,000,000 shares authorized; 14,119,656
                and
                13,744,654 shares issued and outstanding for March 31, 2008 and December
                31, 2008, respectivelly
            
            
            1,411,966
            
            
            1,374,466Subscriptions
                receivable
            
            
            (462,500
            )
            
            (462,500
            )Notes
                receivable from stockholders
            
            
            (545,165
            )
            
            (545,165
            )Deferred
                consulting fees
            
            
            (209,578
            )
            
            (334,921
            )Additional
                paid-in capital
            
            
            9,786,281
            
            
            9,748,781Accumulated
                deficit
            
            
            (12,207,494
            )
            
            (11,232,567
            )Total
                stockholders' equity
            
            
            (1,908,610
            )
            
            (1,134,026
            )Total
                Liabilities and Stockholders' equity
            
            $
            2,621,511
            
            
            2,878,791





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 Months Ended March 31, 2008 and 2007**


**(Unaudited)**





**2008**
            
            **2007****CONTRACT
                REVENUES**
            
            $
            1,526,602
            
            $
            3,185,469**COST
                OF SALES**
            
            
            1,308,479
            
            
            2,000,230**GROSS
                PROFIT**
            
            
            218,123
            
            
            1,185,239**OPERATING
                EXPENSES**Consulting
                and other compensation
            
            
            271,384
            
            
            429,363Salaries
                and related
            
            
            53,496
            
            
            116,634Selling,
                general and administrative
            
            
            438,029
            
            
            173,276**TOTAL
                OPERATING EXPENSES**
            
            
            762,909
            
            
            719,273**OPERATING
                INCOME (LOSS)**
            
            
            (544,786
            )
            
            465,966**OTHER
                INCOME (EXPENSES)**Gain
                on writeoff of accounts payable
            
            
            56,628
            
            
            12,553Loss
                on disputed accounts payable
            
            
            -
            
            
            (24,241
            )Interest
                expense*
            
            
            (486,769
            )
            
            (465,241
            )**TOTAL
                OTHER EXPENSES**
            
            
            (430,141
            )
            
            (476,929
            )**LOSS
                BEFORE PROVISION FOR****INCOME
                TAXES**
            
            
            (974,927
            )
            
            (10,963
            )**PROVISION
                FOR INCOME TAXES**
            
            
            -
            
            
            -**NET
                LOSS**
            
            $
            (974,927
            )
            $
            (10,963
            )**NET
                LOSS APPLICABLE****TO
                COMMON STOCKHOLDERS**
            
            $
            (974,927
            )
            $
            (10,963
            )**Basic
                and diluted net loss available to****common
                stockholders per common share**
            
            $
            (0.07
            )
            $
            (0.00
            )**Basic
                and diluted weighted average common****shares
                outstanding**
            
            
            14,033,089
            
            
            11,983,543





*
      Interest includes $144,001 additional penalties and interest on defaulted
      convertible note, debt discount amortization of $251,894 and deferred financing
      cost amortization of $89,573 for the quarter ended March 31, 2008, and $84,000
      interest, debt discount amortization of $291,667, and deferred financing cost
      amortization of $89,573 for the quarter ended March 31, 2007, all related to
      $3.8 million convertible notes issued in the first quarter of 2006.





See
      accompanying notes to the condensed consolidated financial statements.


F-2


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


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**For
      the Three Months Ended March 31, 2008 and 2007**


**(Unaudited)**





**2008**
            
            **2007**Cash
                flows from operating activities:Net
                loss
            
            $
            (974,927
            )
            $
            (10,963
            )Adjustments
                to reconcile net loss to net cash (used in) provided by operating
                activities:Depreciation
                and amortization of property and equipment
            
            
            20,757
            
            
            28,578Gain
                on write off of accounts payable
            
            
            56,628
            
            
            12,553Loss
                on disputed accounts payable
            
            
            -
            
            
            (24,241
            )Amortization
                of deferred financing cost
            
            
            89,574
            
            
            89,574Amortization
                of debt discount
            
            
            251,894
            
            
            291,667Amortization
                of deferred consulting fees
            
            
            125,343
            
            
            98,977Estmated
                fair market value of common stock issued for consulting services
                and
                related change in fair value
            
            
            75,000
            
            
            247,500Changes
                in operating assets and liabilities:Contracts
                receivable
            
            
            (60,178
            )
            
            (170,151
            )Inventories
            
            
            170,900
            
            
            (212,874
            )Costs
                and estimated earnings in excess of billings on uncompleted
                contracts
            
            
            (22,635
            )
            
            288,333Prepaid
                expenses and other current assets
            
            
            (222,867
            )
            
            12,801Notes
                receivable from stockholders
            
            
            -
            
            
            (7,000
            )Accounts
                payable and accrued liabilities
            
            
            (207,810
            )
            
            19,719Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            410,089
            
            
            (53,201
            )Net
                cash (used in) provided by operating activities
            
            
            (288,232)
            
            
            611,272Cash
                flows from financing activities:Restricted
                cash
            
            
            -
            
            
            123,898Bank
                overdraft
            
            
            12,699
            
            
            15,318Principal
                payments on notes payable
            
            
            (6,196
            )
            
            (486,000
            )Net
                cash provided by (used in) financing activities
            
            
            6,503
            
            
            (346,784
            )Net
                (decrease) increase in cash
            
            
            (281,729
            )
            
            264,488Cash
                at beginning of period
            
            
            281,729
            
            
            53,318Cash
                at end of period
            
            $
            -
            
            $
            317,806




See
      accompanying notes to the condensed consolidated financial statements.




F-3


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


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**







**1.
      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES**




***Organization
      And Nature Of Operations***




New
      Century Companies, Inc. and its wholly owned subsidiary, New Century
      Remanufacturong, Inc., (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,
      Inc.. 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, 2007, 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, 2008, 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 months ended March 31,
      2008
      are not necessarily indicative of the results for the full year ending December
      31, 2008. Amounts related to disclosure of December 31, 2007 balances
      within these interim consolidated financial statements were derived from the
      audited 2007 consolidated financial statements and notes thereto.




***Reclassifications***
  The
        Company has reclassified
        the presentation of current prior-year information to conform to the current
        presentation.


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 $ 12,207,000
      and was also in default on its convertible debt. These factors, 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 renegotiated or new 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,
      2008. 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
      March 31, 2008, the company’s inventory was determined to be approximately
      $715,000 net, based on approximately $82,000 cost of labor, $486,000 cost of
      materials, $42,000 cost of subcontracted services, $391,000 allocated indirect
      overhead cost, offset by a $286,000 reserve for estimated markdowns on inventory
      costs. At December 31, 2007 the company’s inventory was determined to be
      approximately $1,172,000 net, based on approximately $86,000 cost of labor,
      $615,000 cost of materials, $61,000 cost of subcontracted services, $410,000
      allocated indirect overhead cost, offset by a $286,000 reserve for estimated
      markdowns on inventory costs.




F-5




***Revenue
      Recognition***




The
      Company's revenues consist primarily 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. The Company recognizes
      revenue on contracts pursuant to Statements of Position 81-1, “Accounting for
      Performance of Construction-Type and Certain Production-Type
      Contracts.”





For
      revenues from stock inventory the Company follows Staff Accounting Bulletin
      ("SAB") No. 104, "Revenue Recognition", which outlines the basic criteria that
      must be met to recognize revenue other than revenue on contacts, and provides
      guidance for presentation of this revenue and for disclosure related to these
      revenue recognition policies in financial statements filed with the SEC.




For
      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
      financial statements.




Contracts
      that are substantially complete are considered closed for 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 March 31, 2008, the Company estimated the
      markdowns, price concessions and warranty costs and concluded amounts are
      immaterial and did not record any adjustment to revenues.


F-6




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





Basic
      net
      earnings (loss) per share is computed by dividing net income (loss) by the
      weighted average number of common shares outstanding for the period. Diluted
      net
      income (loss) per share is computed by dividing net loss by the weighted average
      number of common shares and dilutive common stock equivalents outstanding for
      each respective period.





Common
      stock equivalents, representing convertible Preferred Stock, convertible debt,
      options and warrants totaling approximately 5,637,000 at March 31, 2008 and
      6,192,972 at December 31, 2007 are not included in the diluted loss per share
      as
      they would be anti-dilutive. Accordingly, diluted and basic loss per common
      share are the same at March 31, 2008 and December 31, 2007.




***Stock
      Based Compensation***




Effective
      January 1, 2006, we adopted the fair value method of accounting for employee
      stock compensation cost pursuant to SFAS No. 123-R, *Share-Based
      Payments* .
      Prior
      to that date, the Company used the intrinsic value method under Accounting
      Policy Board Opinion No. 25 to recognize compensation cost.




Under
      the
      modified prospective method of adoption for SFAS No. 123-R, the compensation
      cost recognized by the Company beginning January 1, 2006 includes compensation
      cost for all equity incentive awards granted subsequent to January 1, 2006,
      based on the grant-date fair value estimated in accordance with the provisions
      of SFAS No. 123-R. The Company had no equity incentive awards granted prior
      to
      January 1, 2006 that were not yet vested. Accordingly, no compensation expense
      and $86,400 in share-based compensation expense was recognized in the
      accompanying consolidated statements of operations for the three months ended
      March 31, 2008 and 2007.





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.





On
      November 13, 2006, the Company granted 2,000,000 options to key employees.
      At
      March 31, 2008, the Company had 1,050,000 options available for future issuance
      under their equity compensation plans.





There
      are
      no share-based compensation resulting from the application of SFAS No. 123-R
      to
      options granted outside of the Company's Stock Option Plan for the three months
      ended March 31, 2008 and 2007. Share-based compensation recognized as a result
      of the adoption of SFAS No. 123-R use the Black Scholes option pricing model
      for
      estimating fair value of options granted.


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





At
      March
      31, 2008, 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, 2008 was not
      applicable.




Options
      outstanding that have vested and are expected to vest as of March 31, 2008
      are
      as follows:




Weighted
              
              Weighted
              
              AverageAverage
              
              Remaining
              
              AggregateNumber
                  of
              
              Exercise
              
              Contractual
              
              IntrinsicShares
              
              Price
              
              Term
                  in Years
              
              Value
                  (1)Vested
                  (2)
              
              
              3,950,000
              
              $
              0.20
              
              
              0.74
              
              $
              —Expected
                  to vest
              
              
              —
              
              
              
              
              
              
              
              $
              —Total
              
              
              3,950,000
              
              
              
              
              
              
              
              $
              —




(1)
            These
                values calculates as the difference between the exercise price and
                $0.20,
                the closing market price of the Company's common stock on March 31,
                2008
                as quoted on the Over-the-Counter Bulletin Board under the symbol
                "NCNC.OB" for all in-the-money options
                outstanding.




(2)
            Include
                800,000 options that became fully vested on March 14, 2008 and are
                valued
                at $120,000 based on the stock market price of the shares at the
                contract
                date.


F-8




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
              
              
              
              Weighted
              
              AggregateAvailable
              
              Number of
              
              Average
              
              Intrinsicfor Grant
              
              Shares
              
              Exercise
                  Price
              
              Value
                  (1)December
                  31, 2007
              
              
              1,050,000
              
              
              3,950,000
              
              $
              0.20
              
              $
              79,000Grants
              
              
              —
              
              
              —
              
              
              —Exercises
              
              
              —
              
              
              —
              
              
              —Cancellations
              
              
              —
              
              
              —
              
              
              —March
                  31, 2008
              
              
              1,050,000
              
              
              3,950,000
              
              $
              0.20
              
              $
              —Options
                  exercisable at:March
                  31, 2008
              
              
              
              
              
              3,950,000
              
              $
              0.20December
                  31, 2007
              
              
              
              
              
              3,150,000
              
              $
              0.22




(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 March 31, 2008 and December 31, 2007, the market price
                of
                the Company's common stock was $0.20 and $0.22, respectively).




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 in
      transactions when the value of the goods and/or services are not readily
      determinable the fair value of the equity instruments is more reliably
      measurable and 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.


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, 2008 and 2007, the Company amortized approximately
      $90,000, each reporting period, to interest expense.




***Stock
      Purchase Warrants Issued With Notes Payable***




In
      2006,
      the Company granted warrants in connection with the issuance of certain notes
      payable. Under Accounting Principles Board Opinion No. 14, " *Accounting
      for Convertible Debt and Debt Issued With Stock Purchase
      Warrants* ,"
      the
      relative estimated fair value of such warrants represents a discount from the
      face amount of the notes payable. Such discounts are amortized to interest
      expense over the term of the notes. During the three months ended March 31,
      2008
      and 2007, the Company amortized approximately $158,000 and $183,000,
      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. During the three
      months ended March 31, 2008 and 2007, the Company amortized approximately
      $94,000 and $109,000, respectively, to interest expense.




***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, 2008, 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, and to State of
      California for the years before 2003.




F-10





***Significant
      Recent Accounting Pronouncements***




In
      December 2007, the FASB issued SFAS No. 141(R), *Business
      Combinations* .
      SFAS
      No. 141(R) retains the fundamental requirements in SFAS No. 141, *Business
      Combinations* ,
      that
      the acquisition method of accounting be used for all business combinations
      and
      for an acquirer to be identified for each business combination. SFAS No. 141(R)
      requires an acquirer to recognize the assets acquired, the liabilities assumed,
      and any noncontrolling interest in the acquiree at the acquisition date,
      measured at their fair values as of that date, with limited exceptions specified
      in SFAS No. 141(R). In addition, SFAS No. 141(R) requires acquisition costs
      and
      restructuring costs that the acquirer expected but was not obligated to incur
      to
      be recognized separately from the business combination, therefore, expensed
      instead of part of the purchase price allocation. SFAS No. 141(R) will be
      applied prospectively to business combinations for which the acquisition date
      is
      on or after the beginning of the first annual reporting period beginning on
      or
      after December 15, 2008. Early adoption is prohibited. The Company expects
      to
      adopt SFAS No. 141(R) to any business combinations with an acquisition date
      on
      or after January 1, 2009.





In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interests in Consolidated Financial Statements, an amendment to ARB No.
      51* .
      SFAS
      No. 160 changes the accounting and reporting for minority interests, which
      will
      be recharacterized as noncontrolling interests and classified as a component
      of
      equity. SFAS No. 160 is effective for fiscal years, and interim periods within
      those fiscal years, beginning on or after December 15, 2008. Early adoption
      is
      prohibited. The Company is currently evaluating the impact SFAS No. 160 may
      have
      on its consolidated financial statements.





Other
      recent accounting pronouncements issued by the FASB (including its Emerging
      Issues Task Force, or “EITF”), the AICPA, and the SEC did not or are not
      believed by management to have a material impact on the Company’s present or
      future consolidated financial statements.




**2.
      CONTRACTS IN PROGRESS**





Contracts
      in progress which include completed contracts not completely billed,
      approximate:





March 31, 2008
            
            December 31, 2007Cumulative
                costs to date
            
            $
            4,124,000
            
            $
            7,007,000Cumulative
                gross profit to date
            
            
            3,466,000
            
            
            7,893,000Cumulative
                revenue earned
            
            
            7,590,000
            
            
            14,900,000Less
                progress billings to date
            
            
            (7,494,000
            )
            
            (14,350,000
            )Net
                under billings
            
            $
            95,000
            
            $
            550,000




F-11





The
      following approximate amounts are included in the accompanying condensed
      consolidated balance sheets under these captions:





March 31, 2008
            
            December 31, 2007Costs
                and estimated earnings in excess of billings on uncompleted
                contracts
            
            $
            593,000
            
            $
            571,000Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            (498,000
            )
            
            (88,000
            )Net
                under billings
            
            $
            95,000
            
            $
            483,000





**3.
      CAMOFI Master LDC (“CAMOFI”) CONVERTIBLE DEBT**




The
      Company’s convertible debt financing with CAMOFI is in default. Contractual
      payments on the note have not been made since July 2007 and aggregate to
      $3,646,889 principal, interest and penalties. For the three months ended March
      31, 2008, no principal payments were made on the secured convertible notes
      payable. As of March 31, 2008 and December 31, 2007, the principal balance
      is
      approximately $2,567,000 which is presented net of debt discounts totaling
      approximately $924,000 and $1,176,000, respectively.




During
      the three months ended March 31, 2008 and 2007, the Company amortized
      approximately $252,000 and $292,000, respectively, of debt discounts, including
      beneficial conversion features, to interest expense related to the convertible
      note payable to CAMOFI .





**4.
      EQUITY TRANSACTIONS**





**Equity
      Compensation**





In
      February 2008, the Company entered into a year contract with a third party
      for
      public relations services valued at $30,000. The fee was paid in the form of
      150,000 shares of the Company’s common stock based on the stock market price of
      the shares at the contract date. The value of the common stock on the date
      of
      the transaction was recorded as a deferred charge and is amortized to operating
      expense over the life of the agreement. At March 31, 2008, the remaining
      deferred consulting fees under this contract totaled $25,000.





In
      February 2008, the Company entered into a three month contract with a third
      party for public relations services valued at $20,000. The fee was paid in
      the
      form of 100,000 shares of the Company’s common stock based on the stock market
      price of the shares at the contract date. The value of the common stock on
      the
      date of the transaction was recorded as a deferred charge and is amortized
      to
      operating expense over the life of the agreement. At March 31, 2008, the
      remaining deferred consulting fees under this contract totaled
      $10,000.




F-12




In
      March
      2008, the Company entered into a one month contract with a third party for
      public and financial communication  services
      valued at $25,000. The fee was paid in the form of 125,000 shares of the
      Company’s common stock based on the stock market price of the shares at the
      contract date. The value of the common stock on the date of the transaction
      was
      recorded as a deferred charge and is amortized to operating expense over the
      life of the agreement. At March 31, 2008, the remaining deferred consulting
      fees
      under this contract totaled $20,161.





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, to a third party for investor marketing services under a one month
      contract. The fee as recorded as public company expense in the first quarter
      of
      2007.





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, to a third party for financial consulting services under a 13 day
      contract. The fee as recorded as public company expense in the first quarter
      of
      2007.





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, to a third party for investor relation services under a one month
      contract. The fee as recorded as public company expense in the first quarter
      of
      2007.





In
      accordance with EITF 96-18, “Accounting for Equity Instruments That Are Issued
      to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
      or
      Services,” since the value of the services were not readily determinable on
      transactions that occurred in 2007 and the fair value of the equity instruments
      was more reliably measurable, the value of the services were based on the
      market price of the shares. Further, under these arrangements, the performance
      criteria required for a measurement date was not reached until the service
      period was completed. As a result, the Company was required to
      re-measure the consideration at each reporting date based on its then current
      stock value.





During
      the three months ended March 31, 2008 and 2007, the Company amortized
      approximately $125,000 and $99,000, respectively, of consulting expense related
      to deferred consulting fees on such equity based compensation arrangements.





As
      of
      March 31, 2008 and December 31, 2007, the unamortized portion of consulting
      fees
      on such equity based compensation arrangements approximate $210,000 and
      $234,000, respectively.





**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. The preferred shareholders does not have any voting rights and has
      liquidation preferences.





At
      March
      31, 2008 and December 31, 2007, the Company had a total of 26,680 preferred
      shares Series C and 11,640 preferred shares Series D issued and outstanding.
      As
      of March 31, 2008 and December 31, 2007, the Company’s accumulated dividends
      payable has a balance of $376,725. The Company did not declared or intend to
      declare any dividends as of March 31, 2008.




F-13




**ITEM
        2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF
        OPERATIONS**
 
 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-Q. 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-Q 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.
  1
 
 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. A significant
        acquisition will require additional financing.
  **RESULTS
        OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 COMPARED TO MARCH
        31,
        2007.**
 
 **Revenues** .
        The
        Company generated revenues of $1,526,602 for the three months ended March
        31,
        2008, which was a $1,658,469 or 52% decrease from $3,185,469 for the three
        months ended March 31, 2007. The decrease is the result of lower then usual
        sales, a tighter credit market, and business interruption during
        relocation.
 
 **Gross
        Profit.** Gross
        profit for the three months ended March 31, 2008, was $218,123 or 14% of
        revenues, compared to $1,185,239 or 37% of revenues for the three months
        ended
        March 31, 2007, a 82% decrease. The decrease in gross profit is due to the
        allocation of one time relocation expenses and standard quarterly overhead
        expenses applied to lower revenues.
 
 **Operating
        Loss.** Operating loss for the three months ended March 31, 2008, was $544,786 compared
        to operating income of $465,966 for the three months ended March 31, 2007.
        The
        increase in loss of $1,010,752 is primarily due to decreased revenues and
        lower
        gross profit on jobs in progress for the quarter ended March 31, 2008.
 
 **Interest
        Expense and Debt Discount Amortization.** Interest
        expense for the three months ended March 31, 2008, was $486,769 compared
        with
        $465,241 for the three months ended March 31, 2007. The increase of $21,528
        in
        interest expenses is due to additional interest and penalties on defaulted
        CAMOFI convertible loan.
 
 **FINANCIAL
        CONDITION, LIQUIDITY, CAPITAL RESOURCES**
 
 The
        net
        cash decrease during the three months ended March 31, 2008 was $281,729.
        The
        decrease is due to $288,232 net cash used in operating activities.
 
 For
        the
        three months ended March 31, 2008, the cash provided by financing activities
        was
        $6,503, compared with $346,784 cash used in financing activities in the three
        months ended March 31, 2007. For the three months ended March 31, 2007, cash
        was
        used to make principal payments on the CAMOFI loan. For the three months
        ended
        March 31, 2008, no principal payments were made on the CAMOFI
        loan.
  2
  **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 $ 12,207,000
        and was also in default on its convertible debt. These factors, 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 renegotiated or new 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,
        2008. 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.
 
 **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.
  3
 
 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
        March 31, 2008, the company’s inventory was determined to be approximately
        $715,000 net, based on approximately $82,000 cost of labor, $486,000 cost
        of
        materials, $42,000 cost of subcontracted services, $391,000 overhead cost,
        offset by a $286,000 reserve for estimated markdowns on inventory
        costs.
  4
  **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 Condensed 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.** **QUANTITATIVE
        AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
 
 Not
        applicable.
 
 **ITEM
        4. CONTROLS AND PROCEDURES**
 
 *Evaluation
        of Disclosure Controls and Procedures*
 
 We
        conducted an evaluation under the supervision and with the participation
        of our
        management, including our Chief Executive Officer ,
        who is also our Chief Financial Officer, of the
        effectiveness of the design and operation of our disclosure controls and
        procedures. The term “disclosure controls and procedures,” as defined in Rules
        13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as
        amended (“Exchange Act”), means controls and other procedures of a company that
        are designed to ensure that information required to be disclosed by the company
        in the reports it files or submits under the Exchange Act is recorded,
        processed, summarized and reported, within the time periods specified in
        the
        Securities and Exchange Commission’s rules and forms. Disclosure controls and
        procedures also include, without limitation, controls and procedures designed
        to
        ensure that information required to be disclosed by a company in the reports
        that it files or submits under the Exchange Act is accumulated and communicated
        to the company’s management, including its principal executive and principal
        financial officers, or persons performing similar functions, as appropriate,
        to
        allow timely decisions regarding required disclosure. Based on this evaluation,
        our Chief Executive Officer concluded as of March 31, 2008 that our disclosure
        controls and procedures were not effective at the reasonable assurance level
        due
        to the material weaknesses discussed immediately below.
 
 *Management’s
        Report on Internal Control Over Financial Reporting*
 
 Our
        management is responsible for establishing and maintaining adequate internal
        control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
        under the Exchange Act. Our internal control over financial reporting is
        designed to provide reasonable assurance regarding the reliability of financial
        reporting and the preparation of financial statements for external purposes
        in
        accordance with generally accepted accounting principles. Our internal control
        over financial reporting includes those policies and procedures
        that:
  5
  (i)
              pertain
                  to the maintenance of records that, in reasonable detail, accurately
                  and
                  fairly reflect the transactions and dispositions of our
                  assets;
 
 (ii)
              provide
                  reasonable assurance that transactions are recorded as necessary
                  to permit
                  preparation of financial statements in accordance with generally
                  accepted
                  accounting principles, and that our receipts and expenditures are
                  being
                  made only in accordance with authorizations of our management and
                  directors; and
 
 (iii)
              provide
                  reasonable assurance regarding prevention or timely detection of
                  unauthorized acquisition, use or disposition of our assets that
                  could have
                  a material affect on our financial
                  statements.
 
 Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to the risk that controls may
        become
        inadequate because of changes in conditions, or that the degree of compliance
        with the policies or procedures may deteriorate.
 
 A
        material weakness in internal control over financial reporting is defined
        by the
        Public Company Accounting Oversight Board’s Audit Standard No. 5 as being a
        deficiency, or combination of deficiencies, that results in a reasonable
        possibility that a material misstatement of the financial statements would
        not
        be prevented or detected on a timely basis. A significant deficiency is a
        control deficiency, or combination of control deficiencies, such that there
        is a
        reasonable possibility that a significant misstatement of the company’s annual
        or interim financial statements will not be prevented or detected.
 
 Management
        assessed and evaluated the effectiveness of our internal control over financial
        reporting as of December 31, 2007. Management identified five material
        weaknesses relating to our internal control over financial reporting, as
        follows:
 
 (1)
              We
                  had not effectively implemented comprehensive entity-level internal
                  controls.(2)
              We
                  did not have a sufficient complement of personnel with appropriate
                  training and experience in generally accepted accounting principals,
                  or
                  GAAP.(3)
              We
                  did not adequately segregate the duties of different personnel
                  within our
                  accounting group due to an insufficient complement of
                  staff.(4)
              We
                  did not implement financial controls that were properly designed
                  to meet
                  the control objectives or address all risks of the processes or
                  the
                  applicable assertions of the significant accounts.(5)
              Due
                  to the material weaknesses identified at our entity level controls
                  we did
                  not test whether our financial activity level controls or our information
                  technology general controls were operating sufficiently to identify
                  a
                  deficiency, or combination of deficiencies, that may result in
                  a
                  reasonable possibility that a material misstatement of the financial
                  statements would not be prevented or detected on a timely
                  basis.
 
 The
        foregoing material weaknesses are described in detail below under the caption
        “Material Weaknesses.” ** As
        a
        result of these material weaknesses, our Chief Executive Officer concluded
        that
        we did not maintain effective internal control over financial reporting as
        of
        December 31, 2007.
  6
  In
        making
        its assessment of our internal control over financial reporting, management
        used
        criteria issued by the Committee of Sponsoring Organizations of the Treadway
        Commission (“COSO”) in its *Internal
        Control-Integrated Framework* .
        Because
        of the material weaknesses described above, management believes that, as
        of
        December 31, 2007, we did not maintain effective internal control over financial
        reporting.
 
 An
        independent firm assisted management with its assessment of the effectiveness
        of
        our internal control over financial reporting, including scope determination,
        planning, staffing, documentation, testing, and overall program management
        of
        the assessment project.
 
 *Inherent
        Limitations on the Effectiveness of Controls*
 
 Management
        does not expect that our disclosure controls and procedures or our internal
        control over financial reporting will prevent or detect all errors and all
        fraud. A control system, no matter how well conceived and operated, can provide
        only reasonable, not absolute, assurance that the objectives of the control
        systems 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 in
        a
        cost-effective control system, no evaluation of internal control over financial
        reporting can provide absolute assurance that misstatements due to error
        or
        fraud will not occur or that all control issues and instances of fraud, if
        any,
        have been or will be detected.
 
 These
        inherent limitations include the realities that judgments in decision-making
        can
        be faulty and that breakdowns can occur because of a simple error or mistake.
        Controls can also be circumvented by the individual acts of some persons,
        by
        collusion of two or more people, or by management override of the controls.
        The
        design of any system of controls is based in part on 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. Projections of any evaluation of controls effectiveness to future
        periods are subject to risks. Over time, controls may become inadequate because
        of changes in conditions or deterioration in the degree of compliance with
        policies or procedures.
 
 *Material
        Weaknesses*
 
 *Material
        Weaknesses*
 
 1.
              We
                  had not effectively implemented comprehensive entity-level internal
                  controls, as evidenced by the following
                  deficiencies:
 
 ·
              We
                  did not establish an independent Audit Committee who are responsible
                  for
                  the oversight of the financial reporting process, nor was an Audit
                  Committee Charter defined. At the current time we do not have any
                  independent members of the Board who could comprise this
                  committee.
 
 ·
              We
                  did not establish an adequate Whistle Blower program for the receipt,
                  retention, and treatment of complaints received by the issuer regarding
                  accounting, internal accounting controls, or auditing matters;
                  and the
                  confidential, anonymous submission by employees of the issuer of
                  concerns
                  regarding questionable accounting or auditing matters to the Audit
                  Committee and Board of
                  Directors.
  7
  ·
              We
                  did not have an individual on our Board, nor on the Audit Committee,
                  who
                  meets the “Financial Expert”
criteria.
 
 ·
              We
                  did not maintain documentation evidencing quarterly or other meetings
                  between the Board, senior financial managers and our General Counsel.
                  Such
                  meetings include reviewing and approving quarterly and annual filings
                  with
                  the Securities and Exchange Commission and reviewing on-going activities
                  to determine if there are any potential audit related issues which
                  may
                  warrant involvement and follow-up action by the Board.
 
 ·
              We
                  did not follow a formal fraud assessment process to identify and
                  design
                  adequate internal controls to mitigate those risks not deemed to
                  be
                  acceptable.
 
 ·
              We
                  did not conduct annual performance reviews or evaluations of our
                  management and staff employees.
 
 We
        did
        not have a sufficient complement of personnel with appropriate training and
        experience in GAAP, as evidenced by the following deficiencies:
 
 2.
        We do
        not have a formally trained Chief Financial Officer who is responsible for
        the
        oversight of the accounting function. Currently the CEO is responsible for
        this
        function, but has not had formal accounting or auditing experience.
 
 ·
              The
                  Controller is the only individual with technical accounting experience
                  in
                  our company but is limited in the exposure to SEC filings and disclosures
                  and is not a full-time employee of the
                  company.
 
 ·
              We
                  have not consulted with other outside parties to assist us in the
                  SEC
                  filings and disclosures prior to the December 31, 2007 10-KSB filing
                  during 2007.
 
 3.
        We did
        not adequately segregate the duties of different personnel within our accounting
        group due to an insufficient complement of staff and inadequate management
        oversight.
  4.  We
        did
        not adequately design internal controls that:
 
 ·
              The
                  controls identified in the process documentation were not designed
                  effectively and had no evidence of operating effectiveness for
                  testing
                  purposes.
 ·
              The
                  controls identified in the process documentation did not cover
                  all the
                  risks for the specific process
 ·
              The
                  controls identified in the process documentation did not cover
                  all
                  applicable assertions for the significant
                  accounts.
 
 5.  Due
        to
        the material weaknesses identified at our entity level controls we did not
        test
        whether our financial activity level controls or our information technology
        general controls were operating sufficiently to identify a deficiency, or
        combination of deficiencies, that may result in a reasonable possibility
        that a
        material misstatement of the financial statements would not be prevented
        or
        detected on a timely basis.
  8
  We
        are in
        the process of remediation of the above noted weaknesses and are evaluating
        the
        most efficient method to complete this task.  However, based on our review,
        management has concluded that the financial statements included in this report
        fairly present in all material respects our financial position, results of
        operations and cash flows for the periods presented in conformity with generally
        accepted accounting principles.
 
 *Changes
        In Controls and Procedures*
 
 There
        have been no changes in our internal controls over financial reporting that
        occurred during our first quarter ended March 31, 2008 that have materially
        affected, or are reasonably likely to materially affect, our internal controls
        over financial reporting.
  **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 has been in default with all monthly payments on the
        CAMOFI Convertible Note payable. As of March 31, 2008, the Company is in
        default
        with $2,566,667 principal and $1,080,222, totaling an amount of
        $3,646,889.
 
 Item
        4.
        Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item
        5.
        Other Information
 
 None.
 
 Item
        6.
        Exhibits
 
 Exhibit
        31.1 Certification required by Rule 13a-14(a) or Rule 15d-14(d) and under
        Section 302 of the Sarbanes-Oxley act of 2002
 
 Exhibit
        32.1 Certification required by Rule 13a-14(a) or Rule 15d-14(d) and under
        Section 906 of the Sarbanes-Oxley act of
  9
  **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:
                  May 20, 2008*
              *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:
                  May 20, 2008*
              */s/
                  DAVID DUQUETTE**Name:
                  David Duquette**Title:
                  Chairman, President and Director**Date:
                  May 20, 2008*
              */s/
                  JOSEF CZIKMANTORI**Name:
                  Josef Czikmantori**Title:
                  Secretary and Director*
  10