**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




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




For
      the
      quarterly period ended June 30, 2008




ྑ
            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)




**9835
      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 filer
            Accelerated
                filerNon-accelerated
                filer
            Smaller
                reporting company x




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
      August 12, 2008, the Company had 15,344,656 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 -June
                30, 2008 (Unaudited) and December 31, 2007
            
            F-1Condensed
                Consolidated Statements of Operations (Unaudited) -Three
                and Six Months Ended June 30, 2008 and 2007
            
            F-2Condensed
                Consolidated Statements of Cash Flows (Unaudited) -Six
                Months Ended June 30, 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
            
            2Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            
            7Item
                4T. Controls and Procedures
            
            7**PART
                II - OTHER INFORMATION**Item
                1. Legal Proceedings
            
            11Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            11Item
                3. Defaults Upon Senior Securities
            
            11Item
                4. Submission of Matters to a Vote of Security
                Holders
            
            11Item
                5. Other Information
            
            11Item
                6. Exhibits
            
            11SIGNATURES
            
            12









**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.







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


**CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **June
          30, 2008 and December 31, 2007**


**ITEM
      1. FINANCIAL STATEMENTS**


**June
                  30, 2008**
              
              **December
                  31,****2008**
              
              **2007****(unaudited)****ASSETS****Current
                  Assets**Cash
              
              
              -
              
              
              281,729Contract
                  receivables, net
              
              
              390,900
              
              
              438,876Inventories,
                  net
              
              
              653,730
              
              
              886,107Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              435,434
              
              
              570,797Deferred
                  financing costs, current portion
              
              
              139,178
              
              
              358,292Prepaid
                  expenses and other current assets
              
              
              278,599
              
              
              14,183Total
                  current assets
              
              
              1,897,841
              
              
              2,549,984**Property
                  and Equipment, net**
              
              
              227,860
              
              
              269,092**Deferred
                  financing costs, long-term
                  portion**
              
              
              206,331
              
              
              59,715Total
                  Assets
              
              $
              2,332,032
              
              $
              2,878,791**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****Current
                  Liabilities**Bank
                  Overdraft
              
              $
              66,627
              
              $
              18,962Accounts
                  payable and accrued liabilities
              
              
              1,055,107
              
              
              2,074,666Dividends
                  payable
              
              
              418,000
              
              
              376,725Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              329,038
              
              
              88,025Capital
                  lease obligation, current portion
              
              
              26,703
              
              
              25,597Deferred
                  Gain on forgiveness of debt
              
              
              554,218
              
              
              -Convertible
                  (2007 only) notes payable, net of discount of $319,133at
                  June 30, 2008 and $1,175,504 for December 31, 2007, current
                  portion
              
              
              149,324
              
              
              1,391,163Total
                  current liabilities
              
              
              2,599,017
              
              
              3,975,138**Long
                  Term Liabilities**Capital
                  lease obligation, long-term portion
              
              
              19,750
              
              
              37,679Deferred
                  Gain on forgiveness of debt
              
              
              600,402
              
              
              -Convertible
                  (2007 only) notes payable, net of discount of $345,728for
                  June 30, 2008 and $0 for December 31, 2007, long-term
                  portion
              
              
              2,135,815
              
              
              -Total
                  long term liabilities
              
              
              2,755,967
              
              
              37,679**Commitments
                  and Contingencies****Stockholders'
                  Deficit**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;15,344,656
                  and 13,744,654 shares issued and outstandingat
                  March 31, 2008 and December 31, 2008, respectivelly
              
              
              1,534,466
              
              
              1,374,466Subscriptions
                  receivable
              
              
              (462,500
              )
              
              (462,500
              )Notes
                  receivable from stockholders
              
              
              (545,165
              )
              
              (545,165
              )Deferred
                  consulting fees
              
              
              (166,756
              )
              
              (334,921
              )Additional
                  paid-in capital
              
              
              9,397,195
              
              
              9,748,781Accumulated
                  deficit
              
              
              (13,098,072
              )
              
              (11,232,567
              )Total
                  stockholders' deficit
              
              
              (3,022,952
              )
              
              (1,134,026
              )Total
                  liabilities and stockholders' deficit
              
              $
              2,332,032
              
              
              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 and Six Months Ended June 30, 2008 and 2007**
 **(Unaudited)**
  **For
                  the Three Months Ended June 30,**
              
              **For
                  the Six Months Ended June 30,****2008**
              
              **2007**
              
              **2008**
              
              **2007****CONTRACT
                  REVENUES**
              
              $
              1,434,676
              
              $
              2,600,147
              
              $
              2,961,278
              
              $
              5,785,616**COST
                  OF SALES**
              
              $
              1,363,614
              
              
              1,889,145
              
              
              2,672,093
              
              
              3,889,375**GROSS
                  PROFIT**
              
              
              71,062
              
              
              711,002
              
              
              289,185
              
              
              1,896,241**OPERATING
                  EXPENSES**Consulting
                  and other compensation
              
              
              73,998
              
              
              212,955
              
              
              345,382
              
              
              642,318Salaries
                  and related
              
              
              74,123
              
              
              110,336
              
              
              127,619
              
              
              226,970Selling,
                  general and administrative
              
              
              278,441
              
              
              195,095
              
              
              716,470
              
              
              368,371**TOTAL
                  OPERATING EXPENSES**
              
              
              426,562
              
              
              518,386
              
              
              1,189,471
              
              
              1,237,659**OPERATING
                  INCOME (LOSS)**
              
              
              (355,500
              )
              
              192,616
              
              
              (900,286
              )
              
              658,582**OTHER
                  INCOME (EXPENSES)**Gain
                  (loss) on writeoff of accounts payable
              
              
              3,577
              
              
              4,729
              
              
              60,205
              
              
              (6,959
              )Interest
                  expense
              
              
              (497,382
              )
              
              (722,273
              )
              
              (984,151
              )
              
              (1,187,514
              )**TOTAL
                  OTHER EXPENSES**
              
              
              (493,805
              )
              
              (717,544
              )
              
              (923,946
              )
              
              (1,194,473
              )**LOSS
                  BEFORE PROVISION FOR****INCOME
                  TAXES**
              
              
              (849,305
              )
              
              (524,928
              )
              
              (1,824,232
              )
              
              (535,891
              )**PROVISION
                  FOR INCOME TAXES**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**NET
                  LOSS**
              
              $
              (849,305
              )
              $
              (524,928
              )
              $
              (1,824,232
              )
              $
              (535,891
              )Preferred
                  Stock Dividends
              
              $
              (41,275
              )
              $
              27,350
              
              $
              (41,275
              )
              $
              27,350**NET
                  LOSS APPLICABLE****TO
                  COMMON STOCKHOLDERS**
              
              $
              (890,580
              )
              
              (497,578
              )
              $
              (1,865,507
              )
              $
              (508,541
              )**Basic
                  and diluted net loss available to****common
                  stockholders per common share**
              
              $
              (0.06
              )
              
              (0.04
              )
              $
              (0.13
              )
              $
              (0.04
              )**Basic
                  and diluted weighted average common****shares
                  outstanding**
              
              
              14,200,975
              
              
              12,654,601
              
              
              14,040,672
              
              
              12,320,927


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 Six Months Ended June 30, 2008 and 2007**
 **(Unaudited)**


**2008**
            
            **2007**Cash
                flows from operating activities:Net
                loss
            
            $
            (1,824,232
            )
            $
            (535,891
            )Adjustments
                to reconcile net loss to net cash(used
                in) provided by operating activities:Depreciation
                and amortization of property and equipment
            
            
            41,232
            
            
            63,535Gain
                on write off of accounts payable
            
            
            (60,205
            )
            
            -Amortization
                of deferred financing cost
            
            
            180,960
            
            
            179,148Amortization
                of debt discount
            
            
            503,788
            
            
            848,485Amortization
                of deferred consulting fees and deferred employees stock
                option
            
            
            168,165
            
            
            (126,683
            )Estmated
                fair market value of common stock issued for consulting servicesand
                related change in fair value
            
            
            83,000
            
            
            610,000Conversion
                of interest to common stock
            
            
            -
            
            
            74,317Bad
                debt expense
            
            
            27,259
            
            
            -Changes
                in operating assets and liabilities:Contracts
                receivable
            
            
            20,717
            
            
            (4,766
            )Inventories
            
            
            232,377
            
            
            (173,695
            )Costs
                and estimated earnings in excess of billings on uncompleted
                contracts
            
            
            135,363
            
            
            48,960Prepaid
                expenses and other current assets
            
            
            (264,416
            )
            
            18,645Notes
                receivable from stockholders
            
            
            -
            
            
            (17,500
            )Accounts
                payable and accrued liabilities
            
            
            202,406
            
            
            (77,846
            )Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            241,013
            
            
            (99,635
            )Net
                cash (used in) provided by operating activities
            
            
            (312,573
            )
            
            807,074Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            -
            
            
            (30,000
            )Net
                cash used in investing activities
            
            
            -
            
            
            (30,000
            )Cash
                flows from financing activities:Restricted
                cash
            
            
            -
            
            
            123,898Bank
                overdraft
            
            
            47,665
            
            
            6,929Proceeds
                of issuance of convertible notes payable
            
            
            -
            
            
            -Principal
                payments on notes payable
            
            
            (16,821
            )
            
            (620,523
            )Deferred
                financing costs
            
            
            -
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            30,844
            
            
            (489,696
            )Net
                (decrease) increase in cash
            
            
            (281,729
            )
            
            287,378Cash
                at beginning of period
            
            
            281,729
            
            
            53,318Cash
                at end of period
            
            $
            -
            
            $
            340,696Supplemental
                disclosure of non-cash financing and investing activities:Accrued
                cumulative dividends on preferred stock
            
            $
            41,275
            
            $
            42,400Reversal
                of accrued dividends older than four years on preferred
                stock
            
            $
            -
            
            $
            (69,750
            )Conversion
                of notes payable and interest to common stock
            
            $
            -
            
            $
            424,317Common
                stock and warrants issued for deferred financing costs
            
            $
            102,500
            
            $
            -


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 AND SIX MONTHS ENDED JUNE 30, 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
      Remanufacturing, 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.




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 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
      consolidated 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 June 30, 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 and six months ended June 30, 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 condensed
      consolidated financial statements were derived from the audited 2007
      consolidated financial statements and notes thereto.





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 losses from operations year to date
      of approximately $849,000, an accumulated deficit of approximately $13,098,000
      and a negative working capital balance of approximately $701,000. These factors,
      among others, raise substantial doubt about the Company's ability to continue
      as
      a going concern. The Company intends to fund operations through 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.





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
                Company has successfully restructured its debt, eliminating the penalties
                and interest for past default and extending the repayment term (See
                Note
                3).





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.




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 cost,
      offset by reserve for estimated markdowns on inventory costs.




Inventory
      costs as of June 30, 2008 and December 31, 2007:


June
                  30, 2008
              
              December
                  31, 2007Cost
                  of labor
              
              $
              67,000
              
              $
              86,000Cost
                  of materials
              
              
              451,000
              
              
              615,000Cost
                  of subcontracted services
              
              
              42,000
              
              
              61,000Allocation
                  of indirect overhead cost
              
              
              380,000
              
              
              410,000Gross
                  inventory
              
              $
              940,000
              
              $
              1,172,000Reserve
                  for estimated markdowns on inventory costs
              
              
              (286,000
              )
              
              (286,000
              )Net
                  inventory
              
              $
              654,000
              
              $
              886,000




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 June 30, 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
      income (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 income (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 1,352,000 at June 30, 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 June 30, 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, $0 and $86,400 of
      share-based compensation expense was recognized in the accompanying condensed
      consolidated financial statements for the three month periods ended June 30,
      2008 and 2007, respectively. $0 and $216,000 of share-based compensation expense
      was recognized in the accompanying condensed consolidated financial statements
      for the six month periods ended June 30, 2008 and 2007,
      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.





On
      November 13, 2006, the Company granted 2,000,000 options to key employees.
      At
      June 30, 2008, the Company had 1,050,000 options available for future issuance
      under their equity compensation plans.





There
      is
      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 or
      six
      months ended June 30, 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, no changes occurred
      in the period ended June 30, 2007.




Options
      outstanding that have vested and are expected to vest as of June 30, 2008 are
      as
      follows:


WeightedWeighted
              
              AverageAverage
              
              Remaining
              
              AggregateNumber
                  of
              
              Exercise
              
              Contractual
              
              IntrinsicShares
              
              Price
              
              Term
                  in Years
              
              Value
                  (1)Vested
                  (2)
              
              
              3,950,000
              
              $
              0.20
              
              
              0.97
              
              $
              —Expected
                  to vest
              
              
              —
              
              
              
              
              
              
              
              $
              —Total
              
              
              3,950,000
              
              
              
              
              
              
              
              $
              —




(1)
            These
                values are calculated as the difference between the exercise price
                and
                $0.13, the closing market price of the Company's common stock on
                June 30,
                2008 as quoted on the Over-the-Counter Bulletin Board under the symbol
                "NCNC.OB" for all in-the-money options
                outstanding.




(2)
            Includes
                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




Options
        outstanding that are expected to vest are net of estimated future forfeitures
        which are estimated when compensation costs are recognized in accordance
        with
        the provisions of SFAS No. 123-R, 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
              
              
              —
              
              
              —
              
              
              —June
                  30, 2008
              
              
              1,050,000
              
              
              3,950,000
              
              $
              0.20
              
              $
              —Options
                  exercisable at:June
                  30, 2008
              
              
              
              
              
              3,950,000
              
              $
              0.20December
                  31, 2007
              
              
              
              
              
              3,150,000
              
              $
              0.20




(1)
            Represents
                the 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 June
                30, 2008 and December 31, 2007, the market price of the Company's
                common
                stock was $0.13 and $0.22, respectively) for all in-the-money options
                outstanding..




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***





Note
      Payable





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.





In
      June
      2008, in connection with the CAMOFI debt reduction as discussed in Note 3,
      the
      Company entered into a contract with a third party for financial services.
      The
      Company issued 300,000 shares of common stock valued at $36,000, based on the
      market price of the shares on the date of the agreement. The fee is capitalized
      and amortized over the term of the related debt.





During
      the three months ended June 30, 2008 and 2007, the Company amortized
      approximately $90,000 to interest expense. During the six months ended June
      30,
      2008 and 2007, the Company amortized approximately $181,000 to interest expense.
      At June 30, 2008, the unamortized portion of deferred financing costs for the
      CAMOFI note payable is approximately $275,000.





Real
      Estate Lease





On
      April
      1 st ,
      2008,
      the company entered into a commercial lease agreement to lease its premises
      for
      ten years. Per the lease, the Company incurred a brokerage fee of approximately
      $72,500. This cost is capitalized and amortized over the term of the lease.





During
      the three months ended June 30, 2008, the Company amortized approximately $1,800
      to rent expense. At June 30, 2008, the unamortized portion of deferred brokerage
      fees for the lease payable is approximately $70,000.




***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 June 30, 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 the 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.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”
SFAS No. 157 defines fair value, establishes a framework for measuring fair
      value in generally accepted accounting principles and expands disclosures about
      fair value measurements. SFAS No. 157 applies under other accounting
      pronouncements that require or permit fair value measurements, the FASB having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, SFAS No. 157 does not require
      any
      new fair value measurements. SFAS No. 157 is effective for fiscal years
      beginning after December 15, 2007. The adoption of SFAS No. 157 did
      not have a significant impact on the Company’s financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” SFAS No. 159 expands the scope
      of specific types of assets and liabilities that an entity may carry at fair
      value on its statement of financial position, and offers an irrevocable option
      to record the vast majority of financial assets and liabilities at fair value,
      with changes in fair value recorded in earnings. SFAS No. 159 is effective
      for fiscal years beginning after November 15, 2007. The adoption of SFAS
      No. 159 did not have a significant impact on the Company’s 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.




F-11




**2.
      CONTRACTS IN PROGRESS**





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





June
                30, 2008
            
            December
                31, 2007Cumulative
                costs to date
            
            $
            5,017,000
            
            $
            7,007,000Cumulative
                gross profit to date
            
            
            4,007,000
            
            
            7,893,000Cumulative
                revenue earned
            
            
            9,024,000
            
            
            14,900,000Less
                progress billings to date
            
            
            (8,918,000
            )
            
            (14,350,000
            )Net
                under billings
            
            $
            106,000
            
            $
            550,000







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





June
                30, 2008
            
            December
                31, 2007Costs
                and estimated earnings in excess of billings on uncompleted
                contracts
            
            $
            435,000
            
            $
            571,000Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            (329,000
            )
            
            (88,000
            )Net
                under billings
            
            $
            106,000
            
            $
            483,000




F-12




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




On
      February 28, 2006, the Company secured a 12% senior convertible promissory
      note
      with CAMOFI Master LDC. As of June 26, 2008 an aggregate of $3,800,890
      principal, interest and penalties were due under the note.





Pursuant
      to a letter agreement dated June 26, 2008 (the “Letter Agreement”) between New
      Century Companies, Inc. (the “Company”) and CAMOFI Master LDC (“CAMOFI”), CAMOFI
      agreed to waive certain penalties and default interest which have been accrued
      under the transaction documents previously entered into with CAMOFI, including
      a
      12% Senior Secured Convertible Promissory Note due February 20, 2009 in the
      original principal amount of $3,500,000, Security Agreement, an Amended and
      Restated Registration Rights Agreement, and a Subsidiary Guaranty. The waiver
      is
      subject to the Company’s performance of its obligations under the Letter
      Agreement and the execution of further documentation to be prepared in
      connection with the Letter Agreement. Pursuant to the Letter Agreement, the
      Company issued an amended and restated Note (the “Amended Note”) in the
      principal amount of $2,950,000 with a new maturity date of August 1, 2010.





Additionally,
      under the Letter Agreement, the Company issued 725,000 shares of common stock
      and 725,000 five year warrants with an exercise price of $0.10 and 725,000
      five
      year warrants with an exercise price of $0.20. Commencing on August 1, 2008,
      and
      continuing thereafter on the first business day of every month for the next
      twenty-four months, the Company has the obligation to pay to CAMOFI the amount
      of $70,000, allocated first to the payment of interest and second to the payment
      of principal on the Amended and Restated Note. On or before August 1, 2010,
      the
      Company shall pay to CAMOFI all amounts still outstanding under the Amended
      and
      Restated Note, whether of principal, interest or otherwise.





The
      transaction qualified as Troubled Debt Restructuring under SFAS No. 15 due
      to
      the company’s current financial difficulties and the concessions granted by
      CAMOFI.  In accordance with SFAS No. 15, no gain on the forgiveness of
      interest and penalties  was recognized  as the carrying value of the
      note did not exceed the future cash payment at the time of transaction.
 The fair value of the warrants and stock given to CAMOFI was approximately
      $233,000 based on the Black Scholes pricing model and was recorded as a
      reduction to the note  The remaining forgiveness of the interest and
      penalties of $624,000 were recorded as a deferred gain.





The
      assumptions used in the Black-Scholes pricing model for this transaction were
      as
      following, risk free rate of 3.44%, expected life of 5 years and an implied
      volatility of 187%.





CAMOFI
      also cancelled 3,476,190 warrants with a term of five years, which were issued
      on February 28, 2006 with an exercise price of $0.63 and 1,500,000 warrants
      dated December 19, 2006 with an exercise price of $0.35. The fair value of
      such
      warrants on June 26, 2008 was approximately $530,000, based on the Black-Scholes
      pricing model and recorded as a deferred gain to be amortized to
      interest expense over the life of the debt.




F-13




***Stock
      Purchase Warrants Issued and Cancelled in connection with CAMOFI
      note***




In
      2006,
      the Company granted warrants in connection with the issuance of 12% Senior
      Secured Convertible Promissory Note. 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 June 30,
      2008
      and 2007, the Company amortized approximately $175,000 and $348,000,
      respectively, to interest expense. During the six months ended June 30, 2008
      and
      2007, the Company amortized approximately $333,000 and $531,000, respectively,
      to interest expense.




***Beneficial
      Conversion Feature Of CAMOFI Convertible Notes Payable discontinued on June
      26,
      2008 for restructured debt***




The
      convertible feature of certain notes payable provide 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 condensed 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 June 30, 2008 and 2007, the Company amortized
      approximately $84,000 and $208,000, respectively, to interest expense. During
      the six months ended June 30, 2008 and 2007, the Company amortized approximately
      $178,000 and $318,000, respectively, to interest expense. As part of the
      restructuring of the CAMOFI debt as discussed in Note 3, the CAMOFI debt no
      longer has a conversion feature.




For
      the
      three and six months ended June 30, 2008, no principal payments were made on
      the
      CAMOFI note. As of June 30, 2008 and December 31, 2007, the principal balance
      is
      approximately $2,950,000 and $2,567,000, respectively, which is presented net
      of
      debt discounts totaling approximately $664,000 and $1,176,000,
      respectively.




F-14


**4.
      EQUITY TRANSACTIONS**





**Equity
      Compensation**





In
      June
      2008, the Company entered into a 19 day contract with a third party for public
      relations services valued at $18,000. The fee was paid in the form of 200,000
      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 June 30, 2008, the remaining deferred
      consulting fees under this contract totaled $15,000.





In
      February 2008, the Company entered into a one-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 and the value was based on the
      stock market price of the shares at the contract date. The fee was recorded
      as a
      deferred charge and is amortized to operating expense over the life of the
      agreement. At June 30, 2008, the remaining deferred consulting fees under this
      contract totaled $17,500.





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 and the value was based on
      the market price of the shares at the contract date. The fee was recorded as
      a
      deferred charge and was amortized to operating expense over the life of the
      agreement. At June 30, 2008, the fee was amortized entirely.





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 and the value was based on the market price of the shares
      at the contract date. The fee was recorded as a deferred charge and was
      amortized to operating expense over the life of the agreement. At June 30,
      2008,
      the fee was amortized entirely.





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





In
      June
      2007, the Company issued 300,000 shares of common stock valued at $210,000
      (based on the market price of the shares) to a third party for internet public
      investor relations services under a three year contract. The common stock was
      recorded at the estimated fair value of the common stock on the date of the
      transaction and is amortized over the life of the agreement. At June 30, 2008,
      the remaining deferred consulting fees under this contract totaled
      $134,167.





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





F-15


In
        June
        2007, the Company issued 75,000 shares of common stock valued at $52,500
        (based
        on the market price of the shares) to a third party for corporate consulting
        and
        market services under a 6 month contract. The common stock was recorded at
        the
        estimated fair value of the common stock on the date of the transaction and
        was
        amortized over the life of the agreement.
 
 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 was 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 was 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 was 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
      and six months ended June 30, 2008, the Company recorded a decrease of
      approximately $10,000 on such services.





During
      the three months ended June 30, 2008 and 2007, the Company amortized
      approximately $90,000 of consulting expense related to deferred consulting
      fees
      on such equity based compensation arrangements. During the six months ended
      June
      30, 2008 and 2007, the Company amortized approximately $179,000 of consulting
      expense related to deferred consulting fees on such equity based compensation
      arrangements.





As
      of
      June 30, 2008 and December 31, 2007, the unamortized portion of consulting
      fees
      on such equity based compensation arrangements approximate $167,000 and
      $234,000, respectively.





**Dividends
      on preferred stock**





The
      preferred Series C shares and preferred 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 do not have any voting rights and have
      liquidation preferences.





At
      June
      30, 2008 and December 31, 2007, the Company had a total of 26,680 preferred
      Series C shares and 11,640 preferred Series D shares issued and outstanding.
      As
      of June 30, 2008 and December 31, 2007, the Company has accumulated dividends
      payable balances of $418,000 and $376,725, respectively. The Company did not
      declare and does not intend to declare any dividends as of June 30, 2008.




F-16




**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 the United
      States, Canada and Mexico.




2





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 JUNE 30, 2008 COMPARED TO JUNE 30,
      2007.**





**Revenues** .
      The
      Company generated revenues of $1,434,676 for the three months ended June 30,
      2008, which was a $1,165,471 or 45% decrease from $2,600,147 for the three
      months ended June 30, 2007. The decrease is the result of lower than usual
      sales
      volume, a tighter credit market, and manufacturing inefficiencies caused by
      the
      relocation of the Company’s operations to a new facility.





**Gross
      Profit.** Gross
      profit for the three months ended June 30, 2008, was $71,062 or 5% of revenues,
      compared to $711,002 or 27% of revenues for the three months ended June 30,
      2007, a 90% decrease. The decrease in gross profit is due to certain fixed
      overhead expenses applied to lower revenues and increased cost of sales due
      to
      setting up a new plant after relocation.





**Operating
      Loss.** Operating loss for the three months ended June 30, 2008, was $355,500 compared
      to operating income of $192,616 for the three months ended June 30, 2007. The
      increase in loss of $548,116 is primarily due to decreased revenues and lower
      gross profit on jobs in progress for the quarter ended June 30, 2008.





**Interest
      Expense and Debt Discount Amortization.** Interest
      expense for the three months ended June 30, 2008, was $497,382 compared with
      $722,273 for the three months ended June 30, 2007. The decrease of $224,891
      or
      31% in interest expenses is primarily due to $278,000
      of debt discount charged to interest expense related to the conversion of
      $350,000 of principal from the CAMOFI Note into the Company’s common stock
      during the three months
      ended June 30, 2007.





**RESULTS
      OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO JUNE 30,
      2007.**





**Revenues** .
      The
      Company generated revenues of $2,961,278 for the six months ended June 30,
      2008,
      which was a $2,824,338 or 49% decrease from $5,785,616 for the six months ended
      June 30, 2007. The decrease is the result of lower than usual sales volume,
      a
      tighter credit market, and business interruption and manufacturing
      inefficiencies caused by the relocation of the Company’s operations to a new
      facility.




3





**Gross
      Profit.** Gross
      profit for the six months ended June 30, 2008, was $289,185 or 10% of revenues,
      compared to $1,896,241 or 33% of revenues for the six months ended June 30,
      2007, a 85% decrease. The decrease in gross profit is due to certain fixed
      overhead expenses applied to lower revenues and increased cost of sales due
      to
      relocation.





**Operating
      Loss.** Operating loss for the six months ended June 30, 2008, was $900,286 compared
      to
      operating income of $658,582 for the six months ended June 30, 2007. The
      increase in loss of $1,558,868 is primarily due to one time relocation expenses,
      decreased revenues and lower gross profit on jobs in progress for the six months
      ended June 30, 2008.





**Interest
      Expense and Debt Discount Amortization.** Interest
      expense for the six months ended June 30, 2008, was $984,151 compared with
      $1,187,514 for the six months ended June 30, 2007. The decrease of $203,363
      or
      17% in interest expenses is primarily due to $278,000
      of debt discount charged to interest expense related to the conversion of
      $350,000 of principal from the CAMOFI Note into the Company’s common stock
      during the six months
      ended June 30, 2007.





**FINANCIAL
      CONDITION, LIQUIDITY, CAPITAL RESOURCES**





The
      net
      cash decrease during the six months ended June 30, 2008 was $281,729. The
      decrease is due to $312,573 net cash used in operating activities.





For
      the
      six months ended June 30, 2008, the cash provided by financing activities was
      $30,844, compared with $489,696 cash used in financing activities in the six
      months ended June 30, 2007. For the six months ended June 30, 2007, cash was
      used to make principal payments on the CAMOFI loan. For the six months ended
      June 30, 2008, no principal payments were made on the CAMOFI loan.





**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 losses from operations year to date
      of approximately $849,000, an accumulated deficit of approximately $ 13,098,000
      and a negative working capital balance of approximately $701,000. These factors,
      among others, raise substantial doubt about the Company's ability to continue
      as
      a going concern. The Company intends to fund operations through 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.





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
                Company has successfully restructured its debt, eliminating the penalties
                and interest for past default and extending the repayment term (See
                Note
                3).





4




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.




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**




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.




5




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 June 30, 2008, the Company estimated the
      markdowns, price concessions and warranty costs and concluded amounts are
      immaterial and did not record any adjustment to revenues.





**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. (See
      Note
      1 to Condensed Consolidated Financial Statements, Inventory
      section)




6





**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
      4T. 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 June 30, 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:




(i)
              pertain
                  to the maintenance of records that, in reasonable detail, accurately
                  and
                  fairly reflect the transactions and dispositions of our
                  assets;
  7




(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.




8





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.




9




·
            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.





2.
      We did
      not have a sufficient complement of personnel with appropriate training and
      experience in GAAP, as evidenced by the following deficiencies:


·
              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 as detailed by the
      following:





·
            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.




10





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 quarter ended June 30, 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





None.





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 by Chief Executive Officer
      and




Exhibit
      31.2 Certification required by Rule 13a-14(a) or Rule 15d-14(d) and under
      Section 302 of the Sarbanes-Oxley act of 2002 by Chief
      Financial Officer





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 2002





11




**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:
              August
              14, 2008*
            
            */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:
                August
                14, 2008*
              
              */s/
                  DAVID DUQUETTE**Name:
                    David Duquette*
                  *Title:
                    Chairman, President and
                    Director*
  *Date:
                    August
                    14, 2008*
                  
                  */s/
                      JOSEF CZIKMANTORI**Name:
                          Josef Czikmantori*
                        *Title:
                          Secretary and
                          Director*
 12