SECURITIES
      EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





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





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





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







NEW
      CENTURY COMPANIES, INC.





(Exact
      name of Registrant as specified in its charter)








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











9835
      Santa Fe Springs Road


Santa
      Fe
      Springs, CA 90670





(Address
                of Principal Executive Offices)(Zip
                Code)








(562)
      906-8455





(Registrant's
      telephone number, including area code)





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





Yes
x
      No o





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





The
      number of shares of Common Stock, par value $ 0.10 per share, outstanding as
      of
      June 30, 2007 was 13,429,656.





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













Table
      of
      Contents





PART
      I
      FINANCIAL INFORMATION





ITEM
      1.
      FINANCIAL STATEMENTS (Unaudited)





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





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





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





ITEM
      3.
      CONTROLS AND PROCEDURES





PART
      II
      OTHER INFORMATION





ITEM
      1.
      LEGAL PROCEEDING





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





ITEM
      3.
      DEFAULTS UPON SENIOR SECURITIES





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





ITEM
      5.
      OTHER INFORMATION





ITEM
      6.
      EXHIBITS




2





**ITEM
      1. FINANCIAL STATEMENTS**





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





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





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





**OVERVIEW**





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




3





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





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





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





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





**OVERVIEW
      OF OPERATIONS**




The
      Company's current strategy is to expand its customer sales base with its present
      line of machine products. The Company's growth strategy also includes strategic
      acquisitions in addition to growing the current business. Plans for expansion
      are funded through current working capital from ongoing sales. As of June 30,
      2007, the Companies working capital is $1,222,314. However, significant growth
      will require additional funds in the form of debt or equity, or a combination
      thereof. The Company's growth strategy also includes strategic acquisitions
      in
      addition to growing the current business. A significant acquisition will require
      additional financing.




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





**Revenues** .
      The
      Company generated revenues of $2,600,147 for the three months ended June 30,
      2007, which was a $302,374 or 13% increase from $2,297,773 for the three months
      ended June 30, 2006. The increase is the result of higher sales volume and
      higher selling prices of New Century machines due to improved economic
      conditions .




**Gross
      Profit.** Gross
      profit for the three months ended June 30, 2007, was $711,002 or 27% of
      revenues, compared to $806,721, or 35% of revenues for the three months ended
      June 30, 2006, a 12% decrease. The decrease in gross profit is due to change
      in
      product mix for the type of machines in process.




**Operating
      Income.** Operating income for the three months ended June 30, 2007, was $192,616 compared
      to operating income of $360,379 for the three months ended June 30, 2006. The
      decrease of $167,763 or 47% in operating income is primarily due to
      approximately $88,000 increase in consulting expenses for public relations
      and
      market services, and secondarily to approximately $49,000 increase in salaries.




4





**Interest
      Expense and Debt Discount Amortization.** Interest
      expense for the three months ended June 30, 2007, was $722,273 compared with
      $813,110 for the three months ended June 30, 2006. The details of interest
      expenses for the three months ended June 30, 2007 are presented
      bellow:








**NEW
                CENTURY COMPANIES, INC. AND SUBSIDIARY****INTEREST
                EXPENSES****For
                the Three Months Ended June 30, 2007 and 2006****(Unaudited)****(Rounded
                to nearest thousand)**




**For
                the Three Months Ended June 30,**
            
            **Variance****2007**
            
            **2006**
            
            $
            
            %**$3.5
                million convertible note**Amortization
                of debt discount (non-cash expense)
            
            $
            557,000
            *
            $
            311,000
            
            $
            246,000
            
            
            79
            %Amortization
                of deferred financing fees (non-cash expense)
            
            
            90,000
            
            
            84,000
            
            
            6,000
            
            
            7
            %Interest
                on notenon-cash
                conversion into stock
            
            
            74,000
            
            
            -cash
                payments
            
            
            -
            
            
            105,000Liquidated
                damages accrued for failure to register common stock to convertible
                note holders (non-cash expense)
            
            
            -
            
            
            119,000
            
            
            (119,000
            )
            
            -100
            %**$300,000
                convertible note**Amortization
                of debt discount (non-cash expense)
            
            
            -
            
            
            150,000
            
            
            (150,000
            )
            
            -100
            %Amortization
                of deferred financing and extension fees (non-cash
                expense)
            
            
            -
            
            
            30,000
            
            
            (30,000
            )
            
            -100
            %Interest
                on note
            
            
            -
            
            
            14,000
            
            
            (14,000
            )
            
            -100
            %**Interest
                and adjustments on other notes payable and leases**
            
            
            1,000
            
            
            1,000
            
            
            0
            
            
            0
            %Total
            
            $
            722,000
            
            $
            814,000
            
            $
            (92,000
            )
            
            -11
            %




*
                Includes $278,000 of interest expense due to debt discount reduction
                related to $350,000 conversion of principal of the CAMOFI Note in
                to
                the Company’s
                common
                stock





**RESULTS
      OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO JUNE 30,
      2006.**





**Revenues.** The
      Company generated revenues of $5,785,616 for the six months ended June 30,
      2007,
      which was a $1,787,996 or a 45% increase from $3,997,620 for the six months
      ended June 30, 2006. The increase is the result of higher sales volume and
      higher selling prices of New Century machines due to improved market
      conditions.





**Gross
      Profit.** Gross
      profit for the six months ended June 30, 2007, was $1,896,241 or 33% of
      revenues, compared to $1,209,960, or 30% of revenues for the six months ended
      June 30, 2006, a 57% increase. The increase of gross profit is the result of
      increased sales and
      higher selling prices. .




**Operating
      Income.** Operating income for the six months ended June 30, 2007, was $658,582 compared
      to operating income of $308,589 for the six months ended June 30, 2006. The
      increase of $349,993 or 113% in operating income is due to the increase in
      revenues and gross margins as noted above.




5





**Interest
      Expense and Debt Discount Amortization.** Interest
      expense for the six months ended June 30, 2007 was $1,187,514 compared with
      $1,208,938 for the six months ended June 30, 2006. The details of interest
      expense for the six month ended June 30, 2007 are presented
      bellow:





**NEW
                  CENTURY COMPANIES, INC. AND SUBSIDIARY****INTEREST
                  EXPENSES****For
                  the Six Months Ended June 30, 2007 and 2006****(Unaudited)****(Rounded
                  to nearest thousand)**
  **For
                  the Six Months Ended June 30,**
              
              **Variance****2007**
              
              **2006**
              
              $
              
              %**$3.5
                  million convertible note**Amortization
                  of debt discount (non-cash expense)
              
              $
              848,000
              
              $
              408,000
              
              $
              440,000
              
              
              108
              %Amortization
                  of deferred financing fees (non-cash expense)
              
              
              179,000
              
              
              112,000
              
              
              67,000
              
              
              60
              %Interest
                  on notenon-cash
                  conversion into stock
              
              
              74,000
              
              
              -
              
              
              74,000cash
                  payments
              
              
              84,000
              
              
              134,000
              
              
              (50,000
              )
              
              -37
              %Liquidated
                  damages accrued for failure to register common stock to convertible
                  note holders (non-cash expense)
              
              
              
              
              
              163,000
              
              
              (163,000
              )
              
              -100
              %**$300,000
                  convertible note**Amortization
                  of debt discount (non-cash expense)
              
              
              -
              
              
              300,000
              
              
              (300,000
              )
              
              -100
              %Amortization
                  of deferred financing and extension fees (non-cash
                  expense)
              
              
              -
              
              
              59,000
              
              
              (59,000
              )
              
              -100
              %Interest
                  on note
              
              
              -
              
              
              30,000
              
              
              (30,000
              )
              
              -100
              %**Interest
                  and adjustments on other notes payable and leases**
              
              
              2,000
              
              
              3,000
              
              
              (1,000
              )
              
              -33
              %Total
              
              $
              1,187,000
              
              $
              1,209,000
              
              $
              (22,000
              )
              
              -2
              %
  *
                  Includes $278,000 of interest expense due to debt discount reduction
                  related to $350,000 conversion of principal of the CAMOFI Note
                  in to
                  the Company’s
                  common
                  stock


**FINANCIAL
      CONDITION, LIQUIDITY, CAPITAL RESOURCES**





The
      net
      cash increase of the Company during the six months ended June 30, 2007 was
      $287,378. The increase is due to net cash provided by operating activities
      of
      $807,074, offset by $489,696 net cash used in financing activities, cash used
      primarily to pay down the Companies notes payable.




For
      the
      six months ended June 30, 2007, the cash provided by operating activities was
      $807,074, compared with $1,032,687 cash used in operating activities in the
      corresponding period from 2006. The increase in cash provided by operating
      activities is a result of increased sales.




6


For
      the
      six months ended June 30, 2007, the cash used in financing activities was
      $489,696, compared with $1,052,686 cash provided by financing activities in
      the
      six months ended June 30, 2006. The decrease of cash provided by financing
      activities is primarily due to $3,800,000 of proceeds from the issuance of
      two
      convertible notes in 2006, compared to no cash proceeds from debt or equity
      in
      2007.


**GOING
          CONCERN**
 
 The
          accompanying condensed consolidated financial statements have been prepared
          assuming the Company will continue as a going concern, which contemplates,
          among
          other things, the realization of assets and satisfaction of liabilities
          in the
          normal course of business. The Company has an accumulated deficit of
          approximately $ 8,300,000.
          This factor, among others, raises substantial doubt about the Company's
          ability
          to continue as a going concern. The Company intends to fund operations
          through
          anticipated increased sales along with debt and equity financing arrangements
          which management believes may be insufficient to fund its capital expenditures,
          working capital and other cash requirements for the year ending December
          31,
          2007. Therefore, the Company will be required to seek additional funds
          to
          finance its long-term operations. The successful outcome of future activities
          cannot be determined at this
          time
          and there is no assurance that if achieved, the Company will have sufficient
          funds to execute its intended business plan or generate positive operating
          results.
 
 In
          response to these problems, management has taken the following actions:
 ·
                  The
                      Company continues its aggressive program for selling inventory.
 ·
                  The
                      Company continues to implement plans to further reduce operating
                      costs.
 ·
                  The
                      Company is seeking investment capital through the public and
                      private
                      markets.
 The
          accompanying condensed consolidated
          financial statements do not include any adjustments related to recoverability
          and classification of asset carrying amounts or the amount and classification
          of
          liabilities that might result should the Company be unable to continue
          as a
          going concern.


**INFLATION
      AND CHANGING PRICES**





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




**REGISTRATION
        RIGHTS OBLIGATION**
 
 On
        May 1,
        2007, the Company entered into an Amended and Restated Registration Rights
        Agreement (the “2 nd Amendment”) with CAMOFI, the holder of 12% Senior Secured Convertible Note.
        Pursuant to the Amendment, CAMOFI agreed to waive any liquidated damages
        prior
        to the date of the 2 nd Amendment. Also, within 30 days after the date of the 2 nd Amendment, the Company agreed to file a registration statement to cover the
        resale of the shares issuable upon conversion of the CAMOFI Note up to 33%
        of
        the Company’s issued and outstanding stock, and, in 90 days after the date of
        filing, to have the registration statement declared effective by the Securities
        and Exchange Commission.
 
 On
        July
        18, 2007, in view of the Securities and Exchange Commission’s (the “SEC”)
        position and interpretation of Rule 415 promulgated by the SEC pursuant to
        the
        Securities Act of 1933, as amended, CAMOFI waived its rights to have the
        Company
        register 33% of its issued and outstanding shares in the Registration statement
        that the Company filed on May 31, 2007 (the “Registration Statement”), as
        required by the May 1, 2007 Amended and Restated Registration Rights Agreement,
        and agreed to the inclusion of 3,000,000 shares of common stock of the Company
        representing 27% of the public float of the Company in the Registration
        Statement. All of the other provisions of the Registration Rights Agreement
        remained the same. (See Note 5)




**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 bellow are significantly affected by judgments,
      assumptions and estimates used in the preparation of the financial statements:





**Revenue
      Recognition**





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





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





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


7





In
      December 1999, the Securities and Exchange Commission issued Staff Accounting
      Bulletin 101 ("SAB 101"), "Revenue Recognition," as amended by SAB No. 104
      which
      outlines the basic criteria that must be met to recognize revenue and provides
      guidance for presentation of revenue and for disclosure related to revenue
      recognition policies in financial statements filed with the Securities and
      Exchange Commission. Management believes that the Company's revenue recognition
      policy for services and product sales conforms to SAB 101 amended by SAB 104.
      The Company recognizes revenue of long-term contracts pursuant to SOP 81-1.





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





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





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





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





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





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


**Classification
      Of Warrant Obligation**





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


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


8


**ITEM
      3. CONTROLS AND PROCEDURES**





**EVALUATION
      OF CONTROLS AND PROCEDURES**





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





**CHANGES
      IN CONTROLS AND PROCEDURES**





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





**LIMITATIONS
      ON THE EFFECTIVENESS OF INTERNAL CONTROL**





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




9





PART
      II.
      OTHER INFORMATION





Item
      1.
      Legal Proceedings





None.





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





During
      the quarter ended June 30, 2007, the Company issued 100,000 shares of common
      stock to Equities Global Communications for public investor relations services,
      300,000 shares of common stock to MarketByte, LLC, for internet public investor
      relations services, 15,000 shares of common stock to Evergreen Marketing, Inc.
      public investor relations services, and 75,000 shares of common stock to
      Longport Holdings, LLC, for corporate consulting and market
      services.





In
      June
      2007, the Company` Board of Directors approved issuance of 675,000 shares of
      common stock as a conversion of principal and interest due on 12% Senior Secured
      Convertible debt. The shares were recorded on June 2007 in the issued and
      outstanding number of common shares, and were issued on July 2007.





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





Item
      3.
      Defaults Upon Senior Securities





None.





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





None.





Item
      5.
      Other Information





The
      Company is in process of filing a registration statement.





Item
      6.
      Exhibits





Exhibit
      31.1 Section 302 Sarbanes Oxley Certification





Exhibit
      32.1 Section 906 Sarbanes Oxley Certification




10




**NEW
                  CENTURY COMPANIES, INC. AND SUBSIDIARY****CONDENSED
                  CONSOLIDATED BALANCE SHEET****June
                  30, 2007****(Unaudited)**
  **ASSETS****Current
                  Assets**Cash
              
              $
              340,696Contract
                  receivables
              
              
              308,327Inventories,
                  net
              
              
              1,293,877Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              1,111,708Deferred
                  financing costs, net
              
              
              358,292Prepaid
                  expenses and other current assets
              
              
              1,560Total
                  current assets
              
              
              3,414,460**Property
                  and Equipment, net**
              
              
              330,729**Deferred
                  Financing Costs Long Term, net**
              
              
              238,862Total
                  Assets
              
              $
              3,984,051**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities**Bank
                  Overdraft
              
              $
              25,701Accounts
                  payable and accrued liabilities
              
              
              1,113,614Dividends
                  payable
              
              
              335,450Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              353,276Lease
                  payable
              
              
              24,710Convertible
                  notes payable, net of discount
              
              
              339,395Total
                  current liabilities
              
              
              2,192,146**Long-Term Liabilities**Lease
                  payable - long term portion
              
              
              48,608Convertible
                  notes payable, net of discount
              
              
              197,980Total
                  long term liabilities
              
              
              246,588**Commitments
                  and Contingencies****Stockholders'
                  Equity**Cumulative,
                  convertible, Series B preferred stock, $1 par value,15,000,000
                  shares authorized, no shares issued and outstanding(liquidation
                  preference of $25 per share)
              
              
              -Cumulative,
                  convertible, Series C preferred stock, $1 par value,75,000
                  shares authorized, 27,780 shares issued and outstanding(liquidation
                  preference of $933,000)
              
              
              27,780Cumulative,
                  convertible, Series D preferred stock, $25 par value,75,000
                  shares authorized, 11,640 shares issued and outstanding(liquidation
                  preference of $416,000)
              
              
              291,000Common
                  stock, $0.10 par value, 50,000,000 shares authorized;13,429,656
                  shares issued and outstanding
              
              
              1,342,966Subscriptions
                  receivable
              
              
              (462,500
              )Notes
                  receivable from stockholders
              
              
              (542,902
              )Deferred
                  consulting fees
              
              
              (459,751
              )Additional
                  paid-in capital
              
              
              9,665,381Accumulated
                  deficit
              
              
              (8,316,657
              )Total
                  stockholders' equity
              
              
              1,545,317Total
                  Liabilities and Stockholders' equity
              
              $
              3,984,051See
                  accompanying notes to these 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, 2007 and
                    2006****(Unaudited)**
  **For
                  the Three Months Ended June 30,**
              
              **For
                  the Six Months Ended June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006****CONTRACT
                  REVENUES**
              
              $
              2,600,147
              
              $
              2,297,773
              
              $
              5,785,616
              
              $
              3,997,620**COST
                  OF SALES**
              
              
              1,889,145
              
              
              1,491,052
              
              
              3,889,375
              
              
              2,787,660**GROSS
                  PROFIT**
              
              
              711,002
              
              
              806,721
              
              
              1,896,241
              
              
              1,209,960**OPERATING
                  EXPENSES**Consulting
                  and other compensation
              
              
              212,955
              
              
              124,900
              
              
              642,318
              
              
              327,958Salaries
                  and related
              
              
              110,336
              
              
              61,791
              
              
              226,970
              
              
              126,122Selling,
                  general and administrative
              
              
              195,095
              
              
              259,651
              
              
              368,371
              
              
              447,291**TOTAL
                  OPERATING EXPENSES**
              
              
              518,386
              
              
              446,342
              
              
              1,237,659
              
              
              901,371**OPERATING
                  INCOME**
              
              
              192,616
              
              
              360,379
              
              
              658,582
              
              
              308,589**OTHER
                  (INCOME) EXPENSES**Loss
                  on forgivenes of debt
              
              
              4,729
              
              
              -
              
              
              (6,959
              )
              
              -Derivative
                  liability
              
              
              -
              
              
              799,524
              
              
              -
              
              
              34,762Interest,
                  including debt discount amortization
              
              
              (722,273
              )
              
              (813,110
              )
              
              (1,187,514
              )
              
              (1,208,938
              )**TOTAL
                  OTHER (INCOME) EXPENSES**
              
              
              (717,544
              )
              
              (13,586
              )
              
              (1,194,473
              )
              
              (1,174,176
              )**INCOME
                  (LOSS) BEFORE PROVISION FOR****INCOME
                  TAXES**
              
              
              (524,928
              )
              
              346,793
              
              
              (535,891
              )
              
              (865,587
              )**PROVISION
                  FOR INCOME TAXES**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**NET
                  INCOME (LOSS)**
              
              $
              (524,928
              )
              $
              346,793
              
              $
              (535,891
              )
              $
              (865,587
              )**NET
                  INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS**
              
              $
              (497,578
              )
              $
              304,393
              
              $
              (508,541
              )
              $
              (620,112
              )**Basic
                  net income (loss) applicable to common
                  stockholders****per
                  common share**
              
              $
              (0.04
              )
              $
              0.03
              
              $
              (0.04
              )
              $
              (0.06
              )**Diluted
                  net income (loss) applicable to common
                  stockholders****per
                  common share**
              
              $
              (0.04
              )
              $
              0.02
              
              $
              (0.04
              )
              $
              (0.06
              )**Basic
                  weighted average common shares outstanding**
              
              
              12,654,601
              
              
              11,291,359
              
              
              12,320,927
              
              
              11,047,485**Diluted
                  weighted average common shares outstanding**
              
              
              12,654,601
              
              
              12,222,041
              
              
              12,320,927
              
              
              11,047,485
 See
                  accompanying notes to these condensed consolidated financial statements.






F-2




**NEW
                  CENTURY COMPANIES, INC. AND SUBSIDIARY****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS****For
                  the Six Months Ended June, 2007 and 2006****(Unaudited)**
  **2007**
              
              **2006**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (535,891
              )
              $
              (865,587
              )Adjustments
                  to reconcile net loss to net cashprovided
                  by (used in) operating activities:Depreciation
                  and amortization of property and equipment
              
              
              63,535
              
              
              77,594Amortization
                  of deferred financing costs
              
              
              179,148
              
              
              170,779Amortization
                  of debt discounts
              
              
              848,485
              
              
              707,790Amortization
                  of deferred consulting fees
              
              
              (126,683
              )
              
              221,332Estmated
                  fair market value of common stock issued for consulting servicesand
                  related change in fair value
              
              
              610,000
              
              
              -Conversion
                  of interest to common stock
              
              
              74,317Derivative
                  liability expense
              
              
              -
              
              
              (34,762
              )Changes
                  in operating assets and liabilities:Contracts
                  receivable
              
              
              (4,766
              )
              
              (462,700
              )Inventories
              
              
              (173,695
              )
              
              (357,140
              )Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              48,960
              
              
              (182,264
              )Prepaid
                  expenses and other current assets
              
              
              18,645
              
              
              (34,669
              )Notes
                  receivable from stockholders
              
              
              (17,500
              )
              
              -Accounts
                  payable and accrued liabilities
              
              
              (77,846
              )
              
              (153,572
              )Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              (99,635
              )
              
              (119,488
              )Net
                  cash provided by (used in) operating activities
              
              
              807,074
              
              
              (1,032,687
              )Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              (30,000
              )
              
              (20,000
              )Net
                  cash used in investing activities
              
              
              (30,000
              )
              
              (20,000
              )Cash
                  flows from financing activities:Restricted
                  cash
              
              
              123,898
              
              
              (1,500,000
              )Bank
                  overdraft
              
              
              6,929
              
              
              (14,813
              )Proceeds
                  of issuance of convertible notes payable
              
              
              -
              
              
              3,800,000Principal
                  payments on notes payable and capital leases
              
              
              (620,523
              )
              
              (810,000
              )Deferred
                  financing costs
              
              
              -
              
              
              (422,500
              )Net
                  cash (used in) provided by financing activities
              
              
              (489,696
              )
              
              1,052,687Net
                  increase in cash
              
              
              287,378
              
              
              -Cash
                  at beginning of period
              
              
              53,318
              
              
              -Cash
                  at end of period
              
              $
              340,696
              
              $
              -Supplemental
                  disclosure of non-cash activities:Accrued
                  cumulative dividends on preferred stock
              
              $
              42,400
              
              $
              42,400Reversal
                  of accrued dividends older than four years on preferred
                  stock
              
              $
              (69,750
              )
              $
              -Conversion
                  of notes payable and interest to common stock
              
              $
              424,317
              
              $
              170,250Common
                  stock and warrants issued for deferred financing costs
              
              $
              -
              
              $
              641,790Debt
                  discount on notes payable for note extension
              
              $
              -
              
              $
              18,900Waived
                  cumulative dividends on preferred stock
              
              $
              -
              
              $
              287,875Conversion
                  of Series C preferred stock to common stock
              
              $
              -
              
              $
              2,000
  See
                  accompanying notes to these 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, 2007 AND 2006**







**1.
      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES**




***Organization
      And Nature Of Operations***




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




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




The
      Company trades on the OTC Bulletin Board under the symbol
      "NCNC.OB".




***Principles
      Of Consolidation***




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




***Basis
      Of Presentation***





The
      accompanying unaudited interim condensed consolidated financial statements
      have
      been prepared by the Company, pursuant to the rules and regulations of the
      United States Securities and Exchange Commission (the "SEC"). Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States of America (“GAAP”) have been omitted pursuant to such SEC rules
      and regulations; nevertheless, the Company believes that the disclosures are
      adequate to make the information presented not misleading. These financial
      statements and the notes hereto should be read in conjunction with the financial
      statements, accounting policies and notes thereto included in the Company's
      Annual Report on Form 10-KSB for the year ended December 31, 2006, filed with
      the SEC. In
      the
      opinion of management, all adjustments necessary to present fairly, in
      accordance with GAAP, the Company's financial position as of June 30, 2007,
      and
      the results of operations and cash flows for the interim periods presented,
      have
      been made. Such adjustments consist only of normal recurring adjustments. The
      results of operations for the three and six months ended June 30, 2007 are
      not
      necessarily indicative of the results for the full year ending December 31,
      2007.




F-4




***Going
      Concern***





The
      accompanying condensed consolidated financial statements have been prepared
      assuming the Company will continue as a going concern, which contemplates,
      among
      other things, the realization of assets and satisfaction of liabilities in
      the
      normal course of business. The Company has an accumulated deficit of
      approximately $ 8,300,000.
      This factor, among others, raises substantial doubt about the Company's ability
      to continue as a going concern. The Company intends to fund operations through
      anticipated increased sales along with debt and equity financing arrangements
      which management believes may be insufficient to fund its capital expenditures,
      working capital and other cash requirements for the year ending December 31,
      2007. Therefore, the Company will be required to seek additional funds to
      finance its long-term operations. The successful outcome of future activities
      cannot be determined at this
      time
      and there is no assurance that if achieved, the Company will have sufficient
      funds to execute its intended business plan or generate positive operating
      results.





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


·
              The
                  Company continues its aggressive program for selling inventory.
 ·
              The
                  Company continues to implement plans to further reduce operating
                  costs.
 ·
              The
                  Company is seeking investment capital through the public and private
                  markets.


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




***Inventory***




Inventories
      are stated at the lower of cost or net realizable value. Cost is determined
      under the first-in, first-out method. Inventories represent cost of work in
      process on units not yet under contract. Cost includes all direct material
      and
      labor, machinery, subcontractors and allocations of indirect overhead. As of
      June 30, 2007, the company’s inventory was determined to be approximately
      $1,294,000 net, based on approximately $170,000 cost of labor, $879,000 cost
      of
      materials, $89,000 cost of subcontracted services, $442,000 overhead cost,
      offset by a $286,000 reserve for estimated markdowns on inventory
      costs.




***Revenue
      Recognition***




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




F-5




Staff
      Accounting Bulletin ("SAB") No. 104, "Revenue Recognition" outlines the basic
      criteria that must be met to recognize revenue and provides guidance for
      presentation of revenue and for disclosure related to revenue recognition
      policies in financial statements filed with the SEC. Management believes that
      the Company's revenue recognition policy conforms to SAB No. 104. The Company
      recognizes revenue on contracts pursuant to Statements
      of Position 81-1,Accounting
      for Performance of Construction-Type and Certain Production-Type
      Contracts.




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




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




Contracts
      that are substantially complete are considered closed for condensed consolidated
      financial statement purposes. Costs incurred and revenue earned on contracts
      in
      progress in excess of billings (under billings) are classified as a current
      asset. Amounts billed in excess of costs and revenue earned (over billings)
      are
      classified as a current liability.




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




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




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





Under
      SFAS 128, “Earnings Per Share,” ** basic
      earnings per common share is computed by dividing income (loss) available to
      common stockholders by the weighted-average number of common shares assumed
      to
      be outstanding during the period of computation. Diluted earnings per share
      is
      computed similar to basic earnings per share except that the denominator is
      increased to include the number of additional common shares that would have
      been
      outstanding if the potential common shares had been issued and if the
      additional common shares were dilutive.




F-6





Common
      stock equivalents, representing convertible Preferred Stock, convertible debt,
      options and warrants totaling approximately 13,429,656 shares at June 30, 2007
      are not included in the diluted loss per share as they would be anti-dilutive.
      Accordingly, diluted and basic loss per share are the same for June 30, 2007.




***Stock
      Based Compensation***





Effective
      January 1, 2006, the Company adopted the provisions of SFAS No. 123-R,
      "Share-Based Payment," ("SFAS No. 123-R"). SFAS No. 123-R requires employee
      stock options and rights to purchase shares under stock participation plans
      to
      be accounted for under the fair value method and requires the use of an option
      pricing model for estimating fair value. Accordingly, share-based compensation
      is measured at the grant date, based on the fair value of the award. The
      exercise price of options is generally equal to the market price of the
      Company's common stock (defined as the closing price as quoted on the
      Over-the-Counter Bulletin Board administered by Nasdaq) on the date of grant.
      $86,400 and $0 of share-based compensation expense was recognized in the
      accompanying condensed consolidated financial statements for the three month
      periods ended June 30, 2007 and 2006, respectively. $216,000 and $0 of
      share-based compensation expense was recognized in the accompanying condensed
      consolidated financial statements for the six month periods ended June 30,
      2007
      and 2006, respectively




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





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





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





On
      November 13, 2006, the Company granted 2,000,000 options to key employees.
      The
      options will vest and become exercisable on December 1, 2007. At June 30, 2007,
      the Company had 1,750,000 options available for future issuance under their
      equity compensation plans.




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 June 30, 2007 is recognized
      in the period the forfeiture estimate is changed.




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




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




Number
                of
              Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Term
                in Years
            
            Aggregate
              Intrinsic
              Value
                (1)Vested
            
            
            1,250,000
            
            $
            0.32
            
            
            0.42
            
            $
            515,000Expected
                to vest
            
            
            2,000,000
            
            $
            0.20
            
            
            2.69
            
            $
            1,060,000Total
            
            
            3,250,000
            
            
            
            
            
            
            
            $
            1,575,000




(1)These
                amounts represent the difference between the exercise price and $0.73,
                the
                closing market price of the Company's common stock on June 30, 2007
                as
                quoted on the Over-the-Counter Bulletin Board under the symbol "NCNC.OB"
                for all in-the-money options
                outstanding.





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




Outstanding
                OptionsShares
              Available
              for
                Grant
            
            Number
              of
              Shares
            
            Weighted
              Average
              Exercise
            
            Intrinsic
              Value(1)December
                31, 2006
            
            
            1,750,000
            
            
            3,250,000
            
            $
            0.25
            
            $
            130,000Grants
            
            
            --
            
            
            --
            
            
            --
            
            
            --Exercises
            
            
            --
            
            
            --
            
            
            --
            
            
            --Cancellations
            
            
            --
            
            
            --
            
            
            --
            
            
            --June
                30, 2007
            
            
            1,750,000
            
            
            3,250,000
            
            $
            0.25
            
            $
            1,575,000Options
                exercisable at:June
                30, 2007
            
            
            
            
            
            1,250,000
            
            $
            0.32




(1)
      represents the added value as difference between the exercise price and the
      closing market price of the Company's common stock at the end of the reporting
      period (as of December 31, 2006 and June 30, 2007 the market price of the
      Company's common stock was $0.21 and $0.73, respectively).




F-8




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




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





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




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




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





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





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








F-9





***Deferred
      Financing Costs***





Direct
      costs of securing debt financing are capitalized and amortized over the term
      of
      the related debt. When a loan is paid in full, any unamortized financing costs
      are removed from the related accounts and charged to operations. During the
      three months ended June 30, 2007 and 2006, the Company amortized approximately
      $90,000 and $104,000, respectively, to interest expense. During the six months
      ended June 30, 2007 and 2006, the Company amortized approximately $179,000
      and
      $171,000, respectively, to interest expense. At June 30, 2007, the unamortized
      portion of deferred financing costs for the convertible note payable is
      approximately $597,000.




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




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





***Classification
      Of Warrant Obligation***





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





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




F-10





On
      December 19, 2006, the Company entered into an amended agreement with the
      warrant holder, CAMOFI Master LDC, where by the warrant holder agreed to waive
      all liquidated damages incurred as a result of the Company’s inability to file a
      registration statement to register the shares underlying the warrants. In
      addition, a limit was placed on the amount of liquidated damages to be incurred
      in the event the Company fails to have an effective registration statement
      within the time period required by the amended agreement. The liquidated damages
      would be limited to 10% of the outstanding balance of the note. As a result,
      the
      warrants met all the criteria outlined in EITF 00-19 to be classified as equity.
      Accordingly, the warrants were reclassified to equity at December 19, 2006,
      and
      the $695,000 fair value of warrant liability was credited to additional paid
      in
      capital. The December 19, 2006 Amended Registration Rights Agreement was Amended
      on May 1, 2007 and July 18, 2007. (See Note 5)





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




***Income
      Taxes***





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





***Significant
      Recent Accounting Pronouncements***





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




F-11





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




**2.
      CONTRACTS IN PROGRESS**




Contracts
      in progress as of June 30, 2007 which include completed contracts not completely
      billed represent the following:





Cumulative
                costs to date
            
            $
            5,260,000Cumulative
                gross profit to date
            
            
            5,378,000Cumulative
                revenue earned
            
            
            10,638,000Less
                progress billings to date
            
            
            (9,879,000
            )Net
                under billings
            
            $
            759,000





The
      following is included in the accompanying condensed consolidated balance sheet
      under these captions as of June 30, 2007:





Costs
                and estimated earnings in excess of billingson
                uncompleted contracts
            
            $
            1,112,000Billings
                in excess of costs and estimated earningson
                uncompleted contracts
            
            
            (353,000
            )Net
                under billings
            
            $
            759,000








F-12





**3.
      DEBT FINANCING TRANSACTIONS**




During
      the three months ended June 30, 2006, the Company made cash payments of $36,000
      to reduce the principal balance on one of its outstanding secured notes payable.
      As of June 30, 2006, the balance of the note was $120,000.




During
      the three months ended June 30, 2006, the Company did not make any principal
      payments on one of its secured convertible note payable. As of June 30, 2006,
      the balance of the note was $3,500,000.




Also,
      during the three months ended June 30, 2006, the Company did not make any
      principal payments on one of its outstanding convertible notes payable. As
      of
      June 30, 2006, the principal balance on that note was $300,000.




During
      the three months ended June 30, 2007, the Company made cash payments of $12,000
      to pay off one of its outstanding secured notes payable.




During
      the six months ended June 30, 2007, the Company made cash payments of $466,667
      to reduce the principal balance on one of its outstanding secured convertible
      notes payable. Also, the Companies Board of Directors approved conversion of
      $350,000 principal and approximately $74,317 interest into 675,000 shares of
      Companies common stock. As of June 30, 2007, the principal balance is
      approximately $2,217,000 which is presented net of debt discounts totaling
      approximately $1,680,000 .




Also,
      during the three months ended June 30, 2007, the Company recorded a capital
      lease of $79,176 and made cash payments of $7,497 of which $5,858 were
      recorded as payments on the principal balance of the capital lease payable.
      As
      of June 30, 2007, the principal balance on that lease was $73,318 .




**Debt
      Discount**





During
      the three months ended June 30, 2007 and 2006, the Company amortized
      approximately $278,000 related to a convertible note payable to CAMOFI Master
      LDC ("CAMOFI") and $247,000, respectively, of debt discounts to interest
      expense. For the three months ended June 30, 2006, $97,000 was related to CAMOFI
      and $150,000 was related to a convertible note payable to Motivated Minds,
      LLC
      (“Motivated Minds”). Also, on June 2007, the Company reduced the debt discount
      by an additional $278,000 ,
      as
      result of conversion of $350,000 of principal on the CAMOFI note into the
      Company’s common stock.




F-13







During
      the six months ended June 30, 2007 and 2006, the Company amortized approximately
      $560,000 and $689,000, respectively, of debt discounts to interest expense.
      For
      the six months ended June 30, 2006, $389,000 was related to a convertible note
      payable to CAMOFI Master LDC ("CAMOFI") and $300,000 was related to a
      convertible note payable to Motivated Minds, LLC (“Motivated
      Minds”).





**4.
      EQUITY TRANSACTIONS**





**Equity
      Compensation**





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





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





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





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





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





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




F-14







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




As
      described in Note 1, the Company enters into equity based compensation
      arrangements with non-employees where the value of the services are not readily
      determinable and the fair value of the equity instruments is more reliably
      measurable. Under most of these arrangements, the performance criteria required
      for a measurement date is not reached until the service period has been
      completed. As a result, the Company is required to re-measure the consideration
      at each reporting date based on its then current stock value. During the quarter
      ended June 30, 2007, the Company recorded net increases to the fair values
      of
      such equity based compensation arrangements of approximately $19,500. During
      the
      six months ended June 30, 2007, the Company recorded net increases to the fair
      values of such equity based compensation arrangements with third parties
      totaling $44,500.





During
      the three and six month months ended June 30, 2007 the Company amortized
      approximately $50,000 and $127,000, respectively, of consulting expense related
      to the amortization of deferred consulting fees on such equity based
      compensation arrangements.





As
      of
      June 30, 2007, the unamortized portion of consulting fees on such equity based
      compensation arrangements approximate $316,000.





**Dividends
      on preferred stock**





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





Accrued
      dividends on Company’s preferred common stock older then four years are beyond
      the California Statute of Limitations and the dividends are no longer required
      to be paid. Therefore, the Company decreased dividends payable with $69,750
      in
      June 2007 for those dividens older then four years.





At
      June
      30, 2007, the Company had a total of 27,780 preferred shares Series C and 11,640
      preferred shares Series D issued and outstanding. On June 30, 2007 the Company
      recorded an accrual of $42,400 dividends for preferred shares shareholders
      who
      did not waive their right to receive dividends. As of June 30, 2007, the
      Company’s accumulated dividends payable has a balance of $335,450.




F-15





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





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





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





**5.
      SUBSEQUENT EVENTS**





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





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





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




F-16








**SIGNATURES**





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






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






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




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